Aalberts N.V. (AMS:AALB)

Earnings Call: H1 2019

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Jul 25, 2019

Welcome, people in the room. Welcome, people joining our webcast. The agenda for today is that we will talk about Albertson, the highlights of the first half year. We will look to the operational review, financial review, but we also are looking forward what we expect in the second half and further. And then of course, we have a lot of questions and answers. Alberts. Yes, Alberts is and this sheet we have shown many times is that we have unique technologies, mission critical technologies where we have a unique market position. We are a company where mission critical people can't resist going beyond the line of duty. What does that mean? It means that you really have the mentality to go the extra mile and that good is never good enough. It's a culture where we are really proud of. The third thing is that greatness is made of shared knowledge. Sharing ideas, creativity and fast learning brings you a lot of innovation. So this is the essence of our company. To create shareholder value, it's a way of working. And when you look to the 3, let's say, points we just mentioned, then actually the way we create shareholder value is by achieving these leading niche technology positions. And you saw that also in our press release of today that it's very important to have these unique positions to really have high entry barriers, pricing power, but also create a high added value margin to invest and keep investing in innovation. Combined with our culture, operational excellence relentlessly continuously improving your margin and generating strong cash conversion. We also showed that in the first half and we'll come back to that. And then the cash you generate allocate that on a very disciplined way there where you make the highest return. It's a continuous process where you have to be very alert and very disciplined, but also very thorough. We also aligned capital in the first half to other topics where we thought we could have a higher return. Technology exchange, innovation speed, creativity, fast learning, adapting to the market will be more and more important in my view in the coming years. So when you share knowledge and you learn from each other, that's a tremendous strength of ours. So we really practice that also in our networks. And it also gives us the amount of innovations what we also see in the first half, but also the last years which we started, but also the coming years. Our track record over the last 40 years is shown in this sheet. Sustainable profitable growth over 40 years. A focused technology leader strongly positioned for accelerated future growth. We did it already 40 years, and we will continue to do that on a very disciplined way. The most important is it's all about people, I always say. Without good people, without the strength of the culture of the people, but also the intensiveness they practice their job every day, being an entrepreneur, take ownership, go for excellence, share and learn knowledge, try to become better and of course, act with integrity is the basis of the success. And without that, you have no future. But when these people also, let's say, exchange the knowledge, you get a lot of creativity in your company. Innovation is driving our growth, and I think you see more and more that we get traction in that. The innovation roadmaps we started to build somewhere 2 to 3 years ago. In one business team, we started earlier than the other business team. We made also 5 year business plans, including innovation roadmaps. We invested heavily in R and D. We still are doing that. We also will not stop because R and D and also creativity in R and D will bring the profit and the organic growth of the future. We leverage megatrends, and I can't say how important that is because we studied that the last years, but also in the Capital Markets Day of 2 years ago, we said climate change, urbanization, raw material scarcity, Internet of Things and globalization and co development is really driving all kind of new initiatives in the world. And we are on top of that. We are at the heart of it. And we exchange this thinking and also we embrace the new technologies. Therefore, you need a very pragmatic culture with fast learning, close to the business and that's why you keep yourself ahead of the game. Now when you look to the highlights and what I did here in this sheet is to show you a little bit what kind of activities where we are active in at the moment. There's a lot going on and this started already 2, 3 years ago. But when you look to all the and these are the real highlights, innovations driving additional growth in Installation Technology. It exceeded our expectations. So our PowerPress fitting and valves are really doing very well. We launched it in the beginning of 2018 and we have a tremendous revenue already in 2019. And we must even be careful that we can all produce it in the coming years. Successful innovation, a set of our digital engineering services worldwide. We extended we are busy with extending expansion of the building in Belgium with our company Henkau. New distribution assembly center in the Netherlands, in Zivolle, which we will make operative after summer. It's now built, so we have to utilize it. New generation of electronic regulators for cars. We launched the full four valves for District Energy and Industrial and Residential and Commercial Buildings. Very interesting. And my colleague, Mr. Jager, will come back to that. We increased the investments on Additive Manufacturing. There for the future. We started co development projects for service technologies. What happens in electrical and hybrid cars is that you see more and more weight reduction because the cars are more heavy with the batteries, so they are looking for lighter materials, but they have to have the same strength. We bring there the outcome with our service technologies. We opened a renewed extrusion hall in the Netherlands with upgraded equipment. And we scored the 1st long term digital contracts in climate technology through our digital hubs in France and the Netherlands. Last but not least, advantage of investments and earlier gained projects in the semicon industry, we took really advantage in the first half. We still made organic growth even it was lower in the semicon in the first half, but we see a prosperous future. We are where technology matters, where we really can make the difference and where we also can make progress through innovation and through doing it on a very unique way. There's a lot to gain. The highlights in numbers. Organic revenue growth plus 3% and EBIT growth 5%. EBIT margin be increased to 13.1% despite more difficult market circumstances, but we kept investing in CapEx. It's even plus 26%, to facilitate all the initiatives we have running at the moment and also to facilitate, but also to finance the innovations for the future. Innovation is normally done for 3 to 5 years. So the moment you start with an idea and you have it operationally run and you get sales out of it, it could take you 3 to 5 years. We did a nice acquisition in Chicago and our cash flow from operation showed a very strong increase. We think a very solid performance due to the unique market positions, innovation and organic growth initiatives, which we took the last years, our entrepreneurial strength, because it's all about people and very strong focus business teams, which we created the last years. By creating focus in your business team, they are busy with long term innovation roadmaps and long term business plans, so you get focus in your activities. And we will continue with that. My colleague, Mr. Jager, will now talk about the operational review. So Wim, thank you very much for the intro. Otto, I would like to welcome the people here present in our nice boardroom and the ladies and gentlemen joining us on the web. After having seen that the overall picture is pretty positive, I would like to give you some background of the business in specifically. So intending to start with installation technology, we made a turnover of €574,000,000 which is more or less flat compared to the period in 2018. Where did that come from besides the positive development we see in a couple of areas? In the U. S, we had a pretty slow start, though the top line was more or less like 2018. In Europe, we achieved organic growth, which was above average. And if you look at Asia Pacific, which is in that business, a slow number, we achieved a slight organic growth, but the lever is pretty small, so that is not so visible in the numbers. Positive currency effects being somehow balanced out with divestment representing some good USD 20,000,000. Arnaud may later out that in a bit more detail. If you look at the turnover, we achieved around an EBIT of USD 70,000,000 that equals to 12.2%, which is a bit softer compared to the period in 2018. So the main deviations or impact on that, we had a good stock reduction in the U. S. You may remember from last year's discussion that we had a strong increase in the U. S. Stock for a couple of operational items when we changed the way of how distributing. That was one of the backgrounds. So we are currently in process to get that reduced. We had the U. K. Topic where the businesses are pretty uncertain. So we got stock increase, stock decrease. So that made the entire operation a bit less favorable. And then we have no principal stock increase in the entire segment, if you look at that at the 2018 numbers. So Arnaud Mornings, our CFO, will give you some details of how that work and what the EBIT impact is. If you look at the CapEx, we have still continued to invest in our fast growing product lines as well as in the overall operational excellence project. Wimland that of the beginning, that is a significant portion of our taking care of having good operations, being world class manufacturing, and that requires investment into our operations. And we are expecting improvements to go, a, with the realization of further agreements with large key accounts and further execution of the operational excellence project. If you look at that type of subdivision multilayer system, so they achieved a fantastic H1. They have opened a huge amount of larger key accounts, resulting out of the R and D activities and the efforts we have spent into that technology in the last years. So as a key takeaway, the strategy getting more and more traction, and we see a lot to gain in the upcoming months. If we then move over to Material Technology, where we do have achieved a €392,000,000 turnover represent a good 4% growth compared to 2018, Despite the fact that we have lower activities in Europe, mainly due to the automotive market, Everybody knows that there is a capacity constraint of the WLTP testing, which comes up with a new emission requirement. We have, therefore, lower car sales worldwide, which is also visible if you analyze a bit the automotive sky, especially the OEM. And that caused that we have an inventory reduction in the entire supply chain. And you know that we're sitting more or less on a T3, T4 level. So if the whole supply chain starts reducing their inventory, yes, that is somehow an effect for us. That is somehow compensated with very good developments in Eastern Europe as well as in North America and also for parts for electrical and hybrid vehicles where we have a lot of projects which are currently in renovation and already running business. If one would then look at the result with the SEK 54,000,000, that represents around a 13% 8%. It's a slight growth compared to the last year. So where does that come from? Mainly, it's the U. S. Market. In all major markets we are in, whether that's automotive, general industry and aerospace, we achieved good performance. We did a very good cost based management in Europe. So we aligned that with the reduced business. We started that very early as we saw signs that automotive may become a bit weaker. And also the business we have acquired in 2018, they were very well integrated and showed a very good performance. If you look at specialized manufacturing, they did very well in aerospace, in general industry and also in automotive. One could say that we're harvesting there the fruits of the combined highly specialized technology offering we do there in Fanlo. CapEx was steered into growth areas such as North America, Eastern Europe and new technologies. So Wim mentioned in his intro that we start looking into the additive manufacturing environment where you see in a couple of industry projects to be developed, and we come into that business by our wide range of post treatment which is a quite crucial part of that, But there are around 10 process around the print job, especially on the post treatment side where we have a highly expertise with our more than 100 different technologies will be useful for that. So when we started developing that business with our key competence. One last thing to mention is the acquisition of Precision Plating. Wim set that out at the beginning. That is a Precision Plating that is a consequent development into another region for the PEM business we did last year in France. It's all about electrical and application, whether that is for aerospace, for automotive or for buildings. It's all about the electrical connectivity and therefore the related plating processes, but we do have a very strong position in Europe with the acquisition we did in France, and we gained a comparable position with the acquisition of PPC. So turnover is around €36,000,000 €38,000,000 on an annual basis, and that is consolidated starting from May onwards. So the key takeaway for Material Technology in H1, that is a solid performance despite the lower order intake into some of the European markets, and we have a lot of opportunities via portfolio strengthening. If we go over to Climate Technology, they're replanting with a 278, a slight organic growth. But the organic growth was pretty strong with a good 3%. So they were in line with the entire Alberts Industries, but part of that organic growth is eaten up by currency effects. The EBITDA expectation were actually higher than the €33,000,000 which we have expected. There was one another product line, which took a bit more time and more efforts than we have anticipated in our planning. But right now, it's on a good track. So and we're expecting for the second half of the year better development. So there is a lot of ground for further developments. It's a fast growing digital hub, which we have realized in France and the Netherlands. We mentioned that already on the full year numbers for 20 18. We have a lot of operational exhaust project, which are in Kyushin. One example is the automated expansion, which we realized in Italy and the new build production and distribution center in the Netherlands, which is the decision is taken. So that's going to be start, and that will give us further good performance in the future. Further, we do optimization of our existing product lines. So as a key takeaway, one could say we have new product lines, there's still a lot to improve as well as portfolio optimization. Concerning Industrial Technology, it's also very strong growth of 11%. So the fluid control activities show organic growth driven mainly by innovations. We said in the beginning that innovation is a key topic for us. To give you a few examples, we realized wealth projects for CNG as well as air conditioning. They were partly tailor made for specific models. We get a good progress in the dispense technology via innovation as well as a strong alignment of the sales force that we could target more and more worldwide key accounts. In advanced mechatronics, we are well positioned in the semicon market. We had a good growth of 3% to 4%, cleared with less than what we have expected and also less than the 20% we did in the last in 2018 on that division. But one could say despite the principal development of the market, we are still growing, and we see there a payoff of the investments and the stock build up what we did in that segment. And we have a good horizon for the second half of this year. I just mentioned the ASML outlook, so they are pretty positive. So if they would like realizing their profits, then yes, then we will participate on that. The EBIT of CHF 34,000,000 that represents the 15.9% demonstrates a strong performance of this technology and innovation intensive business. Also, the acquisition of Pfaff was very well integrated and showed an increased performance, what we have expected by doing that. A continuous portfolio analyzers, which is quite key in that division that results in a divestment of 1 company with a turnover of around €12,000,000 a year. And we expect further strong performance for the months, especially in the semicon market and in the other markets we are working in. So where the key takeaway, one could say innovation is driving the growth, and we take advantage out of investments earlier down. If you can summarize the entire operational revenue, innovations, operational excellence is also helping us in the first year of first half of twenty nineteen, managing to some challenges, which you see worldwide. And we did our homework for creating a good future and also to managing quite properly the day to day activities. If we go on further, then I would like to hand over the word to Arne Mennings, our CFO, and he will give you further guidance and further insight of the performance of the first half of twenty nineteen. Thanks. Yes. Welcome, everybody. Also from my side, welcome people in the webcast, welcome people in the room. I would like to go now through the financials. And just for the record to be mentioned, of course, to start with, that IFRS 16 is applicable from 2019 onwards. So in the figures of 2018, we did not restate them. They are as they were reported last year. And for 2019, IFRS is taking into account. I will give a full explanation of the differences per item in the last slide. So I think a nice revenue growth, 4%, 3.6% actually in the detail, of which 2.5% organic. Not so much impact from acquisition divestments as also guided last year by John Eigendal. Good to mention also is that the added value, as already shown by Wim, has been increasing with 50 basic parts again, which shows that the constant improvement of our portfolio is also, yes, bringing the results. Now of course, EBIT sorry, depreciations and EBITDA are a little bit impacted by IFRS, a little bit, €14,700,000 But the operating profit EBITA is impacted by €400,000 So that is limited, as also indicated last year, 5% increase. Another important change is net interest expense, where we have an increase of cost, but also partly clarified by IFRS for €1,200,000 Other increase is the change of mix of the loans that is converted from euro loans, which we have paid off for new dollar loans for also recent acquisitions made, of course, in the U. S, which are a little bit more expensive. And in the other net finance costs, you see that there is yes, of course, foreign currency exchange results, which clarifies the biggest difference plus some currency material contracts. A little bit lower ETR, also because we divested a company, as also mentioned by of our HFI, small company, which gave a little bit lower effect on the ATR. And that ends up then in a net profit of +6%. Yes, EPS before amortization, €1.25 And yes, again, the main takeaway the key takeaway here is that although market circumstances were difficult more difficult, we still created EBITA and net profit growth. Balance sheet, also here. Of course, some impact important impact of IFRS, which is in the non current assets by the right of use assets of 126,000,000 euros which is also, of course, coming back in noncurrent and current liabilities. That brings me to the first point in net debt. You see a big increase until €905,000,000 But as said, €126,000,000 of that increase is referred to IFRS, which also means that the, let's say, normalized increase outside IFRS is €34,000,000 And just to bring back into your mind also that we have done, from the 1st July last year until now for acquisitions, which is also walking through this number. The net working capital improved with 0.4%. I will come back to that later in my next slide because we believe that mainly the balance of the net working capital has been increasing a lot, and I will also explain you where we did that. But what has been negatively impacted substantially by the IFRS is ROCE. ROCE has been impacted by 0.7%, which means that outside IFRS, we would have been on 15.1% percent compared to 15.2 percent last year, again, with 4 acquisitions done since then. But now we report in IFRS 40.4 percent. So takeaway is that ROCE has been impacted by that. Cash flow. Of course, the EBITDA increased, and we have made a correction for HFI for the non operating income in the result of sale of equipment and change in provisions. And then we have the change in net working capital, which is about the same as last year. But there is a big difference, because last year, we built up inventory in the 1st 6 months €48,000,000 for the whole group. And as Oliver said, it was even more in, let's say, in Slacer Technology. Receivables, we increased EUR 8,000,000 more than last year. Well, let's say, we collected EUR 8,000,000 more than last year. But in payables, as you all may remember, in the year end results of 2018, we have gone a little bit too far maybe by stretching our payables. So what we did in this period is that we stretched a lot less, and that means also a negative impact of €54,000,000 on this payable line. So in total, that brings the sum of €2,000,000 difference with last year, but because we built up much less stock in the first half year of this year and much more last year, we believe that the balance of net working capital is much more healthy. And it also says something about the quality of earnings, because the margin that you normally also gain with stock buildup is now not there. The second important point is the line for acquisition disposal of subsidiaries, where we, of course, made our acquisition of PPC per the 1st May. And also there, we have some deferred payments and earn out of previous acquisitions. But of course, also on the disposal side, we have the collection of the sale of HFI. In general, a net increase in cash, let's say, a decrease in cash of €202,000,000 versus €234,000,000 negative last year, which is an increase of €32,000,000 Strong cash flow from operations. Net working capital more balanced after the big stretch we made last year. And again, we also realized ourselves that we had to bring back the inventories more in line, and that is what we actually are doing. Revenue and CapEx. Segment reporting. Now we have seen already the numbers, of course, in the previous slides, an increase of revenue of 4%, but also a strong increase in CapEx. We continue to invest in many, yes, innovation and organic growth projects, but also we continue to invest in efficiency initiatives. And that's also like Wim said, we have still a lot to gain there. That's also exactly the reason that we continue to invest in that in this organic growth initiatives. Operating profit, EBITA, increase of 5%, And you see the split here per segment again also compared to last year. What we see, of course, is that the Enslaved technology is a little bit lower revenue wise, but that has to do, like Oliver explained, with divestment, of course, maybe divestment of some activities last year. They made good organic growth in Europe, a little bit slower start in the U. S, but also there, we saw increase of orders at the end of the second half year. But what is most important here, also when you look at the EBITA percentage, is that we built off these stocks of over €50,000,000 And even in the U. S, we did not build up less stock, but we decreased the stocks. So we believe that the situation is much better because of that now. And we also are confident that with the plans that we have for more businesses, because we do it not only on installation technology, for the next 3 years, we have good improvement plans running, which we follow-up regularly, and we will continue to improve these inventories. Material Technology, good increase. Oliver already explained about that. Also, profitability increase. Actually, the rest is increasing. Climate Technology, a little bit small increase, but there it was already explained that although we also there had an okay organic growth, we had some delay in the product introduction or new product introduction where we put a lot of effort in. And that is still to expect in the second half of the year, But of course, the costs are also made in the first half year without the revenues there. So there, we had a little bit smaller increase of profits. And Industrial Technology performed well. And also there, you see that the portfolio is really bringing the results. That brings me to the last slide with the impact of adaptation adoption of IFRS 16 in our numbers, where you can see that on EBITDA level, the adoption is €40,700,000 On EBITA level, it's only €400,000 €400,000 That's the number that we are at least always focusing on, so that is hardly changed. Net interest, because of the right of use assets, of course, and also the financing part of that, increase of €1,200,000 income tax expenses, a correction of €200,000 and that brings to net profit. That's a little bit lower, €600,000 versus the number without these corrections. Now net debt, important number where you see the EUR 126,000,000 increase for only, yes, IFRS, the same almost the same number as the total assets are increasing. And yes, that brings to the ROCE, which is lower, as I already explained, 0.7%. That has impact. And also on the equity percentage, you see a negative of 1.9%. Leverage ratio, to finalize, 0.2 difference, which means that we are now at 1.9 instead of 1.7. The 1.7 would have been exactly the same again as last year. So the adoption of IFRS has impact on return on capital employed. That is the big takeaway, I would say, from this slide. And then I can hand over again to Wim. Yes, Albert's looking forward. This is Albert's looking forward. A lot of shelf help going forward to drive organic growth. Yes, I can say we are actually pretty positive about the second half because when you look to these examples like innovations in for thermal management for hybrid and electrical vehicles. We are busy with many co development projects and service technologies for changes in voltage in cars. So I always said that we are living in material technology of new parts. So that means when the voltage, which is now happening in cars are changing, then you get weight increase because you need thicker material. That's not possible because then the car will be very heavy. So they use other materials, but we want to have the same strength. So we at this moment, especially in Southern Germany, we have a very good order intake in this field because they are all busy with new parts. That will accelerate. We are one of the few companies in Germany, we are market leader in Germany in service technologies, who can help the customer to develop these kind of coatings. One example I can give. There is a car, it's called the 7 Series, which has to be cooled because this is a hybrid car. Instead of having 2 cooling pumps, this car needs now 7 cooling pumps. These all these cooling pumps have to be treated for service treatment. That's one example. Now, so when cars are changing, parts are changing. When parts are changing, you have to innovate to develop them and that is new business. So we are living from new parts. Besides that, we also come back to the existing automotive market, because we want to give you a little bit more our guidance, what we hear from our customers. Coming back to Albus looking forward. Also in, let's say, Climate Technology, we have fantastic amount of new product lines. We already mentioned in February that we have 15 new product lines on the table, which we showed in our in the biggest acquisition in the world in Frankfurt in the month of February, March. We are launching them step by step. This will take 18 months to 24 months. Innovation is not going like a rocket. It's going step by step, but we are not stopping. So that means that we will continue bringing these products to the market. As maybe also remember last year, quarter 3 was not the best quarter for Climate Technology, but we expect now a much better quarter, so that with including also these innovations. We will start a new build probably in quarter 4 when we have the approval to build for Climate Technology to build a new factory will be in Almere. Probably, we will also send a small press release out because we're very proud on it. It will probably September, October, where we build a complete new factory, but also a new assemble center and also a distribution facility besides it, because we have a very good growth in these product lines, which we produce now in Bunscouten. Our innovations on the area of Marine are also making progress. We see more and more that in Marine there come legislation for emission reductions. The 1st January 2020, the bigger ships like container ships have to reduce their emission. We can help them because we can control the fuel systems in their engines. So we expect also from these kind of sustainable transportation trends, we expect a lot of innovations. It's not for nothing that we said climate change or sustainable transportation is one of our topics to drive innovation. That will only increase, yes, but it's not something on the short term, rebuilding a company on the long term or midterm. So that will keep on continuously progress. The innovation roadmaps again started 2, 3 years ago. The most effect of the innovation you always get between 3 5 years. So that means for us in 2020, 2021, we will see impact of that and it's now coming more and more. That is called self help. So we think that also in the second half, we will add a lot of self help. Besides that, operational excellence will be continuously relentlessly pushed. That means we have to become more efficient. We have to automate more factories. We still have a few larger sites, which we want to consolidate. We are not ready with that, especially in installation technology. We have still a lot to do because we brought it together and as last the last team which was brought together was installation technology. So we still have a lot to gain. So a lot of innovations are underway, expansions, automations of factories, but also, yes, new equipment. So that means that our CapEx will continuously going to rise. Also that is what we explained in December 2017. It could hit somewhere between the €150,000,000 €170,000,000 in the end. After a certain spike, in the coming years, we will go down again. So that's what you see. We expand Belgium, we built in Almere, we finished Zivolle and we keep on investing in innovations. Also very nice dimensions are the upgraded product lines in Dispense. Dispense we brought together as we heard from my colleague Mr. Jaeger, but we have very nice products in Dispense, which we also launched in the second half. We expect a lot of it because one competitor of ours did not such a good job, so maybe we could take that position for a big part. There's a lot to gain and there's a lot coming. That is my message to you. When we look further forward, next slide, we give a little bit more guidance on 2 markets because it is difficult. And what you read in the papers and what you hear, there's a lot of uncertainty. What we did for ourselves, we did a very thorough investigation with our customers. We called them intensively. Our management is on top of things. And this is what came out in Automotive that we think that the engine mix of vehicles, which is now really disturbing a little bit of supply chain, that means which engine has to go to which car, because diesel is less, petrol is higher, gas is higher, electrical is coming. So you get a change of mix. This should be in the boundaries of the legislation, which is in 2021 effective. So you see the car manufacturers puzzling what is the right mix. This is coming more clear. We see that now. Maybe when you order your own car, you sometimes also see that, because you see a delay when it's delivered. It doesn't say anything about the ordering. It says something about the delivery. That's a big change and a big difference. The second thing is the capacity of the WLTP testing, which Mr. Jaeger mentioned is improving. We see that. A very important point, inventory reduction will stabilize. We get really the signs of that. It started already step by step from July last year and we see now where we produce products in specialized manufacturing, we see a rise. That means for us, normally that 3, 4 months later, you have also your heat treatment and service treatment business. So we trust on that and we talk to our customers. Developments of hybrid and electrical cars will continue. It will give new business, yes, so it will not stop. It will give new business and replace also the business you lose, yes, because all this business in automotive in material technology is mostly taking some years and then you get a new part. When you look to semicon, we expect an increased activity level in the second half of twenty nineteen. We talk to our customers, but also the front end of the semicon market and that's very important to understand. You have a front end and a back end. The front end you invest in the efficiency how you produce a chip. That means that the customer who eventually uses the machinery in the front end has a competitive edge when he has more efficient chip producing. That means he can fight in the market. The moment a customer doesn't do that, you lose also in the market. So the efficiency investments in semicon are continuing and that is where we are. So we see an increased activity level in the second half, mainly quarter 4. I think you get also some guidance from others in the market the last weeks where this is confirmed. Our inventory was kept on a high level. So the inventory reduction we gained in Installation Technology, we build up in Industrial Technology Advanced Mechatronics. Why? Because we will see the hiccup, the pickup. And when we see the pickup, we can deliver immediately. So we build up there roughly, I think, €15,000,000 to €20,000,000 additionally inventory, which we will ship out the second half for a big part. So we are busy with the customer. The development of projects in which Albus is participating is not stopping. It's ongoing. We scored 2 very big projects, as you can maybe remember, 2 years ago, and we pre invested in machinery, and we take really advantage of that. So in semicon, we grew the last year's 20% or more than 20%. First half, it's maybe 4%, but we will ramp up again. And next year will be very nice. Yes, so let's be a little bit longer term thinkers and we have a prosperous future in this end market, a very prosperous future. Why? Because 5 gs, autonomous driving, the mobile phones, everything will increase, data, memory, logic, everything will increase. So this is a fantastic market. We are a top supplier in this. So let's not disturb us from a short term little bit lower growth. We have a prosperous future. So coming to that, self help initiatives, acceleration of that even, organic growth potential, we have more CapEx. Do you really think that we would spend all this CapEx when we don't see the possibilities, when we say every time disciplined capital allocation? On organic growth, this company has fantastic possibilities, and we will pursue that. Besides that, we expect in the semi com and automotive, a pickup. Yes? In automotive, we expect a stabilization, as I explained, but also a small pickup because inventory reduction is over. And semicon, we have very good signals that we will have a good second half, especially quarter 4. So that brings us to the outlook, which is exactly the same that we remain confident in the execution of the many growth and innovation initiatives, also efficiency initiatives and investment plans, we keep on pursuing them because we really believe in them even more than 6 months ago, We will pursue our strategy focused acceleration, which we set almost 2 years ago. And we will drive our profitability further and convert, especially this year, strong operational execution into free cash flow. We will make a nice cash flow this year. To update you, and that's my next slide, to update you on our strategy, which we launched, as you know, 2 years ago. We will update you about where we are, what did we find out in the 2 years more in-depth, what will we accelerate, what will we change and because we think we learned a lot in these 2 years, but one thing is for sure, the organic growth possibilities, what we have initiated also 2 years ago, even exceeding our expectations the coming years. So that's a little bit the tip of the slayer, the tip of the whatever and of what we want to say there. We want to invite you and our shareholders, but also potential shareholders, investors to come to our fantastic facility here in Utrecht, where we are here, in our Experience Center. And we also will show you some very nice innovations, which we have in the pipeline and also are already selling. So we will do that the 4th December 2019. So hopefully, we get a lot of visitors in our nice new office in Utrecht near the train station. So I would like to thank you very much for our presentation and we hope of course that we have a lot of questions and that we all can answer them. Thank you. So who is first? Is it me? Can I go first? Okay. Frank Claes from Degroof Petercam. Question on M and A. How high is that on your agenda? And what are the main focus areas currently? And what do you see on pricing, for instance? Do you see multiples already coming down? And then secondly, working capital, how much room for improvement do you see still there? And what are the main areas? Is it indeed inventories? Or is there also room on the other fields? Yes. Maybe coming to the M and A. M and A, as we also guided at the beginning of the year that we expect 2 to 4 acquisitions, mainly bolt on acquisitions to do in 2019. That's still our goal. So we still we think we can achieve that between 24, as we did last year. Both on acquisitions are very interesting because, yes, you strengthen your market position, you create more uniqueness and they can be integrated pretty easily. You take lesser risk and you have a quicker return on the business plan you made upfront. So we will continue that. M and A will always be an important fact of the growth. Our ideal situation is organic growth, of course, is the nicest growth, but combined with bolt ons that you build your chosen market position further. Coming to pricing, we also talked and we looked at a lot of bigger acquisitions. But for me, the prices are too high. So and they are not coming down at the moment. So we will not spend money on too expensive acquisitions when we don't see the return. And our policy is as always that we have 3 golden rules is that it should be a perfect strategic fit. The second thing, it should be management of ourselves or the management of the other party that we really believe in the business integration plan that we get a return out of it. And the third is we never pay too much based on the free cash flow out of the business integration plan because we want to have our money back in maximum 7 to 8 years, yes? The bolt on acquisitions are very nice, because you build up relationship. We know the market in-depth, so we have lesser competition. We don't like auctions, because at auctions, everything is driven up to the highest profitability and have no CapEx investments. So when you take them over, you have to invest all the things. So we believe in bolt ons where you really build relationships and then that there are more arguments to sell to us than only the money. And there we are pretty successful and we will keep on successful. We have a very nice pipeline, but we are very critical. I can tell you the last 2 months, we rejected probably 3, 4 projects that we were busy with, yes? So and even sometimes signed already an LOI. So we are very critical. We are working for our shareholders to have a disciplined capital allocation. But we see enough room for additional acquisitions also this year and the coming years. But multiples for bigger companies, in my opinion, yes, I think they are crazy personally. So we will not do that. Working capital? Working capital. As I also explained, we have for yes, our most important capital or let's say, working capital users businesses. We have made 3 year improvement plans, of course, mainly focused on stocks, but also on to keep focus on receivables. Payables, I would say, you see already now per half year one closing that we are trying to stretch that a little bit less than we used to do in the past. That also means that the first gain we had now in the first half year did not really pay off in cash immediately because we had to compensate the year end position of last year of payables. But we believe that with the stock improvement plans that we have at this moment in the next 3 years, we could make an improvement of about EUR 100,000,000 euros calculate in days, when you calculate in day because also, of course, when you grow organically in revenue, you also grow working capital normally. But we can improve in days. Calculated about EUR 100,000,000. And what will happen is that we will keep on reducing the inventory in insulation technology. But when we ship out Advanced Megatronics, that will also go down in the second half. So that's because we build up in Advanced in the first half. Markus Pekt, the idea. Firstly, can you provide some kind of bridge in your EBITDA because we have seen highly profitable acquisitions, we have seen divestment and also, obviously, some organic performance. And let's say, as you saw in the revenue split, the impact of M and A in half year one was not so big. That's also what Joao Eigerdau guided last year. When we look to the holding elimination line in the EBITA specification, you see that we had a normal situation here, first half year last year, about EUR 6,000,000 costs. This year, it was a little bit lower, €3,900,000 So you see that there, we had a small advantage of a disposal that we did just before closing of half year 1 of HFI. In principle, the first half year of twenty eighteen showed a normal picture, and that's also what we still expect for the remainder of the year. So in the first half year, there's only a very small advantage of an disposal because yes, let's say and if I compare to last year, we also had some small advantage in the first half year. But so that is not a big difference. But for the second half year, we still expect that, yes, the whole new elimination line would show the same normal picture, again around EUR 10,000,000, EUR 12,000,000, unless we can still make a divestment before the year end to compensate some of that. That. That is how it looks like. So let's say the EBITA performance of 2019 is more or less organic. Despite the currency impact, of course, what we also have disclosed. But if I'm right, last year, you made a very profitable acquisition. PPC is a very profitable acquisition. You have invested in the business in the 1st May. 1st May. Okay. So that's not really visible. But if you really look at that and what we've done last year and this year, the acquisition impact, it's not 0, but it's not really visible in the numbers. Okay. Now the difference is we did Pfaff in 1st July, and we sold the retail business, 1st July. So Pfaff is indeed having higher margin than retail. The revenue is half of it, yes. So yes, that's 1st July last year. Then we did an acquisition, Royal Metafinish, in October last year. So that's really counting. But PPC, yes, it's you can't even count it. It's 1 or 2 months. So and then we did a very small one in New Jersey, Copeliner, which had, I think, dollars 7,000,000 revenue. So it's, I think, dollars 1,500,000,000 it's almost nothing. So the difference is, of course, that we acquired a little bit higher margins. So that's correct. So there we have a little bit of advantage, but not so much because so the most is EBITA growth organically. I think it's not completely 5%, but let's say it's maybe 4%, I think 4%, something like that. I think what is maybe important to mention is also that and that is really affecting our profitability is don't underestimate when you reduce your stock in a highly virtual integrated company like Apollo in America, because we do the pouring, the foundry, then we have machining, then we do the assembly. So when you reduce that $30,000,000 of stock, you're lacking a lot of absorption. That's how they call it. So yes, that's probably also the reason why the EBITA organic growth yes, is a little bit less. But that will stop. The inventory reduction, we will not continue. We will further optimize. Previous sessions, you had said that you are looking to your portfolio and intended to divest some €40,000,000 to €50,000,000 of business. When I read through the press release, I got a feeling that you once again run through your portfolio and yes, might do a little bit more than that. Yes. I think then we wrote a good press release because that's you've seen that well, especially I think in Climate Technology. Also that is not new. I always said I have to get rid of some more and that it could be part of our topic in December, yes. And because what we see after 2 years, yes, we drove these 12 business teams. We drove the 5 year plans. And as always, you have some things which go much better than you originally thought and now something which are lagging behind and you get nice stories and nice excuses. Yes. So we are indeed thinking and especially also in that area that we should maybe do a little bit more. But I don't want to make this the Capital Markets Day, but that's correct. That's also why we put that Centene. And that is actually holding us a little bit back to increase our margin quicker in climate, because when you would ask me where are you a little bit, where did you expect a little bit more, it's actually in that area, because it's such a nice business. And one part of the business we do very well, high margins, but another part is lagging behind. We must get rid of certain things. So it's very well studied. I'm happy because then we don't write the press release for nothing. Also will be discussed at CMD, but still I want to ask you. What you also mentioned is that the main impact of IFRS is your on your ROCE. Is it something which you will change as well, the outlook because of the IFRS 16 implementation? Or is that still what you can reiterate over? We'll come back to that in December. But of course, it's a setback. It is like it is. But you know us a little bit. So we will try to, of course, to outperform. I hope so. And also a bit of exchange in wordings concerning your capital investments because I thought it was very, very clear that you put your money there, whether it's growth and margins and whatever, but still I read some kind of fine tuning again. Could you really specify what the difference is? Very nice example, I think, Oliver. Yes. I mentioned that when I said where we skid our CapEx into certain directions. So we made a quiet move in the course of this year that we focused on North America in new technologies. I mentioned that we look for additive manufacturing, that we, in that environment, put a few investments and a few machineries in. So consequently, we reduced a bit what we do in other markets. That also applies for Europe. Region, we that was technical wise. And if you look at regions, so we further focused our investments into Eastern Europe. We work on a couple of Polish facility, which we will increase, partly automotive, partly aerospace, partly industrial gas turbines where we have a good liaison with the supply chain over there. Same in North America, if you look at regions besides the technology I have mentioned. Those also have implications for the amount of CapEx you will invest? Or does it more or less the same what you allocated to? I think that we have given guidance on that. And yes, we stick in that. Between £360,000,000. And we will remain on that topic. But it's a continuous process. And I think when you see now, you have lower sales in Europe. Of course, you change your pattern. And when you see, yes, certainly additive manufacturing, we see some very nice opportunities. You can say, oh, I spend more. You can also say, I take a little bit back and I put it there. So it's continuous fine tuning. I think you have to do very aggressively all the time when situation are changing. That's, I think, one of our things which we have in our DNA, you have to be very alert on that. Madhav, underlined that a bit. I mean, if automotive is a bit less in H1, when it's somehow logic that you are not starting investing in capacity in Europe for automotive. So you put a brake on there. And if you see opportunities, on other hand, may you And another thing is, for example, that you see that thicker materials in cars due to changes of voltage, a car is always 12 volts. Now when you bring it to 24, maybe 48 volts, yes, you you need otherwise you burn all cars. So you need thicker materials. That changes certain business profiles. When you are too late with that, suddenly you see profitability going down. So below all these markets, there's going on a lot. And I think the greatness, how we see that and you adapt on that, greatness is made of shared knowledge is really true. You have to learn and be adept very fast, but keep on investing in the right things. Yes. You could certainly estimate the investment in PPC, But one part of that, when you see the change of the electrical vehicles, the more usage of that, that type of coating and that type of technology supports that development. But it could be that when certain things have such a big potential that you want to put more CapEx or capital there, that other things you should give no money anymore. So that's coming back to your first question. But we will come to that in December. Henk, Fehrman, Kempen. My first question is on the organic sales growth, 2.5%. And I just from my understanding, that equals about €35,000,000 of organic sales. From my understanding, is it fair to assume that about half of that €35,000,000 is Industrial Technologies and the other one, Installation Technologies? We have to summarize what was being discussed. I think when you what we earlier said in these meetings is when you look what is above average and what is below average, then industrial technology was above average. Material technology was a little bit below average. Climate technology was spot on. And the same was roughly in Installation Technology, maybe a little bit more. But Europe was very good, and America was roughly flat due to the slow start, but we will see a very good second half in America. So that's roughly the then I think you know, leverage is 3, and then roughly where it is. Second question. When you are a quick thinker, of course. 2nd question on one remaining question on working capital and more specifically, the inventories. I think in the previous earnings call, we also discussed the inventory position in relation to the commodity prices. And if I summarize the inventory position now, it increases by 1% versus sales growth of about 4%. Gerdauper? No, because actually, the material prices between Q4 2018, Q1 2019 and Q2 2019 are more or less the same. There's the efforts and of course, it's also the way how you try to cover your materials, of course. So the impact of raw materials is not. Okay. Then I have some questions on Material Technology, I hope you appreciate them. If I You appreciate every question. If I take a step back and look at the past 4 years, right, in material technology, you've had an economic tailwind and you've invested about SEK 500,000,000 via CapEx and via M and A, which equals about 50%. But if I look at the E8 growth and also first and I look at terms being made on just like once back with this dose report, is it fair to see the best still on Osmolensp flight? Yes. The cadence we made was 2014. When you look at the 4 months of Impeccla when we acquired the company, that was around 6.9 percent EBIT margin. So this is more or less doubled within the years we are running that business. So principally spoken, we are happy with the development of the success. Also, we increased in the Heat Treatment division quite strongly the EBITDA margin if you look at 4 years ago and what has been achieved in the entire year 2018. But I couldn't say there is nothing to do. There are still room to improve. But the impact on acquisition, when you still see ups and downs of certain sites, but if an average, we could say we are we have achieved what we have expected, but it will be better in the future. I think we agreed that we could do better. But because we as you know, probably before we did the acquisition of Impeggro, we made already in our service treatment and knee treatment. We made already 14.5 percent EBIT. And I think it has also to do with the integration of the acquisitions, which I think some are going well, others take more time. So it's always taking more time. But in general, I think it's a very good question because I think we still can gain a lot there. But also here, you see that certain businesses, also now due to the market changes are disrupting a little bit. So we have still some things which are actually by far not optimal. So maybe we should split them from the very nice business. But a very good question. So my opinion is we still have a lot to do. So maybe we don't agree here, but but I think we still have a lot to gain there. But don't forget now for the first half that we had a minus 3%, minus 4% in Europe, which is highly profitable. So that doesn't help for the first half year results. We compensated with other things, but we yes, we had lesser EBIT there. Yes. Last question on the it was less €60,000,000 cash outflow in the first half on the acquisitionside. You only did one small acquisition. Is it fair to assume there was a sizable earnout also in that figure? Or There was also an earnout of and some of these diluted payments that we agreed when we bought the other companies several years ago. Okay. Thank you. So a combination? And it was a nice company we bought. That's correct. That's only for a few months. Can you hear me? Yes. First of all, I had a question about you made an example. I mean, I can imagine how innovation would work in challenging end markets. I can see why that would work in terms of your organic growth. But you also made an example I was actually looking for an example how operational excellence works in Challengers and End Markets, how that actually helps you and whether you have a real hard example to make it a little bit more simple for me, that's good. Yes, operational excellence is something we've been driving already all these years. And actually, I started to a lot with that when we transformed the company to clusters. What you see the last years, we're driving much more innovations organic growth. So it's superior. It's a phase that operational excellence you should always do. What is operational excellence? And we have a net a list of projects in each business team. And I demand at least 20 or even more, where you optimize your operations in every sense. So that means in your factory, in your supply chain. Now what does it mean? You have assembly work, which is where you have maybe amount of people assembly by hand and you automate it with a machine. That's the project. Another thing is that you consolidate the warehouses in Zee Lauder, what we're now doing. So the building is there. So we have 7, 8 warehouses all over Europe in installation technology and we cluster them to 1 warehouse. Then you streamline the packaging, you streamline the branding, you streamline this. That is what we're going to do in the coming 12 months in Seevold. We have still some larger sites, which we want to consolidate with other sites. And for example, in the U. K. But we have an alert reacting. I think in the U. K, we have to be our producer even more than we are. We must attack the market. So we will bring additional added to U. K. That's to take this day to factories in a month. But that are the big things. The smaller things are, once the 10,000 here, you gain 50,000 there, because you continuously think of cost reduction, automation, supply chain improvements and that's an ongoing thing. But of course, what's the question which was here before, we are in material technology, when you have 3%, 4% less volume in heat treatment, service treatment in Germany, which we have, yes, we have a furnace. So when you have a furnace and your furnace is filled 4% or 5% less, you have the same cost. So you have a pretty high breakeven point. That's that business. So that is, of course, not helping the total EBIT picture. But we compensated it, but we had this 4% less. But operational excellence is helping all these these are examples. So not only larger things, which we still have in the pipeline, we still have to reduce in my opinion 2, 3 bigger locations into other locations in America and Europe. But that's mainly in installation technology. And is it also fair to assume that while you consolidate the warehouse in Europe, I think which we're also seeing in North America, there might be double running costs, there might be double inventories in the time of I explained that many times. There's a big difference between America. America was a very difficult situation in the last 4, 5 years because we had 3 companies which had all reps and agents, which were stock holding. So we had a situation of roughly 75 reps and agents, which also had our inventory and the contacts to their customer. We had only maybe 10 to 15 own salespeople. Now the decision we made 4, 5 years ago, and it's I think it's really in that period, is that we said we want to have our own salespeople, our own sales force. Why? Because when you have innovations, you can push them really to the spec. You need to have a specification sales force to come in the specification of the building projects. When you don't have that, you have no power. An agent is short term oriented. When you can sell tomorrow this, the day after tomorrow he sells that. So we have no power. So we made a real strategic difficult decision to do that. That means we had to build up a sales force of 85 people from 12 to 85 and we had to reduce the agents from 75 to now we have maybe 8 or 10 and pay them off. In the meantime, when the reps are stockholding, yes, you have to build up a separate distribution network, otherwise you can't service your customers. So we had that period double costs in America. So we did that all. In the meantime, we acquired short joints, which had also 2 warehouses and we had, by the way, more than $20,000,000 of stock. We bought that company, so we also are busy to integrate that and bring it down. And we got also already rid of the 2 warehouses. We did it all. This was 2016. Yes, but it was so nice acquisition when we did it. So we have it all done last year. We also changed the management because we thought we should have much more professionalized also the fashion and everything. So and now we make it efficient. So with CU now this year, €30,000,000 reduction. We start a lot of operational integration, but still our IT is not on one platform. We still have to do. So that is America. Europe is more simple, because you have one warehouse and we have already all the salespeople. So what we just do, we said the warehouse in Germany or France, we integrate and then we do the warehouse in place X. So we integrate step by step the 6, 7 warehouses in the olden with a very new IT system. So it's much easier. So I don't expect a lot of disruption, could be a little bit, but America was. America, we have created a great position. And maybe when you noticed in the press release, we also said we expanded business with key accounts. We scored a few key accounts in the first half, where we have next year tremendous sales. So we have to invest heavily in our production lines in Fayetteville and in Arkansas, otherwise we can't even handle it. So the strategy is getting traction what we said, but still a lot to gain. But yeah, it takes time, but we are coming there now. We'll be getting the right direction. So that's also why I still very confident to hit the 14% EBIT in Insulation Technology. Right. Thank you. And if I if I'm not mistaken, within Climate Technology, the one kind of area where you guys always have a white spot, so to speak, was air. Is that still the case? Are you looking at that still? And is it something that has to be Good memory. Well, I mean, time's not But on the previous question, I didn't. So on is it something that needs to be inorganic? Or actually, could you try to build it organically? No, I think you're fully right. We mentioned also air and it's still in our definition. Air, we cannot do organically. I think it's too long. So when we will do air, then you have to do an acquisition. I must say at the moment and we also face that, that we see so many opportunities in hydronic flow control that air is actually became a little bit on the backside. But it's still an interesting market. So I don't want to say we'll never do it, but the moment you can drive organically, what you have is much more interesting than doing again a broader activity. So probably for the coming years, we will not pursue air, but exploit everything we have in Hydronic and get rid of some old portfolio and maybe integrate even a little bit more than we did till now, but we come back to that in December. And then my last question was more of a management lesson for myself is how I mean, at one hand, you say innovation, I mean, you need to look 3 to 5 years out and it will help your business overall. But currently, the challenging end markets also dictate, and I think Mr. Jager just mentioned it, okay, we see a little bit weakness in automotive end markets, so we shift a little bit of the CapEx that we spend there, maybe down to 0, to other areas. How should I balance the short termism of that and the long termism of I mean, it seems like a contradiction in Terminus, but so how should I how do you balance basically the CapEx allocation in terms of short term and long term? Yes. What it has to do with, we also there we guided, we said when we have the CapEx, we have 40% we spend on innovation, 30% we spend on efficiency and 30% we spend on capacity expansion. And where my colleague was referring to is the capacity expansion. So that's the first thing you cut because when you see volume going down, you're cutting capacity expansions immediately, yeah? But the innovations you protect. Growth areas, you also protect. You even give more money. So what we did, actually he did, is that he got capacity here and there and that we spend actually in innovation more, especially in additive manufacturing related processes in North America. Thank you very much. All right. It's Jaap Van Vist from Lucerne. A few questions on the margins. So the added value margin went up by 50 bps, which I think is quite impressive. Can you talk a little bit sort of what has been driving that? Was that product mix, pricing? Anything else you would highlight? I think pricing was limited to between 0.5% 1%, I would say, also because material prices were quite stable, of course. And yes, let's say, we made, of course, again, an improvement of our portfolio, so that is supporting this improvement. Yes, and what we already said earlier is that, let's say, the margin in Slaves Technology was a little bit lower. But take into account the less stock build that we made there. So still there is also upside, we believe, like Wim already explained also in earlier with the potential for the future. And would you be willing to share sort of how much that impacted stock reduction on margins? Was it like significantly? I would say that has costed a few million. Okay. Yes. And then if we sort of And that was mainly because of the absorption, that you may say, the absorption in Europe. Yes, I think it's more than a few million. But it's let's say a few million. Okay. And then sort of we actually see a lot of companies struggling with cost inflation, labor cost inflation in Germany, in the U. S, etcetera. You actually seem to manage that really well given the EBITA margin development. Can you talk There's a tricky thing there. The tricky thing is that wages always take longer. So we expect the second half and next year that there will be a big impact. So we already discussed a lot in the management team to increase prices based on that's it's going very slowly. Because things are you get a wage increase and then they say often it will go on in the 1st July or the 1st Jan. So the wage increase, that's also the discussion you have now in several countries. Why don't the people have more salaries? I think it will come because we it's already agreed. And so we have to adapt on that. It's that's what So from that perspective, it's reasonable to assume that the pricing component on the top line also goes up a bit? No, yes. But to actually cover up for which I think we have to we really have to compensate for that in the second half, but mainly next year. Okay. All right. Yes. And when you don't do that, it's a big risk because it's sort of it kills you because it comes in very slowly. It's like raw materials. Yes. All right. And then I would also just on Materials Technology, right, because you indeed mentioned actually quite a significant headwind from the lower production in Europe, but the margin still went up, which I think is quite impressive. But what was actually helping that so much? Well, I tried to explain that we made good cost management in Europe to steer margins, and then we had better business in Eastern Europe and as well in North America. And what does it tell us about the second half of the year if those volumes would indeed be more favorable given the phasing of the auto unwind? We don't give margin guidance in detail. But if the automotive guys make what they're saying, I think then we are very positive. Okay. Very clear. And then Wim, maybe also from the CMD. But I know you gave the sort of the 3% organic sales growth target 2 years ago. No, no, no. We gave at least At least, sorry, at least At least, 3% average organic, but I think this is so difficult to explain every time. Yes. Sorry, at least 3%. Even you, But it was at least 3%, which I think at the time the end marks were a bit more favorable, but I guess we do. How do you feel that that's sort of going forward because it seems the innovations are still accelerating? Do you also think that at least could be more than 3? And when you update that We always said more than 3, because you said at least 3. Yes. No, but I think the message I also gave is that we see a lot of opportunities in our existing business. And some plans are working out well, some are exceeding our expectations and some plans are a little bit behind. So then it's wise to sometimes go through that wholesale cycle again and maybe say, hey, I can maybe focus more on the things which are growing faster and allocate my capital there, which you do every quarter. But from a business point of view, you have to review it and that's also what we are doing until December. And then it could be that you have a higher growth page, yes. Because organic growth is by far the nicest growth. When you realize your operational leverage and your drop through, and that is also very important that you stick to your operational excellence, that you create also the leverage. All right. That's very helpful. So yes, let's see. It's not about the growth. It's about profitable growth. And that direction, it will lead to growth. We certainly agree. I've got one question left on Advanced Mechatronics. Like in the past, you've been a bit more elaborate on the fact that you might want to go greenfield into Asia to follow your clients in that respect. And I was just wondering whether you could take me through what kind of metrics would be needed to actually follow-up on that decision, given that it seems unlikely that you're going to be doing large M and A in that area given your comments on multiples. I was just wondering whether you could expand to that. Yes. There are 2 comments on that. You're right with the large multiples for buying a platform. The other disadvantage of buying a platform, we investigated by the way, we even talked to possibilities. The other disadvantage is that you buy something where we are not so focused as we are today. I think the strength we have in advanced mechatronics is that we do the motion control systems, including the frames and the high purity gas systems. And there we are real specialists with our own IP. So we develop ourselves. We have our own project management that also protects your margin. The moment you become a contract manufacturer, we don't want that. So when you buy a larger platform, which we investigated, you get a lot of things with it you pay high multiple, which you don't like. And then you have to clean it up again in the coming 4 years. So when we could do a small acquisition, which would help us to start up quicker, that is the preference. And you're fully right, that is a real hot topic for myself, because we need to be there. We get our customers ask us that. So we are working on that intensively. So hopefully, we will succeed. But it will probably be more a bolt on or small or a greenfield or a combination. And then it opens a lot of possibilities when we have their footprint. And also where, we also investigating what is in the best place. Maybe one follow-up actually, because you sound very excited about semi specifically. Is there anything that you could do to sort of boost that exposure to the group significantly by an acquisition or? I just explained the situation in what in my opinion in Advanced Mechatronics is a very young business, young in age. And the supply chain is really in my opinion, the supply chain is one of the biggest issues of the bigger tire ones. So we have decided 3, 4 years ago to completely focus on that. So that's also the reason why we sold off a lot of other companies. So when you look to the original activities we have, we have actually left Advanced Megatronics and then we acquired even Plurtech. In the meantime, we grow rapidly organically with our facility also in our office in Einshorten in the High-tech Campus and that will continue. But I want to stick to the strategy. That means the technology I have, I want to expand worldwide. So and then doing a bigger acquisition that disturbs actually your strategy. So I think we have a much higher profitability and sustainable profitable growth when we will do a smaller bolt on, get a footprint in the market and then accelerate heavily with organic growth. So I think organically, we will we have big plans there. So I think even without an acquisition, it's the coming 4, 5 years, also from 2020 onwards, it's a very prosperous future. It's but you have to look a little bit further than only 3 months, yes, because that is the only request to you, because it is so simple, yes. You have 5 gs, which will come. You have autonomous driving, which will come. You have more mobiles. Your children need more memories to memorize all the videos they make from their friends. There is building data centers everywhere. So yes, it's all based on more calculation power and more memory. And therefore, you need to bring it in smaller surfaces. And that is, for example, what also a company like Assimil is doing. We are one of the top suppliers in that world. We are in EUV. So when EUV goes to 40, yes, we also go to 40, yes. It's so simple. But yes, then you have a small dip here, yes. And we are very well positioned. We invested a lot and pre invested and that's also why we still make growth these 1st 6 months. And I will do the same in Asia. I will do exactly the same. But maybe I should get rid of other business to support that business more. That's correct. So it's but it's not I'm not only positive about the semicol. I think climate also has a but also integrated piping systems has a fantastic future. But advanced mechatronic, we started to bring together already 3, 4 years ago to cluster it. Integrated piping system, we clustered the last one and a half year. And so there you still go through certain turmoil, what I explained. Yes. More questions. Okay. No more questions. Then we have some questions left through the webcast. Question 1, Martin Van Driver, ABN. Why declined EBITDA margin in Installation Technology despite organic growth and the positive effect from divestments? I think we already touched this topic, and the main explanation is that we build off stocks or let's say that we did not build up stocks for €55,000,000 versus last year. So that's a big difference, and that is actually, yes, the reason that the EBITA margin declined slightly. Despite completion of new distribution center structure in U. S. And the sales catch up, delayed orders in Q4 coming in H1 'nineteen. Inventory continued to creep up. Yes. What is the cause of the increase other than organic growth? Now this is this has to do the what he means is the IPS business in the U. S, where we as we explained already in the during the meeting, where we decreased the stock really from the end of 2018 until now. We decreased the stock, so that is something that is not that it is creeping up. The total inventory creeped up a little bit because we also built up some stocks and we did some acquisitions, of course. And so also there, we have some adding of inventory. But the increase of stock that was mainly in Advanced Mechatronics, where we are preparing for, hopefully, high demand in H2. And the rest is foreign exchange differences and acquisitions and divestments. What is the reason behind the swing in payables between H1 'eighteen and H1 'nineteen? Now the reason is that in H1 'nineteen, we pressed let's say, in end of 2018, we pressed our payables a lot because we pushed also we tried to compensate actually the stock buildup that we have done in during 2018, but also in H2. So therefore, we had to stretch payables a lot in at the end of 2018. And as John Eigenal already explained in his meeting in February, we had to take into account that it would be a pushback when you then open the balance in 'nineteen because then, of course, you get the kickback of all these delayed payments, which is a negative. That is what we now have swallowed, I would say, and we compensated that by bringing the stocks down or at least less up. So that is the whole balance that we brought in working capital much more healthy than at the end of last year. There's a lot of questions. Alberts was once indicated as a share with Brexit implications by ING. What are the implications for of the Brexit for H2 in 2019? How does this influence the outlook? Oliver. Yes, I would say that, of course, we have some business in the UK in pounds. So when the pound is really devaluated, of course, that will hurt us for the foreign exchange differences. But we still have a local production with a local cost base and local business. And we are not exporting a lot to the U. K. We are more importing and exporting from the U. K. To the U. S. So we believe that with the strategy of like Wim explained in the meeting, to really invest also in the local image of local production in the U. K, I think that is the best way to attack this risk. Yes. One thing maybe to add is that what as we always said, it will not be a very big impact. But what is not helping, that's also why we wrote in our press release that it's challenging because what happened, the 31st March, it was announced that there was a Brexit. So what did everyone in the U. K, they built up stock. So we had some nice orders, yes. So then after the end of March, certainly there's no Brexit. It's now the 31st October. So what did everyone stock down? So what will happen probably now after summer stock up. Now I can tell you one thing and that's the same is when you have a production where you have to work like that, it's not very efficient. So that doesn't help. And that's also why we wrote it that it is a challenging situation because you have to build up stock. Otherwise, yes, maybe you can't sustain your deliveries. But then you get not a very stabilized production. And that is actually the main effect. On the other hand, we also do a lot to the Middle East. So the cost price is only reducing. So it can also take advantage. But our answer will be that we will utilize more our footprint and utilize more our very strong market position to create more added value, because we have a very integrated very long vertical integration also in the U. K, because we make our own bars of brass. We machine, we assemble. So when you can utilize that more and then maybe decrease somewhere else and consolidate the factories, then we can take big advantage and innovations. So we're launching in the second half a lot of new valve innovations to get market share, where we are pretty successful actually also in the first half. But these disruptions doesn't help. And we know now who is who has been chosen to the new Prime Minister. So let's see what happens. But it's not a big implication by ENG. By the way, there is somebody of ENG here. So can you expand on your view and your most important asset, your employees? Salaries are going up, shortage of qualified personnel. What is your plan? Yes, it's a very good question. Yes, what we see is that we have to do a lot of own initiatives to get the right qualified people everywhere. So we initiated with our human resource development network a lot of initiatives to also with external parties to reschool people from outside, to bring people to other jobs, but also automating equipment. So by automating equipment, you need lesser people for assembly, for example, but you can utilize the people in other areas of your company. I must say, till now, it's we still can find when we want good qualified people, but we have to really bring them to a higher level. So you find good people, but they don't have the right skills. So you have to train them. We put a lot of effort in with and yes, it's a challenge, but we still manage, especially in Advanced Mechatronics. We saw a huge increase the last 2 years. In 2018, we took in 180 people only there. But we still managed to find them, but the most point is they did not always have the right skills. So we have programs in place now to really bring them to a higher level. I don't know if it is in Germany and other countries. The employee topic is more a strategic thing. When you look at the last years, what we all did with the acquisition and the development and bringing business together, who's doing that, and it's not the one sitting here on the table that our management team is doing that. So we have developed them. It was always strategic to develop the people in the direction we need to develop them. And where we can't do that, where we have sources open, yes, we looked in the outside and tried to add qualifications to the management team, which we are needing to be successful in the future. If somebody asked me what's your plan, I mean, if you start working on that today, I personally saw that might be a bit late. With the strategy we have in mind, that's one big part of the strategy besides putting machines and entering markets, making greenfields, making acquisitions. Human Resource Development is an integral part of that strategy. And we have now an Albus network run by my colleague, which is HRD, where we really have now a very nice group of persons, which are really coming together and making these plans also and exchanging the plans jointly. So it's also talent development. It's shifting with certain people to other positions. So we put a lot of attention on that. Very good question because it's in the end all about people on the right place. Okay. Okay. Then I would like to thank we have no questions anymore. And I would like to thank everyone in this room, but also in joining the webcast. So thank you very much and for your presence. Thank you.

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