Aalberts N.V. (AMS:AALB)

Earnings Call: H2 2018

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Feb 26, 2019

Welcome, people in the room. Welcome, people joining our webcast. Our agenda for this afternoon is that we will go through quickly through our Albert's company passport, our strategy and objectives. We will review the business with our colleagues. We talk a little bit about the business development and also the acquisitions and the divestments and the optimizations we've made in the business, financial review, outlook and hopefully a lot of questions and answers from our side. Alberts. The essential thing of Alberts is that we focus on niche technologies where our culture is very important. Good is never good enough. That is an essential thing of our company. Greatness is made of shared knowledge. I cannot stress how important this topic is because our brilliant people talk every day with each other, get ideas and therefore also new innovations. These new innovations are very important for our future business. This is a real strength we have. So essentially, these are the 3 things where we create value with. How do we create shareholder value? Our way of creation. Mission critical technologies, there we always say where there's less traffic of competitors. That's a continuous search for niches, for uniqueness, where we try to get a leading niche position. And I can't tell you enough how important this search is every day. The reason why we are did a very good year also in automotive in 2018 is because we are in niches in businesses where we have less traffic, where we are unique, where we have high entry barriers, therefore high pricing power, high added value margins and sustainable profitable growth. Our mentality, good is never good enough. It stops not by doing your regular work, it goes beyond the line of duty, as we say. So you take the extra step in operational excellence, in improving your EBIT margins, in cash conversion, very important, is a very important topic within hours. And then the cash you generate, you allocate on a disciplined way in your strategic business. What is not strategic, we optimize or we divest, and we keep on doing that because we want to allocate the capital to the highest margin business. Also in 2018, we did a lot of work on that. Greatness is made of shared knowledge, technology exchange, innovation speed, fast learning of colleagues, open culture, adaptation to market developments continuously. I can't tell how important it is and how quick we accelerate there as a total group. The name Alberts is really helping in creating fast learning and fast adaptation and new innovations. What is the effect of creating shareholder value? Our track record, over 40 years of sustainable profitable growth. Who can say that? So why would it not happen the coming years? Even when the world is really uncertain, we believe that the strength we have in our business, in our niche technologies will also help us in the coming years to drive further shareholder value. On the next slide, you see our average development in share price, earnings per share, dividend per share. Dividend, EUR 0.75 per share, an increase of 15% in 2018. We call it a relentless pursuit of excellence continuously that will never stop. What is the key? The key strength is our people. Also that the people and the culture, the Albert's Way winning with people. We introduced that 3 to 4 years ago, and the people feel more and more safe in our total group. That means the moment you feel safe, you exchange your knowledge. The moment you exchange your knowledge, you learn. And when you learn, you adapt and you innovate. Greatness is made of shared knowledge. It's a unique advantage because we are very lean structured ahead of the 25 people, 16,500 people everywhere in the world, learning fast with innovations. Our innovation roadmaps, which we started 3, 4 years ago, are accelerating and becoming bigger and bigger. So we will introduce more products, more technologies in the coming years than we ever did based on this. Global leading niche technology positions in installation technology, material technology, climate technology, industrial technology. Very important this is we are there where we really can make the difference. So when you say, yeah, you are in automotive or in semicol, yeah, that's a big thing, yeah, I'm in semicon. But where are you in semicon? Yes, we are in the front end. We are in the highest technologies. We develop with big OEMs and there we are special. We make the frames of certain Lidika free machinery, there are only 1 or 2 players in the world. So that is the difference. That is the uniqueness, what we call where technology matters. So everywhere we are unique, you can ask the high margins. And we do that in every niche technology position. Our way of sustainable entrepreneurship. We do that already since our inception in 1975. Always we've been where technology matters, but also we embrace the sustainable development goals, as you see here. We really take our responsibility, but we also have an impact, especially we are impacting eco friendly buildings, sustainable transportation, lifetime extension of materials, clean water and sanitation and producing and consuming responsibly. For example, we make almost or sell almost more than 300,000,000 meters of pipe. You can imagine when you transport water or heating through our pipes that we have a big impact also for the environment, but we should talk more about it because Albers does a lot. So that's why this topic for us is very important and it's also our way of sustainable entrepreneurship. Our strategy and objectives, they are not new. We presented them in December 2017 on our Capital Markets Day. So it's now roughly 15 months later, 15 months. We announced the strategy for 5 years. So 15 months later, yes, don't forget that when you look to the numbers later on. Non financial objectives, there it all starts with worldwide leading niche technology positions, continuously improving your portfolio. When it's not the right position, try to improve with an acquisition, with a divestment, with a new product, innovation roadmap, organic growth continuously improving. It is a never ending story in the things we do. So we have an endless potential from that point of view to grow. Creating sustainable profitable growth. Sustainable profitable growth that means long term, not short term, long term profitable. It's about profits, not about growth, it's about profits. What we always say, we need revenue to make profits. But it's about making profits because profits generate cash and cash we can invest with. High added value margin says something about your position, about what you add to the for the customer, your customer added value. Converting strong operational execution into free cash flow, Continuously, we are driving that. We are not there where we want to be. We made some good steps, I think, in 2018, especially on the debtor side, but especially on inventory side, we will make bigger progress the coming years because you see more and more our structures coming together. And first, you need to have your structures well and then you can improve your operational execution even further and generating more cash. Financially, this means an average organic growth for the coming years more than 3%. EBIT margin more than 14% return on capital employed more than 18% free cash flow ratio conversion more than 70% driven by entrepreneurship and that is also I think very important how we create value. It's driven also by our structure. So when you look to the next slide, how are we organized? This is how we are organized. A lean and effective structure. Albert's leadership team of 7 people in the executive team and we have business teams around it. These business teams are developing their strategic business plan for a long term, including innovation roadmaps, long term. Long term started already years ago, but we accelerated that 3 years ago with very dedicated plans. So when you know how our business works, then you know that innovations needs time. So when you start with innovations 2, 3 years ago, you also know that in year 3, 45, it will come to the market. That will be in 2019, 2020 1. For example, Hydronic Flow Control at the moment with 15 new products and systems coming in the market the coming 6 months. We developed them from 2015 to 2018. I was with the team 3 weeks ago. It's amazing, especially also on the field of sustainability, energy efficiency, a tremendous new flow of innovation as they call it, but there's only one team. The uniqueness is the Albus networks. The Albus Networks that is the dotted line you see in the picture is where we drive Albus wide sustainability, operational excellence, HR development, governance, digital, pricing excellence, key account management. That means several people of the different business team comes together under the leadership of 1 executive team member and they drive best practices and fast learning. We do that now for 3 years. It's really working. Myself, I do operational excellence. We have now for the first time in hours, we have roughly now 8 COOs in all these business teams, which we see every 3 to 4 months and we Skype with them every 2 months to drive the projects. That is why our margin goes up, for example, and it will keep on going up because we are not finished. We told you all and also the outside world that in December, we were only 50% done with our operational excellence. That's only 15 months ago. So maybe we are now at 55%. So still a lot to gain even when we make 13.3% EBIT margin. It stimulates business focus, entrepreneurship very important, fast learning and fast decision making. The entrepreneurs within hours are very important and we should never, never lose that. Innovation is driving the profitable growth. As I said, innovation roadmaps, more than €100,000,000 per year we spend now. It doubled the last 5 to 6 years. More than 400 people, we counted them last year in March. It was roughly 419, roughly 419, exactly 419. But it will now be more, yes, 4% of our total revenue. We had always 3% of our total revenue. A pragmatic culture, lean structure keeps us ahead of the game. Things like manufacturing 2.0, what does it mean? It means that you lay out the factory from 0. So we say to the plant manager, make a drawing of your plant when you start from 0 again. Then he says, then I will change everything. Then we say, why don't you do it now then? So that drives change and improvements, master data and leveraging, of course, the megatrends. Do we have to say something about DC, converting strong operational execution into free cash flow? A very important topic in our management, in our teams, generating higher value margins to invest in innovations and market opportunities. So high margins, good position, high margins, pricing excellence and then the cash you generate, innovate and allocate to the right businesses, the right acquisitions in the right innovation roadmaps, in the right sales structures. That is a snowball, which will continue. This is our 10 year history within hours. The next is what do we do with the cash? This slide we already presented many times. First of all, 30% of our net profit before amortization is our dividend. In 2018, 15% up. Organic growth between €130,000,000 €170,000,000 We will give later some guidance about 2019. Many, many projects we have in our business teams, many things we can drive forward. That will also you will see in our guided number for 2019. Acquisitions, bolt on, sweet spot. When you can do an acquisition and you can strengthen your business team by doing that and also generate new organic growth for the future that are the nicest acquisitions. Our deployment, our goal is €100,000,000 to €200,000,000 per annum, which we also reached in 2018. Bigger acquisitions, strategic footprint, you have to wait. Till now, prices were too high, you never know. But we are ready. We have a strong balance sheet. So when the opportunity is there, we will not wait. We will attack, but we have to get our money back. So we calculate before we do these things because a bigger acquisition you can use for strategic footprint can sometimes also ruin your, let's say, your efficiency because a bigger acquisition is mostly an island you acquire is difficult to integrate. The smaller ones you can go faster. So we are careful. Acquiring is easy, but getting the returns, that's the most important. By this, we strengthened our worldwide leading niche positions. Return on incremental capital employed of the last 10 years, 2,008 2018. 10 years, 20.2% return on incremental capital employed. And you know that our goal for return on capital employed of the year is even higher than we reached in 2018. It demonstrates the sustainability of our long term business model, which we have. 2018, the highlights. Revenue up 2%, organically 5%. We had an operating profit plus 9%, I think very well €366,000,000 improved to a margin of 13.3. Our free cash flow amounted to EUR 312,000,000 despite much higher CapEx of EUR134,000,000 which we spent and the year before was EUR119,000,000 So we spent much more CapEx, and we were able to even generate this free cash flow. Our return on capital improved to 16.6 percent, and we continued, and I can't stress how important that is, to invest continuously in organic growth and innovation initiatives. We do that already for years. Also in 2018, we put a lot of money in, additional people and additional roadmaps to generate the growth for the future organically. Otherwise, you don't grow 5% in 2018, where we would not have done the investment in 2005, 2015 or 2016. Bolt on acquisitions, we did 4 very nice companies, very nice bolt ons, EUR 82,000,000 annual revenue. And we optimized our portfolio through divestments and optimization of €97,000,000 The total sum is plus 5 percent organic, earnings per share plus 16 percent, continued investments in growth and innovation also in 2018, but also in 2019. My colleague, Mr. Jager, will explain you more about the different business segments. Okay. Wim, thank you very much for taking that over. Also, I would like to welcome here the present auditorium as well as the ladies and gentlemen joining us on the webcast. After having seen that the overall picture is very positive, I'd like to give you some background on our business in specific. So I would like to start with installation technology, all products for Fluid Medias. So within a EUR 1,100,000,000 turnover, we have achieved EBIT margin of some 12% in 2018. So we are convinced that we have realized a good organic growth. Even if you see that the minus 1% may give a different impression. But currency effect, strengthening of our portfolio via divestments led to a correction, which give us a picture of above. An EBIT margin of 12%, which is a bit softer compared to the half year numbers. So the main background of that is that we have invested in the strength of our organization. We have increased production for Groove and new products, mainly push fit, because we had a high expectation for Q4. So we generated some stocks, so we produced more. But principally, the market were a bit lower in Q4, mainly due to personnel and material constraints, and that led to reduced demand on the market. And further investments into innovations and some digital engineering activities in around in that picture of the margin you see here on that sheet. So right now, Installation Technology is a fully integrated worldwide organization. And this becomes visible by the rollout of the recently presented company passport, which we did in the beginning of last year the acceleration of the rollout of worldwide plants for technology, That's technology wise as well as commercial wise. And the management and organization for America, EPEC and Europe is now fully implemented and functional. I would like to underline that with an example. The presence the erection of the distribution centers in North America that is finished as well we did some distribution commercial centers in Canada. And this is ongoing also for something comparable into Europe. Giving a quick view on the multilayer system. Also they had an excellent year in Europe as well as in North America, sales and result wise. So we are constantly in process to optimize our portfolio and focus our teams on further growth. So the key takeaway for installation technology, it's many investments in the line of a global organization, optimization and efficiency investments. So the focus worked out very well in 2018, And we do have positive expectation for 2019 with all the investments we did in the year of 2018. So Woundkits we have a positive impression also of the development of numbers in 2019. Coming right now to the next technology, Material Technology. So we generated a roughly €750,000,000 turnover with an EBIT margin of 13.3%. One could take 4 headlines to describe the year 2018. We had good organic growth throughout the year. We had good project development for future business. We did an alignment of the surface treatment organization into 1 organization. And we strengthened our portfolio with bolt on the 3 bolt on acquisitions in 2018. So our Albert's worldwide presence demonstrates its power in the increased investment in our heat treatment business in Europe, especially in the Eastern part of Europe. We did an acquisition of specialized manufacturing to achieve a footprint in North America as well as in Mexico. We're widening our surface treatment portfolio via the acquisition of rear to rear capabilities, which is a real niche technology, which find its end application, for example, in more electrification of cars, autonomous driving also yen have a higher demand on electrical end applications, and you need reel to reel plating to deliver the products we are producing, for example, in Metellus in that market. And we did an acquisition of Royal Metal Finishing, and that creates an excellent competence center for corrosion protection systems in the United States. Investment in development of new projects in the automotive business, further electrification of cars as well as autonomous driving. So we see a lot of projects there. We see a very high demand on development capabilities. So we are quite positive in that development for the upcoming year. We do see that in Europe. We see that in Asia and also with the footprint we have created in North America also there that is visible. The energy business, the IGT business, that led to higher value add. So we did investments in that. From an organizational point of view, more engineering. So the aim is that we produce partly completed parts even if the IGT market is pretty low at the moment. So we gained market share, and we're robust in our position in that market. In the Aerospace business, where we are in process to change technical processes, And we are in process to establish robust partnerships with the Tier 1 supplier as well as with the OEMs in Aerospace. And last but not least, we invested also a lot of in operational excellence projects. You know that, that part of the division have quite a lot of sites, and operational excellence is always a key topic to improve the efficiency of the operations. The key takeaway for Materials Technology is good performance and many opportunities via a strengthened portfolio. Everybody talks about automotive industry, which is an important part here. Everybody is a bit hesitating. Everybody is a bit negative you read the press. I could not say that for us in 2018. Sure, we had some lower markets because of the testing procedures, but this is a temporary effect. And also, if you look at China, where we had a very strong development in that business in new products, electrical vehicles, and if you look at the German OEMs, they made quite a good year in 2018 despite the fact that the Chinese principal market appears a bit lower, but that applies not for the markets we are in. Coming right now to Climate Technology. With around €550,000,000 turnover, we achieved an EBIT margin of 12%. That is a good organic growth because of new and upgraded product ranges. We invented also digital functions of our products and services. We had challenging markets post summer due to material and manpower disparities. I would then make a reference to what I said in Installation Technology. We had very good order intake in Q4, which offers good development opportunities for the year 2019. Also here, innovation is a key topic for the upcoming years, and that refers to upgraded product lines, new product lines with new functions, digital business models, first results already achieved in projects in France and the Netherlands. We invest in energy efficiency improvement within buildings via big natural analyzers. We said that the sustainability is a topic in what we are doing. And by analyzing that, we could achieve buildings with lower consumption. And also, we invested in prefabricated modular built systems, which lit at the far end to speed, efficiency and reduced failure rates in the construction of buildings. So if you would like to give that development a headline, we could say quality and time, is that what matters here? Also, a lot of places are here. Operational, excellent plays a key role for further success. We integrated 3 locations in Spain, France and the UK in 2018, and decisions were taken to invest in a new fabrication and distribution center in the Netherlands. So key takeaway for Climate Technology, its new products, its digital business models speeding up our innovation as well as engineering. Coming to Industrial Technology, good €400,000,000 revenue led to an EBIT margin of 15.7%. And it's well known here in the auditorium that we have in Zispekmaen a wide range of niche technologies working B2B on high performance level. So this was a more distinguished view. Starting with Fluid Control, That was quite challenging in the year 2018, mainly due to lower government and projects in Eastern Europe and China. So there was a market a bit lower than what we have expected. The acquisition of Pfaff, the leading sensor and measurement specialist for strength in the portfolio in ships for lower fuel consumption and to extract steering of the uses of fuel via transportation and very good project development in tailor made solutions for regulating fluid in cars, such as CNG valves and air condition valves, which is a reference made to our company, Ventrex, in Austria. Dispense Technologies. This was overall a very good year. We consolidated in 2018 the U. S. Operations so that we have more focus. And we further aligned the diverse operations to be able for a global offering of our major key accounts, to give you an example, such as Coca Cola and Heineken, so that we have a global way to deliver that into that market. Advanced Mechatronics, we have invested around 180 engineers to cope with the development speed of our key accounts and to enlarge the value add of our products. We have good growth perspectives in the front end, means the machine build of the semiconductor market. Also here, everybody said, well, semiconductor is very difficult in the end of 2018 and the beginning of 2019, but underlying that we are in the front end as we have a positive view. If you look at the ISML forecast, so they're aiming for around 30 EUV machines in 2019 while having made 2018 in the last year. So they are quite bullish regarding their forecast. And we co engineered and manufactured pre product, for example, for machine builders for the chip making industry. Key takeaway, that's a good performance, good order intake and additional investments we facilitated the further growth in that business development. So I would like now hand over to my colleague, Arne Mornings. Thank you, Oliver. And also from my side, welcome to everybody here and in the webcast. Business Development, already mentioned several times, acquisitions, divestments, optimizations, a very important part of our strategy. Also this year, we strengthened our portfolio with 4 nice acquisitions, all players with a very strong market position in their niche market segment. That means that these companies, all 4, are creating high added value margins. We remain, as we said, very critical with acquisitions, very disciplined. It should really contribute to our group, to our platform, to our technology, and we should also be able to leverage the Abbot's power financially but also with key account management and the footprint asset. We continue to strengthen this portfolio. We will remain to do that also this year. But as said, 4 nice acquisitions: PAM in France, reel to reel service treatment technology. Oliver already explained a little bit about that, how important it is with electrification of cars. Pfaff Instruments, a very nice company in the Netherlands, also very niche. They make sensor measurement systems and performance management software engineering. Actually, they with their technology, you improve the efficiency of a big container ship. And just to give you an example how special this technology is, And a big container ship normally consumes about $15,000,000 of LNG or petrol per year. Now with this technology, you improve the performance of the ship. So that means you need you know exactly when you need the maintenance for the to clean the bottom of the ship, etcetera, which gives a saving of the performance of 20%. You can imagine that if you install these tools, which is, of course, an investment for an owner, that the return of these tools are very, very high. And the good thing of this company is that we believe and we know already because we brought these business teams together, for instance, with hydraulic flow control, that you can add this technology in other business segments because at the end, in the performance of an heating system in a building, you have exactly the same. You put in energy, and you want to have the highest outcome of efficiency, of performance. So let's say with this technology, we can exchange between the business teams to get a high return of debt. That's a good example of how these teams work together. Now Royal Metal Finishing in the U. S, Material Technology Company, Corrosion Protection and then the 4th one, Copanar in USA and Mexico. All 4 very strong niche companies really strengthening our technology positions in these areas and an annual revenue of €82,000,000 2nd part of this improvement of these positions is, of course, our divestments and optimizations. We constantly have on our agenda to improve our portfolio. That means that non core business or a low margin business, we constantly review that and see if we can stop this or divest it or optimize it, which we did in 2 areas again, insulation technology and material technology, where we, yes, just stopped with these businesses. And at the end, that resulted in a divestment of an annual revenue of €97,000,000 so that the total impact of acquisitions and divestments and optimizations is negative of €50,000,000 full year. John will tell you later about how that impacted 2018. But the most important in strengthening our technology positions going forward is, of course, the organic growth. We have a big attention for our organic growth, and we do that by, like Wim already explained, these innovation roadmaps. All our business teams do have these innovation roadmaps for the long term, and we are really now in the phase that we accelerate that. We will introduce a lot of new products not only this year, but also in the coming years. We even set targets for our teams of innovation rates, so everybody knows really where to go. And what you can also see is that we will even increase again also in 2019 our CapEx budget. We spent about €134,000,000 last year, and we will do in 2019 between €140,000,000 160,000,000 because we really believe that this is where the growth this will be the best possible growth if we really introduce new products and, of course, keep on investing in not only new products, but also in efficiency and capacity of our facility of our production locations. Of course, acquisitions remain an important topic of our business development, but only when it makes sense. We will be very critical as always. It should be 100% strategic, but also 100% cultural fit even if we want to continue with that. That's for us always the crucial fact. Besides that, it should be a very strong market position in their specific niche, and it should also be a business in technology, which we can really optimize further by leverage our group strength with our global platform, with our financial power, with our key account approach where we can combine the power in these businesses and really grow the company, then that acquisition and of course, last but not least, the price should be right because we also want to make money and we want to create a good return on capital employed, yes? Final part, last part, optimizations. It will be a continuous process that we revalue of let's say, evaluate our low margin businesses and noncore. So we will continue also there to optimize further. And I think that brings us to the financial review of John. Okay. Thank you, Arnaud. I think there are some highlights to present. I saw some of you analyzing our numbers, of course, this morning, which always has to be done in a rather short period of time. So I got some similar questions and maybe also some notes later on, which were sent out, maybe some assumptions as well also for 2019. So hopefully, we can elaborate on those items and make sure you're all fully aligned with the numbers and what's behind the story. Maybe starting with the revenue bridge. I think very important to understand how we came from the reported 2017 revenue of 2,000,000,000,000 694,000,000. We had acquisitions. In the press release, you can say, as Arnaud already explained, on full year basis, euros 82,000,000 additional revenue, of which we consolidated €37,000,000 in the year. So that was 2018. So that means there was another, let's say, EUR 45,000,000 additional revenue for 2019 for the full year inclusion of those acquisitions we did in 2018. You see a number of 44 because you may remember in 2017, we did the Plnotek acquisition, which was only consolidated for 6 months. So there's an additional €7,000,000 to be added to that. So that explains the €44,000,000 If we then go to divestments, press release, you can read here the EUR 97,000,000 Arnaud mentioned EUR 55,000,000 was included in 2018 and EUR 5,000,000 was, you could say, a shift over from 2017, which makes the EUR 60,000,000. Currency, also that was disclosed in our press release, €39,000,000 on revenue, negative impact, mainly U. S. Dollar and Russian ruble. If you remember the half year results, we were even at €46,000,000 negative impact year on year. So the dollar strengthened, as you know, in the second half. So that more or less compensated some of that, and we ended up with the EUR 39,000,000 mainly dollar related. So organically, we are left behind with EUR 120,000,000, which is, let's say, close to 5% organic growth, which brings us to the reported EUR 2,759,000,000 So hopefully, that gives you the total picture. That also means that so additionally, you have EUR 45,000,000 impact in 2019 out of the acquisitions, but there is an additional, you could say EUR 42,000,000, so the EUR an additional, you could say, EUR 42,000,000, so the EUR 97,000,000 we explained on the divestments full year and the EUR 55,000,000 in the press release, another EUR 42,000,000 of divestments and optimizations, which has a negative impact in 2019. So more or less, these two compensate each other. So there's no additional benefit in 2019 just to take it, let's say, apples and apples in the comparatives. So hopefully, that helps you as well in your own, let's say, expectations for 2019. Of course, you can pencil in some organic growth if you like, but that's of course up to yourself. But at least the starting point should be the full year reported number as you can see it on this slide. The next slide is on the income statement. Well, starting with the revenue, just explained to the bridge. Our EBITDA, yes, more or less improved by EUR 40,000,000. So that's a strong performance. But you may also remember, if you look at the line depreciation, there's a big jump from 2017 to 2018. But in 2017, we had a benefit of SEK 7,000,000, 8,000,000 we explained a year ago on the same place here, which was, let's say, a benefit on depreciation. And therefore, the €87,000,000 depreciation in 2017 was rather low. And we also guided that the full year 2018 number would be between €95,000,000 100,000,000 and we came out with €96,000,000 So that's not a bad estimate we made about a year ago, but also means that, that benefit was totally included in the numbers of installation technology, if you may remember, which may also explain some of the segment reporting we go into more detail later on. While EBITA, we already saw EUR 30,000,000 improvement to EUR 366,000,000 Net interest expense, well, more or less remained, although we had more or less the same net debt year end 2017 at year end 2018. But as you know, during the year, we're using a lot of working capital during the year, which we reduced at year end, as we will see later on. Other net finance costs were SEK 3,000,000 lower than in 2017. Well, of course, that's a more volatile number due to currency impact, which was a bit less in 2018 compared to 2017. Income tax, I think another element which was picked up by most of you. Our effective tax rate was only 21.4% compared to the 24 point 6% a year ago. Main explanation, you may see that in the Netherlands at the end of 2018, was an announcement by the government that they will reduce the corporate income tax rate in the next 2 years from 25% to 20.5% in 2 steps. That means that all your deferred tax liabilities, which are valued at 25% have to be recalculated and taking these new percentages into account. It's just how IFRS wants you to do that. It's not a choice. It's just how you have to do it. And that helped us in this case to reduce our, let's say, income tax expense in that sense. And it also avoids, of course, the cash out of a similar amount in the next years to come. You may also remember in 2017, we had the same situation in the U. S. Where Mr. Trump signed and the new tax laws just before Christmas end of 2017, where we were also forced to take that impact into account, which helped us also in 2017 to a lower tax rate. But as you can see from the effective tax rate, maybe to a lesser extent with some other benefits also helping the tax rate. Guidance for also 2019, I'll also come back to what I said a year ago, 24%, 25% effective tax rate, we will see as a normal tax rate, especially now that we see that while the Netherlands, U. S, France, U. K, they have also more or less now stabilized on what they plan to do. Hopefully, Germany, all of them will follow to reduce from EUR 30,000,000 to EUR 25,000,000 at some point in time. That would also help our group additionally, but that's not planned yet. So that may come in the future. But that leaves us to the total EUR 275,000,000 net profit, an increase of 15% and EUR 2.49, an increase of 16% on earnings per share. I think the revenue growth now also with decimals. As you know, as financial, we also like to take decimals into account, round them up where needed. But in this case, the 4.6% to be explained, 2.4% was really the reported increase if you take the euro euro comparison to 2017. FX impact at the currencies minus 1.4%, still a big impact. And the total of acquisitions and divestments per cell though, as already shown, a minus 0.8%. And so that brings the total of 4.6 is EUR 2.4 billion, EUR 1.4 billion, EUR 0.8 billion. I think I remember I mentioned already the FX impact on revenue. I think also here to realize there was a EUR 4,300,000 negative impact on EBITA like for like. That's just translation of U. S. Dollars into euros on the full year 2018 results. That number was more or less reached already at half year and more or less stabilized in the second half, more or less the same as we explained for the revenue. And about 70%, 80% of that difference is to be allocated to installation technology. I think also Oliver mentioned that the FX impact is mainly in Installation Technology, and that also partly explains the minus 1% from the segment reporting. So conclusion here, EBITA up 9%, net profit 15%, earnings per share up 16% with the various comments are made also on depreciation compared to 2017 and what happened with the taxes in the year under review 2018. If we go to the balance sheet, of course, there were some impacts of acquisitions, which we did, which normally increases your goodwill and intangibles, but that's normal. We've yes, I think further improved and increased our equity. As you can see, net debt mentioned before more or less stabilized, but we took new debt on board as we will see in the cash flow statement. We spent money on acquisitions. We received some money from divestments, and I think we also worked hard to get our leverage ratio at 1.3. So that's the same level as the end of 2017. I think working capital was a big topic when we were here at the half year results. So what happened with working capital, a very big increase of around SEK 175,000,000 in the first half. We also predicted at that point in time that we would still be left behind at the end of 2018 with a slight increase in working capital, that we would not reverse the full amount in the second half year. So we reversed about SEK 160,000,000 out of that SEK 175,000,000 and we have a minus of SEK 14,000,000 we'll see in the cash flow statement. So the working capital as a percentage of revenue, 16.8%, so the same level as 2017. And you may remember, 2017 was a very strong year on working capital performance. So I think we were happy that starting the year with around SEK 30,000,000 negative compared to 2017 on working capital, We at least managed that into the direction where we are, but more to say about working capital later on. Equity, 53%, still a very solid equity ratio and solvability. And return on capital further improved to 16.6%. Cash flow statement. We had some questions about this as well this morning. So I tried to explain you a few of the headlines there. I think on EBITDA, we already explained around SEK 40,000,000 in increase. And with this line result on sale of equipment, change in provisions, Partly in that line are some, let's say, non cash releases of earn out provisions. We disclosed that in the segment reporting. You normally include that in the acquisition cash flow. So it's not a real cash flow because you have not paid it. So you have to reverse that out of your EBITDA back to your operational cash flow. We had some fire incidents, so insurance money which we received, which is partly linked to the proceeds on the capital expenditure, and you won't see that in the operational cash flow. So this is the real way of, let's say, presenting this on the operational cash flow of EUR 4.27,000,000 which was exactly the same amount as in 2017. While working capital, I'll touch on that a little bit later, net CapEx more or less on the same level as 2017. We explained before, so what we capitalized is SEK 134,000,000, so that's what we put on the balance sheet, but the cash out was only SEK 115,000,000 There's a gap of about €20,000,000 which we already received from the insurance company for the assets which we had to write off because they were damaged by the fire, and we will reinvest that amount in 2019, maybe even partly 2020. I think important to notice that because that will come back in the numbers of 2019. I think finance costs, nothing to mention about that. Income taxes, also that was noted by some of you. You have a lower tax rate, but the cash out is higher. But we made also more profits, so you get a higher tax. Of course, that's also more or less a timing and that we still have to pay taxes also from prior years, where we normally don't get all the filings. Well, we do file on time, but you may not get the payment schedule for that. So that is also something which will shift over the next years to come. And then on acquisitions, we had some comments this morning that the cash out for acquisitions, first half year we had PEM, and we had some earn outs, which we paid in the first half. So that was included in the close to SEK 25,000,000 in the first half of cash out. And there's another EUR 140,000,000 cash out in the second half year, which was, let's say, consisting of the 3 acquisitions, Pfaff, RMF and, to a lesser extent, Co Planar. So those 3 together was that amount. And I think some of you had predicted that, that was maybe a much lower amount because if you look at the revenue contribution of those acquisitions that may look as small or midsized acquisitions, but let's say that the margins are at least a little bit above our average. And therefore, if you look at a normal healthy multiple, I think we paid for those acquisitions, the cash out may be more explainable than was taken into account. That explains the number you see here, although the EUR 131,000,000 on this slide is netted of the EUR34,000,000 which we received from divestments. And as you know, all those divestments were done in the second half of twenty eighteen. We took some new financing on board, EUR 170,000,000 to finance those acquisitions, so new term loans in our normal structure. The 7 year structure, you know from our side, the 1st 2 years, we don't repay. And in the remaining 5 years, we pay in quarterly or semiannual installments to our banks, and that fits very nicely in the repayment schedule we have for the next years to come. We also repaid SEK 140,000,000 again in 2018 after SEK 130,000,000 in 2017. So next few years, you will also see a similar amount going through our cash flow from the term loans, which we took on board, especially in 2014, you remember, for the Impressionon and Flamco acquisition. Dividends paid, SEK 72,000,000 that was also disclosed already in the half year results, and we paid that in May to our shareholders. There's a EUR 7,000,000 yet to non controlling interest, but that mainly includes our share based payment program where we bought shares for those eligible employees and paid that out. So that's the EUR 7,000,000 you will see here, which leaves us to a EUR 27,000,000 positive net cash flow compared to EUR 129,000,000 in 2017. So that's EUR 100,000,000 difference. In 2017, you may remember, we only had, let's say, EUR 41,000,000 cash out in acquisitions, but we took on board SEK 145,000,000 in financing to finance the acquisitions we did in 2016, which were dollar denominated, and we refinanced those in 2017. So that gives you maybe a shift over in those 2 years, but that explains the difference, which some of you noticed in the numbers this morning. So conclusion on working capital, although the delta of minus 14% is more or less in line with what we already guided, But especially, I think the inventories, which increased by EUR 67,000,000 in the first let's say, in 20 18, the full year. But also the first half year, we had already a very big increase, although it's partly, as you know, related to higher raw material prices. On the other hand, yes, we have higher inventories in some of our businesses. We have a plan in place to further reduce. I think there are good reasons why the levels were a bit higher at year end. I think also Oliver touched on the Q4, which was maybe here and there a bit weaker in revenue, but we still produced in that respect, but it also helps us to improve our service levels going forward. But on the other hand, we also have a plan to further reduce our inventories in absolute terms, but especially in percentage of our revenue and especially the quality of our inventories we will further work on. Because I think on the receivables and payables, yes, another strong year on receivables and the payables, at least we had to stretch a bit less than we did in 2017, and we want to get rid of that funny year end movement, as we all know, which always takes place, as I say, on the 33 December. So we try to get rid of that impact. If you look at segment reporting, I think revenue already mentioned in the various slides Oliver showed us. I think installation technology, the minus 1, explainable by currency. Don't forget that part of the divestments we did in the second half year were related to Installation Technology, And we also did some cleanup in the product portfolio included in that number. So that is all impacting, of course, at least in the like for like top line euros. Looking at the CapEx, I think also these numbers were disclosed in earlier slides. So yes, nothing to mention. More important, I think, what's on the bottom of the slide, our CapEx guidance for 2019 that we expect our CapEx to be in the range of €140,000,000 to €160,000,000 for 2019, somewhere in that range. And of course, we will update you further at half year again, but this is what we have in mind, I think, which also, yes, confirms our confidence going forward, investing in our businesses for further growth. Looking at our operating results also per segment, while Installation Technology, look at 2017, very strong, also 12.2%. That number included €39,000,000, €7,000,000, €8,000,000 of depreciation benefit, which was totally linked to Insulation Technology. Of course, we had some one offs again in 2018. In Insulation Technology, it took some additional costs. But I think in the like for like, yes, around that 12% margin, I think, is a fair comparison between the 2 years. I think the margins in the other three segments further improved. And I think we got a lot of questions on this nice holding elimination line where we normally allocate all nonrecurring impacts just to make sure that the segments are clean and that you really look at the correct margin improvement or at least development per segment. I already got one comment that we have been very efficient in the holding to have 0 expenses. I can tell you that we tried hard to win, but we were not very close to that number. So at the half year, we had minus SEK 6,000,000 in that line, and I guided at that point in time without, of course, knowing divestments or the fires, etcetera, that we had some impact in the second half that we normally expect you to be around maybe minus EUR 12,000,000, yes, just on a like for like basis. We came out with 0. So it was about a EUR 10,000,000 to EUR 12,000,000 benefit in the second half year, which came partly from the insurance income to compensate for the damaged assets, partly the release of the earn out provisions, but also the income we got from the divestments. And of course, if we further divest activities or clean up, we may get, of course, further proceeds from that. We asked all of our at least to stop to get income from other sources, meaning insurance. And of course, also the earn outs, yes, that also may differ year on year, how that works out from the acquisitions we have done in the past. I think it's good to see that our EBITA margin improved from 12.5% to 13.3%. And at least you see here, at least in the like for like per segment, the development was a slight minus for insulation technology, as I explained before. The others further improved, one better than others, but yes, more room for improvement, we would say. But hopefully, that explains you the total picture on segment reporting and of course, any further questions on that specific topic we may touch on later on. Dividend proposal, I think already mentioned the cash dividend for 2018. We will propose to the general meeting in April, a SEK 0.75 per share. That's an increase of 15% compared to SEK 0.65, which we paid out in 2018 for the year 2017. On the last slide, so I think also Wim started to touch on the financial objectives in our strategy. This is only the 1st year 2018 of that 2018, 2022 strategy. So where are we and are we on track? Well, looking at the left side, at the 5 year average organic revenue growth, where you may see a nice number starting in 2,008. So that's the 5 years, 2,008 and the 4 preceding years with a record year 2,006 for the ones who were there already at that point in time. That was a record of 14% organic growth. If you average that over the 5 years, that helps you to get to 6.5%. 2013, unfortunately, has a very negative year in it, as you can imagine, which was 2,009. So that more equalized out the total organic to 0. If you take 2018 and the 4 years before, we are at 3.5 percent average organic revenue growth. As you know, our objective for that strategic period is above 3%. And we will update you every year on where we are on that. That is the picture on the average organic revenue growth. EBITA margin, 13.3%, we mentioned. The objective is to be above 14 percent. Return on capital, 16.6 percent. The target is to be above 18 percent. Free cash flow conversion, and we were close to 68%, above 70% is our objective there. Leverage ratio below 2.5%, while we are at 1.3, that's a very low leverage, I would say. Solvability, well above 40%. We were at 53%, but I think also that number maybe except for 2,008, has always been on a high side. And we have not said that we have to reach each of these objectives every year. Some may be reached in 1 year, others may be reached in other years, but the objective is to get to those targets in the 5 year strategic period we are overlooking. So you can see, yes, we are on track to reach those objectives, but you're just 1 year of the 5 underway. I give the word back to Wim regarding the outlook for 2019. 2019 outlook. As it stands here on the sheet, we remain confident in execution of the many growth and innovation initiatives and investment plans. Now I can't tell you how important these plans are, and plans are made already years ago. And when business teams come together and they have a plan, then step by step, they're improving. And what you see now after the transformation of Alberts, let's say, the last 5 years, where we put the business teams together, you see more and more traction in the business teams. You see also that we clean up the portfolio more and more. So this is also motivating all these business teams to, let's say, drive forward all these growth and innovation initiatives. Most of the innovation roadmap started 3 years ago, as I said. So a lot of innovations come to the market in 2019, 2020, 2021. So that will drive our growth. Innovation is driving our growth. So we are very confident of our teams and our plans. We will pursue our focused acceleration and objectives. As Jean Margenal said, we are on track with these targets, and we will pursue that further also in 2019. That means that we will drive our profitability further. So some say to us, hey, Albus, you don't give any guidance. What we say in 2019 that we will generate sustainable profitable growth and we will increase our profitability further. That is the guidance towards our objectives. The comments I have especially to bullet 1 and bullet 3 is the following. What you see here on the sheet is that we remain confident, but I'm pretty positive about the further development. What I see on the plans we have and the innovations and the teams and the energy we have in the teams, that despite maybe here there are some headwinds, what I think in certain markets, we are on the right side because we are where technology matters. So it's very important in semicon, where you are in semicon. It's very important in automotive, where you are in automotive. And the fast learning and the decentralized organization we have with a high level of entrepreneurship with very good plans will also help us in 2019 to generate further profitable growth. On top of that, we have a very nice pipeline of acquisitions. We're working on that very intensively at the moment also. We have again a few topics which we would love to divest to improve our portfolio further. But as we said, we never know when we do it because we want to have the right price at the right timing. So we are very good positioned for further growth, and we are positive about our further development in 2019. Further sustainable profitable growth also in 2019. So that is the guidance and the outlook we give with our team. Thank you very much, and I hope you have a lot of questions which we can answer. Can we start? Of course. Okay. I don't know whether this works, but we'll give it a try anyway. Matten den Drijver, NIPC. With regards to installation technology, would it make sense to ask you how much the OpEx investments have been with regards to operational efficiency and all the innovation roadmaps and also relative to 2017. So we have a bit of a more granularity of how much you actually spent. And possibly, if you could also give some guidance for 2019? I know it's asking a lot, but I want to try it anyway. You want to deal with them 1 by 1? No, no. I think it's maybe difficult to give exactly the number of guidance, but maybe let me give you a few examples, which we did. We bought Shore Joint in 2016 in the last quarter. Shore Joint has a foundry in Thailand and China. But the most interesting part of the sales is in North America. We had an agent in Canada, which agent also took some margin. Now we decided, for example, to change that situation. So that means you change your sales channel, then you have to pay your agent, and you have to sell out the inventory he has. That means 2 things. You have to make a deal with the agent. It means that you have to build up your own sales force, which is roughly 20, 30 people in Canada. We had to install 2 distribution centers in Vancouver and Toronto, and we had to sell out roughly €5,000,000 to €10,000,000 of groove fittings, roughly, which we can't produce in our own factory, which means under absorption in your factory. I can't tell you a number what's exactly, but you can even, I think, imagine. There's only one topic where you it will mean millions of EBITDA because it's also a nice margin product. It's only one example. The second example is that we changed also the sales force. So we again strengthened the sales force in certain areas in North America. We added people for Groove because we bought this company in 2016. So we added people in 2017. We added people in 2018. On the other hand, we also changed the management in America because we thought we should improve there further. And that also is all free, I call it, friction cost to improve it further towards 2019. So when you would ask me, do you think that all these measures we took in 2018, would that have an effect could that have a positive effect on your margin in 2019? When you that question would you would ask me that, I would say yes, because it's all investment, and we made additional cost. How much it is, it'd be different to calculate it in detail because that has to do what I what we say also in the headline of our press release, continued investments in growth and innovations. And just with regards to markets, what can you say about how markets are developing installation technology specifically? What are you seeing in Industrial technology or installation? Installation technology. What are you seeing in North America and Europe? Yes. Maybe one thing to add that is without what John explained about the depreciation, which took place in Installation Technology. So about the costs in that segment. Yes. Compared to EBITA expenses on the second report. Exactly. So I only talked about the additional efficiency measures. The markets, the markets in Europe are in building installations, let's say, the residential buildings, commercial buildings, where we are active in industrial installations, which is mainly North America, are good. We had a good year in 2018. I see also in 2019 that we have very good project base. So when you look in Climate Technologies, for example, where we're also active in residential commercial buildings, And we have a very good pipeline. Order book is much higher than last year, also driven because we had a slow quarter 3 and order intake increased in quarter 4, which we couldn't ship out. Yes? So that was that's the reason why Climate Technology was a little bit lower. But we took already the cost in so that you get a little bit let's say that the margin is not increasing so much. But we are positive about the residential commercial market. The second thing is innovations are coming. So especially in climate technology, I mentioned we have now 15 very nice product lines and systems also with a sustainable approach, energy efficiency driven, business models with digital services, which is really looks very promising. So I'm very excited about that. I must honestly say I was with the team 3, 4 weeks ago, and they said something about Albers is that I saw products, which I never saw in the past at all. I thought they have 3 or 4 product lines, and they had 15 or 20. So it goes so rapidly at the moment, it's accelerating everywhere that and that is the strength of this lean and effective structure. So that is so America, our management is positive about the first half. I must say they have, of course, also some doubts and that I also have. I don't know how the second half will be. I don't know. I don't say it will be bad. Actually, I don't know because, yes, it could be that the amount of liquidity which is put in the market in America due to the tax changes that you get lesser investments. And we have also a lot of industrial installation business there. That means when you have lesser investments in manufacturing shops or equipment that you also have lesser valves. I must say our orders were also in quarter 4 pretty good. So let's see. So first half, I'm not so worried. The second half, I don't know. But it could also be good. On the other hand, we also here introducing what Oliver said, a very nice new product, which we showed you in 2017. It's the power press. And Oliver said push, but he meant the power press fitting and valves, but we also had additionally roughly $5,000,000 to $10,000,000 of stock made in last year to sell out mainly in America because it's running very fast. So that could help us really. So also there, we are not negative, especially not about the first half. Let's see how the second half is. All right. 2 more. On Material Technology, 2% growth, if we exclude M and A, that's slightly negative, 1.5% or thereabouts. Is that solely power generation? And if so, what are you going to do? You mentioned plans, but can you a little bit be more increase? And if you look at margins, 40 basis points improvements at the EBITDA level. Is that how much of that is coming from acquisitions? If you could give a bit more guidance on that. The principal spoke from the margin improvement that comes from the business which is currently running, although there's just improvement in existing business. And if you look at the power gen market, where you had a question too of how that is developed, I mean, that has recognized that if you look at GE and Siemens numbers, which are the main drivers of that, they are pretty low and far behind numbers of 2014 2015 where that market was pretty okay. What we have done that we changed a bit the way how we do things. So we mainly work on the combustion chamber in North America, and we had a lot of brazing and heat treatment activities in that field. What we changed is that we added more value to the products we are doing, mainly in the combustion temperate that we'll be continuously doing so that we get more market share of what is that, a lot of competitors are not really interested in pursuing that. And we are in process to establish in a different way of how we add those products to the market. So we do not see that in 2019 as a threat. What may would be a bit of complicated thing is the change of 2017 to 2018. We restructured the business in 2018. So we reduced the capacity heavily, which we've done. So in 2019, we will take advantage also of the low cost base, mainly in Greenville. But there's a nice opportunity, I think, also what Oliver said is that certain competitors are much weaker than we are, so we can also take share. So that's actually what we're trying to do in power generation. Aerospace is going very well, Aerospace. And then the final one from my side. You previously had some sort of guidance or number that you had in mind for divestments, €150,000,000 to €250,000,000 If you add 2017 2018, you've really basically completed that program. Now there's obviously other activities that you may want to divest. So maybe you can update us on that target for the next couple of months. The target we gave that time that was also before we did this correct. We gave the target of roughly SEK 200,000,000, SEK 250,000,000. And then we changed a little bit higher because we want to sell something else, which we didn't do in the end. But 2014, we bought 2 very big companies that time, and we bought Flamco and Preglond. So and that can happen again. So the moment you buy some bigger entities, there's sometimes always something which is, hey, that's something on the 10% or 20% of that, I don't like. Then you optimize. And especially in Empregolone last year, we did a few things. You don't like that. So you optimize. And then over the years, you sell it, especially on the mornings with this team. You sell it at the right moment at the right price. When it's not the right moment, you don't do it when it's not the right price. You also wait and you improve it. So you do. Now we still have some left, for example, in Flamkol. I think it's not completely ready because we should earn a little bit more money and then probably bring it to the market at the right time. But yes, we have still some left, what we see now. But again, it could also be that when you do an additional acquisition, it comes something to it. And the other thing is optimization of your product lines. Also there, we are not done yet. So what is left? Yes. I think what we see now, it could be that we still have left, Jan, maybe €40,000,000 €50,000,000 what we see now on the radar. I don't know if we do this year. That depends again on the timing and the price. And so but in the end, you must know that we only do it when we get a good price, and we will improve our portfolio towards the years in front of us. Otherwise, we would not do it. And I think the picture, especially also what Arnaud and John showed, that shows that we continue to improving the business, and you get better positions every year, and you get also more pricing power. And that's actually what we want. Thank you. But that's roughly the guidance, €50,000,000 what we see now. Thank you, everyone, Kempen and Co. I also have a couple of questions. I will tackle them 1 by 1, starting with the top line or added value, I should say. In the second half, the added value margin was a bit lower, I think, first the run rate over the previous half years. And actually, we what we did discuss are the is the material the commodity price impact, I think, the last couple of semi annuals. And now I haven't heard any comments related to that, if I'm correct. But I think with the let's say, on average, the commodity price is going down. I would have expected a slightly higher gross profit margin in the second half of twenty eighteen. Yes. I think there's hardly any impact in the second half. What we explained at the first half year, we would expect a full year impact on the revenue side, maybe between 1% 2% on the full year because our, let's say, coverage system, which Arnaud runs from our side, prices have been, let's say, pretty stable from that side. Also, our sales prices have been based on that and of course further improved where possible. So normally it runs more or less in parallel. And what we normally see from the seasonality that our added value margin is lower in the second half year than in the first half year. So in this first half year, we are building up normally also part of our inventories to overcome summer periods and the trends for quarter 3 and quarter 4. So it has always some impact on the added value margin. Some mix effects, of course, are there as well. But I think the raw material content, if you look at the current raw material prices again, I think, Arnaud, yes, that's another topic for 2019, yes, to be on top of that, keep our prices where needed and cover ourselves also throughout the year 2019, yes, where we can to keep our added value margin, although you saw a further improvement from our numbers, another 30 basis points in margin. So yes, normally, you would expect margins to decrease percentage wise, mathematically, if you just add on the raw material price on top. So there's more what we do there also on pricing excellence to improve the mix of our products, do the divestments, as Wim explained, to clean up the portfolio and get to higher margins. I think the raw material impact is not it is, of course, a topic, but not a very big impact in the second half year because we normally predict sales and purchase more or less on that level. Thanks, Bjorn. Secondly, on organic U. S. A. Growth. I think in 2018 and also in 2017, there have been a couple of one off effects. So I think in 2018, it was the provision release. In the second half of twenty eighteen and 2017, it was the depreciation. Also in the second half. Also in the second half. In the second half. Yes, correct. But if you look year on year, my estimate of organic EBITA growth, I think maybe you've done the calculation yourself as well, is about 7%. Is that how we should think of 2018 organic EBITDA growth on an underlying basis of about 7%? Yes. I think 7%, 7.5% is what we also calculated on that. Stripping out all these, let's say, one offs, which are, yes, pluses and minuses, which you just have to forget. So that's, therefore, I think also the presentation on our segment reporting is clean per segment, and that I think gives you the right picture on the underlying revenue and EBITA development organically. Also the impact of acquisitions, of course, was pretty limited in many of the it's a little bit in all of our material technology, but not so much contribution from acquisitions. They're rather small, as we said. Not in cash out maybe compared to what we discussed before, but definitely in contribution to revenue and EBITA last year. Yes. And on the same question basically on the margins. I think 13.3% is quite a high margin, but also because there I think there are some positive one offs in there as well. Like would you agree that the organic margin step up, EBITA margin step up in 2018 year on year is about 30, 35 bps? I think if you strip out the same one offs in 2017, I think the step up is not that far away from, let's say, the 80 basis points which we show. It may be 6 or 70 basis points, but not as low as you indicated. We could have improved even more where we would. In America, we did a lot of things to further improve the efficiency. So that's yes, therefore, it's also very difficult to calculate because you drive also the management every time to improve their business. But the integration of Surejoint, yes, costs you money. But in the end, you do that to come out better. We also, on purpose, let a few 2 customers go to a private label. We thought it was too low margin. Yes. Of course, it's a one off negative for us. Yes. We didn't mention that, but now you have it, yes. So you continuously try to improve that. So I fully agree with John. I think it's pretty like for like, where the 0.8% is the improvement. Okay. That sounds quite nice. It is nice. It doesn't sound only like that. Two questions on the end markets. I think firstly, a large building installations competitor recently in its call warned for the increasing competition of private label in building installations. Maybe you could talk a bit on that. That's why we got rid of 2 prisoners. No, no, that's maybe a joke, but of course, you have every time you have private label or other threats in with customers. And therefore, this innovation driving growth is so important. At the moment, in installation technology, you are you have a new product, you go to your customer, the end user, not only the distributor of your product, that's the wholesaler, but you go to the end user and you share something new. And when he wants to have that and you worked on it for 5 years to get it all done, then you can't only give that to him when he also sells maybe the other products. So innovation is driving your complete sell through of the other products. And so that's but when you have no innovations and you have only the products left in your portfolio for years years years, yes, you get competition, not only from private labeling, but also from other things. And private labeling you get when you don't innovate. So we always say private label, yes, of course, we don't like that. But in the end, sometimes we do it when it's only when it's part of a total package, including our own branded or innovative products. But yes, the competition, as you mentioned, has always been there. What you see in that business is other distribution channels. And also there again, innovation is very important. So that's why we changed the whole structure the last 5 years to with this case integrated piping systems and installation technology. We have a very condensed package of fittings, connections, pipes and valves and hangers, fixing for the pipes. And that's our pitch. The rest we don't do anymore. And we divest or we optimize. That's our business. And then you want to be the best in that, and you allocate all your energy and money to innovate in that particular area, including design services, including digital, including plug and play digital modules in the BIM software. We are all busy with that. But you can't do everything. So that's why the focus is so important. But yes, so this is not new actually. It's a fact of life. So when you don't innovate, you come in these kind of discussions. Especially in the commodities. In the end, in that business, everything will become a commodity, but you don't innovate. Yes. And when you don't have the package and the brand. One follow-up on that. I know that I think many investors have had some questions related to your CapEx step up, sort of new guidance, which is sort of We always said that. And we said it already for 3, 4 years. Would you then say like giving your answers on private label maybe like being is fierce competition that you need to spend this CapEx in order to maintain the same growth in the coming years? The CapEx is 40%, as Arnaud Mounik explains, 40% innovation, 30% efficiency, 30% capacity. The capacity is mainly in heat treatment, for example, Eastern Europe, heat treatment, North America, a big potential for us. Also advanced mechatronics, we have a lot of capacity we need to grow. And so we have more areas. Innovation is 40%. So yes, we spend a lot on innovation, but 30% is efficiency. That means automating of lines. It means that you're manufacturing 2.0. You come with a new layout of your factory. You outsource what you did before yourself or you in source sometimes. You need new equipment. So that's why CapEx is so important because it improves not only your product lines, innovation, but also improves your whole processes, including IT. We also will invest tremendously in IT the coming years. The last years we did already, but I think 4, 5 years ago, we invested 2,000,000, 3,000,000. Coming year will be 15,000,000. So we align all kind of processes. So there's a lot of investments going on to be ahead of the game, yes, because you have to be ahead of the game, and then you can ask a high price. And so when you don't do that, you come in trouble. But it's I think, yes, and it's only accelerating. So you have to accelerate continuously faster. Therefore, we need every brain in our industries. That's what I always say. I need every idea in our industries to connect and to innovate again. So we should not lose time due to big structures. Look to our lean and effective structure we have. It's so lean. We immediately decide and we go. That's a huge strength. I can't tell you how big a strength that is. Tell me a company who has that like that. And that's quick decision making. Let's think a little bit behind the numbers. Those are my questions. Yes, but that's innovation. Hello, it's Jaapalos from Lucerne Capital. A few questions. First on innovation, because you talked a lot about the road map, which has started 2 to 3 years ago. Just from a top line perspective, should we think that sort of the contribution from new products and innovation should be bigger in 2019 than it was in 2018? Could be. Should be. That's a short answer. And you know why I say could be, should be, because it always take longer. When you work with technical people, they say, therefore, you need also a business guy to decide in the end to bring it on the market because a technical person in the end is never ready. And so it takes always longer. So that's why I'm hesitating a little bit. But for the coming years, 'nineteen, 'twenty, 'twenty one, we will see a flow of innovation in many areas. And for example, in the business of Olivier Jager, it's for example developing Eastern Europe, developing North America, developing Mexico, developing China, also to other areas. I call it also innovation. Okay. Maybe to add to that, we also started to measure, let's say, the innovation rate where we can really see, let's say, all the products introduced to the market in the last 4 years, what that contributes to the top line, so how much percentage of your top line gets into new products, let's say, implemented in the market in the last 4 years. And also that percentage, which may differ from business to business, of course, is something we are measuring now and also that should improve and increase. And yes, we are on top of that to spend our money, of course, on the right innovation projects. So I think that's also something which shows that. You always have to analyze, let's say, the health of your turnover. I mean, if you're in automotive, you have to look whether your turnover is not 8 or 9 years old, then you can say, well, yes, that's phasing out cars and products. Then you have to have maybe 3, 4 years old to be always on the right run rate, and then you have to measure that. It's always if you look at Precision Machining that you have always a development scheme of new products you're doing together with the OEMs. And what Wim said on the installation technology where you're more in the construction building, you have to have constantly new products to bring on the market that you can say and you have a certain rate that you have a healthy turnover, which gives the prospects for the future. But to give you one answer for all, let's say, the different niche technologies we are doing, that is a bit that will be a bit complex to do. Okay. That's very clear. And then what about the sort of investments associated with that because you showed that the R and D is stepping up indeed, which perhaps short term is impacting the operating leverage a little bit. But how should we think about it going forward? Is have most of the investments been made now? Or should we continue to expect more step ups? This is a very good question because the R and D additional people, most of the investments have already been done in the last year. So when you that's always why I explained because the question, hey, how can it be your added value is going up from 58 to 63. And of course, Mr. Fehrmann, why is it not going to 65? But we came from 58, yes? And then the EBIT margin didn't go up so quick. That was a question a few years ago. One of the reasons was we invested a lot in R and D, additional management, but also strengthening our structure, CVOs and these kind of things. Indirect cost. Indirect cost, but that is done the last year. So what you get now when the innovation road maps get traction with the people because first you need the people, and then you go work on the innovation road maps. Then it takes 3, 4 years before it really comes in the market. When we invest in equipment, in material technology, it takes you 2 years sometime before you really get the revenue inside the investments you do. That's our business. That takes time. So the most of the costs have been taken. Of course, we will add further, but I think the jump to do these programs have mostly been taken. What we do now a lot is we invest in digital services. We have now a digital app in France, where we have software engineers, more than 10. We have a digital app in Holland. We have a digital hub in Poland. We never had that. So we get all kind of digital business models, but we combine products with services. That's very exciting for the future. And so always this depends on your assumption on organic growth. But all else being equal, the incremental margin in 2019 should be better than 2018 at a similar organic growth rate level? That's our aim. Because you know our goals for our strategy focused acceleration between 2018 2020. Our goal is to have a higher margin than 2014. And we said in December 2017, we want to reach it as soon as possible. We don't know when, but as soon as possible. And then a last question on your M and A because it seems like you've been doing a lot of nice M and A. Could you perhaps share a little bit more about these companies, what their organic growth profile is? And what kind of margins do they make? You mean the companies that we bought? Yes, exactly. Like a positive organic growth, the €100,000,000 of sales that you bought. Now let's say we regarding margins, I can say that they will all contribute to our margin performance. So they are all above our average. And we believe, let's say, these are 4 smaller sized companies, of course, with a very strong position in their niche, yes? But because of our, let's say, the possibilities and opportunities that we see in the leverage of our Albert's power, yes, we see an above average organic growth potential. For example, yes, Copelmark was a small acquisition, but the footprint we got, we looked for many years already, in North America and Mexico, leverage a lot of technologies of precision stamping. But it's the answer, as I said before, it doesn't one answer doesn't fits all. And every acquisition has a different background. Valadon mentioned in the FAF, it's good for exchanging that technology within the group to accelerate the growth in principle. If you look at what Wim said, the co planner activity that is we are creating a footprint of metalist technology in North America. Nobody would do an acquisition of that size in that business, but it has the same technology, and it offers us a hub in North America and Mexico to grow with the key accounts we're having within the Middle East group. So if you talk about organic growth, and we said, well, we are super happy if it's 4%, 5%, yes, if we do their 4%, 5%, I would not be so happy, personally spoken. That should be different. If you take a 3 year period in time and we develop the right customers and the right projects, which we are already doing. We have already 10 projects we are going to develop and how they come in, in the years 2019, 2020 2021. That business, as Wim said, it takes its time to develop. But if you take the old years, 5%, 6% organic growth is not target we are aiming for. This is not why we did that, even if the company could do that by itself. The same applies for Royal Metal Finishing. That's about corrosion protection systems. A significant portion goes into the automotive industry. We do not have any business of that specific technology in North America, and we are quite convinced to accelerate growth while having a combination with customers we do have in Europe. But that is really a strategic investment. That's why we said we are focused not on acquiring turnover and having €30,000,000 €40,000,000 €50,000,000 more turnover in the portfolio. It's about executing what we think we should do in the different technologies. So if you say, well, it's all 5% growth, yes, that's nice, but this is not what it's about. Experience is on paper, we have much higher growth than average on paper because we made all the plans, so the potential is there. Practice is it always take longer. And so but we see that in many things we acquire. And that's also why you have to acquire always 2, 3, 4 things and then again implement because it always needs time to get the traction going on. And then you go again. So let's say, in theory, we should grow much faster with these plans. But sometimes when you are experienced, it's sometimes tough. But on the long end, it is. Yes. Luuk Van Meek, from Bernstein. First, a question about visibility because in the past, you always said, well, we have basically zero visibility up to a couple of weeks. But in the meantime, a lot has changed with all the investments in key account management and the programs you have become part of. You describe how much visibility you now have in your various segments? And how far you can look ahead? We start by Material Technology. Okay. Let me start. If you look at the business we are doing in Automotive and Machine Build and Aerospace, is mainly a service business. So the visibility that's a couple of weeks you could go ahead. And you have your relationship with customers and you know what you're going to expect. But if you look at order intake, that's a much shorter view you have. In other segments, it is a bit longer because you have different trends and products taking more time to develop. But if you look in automotive, I mean, you know what people are buying, and that's your visibility. But when you know that your customer has a lot of work, you also have to work. That is heat and service. But I think in industrial technology, we have a much longer pipeline that when we look to the fluid control, a very nice pipeline where we can see much further. It can be 6 months on time. And that's also the forecast we, for example, have in advanced mechatronics or in specialized manufacturing. Our forecast is not really in order, But you know you are in a program so that they need you. So based on what your customer says to you, especially in the industrial technology area, we see much longer we can see a longer, let's say, forecast or order book. And then on the integration of your distribution in the U. S. And Europe, obviously, the positive has led to higher inventory. That's still the case in some areas. Can you discuss how far you're in the process? And at what time we should expect the release of those inventories? I think the inventory, and you could see that also in the numbers John explained, that's mainly related to North America and something in Europe. So North America and Europe, they're mainly certain product lines. Now one explanation is the power press fitting and valve where we really produced the stock in 2018 because we saw a big traction going on, and we launched that in North America. So we have roughly now we created $5,000,000 to $10,000,000 additional stock to really be very service have our service level on a very high level, which we also do now. So that is more or less done, but that impacted especially the second half of 'eighteen. The second thing is we had expected in North America a little bit more sales in the quarter 4, which didn't come. We had the orders, but we could not ship it all. It was mainly in December. That also has to do with the holidays in that period. And so you expect a little bit more sales, mainly also in the Groove, in the short joint business. So the projects were there, but we didn't have the possibility to ship. So we ended up actually by not having the sales having the orders, but not having the sales and not able to reduce the inventory. But we know exactly where it is, what to do. So we will address that. We already addressed that for 2019 to really sell out. And then finally, on Brexit. You have a small business in the U. K, which I think mainly produces for the local market. To what extent do you think you are vulnerable to Brexit? And also could it affect your your Continental European business? And are you preparing in any way for it? It's very hard to predict. I think everybody is looking at, yes, what's going to happen. But of course, with what we also learned from our, let's say, U. K. Management, of course, the markets may not be as good as you always hoped, but that may be a temporary impact. Of course, we are exporting a lot from our U. K. Business, so produced in the U. K. Exporting. So they are benefiting already for a number of years now from the, let's say, the lower currency of the pound, a bit more expensive for importing from Europe, which is partly within the group and partly from external parties. And there may be some duties coming on compared to what we now see between U. S. And China. That may be something which may occur. You have to defend your position, of course, and take that into account when you go into the market pricing, etcetera. But everybody in that market will have that same issue in that respect. So yes, a concrete number or a concrete impact, yes, it's very hard to predict. I think we are managing the business, try to be cost efficient, lowering our breakeven where we can. Yes, on the other hand, also, yes, do the innovations and make sure that we have a solid position in the U. K. Itself. I think also Oliver has a nice heat treatment business in the U. K, several locations, yes, which is more or less 100% U. K. Oriented. For local, yes. Yes. And going back to the U. K, maybe to add, you maybe remember also that the pound became much cheaper, so let's say, the imports we had in the U. K. Business. Also, we had to increase our price that time. That was maybe 2, 3 years ago. We did that. So what you've seen also with the rates in the U. S, what happens, everybody increases price. So yes, in the end, it's about your market position if you succeed in increasing your price. So we did that also 2, 3 years ago in the U. K. So when this would happen, we will do the same. On the meantime, what we also did, we produce what is sold in the U. K. We also try to produce more in the U. K. We still have a big pretty big manufacturing footprint in the U. K, which can help us even to have a positive effect. But yes, as John says, let's first see what's going to happen. It changes every day. But the preparation for us is the moment you get tariffs, yes, we will adapt our price and, of course, look to the competition and adapt immediately, but we also did in the U. S. Because we increased our price. Okay. Maybe the size, look, the size of the business is less than €200,000,000 what we do in the U. K. So if you look at our geographical split in the press release, it's already included in the first line. Benelux U. K. Nordic, euros 700,000,000. Let's say €180,000,000 to €200,000,000 is U. K. So that's partly what we sell into the U. K. From other territories and what we produce and sell in the U. K. So it's really the sales out in that region. So that's between 5% 8% of group revenue. So in that respect, you have to take it into the relative numbers, I would say. Of course, we will look for any impact it may have and, say, corrective actions, of course. Okay. But also here, in my opinion, the U. K, also a real answer is innovation. What we do with our Installation Technology business is now bringing innovations, which you also assemble or produce locally. And there you can also gain market share. And that is actually also how you can win with your position. Peter Hollis from Kepler Cheuvreux. Maybe as a follow-up on this question. What exactly was the contribution from pricing to the organic growth in 2018? And what do you expect for 2019? Of course, some things you can't predict, but I assume there is some spillover from last year, but we've also seen some raw material prices coming up. So some color there. What we said already in the first half year that we were around, let's say, 1% year on year in the first half, and that we would expect to slightly increase that in the second half year between 1.5% 2% to take the full year impact of 2018 into account compared to 2017. And if you now look at, let's say, our close to 5% at a 4.6% to take a precise organic growth, yes, I think that is still a valid number that there may be 1.5% max 2% is price related and the rest is volume. And we think there is a lesser impact in 2019 because we already implemented, let's say, the full impact of the pricing. And looking at current raw material prices, I think, Arnaud, I think that's where we are, I'd say, heading towards in 2019 as well. There is a limited impact on the pricing other than, of course, pricing excellence, which, of course, is a different topic. So we may still increase prices, but maybe not necessarily just related to raw material. And then on some of the digital business models that you referred to in the earlier questions and also in the press release. I assume today this is still very, very small, but maybe in 3, 5 years, how sizable can it be? Yes. It's a good question. Yes. How sizable it is, I think, what we see now, but it is a trend which you see in more places that you often combine it with the products you sell, that you offer a digital service in combination. Now for example, when we talk about expansion vessels, you have now the opportunity to also storage energy in a vessel where you can also adapt or you can connect certain electricity out of it. So yes, you never know how quickly these products gain momentum. My experience is that it will take time. And so but also here, when you have the possibility to offer it, it can trigger customers to take that product, but in combination with other products. So it will accelerate also the sales of your other product lines. So that's also a positive effect. I think the total number, it's difficult to predict. I don't know. But it's small, you're right, but it will grow. But it is everywhere in every almost every business. It's a topic, yes? So products should communicate with each other. And so there's a lot of digital, yes, content thinking going on. Yes. There is a bit of desire when you say, well, it's digital product. It's not the product per se. It's digital itself. It's a combination of digitizing what you're selling. So that means if you talk about innovations and as you have well fitting, so you have in the climate control business, applications you're offering. So the principal installation you're offering, and that reminds technically the same, but the way how you steer it and how you manage it, that just becomes digital. That's an add on. So the entire package is viewed as digital, but the product per se is still the product it was before, so to say. So if you say, well, what's the digital contribution to give a number, that will be a bit hard to say because the entire way how you managed installations is different. It can be both. For example, we have developed now together with a small, very small acquisition we did in France, we developed now a thermostatic head where all the algorithms are in. So even, for example, that you know exactly how late somebody goes sleep in holidays. You know holidays, everything is in Weather forecast. Weather forecast, everything, yes. It's in such a product. So that's there you put actually software digital content in the product, and we launch it now at the moment. Then we have now a very nice product. It's like this. It's from a company Comap. You can put in every room. You click on it and you say, the temperature is too high. You click here and it goes down. You can take it with you and everywhere you can put that, yes, sort of round, handling unit, you could say. It's a complete new innovation. So what we do, an existing product that we digitalize it with digital additional features. Another example is, for example, we say, hey, you have a nice, here, commercial building. You have a boiler room. What we can do, we can install all your equipment between source and emitter. And we every 2 months, we look to the system performance. And we measure that. So we have all content. We gather the data for you every week, every month, and we see that the system performance is very bad or is good. So I would do this and this and that, then you have less energy. And they give you a contract to monitor that every month, and you get an abandonment. I don't know the you get a sort of service for that. And that's additional payment. So we do that now, but it's in a trial and error and learning phase. Another request we got, hey, in such kind of building, we want to outsource the whole boiler room. Could you maybe do that for us? So can you take it off? So we give you a lease tariff for the whole boiler room. Okay. We have now one pilot running somewhere to see if we can, yes, earn money with that, how it works with the pilot. We are active in a very nice project in The Hague. It's called the Green Village, where there's a row of houses where they're trying, and we are part of that as Alberts, we're trying to bring hydrogen through the network of copper to heat the houses. That is the trial. And we are one of the bigger sponsors with the Technical University of Delft. Now these kind of business models we are busy with, all kind of ideas, innovations. So that means you use hydrogen in your homes as a test. So that could, of course, be fantastic. So these kind of things and how that will, in the end, become a business model, yes, we will see, but it goes very fast. What do we do then? We bring the people together from fluid control, thermal sanitary efficiency, hydraulic flow control. We say, hey, here we have some ideas, Why don't you do this? Why don't you do this? Greatness is shared with all the knowledge we have in the group. That's Albert's. Yes, but that's important to understand. Thanks, Rune. Then my final question is on cost inflation and then especially wages, as we've heard mainly from Eastern Europe and the automotive industry of some sizable waste increases. So what do you expect in general for Alberts for 2019? Therefore, it differs per region, as you already said. But yes, we already see or take even the Netherlands as an example, what happened there already. Yes, there's a huge increase, yes, up to 8%. If you look at the collective labor agreement, which was just finished a few weeks ago, Although it's in steps, but it will increase, let's say, total cost by 8% over a 2, 3 year period, just the Netherlands. But I think also in the U. S, we already have seen some increases in inflation on the cost side. Eastern Europe, I think all of our China already has been on that line for many years now. So yes, I think on average, I think the impact towards 2019, I think we all anticipate to further increase prices as well. But yes, you may see maybe even 2%, 3% on average cost inflation on labor and indirect cost of your people. And you have to incorporate that in your business. And that Price increase prices? Yes. That could be another driver for price increase besides raw material is pretty flat till now. But inflation of wages could be another driver for price increase. We discussed that in our management. I think the main effects you will see maybe a little bit 2019, but it could be 2020. But that's it's a good point. We have to be on top of that. Marfrig Bagdadi. I wanted to questions on your portfolio changes. Firstly, the divestment. You received proceeds of some SEK 35,000,000 selling SEK 100,000,000 of sales. Just roughly, if you would sell it at 8 times, would that mean that you have sold businesses with a margin of about 4%? At least below 10%. There are maybe a few which are a bit higher than the 4 but it was partly also an asset dealer, so it's not always, let's say, totally a company with the full margin. But yes, lower margin businesses, yes, that's correct. So you get a lower multiple and lower margins. And then on the other hand making decisions, we have seen It was also non core. Yes, yes, yes. We don't sell the Pearl sale of our company. So the multiple is normally a little bit lower. Okay. Then on the other hand, you've made acquisitions. If you look at the past, you have made, yes, let me say, different kind of acquisitions, companies with very high profitability, which results in very high cash outs. And otherwise, companies will buy, you had much more upside for improving margins. If we look at these two kinds of acquisitions, when will you realize first your ROCE margin of 18%? And in how many years? No, I think the of course, about the ROCE margins, we have our strategy of focus acceleration. Our aim is to achieve more than 18%. We are now at 16.6%. So we are on track there. So we will improve that. But it's a combination. When you look, for example, to 2014, we had the opportunity that time to acquire Flomco and Impeglon, which had lower margins, both at around 7% EBIT. So we saw the opportunity because we knew the business to improve it. Now both, I can tell you, after now 4 years, 4.5 years, are doing much better than they were then, and they are above our own goals, which we set that time because we knew the business. And the other type is that you add technologies or you add a footprint like coal plant or you add technology like PEM or you add a technology like corrosion protection in America and a footprint. So it's often a combination. It is both. But I think the moment you acquire something which is low EBIT margin and mostly more revenue, then you have to be very sure with your knowledge that you are able to increase it to our average EBIT margin, pretty sure, because otherwise it will really ruin your returns. And but it can generate a lot of value when you do it. And we did both, so I think we can do both also in the future. I agree. But also on the other hand, if you acquire a company with very high profitability, you also have to make sure That you don't pay the highest multiple. Yes, you're fully right. Maintain or at least improve or at least maintain that margin. Yes. Or you don't pay the highest multiple or you are able to increase the revenue fast with your other business. That's of course We improved at ROCE over the last year. So Yes. But we always made we always make plans. We make plans in detail with the existing management or with the management who becomes responsible for, let's say, the add on or the bolt on or the acquisition we do. And then we drive also the performance of that plan in detail. The moment we have not returned, which we agreed upon upfront, yes, we say, hey, let's wait a little bit. We should first get the return on the previous acquisition. Otherwise, it doesn't make sense. Otherwise, you're right, you don't get the returns. But this is the combination, I think. Combination organic growth, then on top of that, you do acquisitions where organic growth by far is the preference. And these acquisitions should generate additional organic growth again by the combination. But that is hard work, so you have to drive the improvement plans very thoroughly. So it's both. When you look globally, where do you see for your markets the best economic environment and where do you think the challenges are greatest? The last one? The challenges are the greatest. I think we have many end markets where we have potential. But because the point is you should not look only to the end markets or what is in the papers about an end market. The point is you should know the combination of our pitch, our technology, which we sell to the market in combination with the end market. So when you look to semicon, for example, yes, semicon, you have the front end, you have the back end, for example. You have investments on the front end, which improve the efficiency of the chip making where we are, but we are not at the back end where others are. No, we are in the efficiency improvement of making chips to make them smaller or quicker or whatever. So there we are. So there is still a lot of possibility even when maybe you have a small dip, but that will continue, yes? That will continue in the coming years. Another thing is automotive. When you are in automotive, when you are in the end not in the electrification of vehicles because that is the trend, and you only are in diesel engines, for example, yes, which is going down, then you will have a problem. So you must also look what is your product or your technology in combination with the end market. And that's where we look every day to optimize that. So from that perspective, we've selected all the businesses in the last years to have a positive leverage of the trends, yes? So energy efficiency of buildings. We are in the boiler room. We are in the piping system. We are in floor heating, yes? But we are not in other things where we don't think there's growth. Otherwise, we stop it. And so we select it all. Yes. So Aerospace, we're also positive, but we are in the area where there's weight reduction of the materials with aluminum technologies for extrusion, machining, coating, but we are not in steel or we are not in plastics. We are in aluminum because we believe in the weight reduction of the planes, which is also the fact because it's growing. That's so in many, many combinations, we see growth. Of course, when there's headwind, yes, you can sometimes also feel the headwind, but with your positioning and your innovation drive, you can counter attack the possible headwind in the future. Maybe a follow-up on one of the earlier comments John made. So there was this release of an earn out provision. I'm not sure how sizable it was, but was the reason then that one of the acquired businesses has not performed to plan? Or what's the reason for this release then? Yes, it's 2 fold. It was only a few million, so it's not a huge number, the few million impact. Two reasons. For one acquisition, we agreed with the sellers that we would buy them out for the earn out 2 years earlier than we agreed because we were going to integrate the business. And then it's very hard to still have focus on the real profitability. And then you always get arguments with the sellers, which we didn't want because they are still in the business running the management. So we paid them off. So in that respect, we paid a lower amount because we paid earlier than the agreed timing. And a small amount which was released, we or let's see, the sellers did not reach the agreed performance for that period. That was a small amount, and therefore, it was released from the liability. And it's clear now for those acquisitions. And whatever is remaining, I discussed with a few of you this morning, that's still on the balance sheet for acquisitions, which we are going to pay out partly this year and partly next year. So we normally have an earn out, and we have also sometimes what we call a deferred payment, so that we pay a part of the already agreed fixed price on a later date with no interest by the way. But that's the deferred payment. This was really related to the earn out, which was released earlier than the originally agreed date, which I think both parties were very happy with. And on the IFRS, as you know, then the difference goes into your income statement. Hi, Philipp Goetz, ABN AMRO. I have just a few questions left, mainly on financials. So the first part is on working capital. John, you mentioned before that there are always funny movements towards the year end. They are funny. So indeed and I think it was mainly related to the payables, I believe, what you said. Also, if I look at according to my definition, and everybody use a different definition, but the days payable outstanding at year end was around 147 days, if you compare it to the raw materials. Historically, it's been an average of 100 days. What is in your view for Alberts the normal level that the payables should be at if you don't have these funny movements? Yes. It's Kerfon, I think it's always difficult to take, let's say, from the balance sheet, if you take just the payables and try to get that linked to raw materials, which is only a part of that. So what we normally do, and if you do that consistently, it also is, let's say, the same KPI to take it on revenue as we do also with receivables on, let's say, day sales outstanding. We also take the days payable outstanding, so the DPO based on the same level. And then, yes, normally we would go for 60 to 70 days on DPO. And on receivables, we are, if you look at our average historical number, between 50 60 days. That's on average. And of course, at year end, you may see a higher number of days DPO on the payables and a lower on DSO because we try to get in as much as we can in cash at year end, and we may pay on the 2nd January, maybe 3rd. So that is, of course, the game. As I mentioned before, we don't like it that much, but everybody is playing the same game. And therefore, you get some funny movements. And yes, we try to get rid of those extremes going forward by managing better, especially inventories and of course, yes, remain a solid position towards your customers and your suppliers. But if I would change the definition, then I would still see a significant increase over the year's If you relate that to full year revenue, it's not that significant. It's not that we were at 20 days before. Now we are at 60. Now we may be we may have been at around 50. And now we are between 60 65. I think that's a more, let's say, solid way because also during the year, we have renegotiated with suppliers extend let's say, extended payment terms, which we already started a few years ago. So that also kicks in more and more. So leave out maybe this funny year end situation. We are trying to get as you may also get some letters from our customers who just say 180 days, otherwise we don't do any business with you. Well, we are not that aggressive that we do that. But yes, we may have extended to 60 or 90 days with some of our major suppliers or even get, let's say, consignment stock from those suppliers. And so we have taken a lot of measures already and I think still some to do to further optimize also on the payable side without, let's say, ruin your relationship with your suppliers because that's not the goal of paying them late. Yes. Okay. Clear. Then maybe indeed on the inventories, I appreciate the comments that you made and also earlier about the fact that product innovations have also led to high inventories and that will probably phase out or you will get rid of that? [SPEAKER FRANCOIS XAVIER BOUVIGNIES:] It was mainly one new product. One new product, yes. But again, if I benchmark you guys towards peers and then not always perfect peers, But it seems that inventory levels are extremely high. I would say if you go to its industry average and you can have discussions about what is a fair number for Alberts, but you can nearly half that number. And you're very sad that you want to improve your inventory levels, but do you have a certain amount of mine where you think that that's what the level that we should be targeting going forward? Of course, we have our own targets, but I think maybe that's too much detail for now. I think much more important is that the quality of our inventories is going to improve. And because of this huge portfolio we have, because all companies have their own products, They have all the products. They have new products. Also the all the innovation, which we have done over the past few years, are just adding, in many cases, products to the portfolio, new developments, acquisitions, etcetera. So I think it's more the quality of the inventories, although we agree that it is too high. But I think we commented that already. The last 2 years, we increased a lot on inventories, partly due to raw material prices, partly due to some other effects, which we explained. So yes, we have a goal in mind to work on, but let's take that first and show that we are going to improve. But it would be nice if we could squeeze out half of those inventories. If you have a buyer, then I'm there tomorrow to get the cash. But you have to be because this question we got also years ago, you have to be very careful what you compare with what you compare. Our strength is and this main installation technology, our strength is that we are very close to the customer. We have a total package, in this case, in mainly, let's say, the piping systems. So where we come from is a much broader portfolio. So we reduced that to Piping Systems. But to optimize that, you need to change your structure, your distribution structure, which we did now in the U. S. So now we're going to make it more efficient. And we're going to do it in Europe. In Sverdolden, there's now a new assembly and distribution center. It's now built. It should be ready in summer. And then we will, of course, optimize in 2019 and mainly 'twenty, but optimize also the distribution footprint in Europe. But I think also our business, which is a package of products, connections, pipes and valves, needs already a much wider portfolio, but that's also the reason why we are able to keep our margins high. That's why it's a combination. And we have a brand in each country, and we grow organically. So of course, for us, it's also simple. Let's only sell connections. And we put them in one place, and we put them in Poland, and we sell them to the whole world. I will be sure that you lose your position. You will become a commodity. You will private label you will be private labelized very quickly. So it's a combination of things. So apples and apples, you have to be very careful here. But it's without doubt that we can improve it, and we have a target. We already mentioned it here a few times. But you will see that in the coming years on inventory, mainly installation technology. But when you look to the inventory in Fluid Control, hey, that are very nice ratios, but it's complete other business. Maybe we have 6% working capital there, but it's not the business. Or in all of our business. Because you have such a product line, such a product portfolio. And his business is even it's below the tip. Then maybe still a question on the release of provisions because you just mentioned that it's just a few millions for the earn out provision. But if I look at the cash flow statement also in the balance sheet, there's a provision release of in total of nearly CHF 22,000,000. So where is the other part coming from? Yes. In this, let's say, CHF 22,000,000, a part say the EUR 22,000,000 a part is linked to the earn out provision, which have been released, which we discussed before. Another element is because of the insurance proceeds, which we received, which are part of, let's say, our EBITDA or EBITDA that's reclassified in the, let's say, the proceeds from sale of equipment. If you look in the cash flow statement on the investing activities, you see a plus of 21.6%. That's coincidentally at the same number, but it has partly to do with each other. So it's more a reclassification in the cash flow statement because those proceeds from the insurance company are not part of your operational cash flow. So you're more or less reclassifying them from your investing to operational to neutralize that impact. And that's not around, let's say, EUR 10,000,000 impact based on that, plus the earn outs and some other, let's say, normal share based payments. And that's also an element of a few million, which is included in there. Okay. But then just to get a picture completely clear, if I look at the balance sheet, there I see a was it a EUR 17,000,000 or EUR 16,000,000 delta year on year. I mean, I assume that the claim for the insurance wasn't there yet, right? [SPEAKER RAFAEL FERNANDEZ:] You mean between the capital allocation? [SPEAKER RAFAEL FERNANDEZ:] Between year end 2017, so the provisions other provisions are noncurrent liabilities. There is a decrease of around SEK 17,000,000. Yes. That's partly linked to that. And partly, of course, we are shifting, let's say, from the earn out provisions to the short term earn out provisions, which are included in the current liabilities. And so every year, when because as we explained before, we released, let's say, a provision or paid out a provision for earnout earlier in 2018, which was supposed to be paid in 2020. So it was under the long term provisions reclassified to short term because it was paid in 2018. And that's also being done at the end of 2018. You look what's going to be paid in 2019, reclassify from provisions to current liabilities with no impact on cash flow, of course. Okay. Then my last question is just on the higher CapEx guidance that you gave. Can you indicate which segments we'll see the largest or where the increase the delta increase is mainly going to go to? And maybe is am I then also correct to assume that what nearly EUR 20,000,000 of that is actually related to just the fires? So that's underlying the increase is not even that high? Well, if you look at SEK140,000,000 to SEK160,000,000 and take, let's say, around SEK20,000,000, I think you're pretty close to that number. We still are, which are between SEK120,000,000 SEK140,000,000 just stripping out it. And we had guidance 130 to 170 going forward. So I think that's within that ballpark number. It's a range, yes? But I think the price will be lower. It will not only spend in 2019, as I said, maybe partly it will even be in 2020, because there is a delivery time of many of the equipments of No, I think it will be between I think because you have to talk to your customer. If you order the line, So there will be maybe an impact of €10,000,000 €10,000,000 €10,000,000 €10,000,000 €12,000,000 I think in 2019. So yes, when we give guidance, €142,000,000 €160,000,000 it could be 155, but it could also be 145. And then yes, let's see how it works out with the insurance cases. But we already have now 2 projects which are delaying how it always goes because we get no permit for new building. That takes half year longer, so that will shift again to 20. So that's so I think 140,000,000 between 160,000,000 that's including the €10,000,000 to €15,000,000 roughly, but could also be close to €160,000,000 And then we manage that every 2, 3 months. We manage that with the team. And mostly, it's delaying things. But my colleague will spend a lot. So we have a lot of plans in material and noise for CapEx because he's very CapEx intensive. We have a big plan in somewhere in the Eastern part of Europe. We can't say too much about that. But so we have that's a big expenditure. But also in Installation Technology, we did a bit less in 2018. So there are nice plans because we have some product lines we are growing very fast, so we had to add capacity there. And we are investing in the distribution and assembly center. And installation technology is evolving, so many good plans. But I would take this guidance including. Yes, definitely. It's included in the number. And when you sit in the middle, you can't be so way off. So Oliver is going to spend it, and another colleague has to reduce his inventories to finance for the CapEx. That's how it's going to work. And when that doesn't work, then yes, we come back to Oliver. Yes, yes, yes, yes. So we have 2 questions from you have more questions, Philippe? We have 2 questions from the webcast. The question one is from Mr. Wienen. And he asked us, U. S. Housing market seems to have weaker H2 'eighteen. Question 1 is to what extent has it impacted the U. S. Installation technology business? No, it has impacted. We said that we have expected a little bit more from quarter 4. We even had our inventories. That's also to do with the December month because we think the 2 weeks, the Christmas and the New Year, were in 2 weeks a lot of people took holidays, so we couldn't ship everything what was ordered. So yes, impact, yes, could be €10,000,000 to €15,000,000, something like that. But the orders were good, so we will ship it out in this year. Hopefully, this is enough answer for Felix Wiener. Question 2. Question 2. Yes. Divestments. Divestments. Hi, Arnaud. €97,000,000 annual business. What impact did that divestment have on group operating margins? A big part of this divestment is low margin business. So I think the second question is related to that because the divested business generates significantly below group EBITA margins. Significantly is a little bit difficult to say, but it was below our group EBITA margins. And then for sure, I think also Martin's question before. So we normally do this to improve our portfolio. And let's say what I said before, we don't normally sell off our pearls. But it can also be a non core business, which has a nice margin, where we get a nice price. So it's not always, but in this case, I think it was, let's say, below average. Majority is below average. The nicest thing when you have both, so noncore and low margin and no growth potential. That are the 3 criteria: no growth potential, non core, no link with the group and low performance. And get a high price. And get a high price. And only €55,000,000 of that was included in 2018, as I explained before. So the impact is not €97,000,000 And the margin on that, it's the €55,000,000 of the margin on that. Just to get the picture complete. No more questions via the webcast. Are there more questions from the room here? No more questions? Then I would like to thank you all and also the people joining the webcast. Thank you very much. Thank you.

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