Aalberts N.V. (AMS:AALB)

CMD 2017

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Dec 6, 2017

Our first Capital Markets Day of Albert Industries. Welcome again. Yes, today, the agenda for today is that we present our strategy update and our objectives and that we hope that there are also a lot of questions and we can all answer them. And we have this afternoon an innovation experience for the people who will join that after lunch. So our agenda for today, we will present that with the 4 of us, is that we go through, let's say, the progress we made in our previous strategy, which we made, our linked strategy, we will then discuss in parts the strategy for the coming 5 years, the update, which is called Focused Acceleration. And I think also the name is already telling something about what is our aim to achieve for the coming 5 years. So the next slide is that in 2014, we launched, at that time, our linked strategy. And it was during that period 2013, 2014 that we made up our mind, and we said we should link the group more together. That was actually the idea and also of the name of linked strategy. We defined at that time 4 pillars of the strategy. The first was focus our approach. The second was improve defined market positions, improve profitability continuously and use more the group strengths, which we already did, but we wanted to intensify that. And we also defined certain things we want to accomplish. I think it's always good to look back what you achieved in that period. So it's roughly a 4 year 3.5 to 4 year period. And so we achieved in the leading of niche position where we tried to, let's say, focus our portfolio much more. And we also started divestments to optimize our portfolio. And we looked for certain niche technologies where we could gain a certain uniqueness and also where we could achieve a market position, which where we could play a leading role in the world. So, we very important is that we look to all these businesses, and we also analyze them and we make choices. We think we are 95% ready with this process. I must immediately say that you are never ready because the market can change and you immediately adapt so that you continuously optimize your portfolio. But I think with the things we thought 4 years ago, we are 95% ahead with what we achieved. 5% not. So there is still a small part where we say, hey, maybe we should divest that, maybe we should optimize that further. Of course, optimizing, you always do. But maybe you should also close some activities, but it's a very small percentage led. It's roughly €40,000,000 to €50,000,000 of revenue where we think, hey, that we should improve or adapt or maybe still divest. The niche technologies, which we created, we think we are now 60% of where we want to be. That means they are in the right direction, but we still can gain a lot of position. Of course, we can do bolt on acquisitions, long term innovation roadmaps, and maybe even the 60% is on the high side. So a lot to gain, especially the market position in these niche technologies. Operational Excellence, 50%. Then maybe some of you would say to me, hey, how is that possible? Because in these 4 years, you said already, we have decided a lot, even sometimes I said 90% to 100%. And you executed 30% to 40%. Now it's only 50%. Now it's actually a simple explanation. When you dig in more in detail in the new let's say, the new focused approach we have, you sometimes see that you can do more than you originally thought. So we expand the program continuously. So there's still 50%, in our opinion, which we still can achieve. We are only halfway. Exchange best practices in the group, very, very important. The more you look into that, the more you see that process in many applications have the same challenges. So that means, when you want to offer a system offering, and we come to that today, it's more almost in every application or every market we offer that, you have the same challenges. That means the solution is different, but the process is, in many cases, the same. So we can learn that from each other. We are 40% on that route. But where we are now, it's on the next let's say, the next slide. You can see we have been transformed to a focused technology leader, strongly positioned for accelerated growth. That's important. So we have really chosen we have, in the end, 9 technologies we have chosen, which we can pursue now and really push forward and create a better position in the worldwide market, but also gain more share, but also gain more growth and also gain more margin, in our opinion. Still a lot to improve in operations and exchanging best practices. There we stand now. In the meantime, what we also did at this very important next topic, and you see that here next to, let's say, the slides here, is the Alberts Way, winning with people. We introduced 2 years ago our values. And I can't tell not enough to the organization or to the outside world how important this is. This is the most important, winning with people. So that means be an entrepreneur, which is in our roots. Take ownership, the same. Go for excellence. It means really that you go to the best. So when you think your factory is efficient, then you should tell yourself it's never efficient enough. For example, we launched now an initiative for our factories. We call it 2.0. That means that you really look to your factories from scratch. How many people you need then? How you can automate? Do you really have to make this? Or can you buy this better? Really automate. Not be satisfied with 10 people on the line, not be satisfied with 2. So challenge yourself. This is a very important thing. So the bar must be very high. Share and learn. Very important. I already said that. Processes are in very cases the same. When we talk about key account management, of course, talking to a big beer customer, I don't want to mention names, or a big building construction, is a different market. But the processes and the tools you can use are very often for 90% the same. So, we can learn how we do that. And that's what you already saw last 12 months. We scored 5 very big key accounts. And actually, it's every time the same how we come to this win. That's what I see. So when we can learn that from each other, how you do that, you win more. So share and learn, very important. Of course, leading by example, speak up procedures, we put a lot of attention to governance, act with integrity. In the end, it's all about people. Then the next phase, 2018, 2022, focused acceleration. As you see, we stick to our pillars. So we have to remain focused. It's not that we want to get broader. We must get better, not broader. And so, we selected the niche technologies and the markets where we want to be in. And these we want to pursue, mainly by accelerating and improving our technology positions. So not a market position, but a technology positions. That means you have a combination of a niche technology in the market. You link that to your customer group. We made these combinations. There, we want to be leading in the world. What it also means, when you change your structure, what we did, based on these niche technologies, that you also get a worldwide approach and also get more worldwide possibilities, like in Asia or more in America or even more in the Middle East, because you drive the technologies worldwide with a worldwide business team. We will explain that more. Accelerate organic growth, increase game changing innovations, executing our long term innovation roadmaps. Long term means long term. In innovation, what you will see some of you this afternoon in that factory took us 4 years, 4 years before we had $1 revenue. So, you innovate also for the future. It takes time. The 3rd pillar, I can't say how important it is, improve continuously your profitability. It will never stop. Relentlessly continue and expand the operational excellence program. You have to be very focused on that because in the end profitability is efficiency, is make or buy, is better purchasing, is a better supply chain, and therefore, you need attention. We will also explain later how we do that with our Alberts networks. We have found a very, let's say, a very efficient way to share information on a very lean way also, still with only 22 people in our head office, yes. Using the Albert strength, it's not saying using group strength. The change is using Albert's strength. That means also the name. That means also together winning with people the Albert's way. It means also that you exchange best practices quicker. And it means it will be a change to the future that the Alberts brand and global footprint we will use much more intensively. The investment power we have, the projects we achieved, let's say, in the 1st months of this year with our with a big key account customer, ASML, which was really a big fight and a big win. We got also mainly due to the Albert's appearance, the Albert's name and the investment power. We were able to immediately say we're going to invest €7,000,000 in our facilities. And we did it. We did it this year. So acquisition expertise and talented people. So what we will do as a team, we will explain all part of these 4. But the coming 5 years will be accelerating what we have created on a very focused and disciplined way, with more organic growth and bolt on acquisitions, a very prosperous future. I want to give the word to my colleague, Oliver Jerger. So thank you very much, Wim. I also would like to welcome the people here in the room as well as the people on the webcast. Remain focused, bullet point number 1 we mentioned. We remain focused on core business and technologies. Just to mention the 4, which we already have, which you know, especially the people who followed us quite some time, installation technology, material technology, climate technology as well as industrial technology. We sharpened our names as the ones you know the pillars from before to give them a good definition to underline the technology driven basis of Abbot Industries. To summarize what we are doing, so we offer mission critical technologies, products and services to our customers' products. If we now get into the details of each of the segments, Happy to start with installation technology, which consists on 2 sub technologies, integrated piping system and plastic connection systems. It goes about distribution control of water and gas, end use, heating, cooling and media supplies in buildings. So consequently, Dizolves Technologies, the end markets we are looking for, we are attracting with our products are commercial and residential buildings, industrial applications and obviously water and gas supply. So the distribution channel for those products goes mainly via wholesalers. If we come now to the second business we are running in Alberts Industry, it's material technology. Also there, we run 2 head technologies, this heat and surface treatment as well as specialized manufacturing. We're offering advanced technology combinations by using our worldwide portfolio of products at our global footprint. The end markets of that business are automotive industry, the general industry, machine built, aerospace and power gen. And that business and services and products that find its way to the market as a B2B business approach. If we come now to business number 3, climate control. Also there, we run 2 technologies. It's hydraulic flow control, thermal and sanitary efficiency. So, we offer complete solutions, partly tailor made for heating, cooling and drinking water. Consequently, to those products, the end markets are commercial and residential buildings. And the way to the market, those business found either via wholesalers or as project business where we do have tailor made solutions. Coming now to business number 4, Industrial Technologies. We run 3 technologies. We have fluid control, dispense technology and advanced mechatronics. So those products are engineered and partly custom made solutions. It goes for specific niche applications to regulate, control fluid majors, sometimes in severe and very critical conditions. So the end markets we are looking for is district energy and gas. You may have recognized that we have a bit less focus on oil for good reasons. We are focusing on the automotive industry, beverage, semicon and science and the general industry. And due to the nature of that business and their technologies, the weight to the market goes directly to the customer as a B2B business. If one would see where we stand at the moment, we have to improve our technology positions within the linked strategy. So we have defined the technologies we are looking for. We have 9 head technologies with 15 business teams. When you look at the regions and the end markets, Kristi said that it's not very homogeneous, and this is one of the actions we are going to take and develop for the future to have a bit more balance in regions and a bit more balance in our end markets. How we could achieve those targets? We have a focused sales organization and our global footprint, our key account structure, which brings things together and develop further markets. We invest in capacity, as Wim already pointed out, either organically or we can do that with bolt on acquisitions. More details of how we would like to do that, that will Arne Mornings, my colleague, will guide you through that. And I may ask him to come on stage. He is set by himself? Yes. Okay. Thank you, Oliver. Yes, as Oliver already mentioned and also Wim, we have at this moment 9 technologies where we focus on and we do that with for 11 end markets and we do that with 15 business teams, 15 focused business teams. And with all these business teams, we defined 5 year strategic growth plans. So they are all very focused. And in these growth plans, main part of that, of course, is also the direction with innovation. So they all prepared their innovation roadmap for the next 5 years. Now with all these internal plans, of course, growth plans, organic growth plans, we are also looking always to bolt on acquisitions to support this organic growth. That remains very important. Now besides these, let's say, internal growth attention for external growth, for organic growth, we also keep on focused on operational excellence and to improve keep on improving our operation internally and to improve our profitability. We keep on focused on pricing excellence. Very important to keep on pricing all the cost increase to the marketplace. We keep on focus on make or buy decisions. We keep on focused on manufacturing automation, SKU rationalization to optimize the portfolio, master data management, consolidation of locations, supply chain consolidation, it's never finished. We are here only for 50% maybe, but it's never finished. We keep on improving it, but it's never finished. It's the relentless pursuit of excellence. And besides these internal trends where we focus on, there are also some big market trends which we would like to stipulate. We have climate control, very important. And the electrification of cars is an important topic of that. Let's say, district energy, energy saving, we are one of the market leaders in district energy. In China, we take big, big progress with that. Urbanization trend, more houses, more houses with more comfort. It's a very important market trend. Raw materials scarcity, where we have additive manufacturing as one of the focus technology for the future. Let's say with additive manufacturing, we can also optimize portfolio because we need less slow movers. We can the slow movers, we can produce additive manufacturing. Internet of Things. Internet of Things. We have 12,000,000,000 connected devices at this moment in the world. That will grow to 50,000,000,000 in the next 3 years is the general thinking. There's a lot of OEMs who are playing in that, and we are in the heart of that in the OEM semicon equipment production. And then the globalization, co development, a very important market trend. Our big customers want to work with strong partners who can engineer products part of their product for them as a co engineering partner. Let's say, it's not only a standard product what we produce, we supply complete solutions and we are also in the heart of the engineering of that. With this Benz, that's an important, let's say, example where it was in the past maybe only a standard product with what we supply, but now we make complete solutions, complete systems for beer and soft drink. Now when you see all these market dynamics and all these trends with our technologies, we are in the heart of it. It's fantastic to see how all our combinations of technologies are also supported on top of our organic growth plans and on top of our operational excellence projects supported by market trends. We are around this everywhere. I don't know if you can read it, but let's say, water saving quality around raw material scarcity, climate change with floor heating, irrigation, there is a lot of dynamic. And our open culture helps us to exchange fresh thinking and embrace these new technologies. It keeps us ahead of the game. No matter how frequently or significantly the game is disrupted, We are in the heart of it. That's very important. Now and then with these focused business teams, 15 teams with 9 technologies for 11 end markets, very focused with their growth plans, their organic growth plans, including innovation roadmaps and also supported by the market trends where we are in the heart of it with all these activities. Yes, that will give additional organic growth with John would like to explain also a little bit more about it, how to use the Albert's strength to utilize all these opportunities in the marketplace. Yes. Thank you, Arnaud, for leading this slide, which we joined together as we try to share and learn as we presented already. I think very important that the Albert's strength, you can of course easy say that we have strengths which we can use as a group, but what are exactly the strengths of Albert's Industries? Well, I think next to the track record, as we are, let's say, allowed to say as of today, looking into the future of the next years, I think also the Alberts Way already explained by Wim with all our values, winning with people and that's very important. I think also the brand, so the Alberts brand, I'll come back to that later on, will be more prominent going forward in our strategy to make sure that we are all recognized as Alberts and also being known as Alberts will attract our employees and key customers also going forward. I think important also our integrated system offering and that we really join forces that we combine products and systems to really attract our customers, also having, let's say, the global footprint. Key account management has been mentioned already a few times, also combining the efforts, whether it's geography that we have, let's say, locations to support our customers globally or that we have a certain technology, which we can expand throughout the group and also learn from other locations and technologies which we have available or which we may acquire fire bolt on acquisitions to become even a stronger player in our market. That's very crucial for the future. I think our strong balance sheet gives us the opportunity to use our investment power. We see more and more that our global key accounts are looking for a strong, let's say, partner, financially strong, so a strong balance sheet, healthy cash flows and investment power to really, yes, attract the right people, but also to put in new technologies, new equipment and as automated as possible where we can. I think also the lean and effective organizational structure, I have another slide on that later on, also gives us the ability to be very flexible and be very short to the point, take quick decisions, whether it's on investments or hiring new people or expanding to other regions in the world. I think that's definitely where we are known for that we have this flexibility to decide quicker and quicker. And we also use our networks within the group. That will be another slide as well, where we really join forces, where we share and learn together to also speed up the cooperation within the group and also that will support, let's say, the healthy future we see as the focused acceleration, as we have mentioned before. It all comes together as you can see on this side the relentless pursuit of excellence. So that's really getting better every day and we want to be the best in what we are doing and we need the best people to achieve that. If we now look at, let's say, what we call the company passport, where we really get, let's say, nailing the Albert's brand essence, something which we got a lot of questions whether we choose the name of Albert or Albert Industries or any other brand name into our future strategy. I think what we have definitely decided and we'll see more of that next year as the rollout is planned for 2018, But we can definitely say that we combine here, let's say, the mission critical people because that definitely makes the difference with the technologies, the 9 technologies we explained before, but also the leading positions in our markets, that combination is very important. And the track record, the investment power, the trust which we try to give to our stakeholders worldwide to make sure that they like to choose us as their partner or even employees who like to work for us as a group. And also I think the culture to always try to improve as much as we can. I think that is definitely what we are known for and what we like to continue going forward. And even what we say here, learning from our failures. So where we did things wrong in the past or where we could have done things better or different, yes, learn from that and make it even better going forward. Well, back to the brand, what we call the creative articulation. So, our brand will be more dominant going forward. And we have said already here that every detail is important, so we like to be an excellent, let's say, producer of the products and system, which we have explained before. We need the best people to realize that. So in that combination and what we also have said in our logo already, you see it had a color red, what we say owning the red, that will be very important going forward. So that color combined with Albert as a name is the company passport going forward and the brand will be lived by our people and will be recognized worldwide and that's what we will definitely work on going forward and that will be presented into 2018. Back to the lean and effective organization structure, I think we can start with a small the leadership team, as we call it, the Albers leadership team, I think already mentioned by Wim that we have only 22 people in our head office. So that's still a small head office, although it doubled in the last 3 to 4 years. Mr. Avis is now looking at me and said, how could you have done it since I left you double the head office? But we did and I think for very good reasons. And I think therefore we are here today to present you the next 5 years. Not sure whether we could have done that without expanding, but I think in the right directions, we have done that. So the leadership team is more or less linked to all those 9 core technologies, which we have explained. So, the niche technologies, the 9 we show here, they are managed by, in total, the 15 business management teams. So, each technology has either 1 or several business management teams in their markets to support the group and the strategy, and they work together where they can, either within the technology or even between technologies, and also that is being stimulated more and more. And the way we try to do that is, of course, also linking the leadership teams to the leadership networks. So, for each discipline, we have created a network where people will meet maybe once or twice a year live in person, but the rest of the year, they may have either in conference calls or Skype or via other media, they have contact with each other to really strengthen, you could say, the fundamentals of our group. If we start on the top, so digital is, of course, a crucial element. So how can we digitalize in the world we are in and work together there? On governance, having people available on the floor to make sure that we are compliant on the governance and the compliance side as much as we can. So, that's partly legally driven, but also it's part of the culture going forward. HR Development, attracting and retaining our talents. They like to work for us, but also keep them working for you, maybe change their jobs every other year, go internationally. That's definitely what we try to achieve in the future, and we have to select those talents and make sure they are being kept happy and motivated to work for the challenges which we are all working for. Operational excellence, I think mentioned already extensively. Also there, we have a network of people joining forces and learning from each other. Of course, Finance and IT, not only because I'm heavily involved in that. I think here we have upgraded the finance teams. We have CFOs on each of the business teams. And also on IT, we have seen that bringing people and companies together and also systems need to be standardized and harmonized. And that's, of course, where we are in the middle of. We try to do that as balanced as we can because we know how disruptive IT systems can be for, let's say, the operations. So, we try to do that in the best way we can, but that definitely will be also on our agenda the next years to come and definitely spend more on IT as well the next years to support our business because that's the real motivator for that. While marketing, not only because of the brands, the company passport, but also in the marketing side, website, annual report, we like to present ourselves as a group, yes, more and more to see that we have capabilities which are much broader than maybe known to the outside world. Our key account management, very important. Pricing excellence, yes, being smart with your pricing in the market, make sure you use your niche technology positions in the markets to get the best possible price and make sure you have excellent service to your customers. And innovation, Arnaud showed already the innovation roadmaps, which are available now for the 15 business teams. Also that is a very important part of the strategy going forward, innovate ourselves out of the world we are in, get the competition running behind us instead of the other way around and make sure that we are, let's say, in the lead of many of those innovations and a few of those you will see this afternoon. Well, the objectives, maybe this is the slide you were all waiting for and the right part is empty. So sorry, Thijs, but there's nothing in. Yes, you thought let's see what they have put in there, but there's nothing in. But I think if Technics is working, Thijs, I will show you. There is definitely more behind this slide. On this slide itself is known. If we start with the worldwide leading niche technology positions, that's what we really are aiming for, the global footprint being, yes, let's say, better positioned in the market, but we are still using the strong brand names of the many companies we have in our group. And you may see only a few of them in the presentation before, but of course, we have much more local brands, which will merge more and more into lesser brands also to recognize ourselves better in the market. Creating the sustainable profitable growth, I think that's what we have done for many years also on earnings per share, but also making sure that we balance our risks also for our stakeholders, whether it's end markets, geographies, customers, so that we don't have one single customer as being a very dominant percentage of the group revenue. That's all part of our risk management to make sure that we have the sustainable growth going forward. Generates high added value margins, I think the innovation roadmap which we have also should help us to drive innovations, get higher margins for the products and services we supply to our customers and making sure with their strategic partnership, we get into the higher margin businesses. Operational excellence will help to further improve margins. Of course, organic growth, you can benefit from your leverage going forward. Some examples we saw already this year, yes, the excellent service to our customers that are all components to make sure that we get into the higher added value margins. And normally, most of that will drop to the bottom line as well if we continue doing that. Another very important way to survive as a company is generating very healthy cash flow. And in our definition, that's the free cash flow. So, how can we generate as much as possible free cash flow, So, we can definitely reinvest that into our business. And so, the capital allocation is crucial in this item. And so, where we try to use the free cash flow which we generate or we can choose, we either put more CapEx to support organic growth. We can do bolt on acquisitions. We can even spend more in R and D or in, let's say, the innovation roadmaps, which we have for each of the business teams. That is all generated from, let's say, the inside strategy going forward. And even if acquisitions would be there, if we can finance a part of even the total purchase price of acquisitions going forward, we think that's a good idea to spend our money. And of course, we will not forget our shareholders by still paying a dividend to our shareholders. So, there is no change on that topic. Well, then the financial ratios, I think that's important to understand. We had a few ratios before. What are the ratios today? Maybe not so much new in that respect. And I think some of you already wrote a note with some of these in it, although you never saw the slide. So in that respect, it has been a secret until now. So when I push the button, I think the first one is important where we did not have, let's say, real guidance other than maybe what was known in the market. So our goal is to reach an average organic revenue growth above 3%. So, we say average, which is, let's say, the average over the next 5 years. So, there will be years where it might be higher than that. There will be there could be years as we have seen in the last years that it could be a bit lower. That's not our objective. The objective is to be above 3%, but it's the average. So I think that's important organic growth to measure that on the average of the 5 year period. Very important that the profitability, so what we call our EBITA margin, so EBITA as a percentage of revenue, we have now put the bar above 14% to be reached in the next 5 years. Not to say when we will reach it, well as soon as we are able to reach it of course, but that's the target our objective for the next 5 years to be above 15% or 14%, which was 12% before. So, I think that's important to note. So, it's an update on that. The same for our return on capital employed. So, that's our EBITA. So, it's a pretax number divided by our total capital employed, which does include goodwill. It's important to mention that as well because some people are calculating with or without goodwill. And of course, without goodwill, it would be a much higher percentage, but we think we paid for the goodwill. So also let's stick to one definition. And the bar here we have put from the 16% before now above 18%. I think you all understand that those 2 EBITA above 14% and return on capital above 18% are closely linked together as were the 12% and the 16% of our current strategy. So I think that's, yes, in that combination a critical point. Remains the same, the free cash flow conversion. The free cash flow before interest and tax divided by EBITDA above 70%. So, there's no change there. Also, that may be a percentage which will not be there every year. Now it's the objective to be above 70%. That's the goal. Leverage ratio, also unchanged to stay well below 2.5. You may know from our covenants that we can go up to 3 times at year end or 3.5 times at midyear in the covenants we have with our banks, but we as management, we feel still comfortable to stay well below 2.5 and we have even been well below 2 in the last few years, but that's I think unchanged in the strategy. The last one also unchanged our solvability, so our total group equity divided by total assets. I think also that is important to show the strength of the group. And also there we feel comfortable to stay well above 40% of our equity percentage on total assets. Also to show to the outside world that we are having a strong balance sheet, that we have the investment power, it all comes together to the objectives which we discussed before and our strategy and making sure that these targets are being lift with all our people. So we are going also into our group in the next months to come, yes, to present this strategy, link everybody into it. I think we have a very good team in place now to support this and reaching those objectives in the next 5 years to come. Thank you. I hand over back to Wim to give you some key takeaways of what we discussed before. Thank you, John. There are key takeaways of the presentation. Yes, first of all, we've been transformed into a focused technology leader. And I think it's the last 4 years. We still have a lot to do. I think also we need the year 2018 to still do a lot, probably also 2019, but we have changed. We have changed to make a choice in niche technologies instead of regions. We have changed to make business teams or 15 business teams. It means we simplified the structure heavily. It means also that we have strengthened these business teams with CFOs, with supply chain managers, but also with innovation people, because when you bundle companies together in a business team, you have bigger companies, you can recruit better management. You can people give more opportunity. So you see in totally that our total management structure is much stronger than it ever was. And I will tell you, it will even become stronger and stronger because what we see is that we create winning teams. Winning teams, they attract the best people. And we get the best people more and more because we want to be part of a winning strategy. It's one of the facts that we grew 5% in the 1st 6 months of 2017. You see that others don't do that, and we do that. It attracts people. We see that. So being strongly positioned for organic growth will also from that point of view, through the focus, accelerate our growth, point 1. Point 2, there is still a lot to do to improve operationally. Pricing excellence, we are not at 50%. We started a pilot in Climate Technology, which is very, very successful. It started with the acquisition of Flamco, very successful. We are now spreading it out. Every executive team member, which are the 4 of us, plus 3 people, you will meet them in the afternoon, 7 people have one subject to drive through the organization. Our colleague, Maarten van der Zeen, he's doing pricing. So the coming years, we're going to make our pricing much more excellent than it already is maybe, but it's in the details. It's a culture. A lot to do. A lot to do in make or buy. A lot to do in Manufacturing 2.0. A lot to do in Supply Chain Improvements. A lot to do in SKU rationalization. A lot of things we just started. So still a lot to do by bringing things together. 3, very important, drive and develop niche technologies worldwide. So it means we have now the opportunity to go with the different teams to other areas in the world to conquer the areas where we are not there. So, bolt on acquisitions, we also look to these points where we can improve the position. For example, when we are not so strong in our advanced Megatronics business, linked to semicon in Asia, maybe we should have there a footprint, for example. We should maybe have a footprint in our Fluid Control business more in Asia or North America. So it's widening your presence, but very focused. And we already have targets list for that, driven by long term innovation roadmaps. Long term innovation roadmaps. So that means that think you start up this year will come to business probably in 2020, 2021. That's how long it takes. When you order a machine, it takes these times already 12 months sometimes. Before the machine is running, it's 14, 15 months. So when you invest today, it gives effect in 2 or 3 years. So a company you don't run by quarter, a company you run long term. That's how you create value. We believe in that. And so, the whole objectives my colleague Eigendal presented is when you want to go to higher return on capital, you have to be very disciplined in your capital and you have to gain value, otherwise it's not possible. Long term, that is the message. Then, point 4, I wrote here, did you know that 12,000,000,000 devices are now connected to the Internet and that in 2020, that will be 50,000,000,000 devices. Did you know that? Did you know that we have the possibility that in an electrical car, we can deliver 7 more parts to the electrical car than we do now in a conventional car? Alberts Industries, did you know that? You can see it this afternoon. Did you know that in 2,040, it's a long way, 54% of the electrical cars are in China? All studies. So we are busy with electrical cars. We're going to invest in China more. We're going to invest in residential homes. Did you know that in the coming 10 years, we have a shortage of residential homes due to the urbanization of people, due to the fact that we have older people who go to the cities. They want to have luxury homes. With flow heating, flow cooling, low temperature heating always will be there. We are full in the middle. We are a market leader in flow heating. Many, many opportunities. Also the smart driving is fantastic, but it all needs more chips. Now we are a big supplier to that industry, semicon. So this whole wave, we are in the middle of it, Alberts Industries. You saw the slide with the balls, coming the balls down. It was to wake you up because these balls are sort of a flipper. You can't do flipper. So these balls, they strengthen each other and create new business. And with our culture, our entrepreneurial culture, we create these businesses. Also, we decide very quick because we are lean. We decide lesser in oil, bigger in semicon immediately. That's the strength and the roots of this company, always. We'll never change. It's culture. Did you know that the most carbon footprint is actually the carbon's exhaustion, you could say, is done by buildings, is 20% to 30% of the total. We are in climate technology. We are in the heart of that. We get projects more and more because they have to be reduced. So the 9 technologies, important to know, are linked to the growth drivers and the market trends. Then our objectives, of course, everybody wants to see what are the numbers. But important is that we now put in a target for average organic revenue growth. It says something about our belief. It says something about our focus. And it is at least 3%. A further increase of EBIT and return on capital employed. And the next slide is actually wrong, I talked to my colleagues. The slide should be like that. It's like a rocket. It takes off. It takes off because we are focused in our business plans, strongly positioned. Then the second acceleration is the innovation roadmaps and the bolt ons, which further strengthen our business models, but very, very disciplined, not big things, not necessary. Small things which add which really create value, yes, no bullshit. Be very disciplined. Spending the money is easy, but getting the return, that is the big thing. And I know it is very difficult to get returns. You have to work hard for it. And then the additional growth drivers, which are there, a lot of people don't see that. We are really in the middle of many things, which just drive this business. And then the strengths we have. There are not so many companies who have this name, this track record. From 19,075, it's built up. Fantastic in 40 years, more than 40 years. The brand, the way we are doing business and then the integrated offering, We are able to offer an integrated solution system, which helps our customers to also divest to us or to, let's say, outsource to us. And we have the investment power to invest then with a global footprint. There are not so many companies who can do that. Strong equity ratio, and then a lean and effective organization structure. So that means we keep lean, 15 business teams, very quick on our feet, so we can go to the many, many opportunities. And then control it. So we worked a lot on the control of that the last year. And a network of fast learning best practices. In this world, when you want to survive the coming 10, 20 years, you have to be very quick in innovation, very quick in your end users. You have to be quick, decide quick, innovate, think of your customer, food on the floor, very efficient and decide every day. Do that every day. And that's our culture. Again, the Alberts way, winning with people, is the most important. Thank you very much. And I hope we have a lot of questions, and I also hope we can all answer them. Peter Hollis of Kepler Cheuvreux. Maybe for John on the financial objectives. So the 3% organic growth at least 3% organic growth and the more than 14% margin. Starting with the growth, can you talk about the operating leverage you get or the incremental margins you make on the at least 3% top line growth? And then you also talked about operational excellence and you indicated you're only halfway there. So, could you maybe quantify the margin uplift you might get from further operational excellence improvements and measures? Yes. For the operational leverage, of course, it depends heavily in which business segment the organic growth will be. We have seen that also over the last years. The highest operational leverage is mainly in the material technology activity. I think nothing new to you itself. So it differs heavily, but normally if you see that organic growth above 3% and the drop through, as we call it, is normally between 15% 20%. I think that's also what general analysts are counting in. Might be a bit higher for some of our activities or even a bit lower in others. You cannot give just 1%, which I think that range is pretty accurate. And of course, operational excellence, but also that is something which we already are doing, although we are only halfway, as Wim explained. We still continue improving operational excellence, but of course, it gets a percentage on an even bigger number. And of course, if it just continues that, yes, that also will contribute several basis points to our EBITA margin going forward. So I think the operational leverage plus operational excellence, those are the 2 main drivers to get above that 14% objective which we have given. And whether it is maybe half inorganic operational leverage or half in operational excellence, yes, that depends, I think, even from year to year and from business to business. But I think in general, we have to step up to above 14%. So you can almost calculate if you take the 5 year period what the contribution should be to get there. But also that will be different I think from year to year. I think it's a healthy assumption that both should contribute going forward to our new targets on that EBITA margin. Of course, that will drive return on capital at the same time. Other aspect is the optimizing of your portfolio. So the moment you get a better market position, you can ask a better price to get a better margin. So it's portfolio, operational excellence and leverage. But actually, pricing is also very important. So when you get a better position, you have lesser traffic of competitors than have the guts also to ask a higher price. We have a lot to gain there also. And the objectives I want to say, our goal is to achieve them as soon as possible. We don't say when. Important. Maybe follow-up on the innovation roadmaps that you have. What does that mean in terms of R and D spending in absolute amounts and also as a percentage of sales? Will there be some leverage there? Or might we see that growing in line with the overall growth? I think you've seen it already. I think we see that R and D is not only in CapEx, it's also people. So I think that's correct. I think you will see more that we probably automate our factories more, that we choose more what we want to produce, that we automate. But therefore, you need more engineers. These engineers are often busy with, of course, the machinery, but that's often linked to a product or a system. And it can also be that we say now, for example, regulators, we already assemble very automated, but I just was there a month ago. And they still found new ways of more efficiently assembly that. So we need lesser people, but therefore, we have 2, 3 engineers. So I think this you will see more and more. So probably you're right, the spending and the investments in engineering and R and D will go up. So you get a higher quality business. And then I think it was Arnaud who mentioned Additive Manufacturing. Can you shed a bit more light on what your expectations are and where you currently stand? Do you already have some of this in house? Or is it still mostly developing? Or a bit more color there. Yes. Let me answer that question. We are since the last 18 months, we are heavily working on what is our best way to get into additive manufacturing. We don't have both machines to produce something, why we didn't do that. We didn't do that because we think that the business is not ready and right at the moment for doing that. So we bring ourselves up to speed, and we think that in the upcoming 2 years, we will be there a step further. So we're investigating internal opportunities, whether we could produce things we are producing better and more efficient and more advanced with a better outcome. We also look for Arno mentioned that in his presentation that we may could do slow movers with that type of technology, where that seems to be appropriate. And on top of that, we also are interested in developing in an outside arborts business. There are several markets we are into. We have presented the market like power gen, like automotive, like aerospace. They are all looking for different produced parts. We are with several technologies involved in that. If you look at that business, what is not finished at the moment all the entire product chain starting from the powder, over engineering, what is the best machine and what is the best pulse treatment. We've been in a couple of R and D circles with our post treatment processes. So and we are quite convinced that as soon that business takes off as it will take off, that we are an integrated part of that industry. For example, we had a booth in the world's biggest fair called Formnext in Frankfurt. We've been there as Arbus Industries with a couple of different technologies with our post treatment processes, and we got more than 70 people asking us for being involved in post treatment processes. That's either end customers, machine producers or people developing in that industry. So we have some expectations, let's say, for the upcoming 2 years to have their position, which suits our business and technologies. It's a great potential for us because we have 100 service network locations in the world. So every additive part needs to have a post treatment. So maybe we would add the competence of additives, and we are looking for ways. We will do that in the coming, I think, coming 12 months. We will find a solution. We can add that to our networks. This is amazing. I also visited a few companies who do that. It's great. It's growing fast now. So we followed it already many years because it's not new, additive. It's already there for 30 years. But now it's used more the technology advancing. So this will be a great opportunity. But you must imagine, when we could make our slow movers in sorry, in installation technology, where you could make them once a year, you can make them every week, so you don't have to have the stock. So parts which we use 100 per year or 1000 per year, You can make them in 1 week. It's possible. Cash. Could be. We're looking at these opportunities. Very interesting for us, and we are on top of it. So it's it's nice. Final question then for John. Working capital, any idea where that can go eventually? Maybe not the target, but give some indications where that metric might go. Yes, we thought adding one objective already to the list was already enough, but I think there is another maybe pending on working capital. I think what we have seen, because I think cleaning up the portfolio of products is still ongoing on the operational excellence side, but I think also on the I think the total management of working capital where we try to manage especially our inventories because that's the biggest part of our working capital with the distribution centers and the new way of logistics, IT systems, if you still need to upgrade. So also here, we definitely have an internal objective to further improve. And then especially the working capital ratio to sales, if you look at the last few years, we have been around 18% to 19% working capital to revenues. We definitely have the goal to further lower that. I couldn't give you an exact percentage, but our goal is to make at least more efficient use of our working capital definitely by the time that we have implemented many of these operational excellence projects, IT improvements and also making sure that the distribution to our end customers because that is still changing as well and look what's happening with the Amazons and others in this world. So how will the distribution footprint look like in the next 3 to 5 years, which may in certain product ranges maybe have a need for higher inventories, more safety stocks and especially in '17, we explained it already at the half year numbers that by introducing all these innovations, you will start with a full range of products with a rather high level of working capital to make sure that you surface the market and your customers to the best possible levels. And later on, if the volumes are increasing, it nails down again. So that depends a little bit on the many topics on our agenda. But the goal definitely is to further improve our working capital. But even if the higher working capital is needed for better service to our customers, I think that still remains much more crucial than maybe a bit more working capital on our balance sheet at the end of the day, especially with the cash flow we generate. There is no worry on that side. Yes. Martijn den Drijver, NIBC. You already mentioned looking at the longer term investments in IT, investments in operational excellence, higher R and D. Should we then consider 2018 to be a year in which profitability increases will be very limited or even stable to negative? That would be the first question. Yes, we can't say anything about 2018. I can tell you we're still very busy with 'seventeen. So let's first finish that. And but I think the trend, what we said is that when you innovate more, and I told that many times already, you're also investing in the organization. So the question came in the past, how can it be that your added value goes up with so many percentage, but your EBIT is going lesser up? That has also to do with the investments we made the last years in management, in more sales, in more R and D to create more organic growth. So that will continue. I think this year, we said already at the midyear numbers, we did a lot. It can be that some years, you do less. But as you know us, our goal is creating sustainable profitable growth during that period. So that will also be the goal in 'eighteen, 'nineteen, 'twenty and 'twenty one. Okay. And then just you're we're used to you to Albert saying, in terms of the outlook, profitable growth, and then we had the EBITDA target, and we had the ROCE target. I was just wondering, you're obviously confident about the near to medium term, but why have you introduced an organic growth rate? Why set yourself such a target? Well, things were going pretty well for you for Alwidge? Yes. We hope also that in the future, they go pretty well. But no, I think it's why did we do that? Because I think it's we think it's important to mention. I think we did a lot of changes in last year. There's a drive to conquer, let's say, the positions which we have now gained. In some cases, we have a very good position. So we can create a leading position. And the goal of having a certain organic growth target, yes, that is also what we go for. So yes, we share that, that's it. It's the same. You could also say, why don't we mention an EBIT target of above 10% and keep that for the coming 50 years? Yes, it's the same. Above 14% is the same as above 10%. Yes. I think as a company, you should also tell what your ambitions are, and this is it. And as you know us, we always try to achieve that as soon as possible. So we also believe in the route we go, and that's why we have it as an objective. But a lot of things we don't have as an objective, but this is one we added. 4 years ago, we had cash was not an objective. And cash, I can tell you, is becoming a real objective, but that takes time. It's also very good for the internal organization to have certain objectives. We have to grow. We have to conquer market positions. It's a must. When you do and don't do that in a world of the future, in my opinion, you are gone. It also helps in the culture. Also when you talk about the values, of course, we have financial objectives also to be presented to our own employees to make sure that they are motivated to go for the targets to be reached, and not all those targets are put on paper. But I think everybody knows where to go. And this organic growth target definitely helps to align the organization going forward. So I think it's a good one to add for both internal and external outlooks, I would say. You also have to take into consideration that even business, which normally was more a local business, becomes more and more global. There are not so many companies who could scope with that. Even services or product you normally serve in regions, you don't do that in the future. The key accounts in for example, in automotive, the T1 and T2 suppliers, they're looking for global supply chain. And this is also one reason why we think we could grow in the future, and that's the reason why we set the target for us to do that in the upcoming 4 years. Luuk Van Beek, Degroof Petercam. I have a question about acquisitions. In your new strategy, you talk about bolt on acquisitions. In the past, you also added quite a lot of value by buying companies with a lower margin like Flamco and then lifting them towards your group margin. Is that something that you want to continue to do in the future? So is this part of this bolt on strategy? Or do you think that opportunities for that are becoming more limited? I think the more we look for, let's say, supported acquisition in our niche technologies, the more, of course, also it will be with better margins. So we are actually looking for bolt on acquisitions with good margins. So not the type where you can improve the margin, but companies that add a high margin that you can grow by using your network basically? I would say we look for bolt on acquisitions, which can accelerate our organic growth, and they will be supportive in our margin. That is what we are looking for, yes. Okay. That's clear. It depends. When you have an integration plan, you can improve the margin pretty quick. What was the impression of Flamcon and Praklon? Because we knew the business. Yes, it could be. But we also know it's hard work. So you have to really make that choice. Flamco and Pregnon, it's hard work. I think we come there, what we said. We really come there. That is a choice. So it depends also on the business you have combined with the bolt on acquisition and then the plan you have to bring it to a higher level. It depends on the management you have. Do they really are able to do that? It's a lot of factors which play in that. So but it could be, but very important is that it strengthen your strategy. The second thing is that, as always, that the management is able to drive that integration plan. And but what it also says is that organic growth is by far the nicest growth you can have combined with these acquisitions. We have a lot of opportunities ourselves, so it's not a must to do acquisitions, but it can sometimes help you to get a better position in a quicker time. And then calculate well, be very critical because money spent is easy, but getting it back is more difficult. Hello. It's Jaap Anders from Lucerne Capital. On the 3% organic growth targets, what is sort of the end market assumption within that target? Because it seems to me that currently you're actually growing a lot faster. There is this is a long period. So when you say average 3%, you make for yourself, let's say, a sort of observation how the markets go. But I think the organic growth is based out of mainly three things. It's, of course, the markets, but these markets can differ. We have 10 end markets, so some go up, some go down. So actually, that's a small element in this 3% in my opinion. Another thing is pricing. The easiest way to grow is optimize your pricing. That will be, I hope, an important element. We're going to work on that. The third thing is volume, that you sell more on volume or new products. And this combination brings that you achieve above 3%. So the element of the markets is pretty low. And due to the fact that you look for a longer period, that you also can have lesser backwind, as we have now, is included. Okay, perfect. So the implicit volume assumption is quite low. It's really pricemix. And then if the markets still where they are Price mix, volume, main parts. Yes. And again, it could be that we have years we are higher. It could also be that you have years which are lower. And we said at least 3%. Okay. That's very clear. And then if we move to these key accounts, because you did win sort of these large contracts in 'seventeen, what is the magnitude of these key accounts as we move to 'eighteen, 'nineteen, 'twenty in terms of the organic growth contribution? What was your question then? What was the question? Well, sort of the magnitude of these key accounts on the organic growth as we as these start to hit the numbers. Paul? Yes. Those key accounts, they play obviously a role in the growth rate. One could not say that only having 2, 3 big contracts that they represent the whole 3% we are looking for. It's a mixture of everything. And in each of the business divisions and business technologies we have, we do have key accounts we are working on, and we are successful in creating bigger contracts. But this is not a we don't have a number which is related to one specific key account. We have expectations what we are going to do, and that is part of the entire story. Okay. But it felt to me that the key accounts is really something new to the Albert story, and we haven't really seen it in the numbers yet, correct? That's going to come into 'eighteen, 'nineteen, 'twenty. The ones we scored in the last 6 months? Yes. So this too for a big part, yes. Well, we'll look forward to So we make a good start, hopefully. Perfect. All right. Hopefully, hopefully. Because also with key accounts, yes, they can sometimes say the volumes are a little bit less. But I must say these contracts don't look so bad. So that is correct. But let's see. All right. We'll look forward to that in the Felix Veenan from SFO. Wim, historically, I think, Alberts was really a group of many small companies within a very strong group. And you've collected these small and mostly entrepreneurial companies over the last 40 years, as you said. I think now with the strategy that you announced where you're going to put the Alberts Industries brand in the forefront and probably take some of these more local niche brands back. Is that not a risk that you lose some of these entrepreneurs who probably have built some of these smaller brands over their career and what probably attracted them to Arbuths? It's a very good question. I fully agree. So it's I think the success, which we always had and we actually have, is all made by all these companies and these names. But when you have let me say it how we do it because we didn't start we don't start going to tomorrow. We started already 3, 4 years ago, but even before that. So our philosophy is when you have the same technologies, let's say, we have a fitting for a press, where you have a pipe and you press that, you have a connection system for that. We had a time, it's not there anymore, that we had 8 brands for the same technology. That makes no sense. So you lose a lot of power. So you should choose the best brand product brand you have. In these circumstances, you can optimize your branding because in this case, the money was spent 8 times on different brands, product brands, and now you spend it one time. In combination with the Alberts mainly organization name, not the product brand, organization name, you strengthened your whole pitch and portfolio to your customer group. That's the idea. So we will product brands are very important. We will always keep them. But we will look for the best ones and not shatter our investments and not shatter our energy. Do we need a local one for niche? You can always keep it at the local level. So but you don't use it as a European level or a global level. So you have to be flexible there also a little bit. But in the end, it's a migration. You have to do it very carefully. We did it already last 4 years. And we don't want to ruin business at all. But we have to align more what we did, and we will keep on doing that. For example, Flambco is a very strong name. It is stronger than other names. But sometimes we have the same business. So why not using that one name, product brand? But we still use Alberts Climate Technology, but we present ourselves to a big, big key account worldwide. You see, we need to use more the combination. It's a big strength we have. We actually not used so much till now, more and more. May I add in one comment here? You said that we may lose the entrepreneurial spirit of the, let's say, local organizations of the local companies, which we have acquired. And I would say it's the opposite. It's not a strong top down approach. We are driving here that we say, well, tomorrow, Heureka, we have a new brand and you take that, please use Arberts instead of your local VS8 or AHC or whatsoever. It's an approach which comes from the business. I see that world is changing. It becomes more global. So people have a demand for having a different appearance to the market. If you look at, for example, automotive, if you look at the project business in installation technology, A part of and one reason or one of the reasons why they're choosing beside our good quality and the good services we are offering is that we are a strong company, which has a global footprint and has a principal good appearance to the market. So they would look for the strength of the balance sheet. So and for that purpose, it helps local business if they use, when it seems to be appropriate, the Arbets brand as a brand which demonstrates that what is required from the market. May that put that a bit in a more understandable context why we said why we have to go here both ways. What we faced also is a lot of internal requests to use that name. So we were also a little bit forced as a team to find a solution for that. When you look to our Dispense business, you talk to very big key accounts. They are waiting more and more to use that Albers name in combination with a fantastic product brand like Taprite or DSI. So we still keep that, but it's a product brand. But they use the overall company name because we can say, hey, look to albus.com and you see what we are. So it's the combination. But it's a very careful process. We took the time, and we take the time. Don't ruin business. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Because it's more and more combined offering. So also like Wim mentioned, the Dispense business, yes, they go for a system where they need all the different technologies to supply one solution for the customer. So there it helps to present yourselves as Albert's Dispense Technologies. And then, of course, you represent still the product brands with the competence behind it, Taprite, the Ezeife, in servers. So there it helps. So and there you get questions from the management itself. Yes, we would like to use that. So the big advantage is you pitch as a team. So the reason why we also got these 4, 5 key cards for the last 6, 7 months is that you pitch as a team. You pitch as an Ambers team where the products distill the strength of the product brand. So then you gain much more yes, you have much more face, much more possibilities. Great. Thank you very much. Not losing the entrepreneurial spirit. Very important. Thank you very much. And then one other one to John, please. You touched and mentioned that you're on the digitalization agenda and that you overview the IT, etcetera. So could you probably just give us a couple more examples in terms of within the disruptive world that we live in with Amazon and with everything that's going on, what you do in terms of digitalizing Alberts on the internal side, but also towards the customer in selling, using stuff like Salesforce or just getting being on top of this? Thank you. Yes. I think what we already have rolled out and we are still, of course, improving that, we are now getting more into, let's say, CRM systems, so that you get your customers aligned not only per country, but now much more also internationally. We are standardizing those systems both in Europe and in the U. S. I think that's an important one to be closer to also your key accounts and share information between companies or various businesses. I think on the distribution footprint, where we already made some, I think, announcements the last few years that we are changing our distribution footprint, especially in North America, where we reduce the number of warehouses, where we use, let's say, efficient IT systems, warehouse management systems to get our products shipped to our customers, yes, more efficient and quicker to get, let's say, also distribution channels aligned much faster than what we did before. And maybe parties like Amazon or comparables, yes, may also take up products produced by our own companies or even by competitors we already see, where the distribution will be done by others, where you even when you are at home, you can order, let's say, a special product from 1 of the companies. It already is shipped to your house, and you only need the installer to install it in your house rather than the installer goes to the wholesaler, buys the product, comes to your house and installs it. So yes, all those trends which we see happening around us, yes, we try to link in with our system that we at least are ready, whether it takes a higher speed going forward. We definitely think it will speed up, although maybe the installation world seems to be a bit more conservative, you sometimes think. But then it can be rapidly exploding going forward. So I think in all these areas, whether it's on e commerce or distribution footprint, our IT systems need to be updated and sometimes even upgraded, especially to link also our systems to our customers or even our suppliers. And so more and more you see that customers would like to see where their products are in the process within your manufacturing or even when they can receive your products, so they can maybe also align that with their internal shipments or combining certain deliveries with the products they buy from us. And so that is also linked to what they then call either the EDI system sets or the electronic data interchange of information, but also vendor management that you really manage the inventories of your customers, and they have, let's say, the opposite situation as well. So all our systems need to be updated and upgraded more in that direction. Partly we have done that, but there's definitely a way to go, as we explained in our strategy, the next years to come. To follow those trends, I think digital is much broader. It's not only IT. It just goes much faster and quicker than we may all see today. And therefore, I think we have to speed up here and there to make sure that we keep pace with what's happening around us. It's Erik Viermann of Kempen and Co. Thank you for the update so far. I have a follow-up question on the innovations. As I remember correctly, you don't you do not yet specify your R and D expenses, and I think a lot goes through your OpEx. And already year to date, a lot of R and D was already spent through your OpEx. Would you be able to give a bit more granularity on that amount? And what was the impact on the margins year to date? And the follow-up is, since you mentioned you want to ramp R and D expenses up, would you consider giving a breakdown or at least give the R and D amount next year so investors can see the margin expansion better on an underlying basis? First of all, we don't want to make more expenses. We want to make more innovations. But to make more innovations, you need to invest. So it's an investment. I think what we said earlier is that we have roughly 3% to 4% we spend on R and D. We mentioned that even in our annual reports. We always did that. I think the change is only let's say, the migration is that you focus it much more. And by focusing and also getting, for example, certain key accounts, you accelerate that investment to a higher level. Yes, and we always took it in the costs. We have a lot of companies who activate it and who make it take it out of their numbers, and you get a sort of EBIT with only with 10 things you have to take out the EBIT, we always put it in as we always did, and we will keep on doing that because it's part of your business. When you want to grow, you should invest. Yes, so that's how it is. And what is the exactly number is probably we will not announce that next year because it's integrated in all the businesses. But it will we will invest more. That is the signal. We already do that last year, this year. I can tell you because I tell nothing different than I told mid August is that for the 2 projects which we have scored in the beginning of the year, we took in more than 50 people, 20 people for machinery to operate and 50 engineers and 0 revenue this year. Now these things, yes, you have to balance that. But that's how you that's R and D. So it's expenses, but it's investment. It's not an expense, it's an investment. You don't create more organic growth when you don't invest. And then it could you first have to invest and then you grow. It's not the other way around. Okay. And in terms of investments through your CapEx, has anything changed in terms of your long term outlook? And can you give a bit more detail on, let's say, CapEx as relatively to your depreciation or relatively to your sales? [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Yes. I think what we already have said also now with the strategy going forward that we will see, let's say, a higher CapEx level compared to depreciation. We had a few years where that was more or less in line the last 2 years. And also in 2017, we already announced that it will be a higher number on CapEx compared to depreciation. If we want to grow organically with the objectives we have shown today, yes, it's pretty obvious that we will spend more on CapEx. And CapEx is really, let's say, in equipment, machinery and innovation related. And next to that, we of course, we'll also spend more on IT, as we said. That's a bit outside the scope of the definition, but there will be more on CapEx compared to depreciation to fuel the organic growth. But of course, that, yes, will be looked into per project, what definitely makes sense, what is the return which we calculate on those investments. I think that is not different than what we have seen before. But I think it's a good development to put more of our free cash flow in CapEx developments to support organic growth. And that's the goal for next years to come. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And all the opportunities we have, because therefore, you invest. You invest because you see an opportunity or an optimization. But a lot of the investments will also be for new products, for new customers. That's why you do it. So you accelerate your growth. Okay. And we still want to reach those targets on return on capital. So we are always looking at, of course, the right balance between the return we get. It's not just spending the money because that's easy to do, but really get the real return on those CapEx projects. And we have a lot of those also linked to key accounts, but also in general, spending the money and getting the return in an, I'd say, reasonable time frame. Yes. And on your group guidance of organic sales growth, obviously, above 3% in your EBITA margin target, would you be able to give a bit more detail per division on how you think that will develop going forward? Arnold? Yes. Let's say for let's say, what do you mean exactly with the details per division? Well, yes, in terms of growth, do you think it will be skewed towards 1 division? I mean, you've talked a lot about Industrials Controls, the step up in same ease in automotive. Good to grow BSQ towards that division or towards the Building Installations division, for example? And also on the margins, will be more skewed towards industrial services or more towards flow control, for example? We should be all high in the booty. Everybody should help, but the room. All should be higher than 14. That's our goal. But of course, as you know, in certain markets, you have a much more niche than position like controls or like industrial technology. So there are no divisions where you feel you, let's say I don't say we will reach that. I said that when you it's difficult to say we end up after 5 years there at 13.2%, and that segment will be $15,100,000 I think what you see already now is that in the different segments that one has more potential from a margin point of view than the other one because one is also diluted by an acquisition, for example, in the business of Oliver. The material technology, we already had 14.5% in the past, and we were diluted that time by Ampraglond. So of course, the potential is higher than 14 there. But in general, we go for all of the simple answer. And also for organic growth, we have also said that although it's 3% for the group, but if you look at the first half year results where we had around 5 percent organic, that was more or less split evenly between the 4 segments. That will not be the case every year in that respect, but it's the goal for everybody in the group to have organic growth above 3%, no matter where you are in building installations or insulation technology or material technology. It's for everybody. That's easy if you have group targets. Everybody should follow the group target because if you reach the group target, as Wim said, it will come out at the end of the day, just mathematics. So also the business plan we make, we make to optimize our portfolio, optimize your pricing or whatever you do. That's our goal. So and of course, in one business, it's different than the other. That's how it is. Okay. Zooming in on your proposition in automotive, because you elaborated a bit on that and the transition towards electrical vehicles. Could you remind us what is the what are the things you do now and the proposition you have towards that market towards that end market? And how what do you expect the ramp up will be in the upcoming 5, let's say, yes, 5 to 10 years? How you expect the margin the markets to transform towards EV and what your proposition will be in the longer term? Yes. Automotive, you said when everybody is talking about electric vehicles. How many vehicles are sold in Europe, electrical driven? Not so many. Everybody is working on developing those. And if you look at the development projects we have, one could conclude that the development into electric vehicles offers more chances than threats. A lot of business divisions we have, we get requests, we develop projects, and we expect Wim said that already in the presentation that we have 7 times more parts in electric vehicles we could do compared to petrol driven vehicles. Mine is a simple explanation. It's electrical system. Yes. It's electrical. Hybrids. Yes. And New connectors all. It's heaven for us. That sounds ridiculous, but it's still. Also, if you look, for example, in China, where we just recently launched a surface treatment facility, which was finished at the end of 2014, we in China, the development of electric vehicles is totally different than it is here. It goes much faster because the government sets real target for the bigger cities to have certain percentage of electrical driven vehicles per city. And there are 2, 3 companies who are driving that business. It's companies like Build Your Dream or NIO, a relatively new company or is it Tesla. We all make already parts which find its root cause into those vehicles. So we are quite positive that we are with that position we have in China with surface treatment and with precision stamping in the southern part of China that we will play a significant role in the development of that business. And if you look at Europe, the let's say, the politicians which think about that, that's a good way to develop that forward, there will be an interim technology called hybrid. Everybody knows that. And that's heaven for suppliers because you have still the petrol engine and you have the electrical engine. So you have both. So we've been quite positive with the development of that. We do not see that development as a threat for our company. No, it's a threat. It's a big opportunity. But full electric cars also have other challenges like cooling, the cooling of the system. In normal petrol cars, you have a cooling fluid, which you can use. You don't have it in a full electrical car. So we will explain you more about that in the afternoon with some nice innovations that we have on that fuel. So it gives also a big opportunity for new solutions for new technology. For example, if you look at the T1 supply chain, they're all developing the new product, whether it's pumps or whatsoever, into electrical run devices. And they're also looking due to the fact that electrical vehicle is more homogeneous even if you have different models, so that you're looking for unique products. So we are working on 2, 3 products which we worldwide launched for cars as of today, but also possible to use for electrical vehicles. So the world will change. And we're looking more for global footprint, simplifying the supply chain and simplifying the range of product to have compared to petrol driven cars. Nerek Fabiese, Evaluation Capital. Following the discussion on CapEx and the ambitions and also following some years where overall growth was quite limited, can you share with us where you have some ample production capacity left in the main product areas before you need to step up investments to reach higher volumes? I think when you go through the businesses, I think we I think in Installation Technology, we still have some capacity left in certain product lines. I think the product lines, which grow very fast, which we saw last years, for example, the factory you will see this afternoon, we are fully loaded. So we have to we already invested for new machinery or quicker machinery. It could also be it's not always that you extend your capacity. You also make the equipment better. So it's a combination. We always try to have the combination. I think in the area of Mr. Jager, I think we have some capacity left in the service treatment, but other areas already pretty full. Yes, and on the other side, maybe some left. But here and there, you see also that we combine efficiency with some capacity extensions. But I think the point is coming more also that you will have to invest in the new customers, which you can see as an innovation or capacity extension. It's often a combination, so it's difficult to I think the question was also asked 45 years ago, that time when we were in the construction at a low level, and we said, yes, we still have 20% to 25% left. So everybody of you thought, hey, leverage. That is still the case in certain areas. So when you pull through products, you still that's still the case to optimize. But let's say it's halved. Let's say it halved. But it's actually too simple to say. But okay, you want to have some answer you can do something with, but because the market is also changing. So when you have capacity for valves and you are full with connection systems, for example, yes, you pull through the valves, but maybe you need other valves, so you use the equipment another way. So it's And then maybe on But still space left. Yes. So on that To increase the margins. So on the CapEx, yes, so assuming, let's there's a number of €130,000,000 €140,000,000 that you're probably going to need going forward, How much of that? Yes. It goes in waves. So probably the coming years, it will go up. This year is already going up. 'eighteen, maybe 'nineteen goes up. But then you come to a period, which is logic. There was someone who wrote a column about it some years ago. He wrote a column, a paper column about it. That investment is waves because you invest more, but then you have to execute all these projects. So the management is not even able to get it all executed and get a return on that. So then normally it drops a little bit. But it says something in general about the opportunities we have for organic growth. That's true. And how would you divide that number if you categorize expansions, improvements on existing products versus new innovative product categories? Yes. Very difficult, I would say. But maybe, let's say, we use a little bit more than half for maintaining what you have. And let's say, the other half is split in 2 for maybe some capacity innovation. And the other half is roughly your improvement you make. We always said 30, 30, 30. But probably the 130 is a little bit higher. And I mean innovation and capacity expansion will be a little bit higher than probably in the past, Like difficult to say, yes? Because I personally look at every machine that is not only a capacity. It should be a much better machine. And hopefully, you take one new one and you kick out 3 old ones. So you have lesser repair costs and you go to the best technology. So what is that then? Capacity expansion? Or is it operational excellence? Mr. Verbisen, you tell me. The last one, probably more than it's not a new product, but it's Yes, it's both. So yes. Thanks. Petrogluks, Kepler Cheuvreux. A couple of follow ups. Maybe starting with a question that was raised by Peyab on the organic growth. You mentioned the importance of pricing. Correct me if I'm wrong, but the perception I have And volume, right? And volume, but focus on And the market. Yes. But my question relates to the pricing. And correct me if I'm wrong, but the perception I have is that historically, the pricing was mainly a reflection of what happened in terms of raw material pricing. Do I understand you correctly that, that is about to change or is changing, that it will be less dependent on what happens to the raw materials and should put a more structural driver then? [SPEAKER JACQUES VAN DEN BROEK:] Correct. Exactly the case. Yes. It's both, yes? So make sure that you cover your increased raw material costs, which has been definitely a big issue also on the agenda this year because of the increased raw material prices. And next to that, doing, let's say, the smarter pricing, you can leave out the raw material component of that to make, let's say, a higher margin on your products, both the innovation products, but definitely also your existing products. That will be a combination of the 2 that you drive the margin. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] It's also a culture. It's value pricing is a culture. You have to train people. It's a long road. But I give you a very simple example, which we had 2, 3 years ago, yes, when we also acquired Funko. When the price of a box of products, which you deliver in 4 weeks, is the same as a bag which you ship in 2 weeks or 2 products which you ship in one day, then you lose a lot of margin because you give an additional service. This is just a simple example. So a box in 4 weeks, you can order, you can plan your production. It's a complete box. It's, let's say, 30 products. But when you deliver a bag, it's only 5, and you deliver it in a shorter time. So you need more stock. So you need to that is all value. That's a simple example, but this you have many examples like that. So it has to do with how you sell your system or your solution or your product. In the meantime, when you have lesser when you are more unique what we achieve with our portfolio, more unique worldwide position, you can ask also higher price, but you must also be able to sell that. So it's actually also a sales training. There are a lot to do there. But it's not only pricing, it's also volume. It's also market. And especially when you offer more system solutions, it's even more incomparable with other things. So there you also have a big opportunity. By the way, you must also be careful with selling system. What Arnaud says that you don't ask too low price because you do a lot of things, which so you in general, what you said is correct. It's not only raw material, it's driving this excellence. It's excellence. It's a culture. Okay. And then on the bolt on acquisitions. Of course, Albert now is a much bigger company than 5 or 10 years ago, and you will continue to grow. What do you consider to be bolt on? Is it EUR 100,000,000, EUR 250,000,000 EUR 500,000,000 EUR 500,000,000 We don't set goals separately for that. It goes like we know where we want to grow, yes, where we want to focus on in the next years. And of course, when we find the right targets, we will go for it. But we don't set ourselves a goal for this is the minimum amount of equity we need. But we would like to do, of course, always a few per year. That will be nice. Okay. And in case you don't find the right targets for the right price? Then we don't buy. But then if you deliver on your growth and your margin ambitions, then we will see your balance sheet gradually delever in the coming years. And you might even end up with a leverage ratio closer to 0 rather than the upper end of your up to 2.5 I'd say we still see enough opportunities in the bolt on acquisitions. So we don't count on that specific case if we don't find them. But the only thing I'd tell you is that we don't, but we don't need to buy. We have enough growth plans to focus on ourselves. And when we find the right targets for the right price, we will buy them. Still, if you would not be able to find them or not at least not at the right price, would you then consider attaining the or maybe stepping up the cash return to shareholders? Is that something you would consider, increasing the payout or It's always what we said. We said always, first is organic growth, CapEx investments, which we simplify finalize is growth. The second thing is acquisitions. And the third thing is organic growth and acquisitions. So we continue that. And when the moment is there that we have, yes, so much cash, which is not usually used and we have the feeling that the coming years we will not be able to give it a good return, yes, then of course, you have other methods to do that. But it's not goal. But yes, it's the other hand, we don't buy things which are by far too expensive or we don't get a return, which we like. But if you give one comment to them, and if you look at the diversity of technologies, the diversity of end markets and regions, So the likeliness of not finding anything to grow is more on the low side. Okay. That's helpful. It would be that you have some years last year, we did 4. This year, we did 2. This year, we're very busy with all kind of organic growth initiatives. So you look also to the management, how busy are they? Are they able to integrate an acquisition? When we did in Pechelon, we were pretty busy at this site. So we didn't do so much acquisition. So we you also are much more looking to other side. So we did Dispense too. They are very busy. So now you look to that's the nice thing of the model. Yes? But we have really lists per technology, and we are having, I think, Arnaud with his team, which is, by the way, only one person. But and he's having 50 to 60 Very strong team. Very lean. There are I have a few acquisitions, Peter, if that's okay. That's very lean. But we talked to 50, 60 companies maybe, but we always did that. And yes, sometimes they come to you very quick. They can even call us tomorrow. Okay. Thank you. But you have we have to acquire the right things with the right returns. But acquisitions will always be part of our strategy. That's important, always, but very disciplined. And even with acquisitions, we can still deleverage the balance sheet. It's not to say that if we continue to do acquisitions, you may only extend when you reach that point. So that's something [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We have not aimed to do very big things because we don't need it, because it hurts your return with the multiples you're paying today. Now I'm thinking you're paying by far too much, especially with things which go through an auction or whatever. So we don't even look at that. Wim den Bergers at Value Fund. I was thrilled by your latest expression, ABAS Industries, as a rocket. From that perspective, yes, I have one specific question. Yes, because you know rocket grows slow in the beginning. Yes. I also You never know when it accelerates. Yes. But there's also a risk to a rocket, I think. So maybe this one question is we spoke about key account management, and that's something that has been with Albers Industries, I think, for 10 years already. But it's becoming more profound now that Albers Industries has its own passport. You have leeway to a great many superior companies throughout the world. And I think it's worthwhile to get some in-depth knowledge for this audience on what percentage of your turnover today is with these key clients, and probably more important, to what percentage could that increase in the next 5 years? Because when I'm right, obviously, there's a lot to offer to these clients. You gain you can probably gain a lot of market share there. My second question specifically relates to China because is there a special strategy within your 5 year program that looks into that end market? You mentioned semicon as one area where you would increase your presence. Can you elaborate a little bit on that perspective? Now maybe the first question and the second question, I think Mr. Jager can answer very well. Yes, the key accounts, I think the definition we give to a key account because you're right, key count is, of course, a broad definition. In our opinion, what we what our definition is, what we aim with that is that you combine technologies or products on the key account level. So you have we clustered the business team, so therefore, we have a more focused offering. And this focused offering, you present together with your Albers organization name to a certain bigger customer, you could say, which mostly also have a global footprint, which links to your global footprint. Now I think these projects, I think they are very small at the moment. So we have scored 5 the last 6 to 12 months, but we are busy with a lot of things to discuss. What the outcome is, I don't know. But we see there's a lot of opportunity. What it also means is that you have to upgrade your organization because you need a complete different cell, but you also need a different execution. So it needs also time. It's again a process which needs time that your organization gets used to that. So that's why I said, yes, there's a potential, but sometimes it goes quicker and sometimes it goes slower. But at this moment, this definition, key account management, is not a big part of our revenue yet. So there's potential. That's why we mentioned it as one of the growth drivers. It needs also training. So we brought together that group worldwide. I know Mr. Monning did that. And we trained them. We share and learn. You see they one is talking to one big beer customer, the other one is talking to Airbus or whatever. But the processes and the learnings are the same. So we have to upscale also the quality and the way of organization. So it takes time. How quick that goes, yes, it's a good question. It's something you are working on. So I don't want to say which percentage in the future. It's impossible. It also includes the element of recurring revenue, I presume, that you have closer Yes. And sometimes you have to innovate for that specific project. So it drives also innovation and then again equipment. And that does mean that you the cyclicality of Albers Industries' turnover and result might be reduced in the future. Is that also an element? [SPEAKER DOCTOR. BURKHARD LOHR:] Bernd Scheifele:] Yes. But I personally think the cyclicality was already much lower. And also before, it was not so as it sometimes was talked about. Of course, we had a lot of construction. Maybe we have now lesser construction because we balance that and we will further balance that. You come in more regions, we have more North America. We want to go more to Asia. So that balance is further out. That's correct. And when you drive this technology, we get more balancing out. It's our second objective. So it is correct. Is it true that the margins on these key client accounts are better, much better probably than average? They can be better, but you also have to be very careful that you don't do all kind of services, which you don't get paid for. It's also a very important lesson. So you that the management is thinking, hey, I go for the revenue, nice, but they forget that the customer is asking for 5 additional technical complex specs. So again, it's also training. There is potential from a market point of view, but it needs also a different yes, mindset. And therefore, it's good that we learn that from each other. But in general, yes. But you do it properly, sorry. What you could see if you look at the organization and how it is developed that we have management team for each of the technologies compared to, let's say, more atomized organization some 10, 15 years ago that will brought us the quality in the organization that we could deal with key accounts. To give a number to that, how much that we will be on average in maybe 5 years, that's a bit hard to say. Principally spoke, we could follow the demands of bigger companies, so key accounts, and to participate in their, let's say, de atomization of their supply chain. And we could do that. So it's an upgrade of your organization. But never forget the local customer. We should have both. Never forget the entrepreneurial spirit of the local company. It's an add on. It's not only. It's an add on. So important because we have to be the entrepreneur also locally. Yes. China? China. Yes. When we did that step over some years ago and saw that we have to invest in China, There was an idea behind that, not having a single entity of a couple of €1,000,000 to be far away because it's cool to be in China. There is industry developing locally, whether it's automotive, whether it's machine build, whether it's right now the trend setting industry for electrical cars. We are part of that, and we would like to grow that further. Does that require more investments, assuming we will be successful with our plan number 12? Yes, sure, it does. But based on good reasons, we will continue to grow that. But no acceleration? Yes. There will be an acceleration. But first, you have to make your homework. Everything has to be good set in place. And when that is done, then you can accelerate. No, I think the electrification of cars in China, it's a big potential which we have to work out. We're going to do that first 4 months next year. Then we want to invest also there more. Before we continue, we have to answer 1 or 2 questions which came via the webcast to make sure that we meet our timing for that because you are still here, but the rest may or will leave in a few minutes. I think the first question was, can you raise prices even if capacity utilization is low? So no growth in volume. I think this refers more to the question we had before that when it comes to raw materials or other elements, we are able to increase the prices, and we try to pass on that, of course, as much and as quick as possible, which is a very important topic. Of course, if there is no growth in volume, maybe the excellence pricing already done, we hope to have achieved that. Of course, it's always more difficult. I think the raw material part has always been high on the agenda, and we have agreements with our customers that we are able to structure the pricing going forward to increase the price when that's the case. I think there was a second question. To optimize the efficiency of the key accounting, Jean Tanja? [SPEAKER JEAN JACQUES VAN DEN BROEK:] Yes. For Arnaud? Yes. Let's say we have a key accounting per business, yes, so that's important to understand. [SPEAKER JEAN JACQUES VAN DEN BROEK:] I don't know what the question is. How are you planning to optimize the efficiency of the key account team? Now we are we have a team per business and we bring these teams also together in key account training, which we did, let's say, a couple of weeks ago for the also for the first time, where we trained specifically on instruments and tools for the people how to be able to take the most effort out of a key account customer. And of course, this is maybe let's say the business are different, but the tools are quite similar how you can use it. So we train the people in that. And besides that, we also analyze how the people are performing and if we need to make some changes also there because, let's say, a good salesman does not need to be a good key account manager. It's a different topic. You act with bigger customers, you act with bigger orders, deals. It's more an ambassador role maybe, should be strong. So let's say we also try to constantly find and attract the right people for these positions. So we are actively working on that. Yes? And this covers the 2 questions which came out of the box. Maarten from Bekker, D. A couple of questions. First of all, on one hand, you mentioned you want to improve EBITDA margin. Secondly, you want to lower your working capital. But at the same time, you keep your free cash flow conversion ratio the same unchanged. That more or less implies that CapEx will be higher. You mentioned CapEx will be higher over depreciation, but really significantly, Could you give a bit more color about your CapEx plans? And in relation to what it is or in relation to depreciation, how much above that level? Yes. I think on the CapEx, we already said that we already for this year guided a higher CapEx than depreciation. So we might be at maybe 120 percent. We said around €115,000,000 €120,000,000 in CapEx for 20 17. So that's not news in itself, with maybe €95,000,000 to €100,000,000 of depreciation. So that will be about the ratio. And if we increase further our CapEx, our depreciation will, of course, also increase, but not as fast as CapEx, yes, that percentage might go up to 130% or 140% of depreciation. Maybe for a number of years, I think we already mentioned that for 'eighteen, 'nineteen, 'twenty, and that might be as far as we can see it today, all things equal, that might be the percentage we are looking for. And of course, that takes out of our free cash flow a bigger portion than relatively to what we had before where depreciation and CapEx was much more in line. Now you see that there is a bigger gap between CapEx and depreciation. Yes, and working capital, we try at least to stabilize as percentage of revenue, as we said, or further improve. That a little bit depends on how the developments we described before will go. So therefore, we think that the above 70% is, let's say, a good objective to go for, for the next 5 years, but might not be reached in every year, will be exceeded in other years. It's always how it goes, but that's definitely the goal whereby CapEx will be higher on the agenda, as we said before, to support organic growth. Because if there is no organic growth, we'll have lesser CapEx because in the years that we had hardly any organic growth, CapEx was more or less in line with depreciation. So we are able to manage that pretty flexible. So our goal is to have less working capital and more investments, simple as that. You also still have a program to divest businesses which are not core to you. What's the status at this moment? And how much do you still want to divest? No, I mentioned that in the beginning of the presentation, €40,000,000 to €50,000,000 of revenue, but we still have the idea, yes, that it's not or it has no link with the group or it has a low financial performance or no growth potential. And as what we said earlier, we will optimize these activities. And then when there's the right opportunity, we will clean up that part of the portfolio. So probably the coming years, we will take next steps. It can also mean that sometimes you find another solution. There's not a divestment, but we just closed it because we think it's better looking to the time we spend on it. But this is roughly the case. These coming years, we will optimize that further, but it's still a small amount. And lastly, what do you see as the main risks in the next couple of years? Main risks. There are always other sides of the coin, so it is good that you asked this question. I think other side of the coin risks are, of course, the whole environment, That's the political environment. I think you have to react very quickly these days. Therefore, I believe in our organization, which we have, because you need local entrepreneurship, but still controlled with a very clear strategy. That's what we aim for, but adapt very quickly. The second thing is our people. I think investing in people and having the best people in the coming years will be the biggest challenge, technical people, but also higher level people. We just talked about key account management. It's you need different people for that. So continuously optimize our human resource development. My colleague is driving that fantastic project you took over from me, a very good, very important topic that we drive Human Resource Development through the group, give people other opportunities, learn them. It's in the end, it's all about people. And that is yes, risk. It's I think you have to be very on top of that. Another thing is still look for your businesses every time. Do I have the right business? Do I have the right portfolio? What we did with oil, but that's your intention on oil because we think the margins will still be difficult coming years. So you adapt immediately and be very motivated as a team. It's in the end, it's all teamwork. So I hope we will that we create a lot of business and a lot of fun, which is also important, with the whole team which we have gathered and we stick together and that we have a fantastic journey to go. It's nice to start working every day at 6. That's also very important that you keep that in the group. Bert van Hoeghne, this is Torben Berge. In the beginning of the presentation, you showed us the achievement rates of your several projects. And the one on operational excellence was the lowest, which the logical conclusion No, no, the lowest was the exchange of best practices. That's 40%. Yes. But excellence was only 50% achieved. That was not the lowest. So almost the lowest. So the logical conclusion is that that's quite hard to achieve. And of course, I understand this is not a straight line, but it goes in leaps and bounds. But can you explain what sort of hurdles you have met and what sort of hurdles can you still expect on this project? You mean specifically on operational excellence? Right. Now the hurdles we have met is that when you bring teams together, yes, you change people. Not always easy. You have to do that step by step. You also find out that certain people are not maybe the people who can run a certain responsibility. Another hurdle is that you have to align this strategy. It needs a lot of communication. You need to take people with you. It's a lot of time, but very important because it's step by step. Yes, for the future, I think when the teams are in place, you have they look to their operations and to their optimizing and they have their targets, you automatically get they come to more ideas, which is logic. So there come new hurdles. New hurdles can be how you move things. New hurdles can be implementation of an IT system, which you have to do step by step, and we are very carefully by that. It can mean that you have to optimize your distribution footprint. It can mean that you have to bring names together, but all with the people. You have to discuss it, take time. It's a long term thing. You don't change these things overnight. I don't believe in it. So it's a culture again that you bring into 60%, 70%, 80%. The big message is, there's still a lot to do, still a lot to improve to come also to a higher margin. And my second question is about you didn't mention currencies. I suppose your projections, targets are regardless of fluctuation. What's your assumption on currency as obviously it's now getting more international? Yes, but we don't have an outlook on currency and don't speculate on that. I think that's our policy anyway. So yes, of course, we based our objectives on the, yes, let's say, the existing situation around currencies, and we already see in the last few years the development, whether it's British pound and U. S. Dollars. Those are 2 dominant currency for us as a group. The rest is mainly dominated in euro anyway, which is also disclosed in our annual report. So yes, if the pounds, although it's still lower than it was before, but if the current situation would continue, But I think also there, organic growth is measured, taking FX impact, so currency impact out. So in that respect, whether currency goes up or down, we always clean our numbers for currency. So in that respect, there is no, let's say, impact on the organic growth targets if you look at the currency. Of course, the translation, where we also had some pluses and minuses the last few years, yes, that will remain, and I don't think that will change in the next few years. And whether that's a positive, a negative or a neutral, yes, let's see how it develops. We try to cover ourselves where we can, and I think that's what we have always done. So we will continue that policy also going into the next years to come. Last question because we are already at 10 minutes past our goal time. Okay. Well, in overdue time, thanks. Joost Beit in Singe Hille. Then one final question. That's on the Power Systems market. That market is down quite a lot. But also in terms of servicing, you can read about gas turbines where the revenues are too low to pay for maintenance. To what extent do you have are you exposed to, let's say, the renewal, the wind and the solar energy market? Is that something that is an opportunity for you or where you have already an established position? If you look at the energy market, it is correct what you're saying that the power gen business which relate to industrial gas turbines, that's low and it's lower than we have expected and anticipated. We do think in line with the sort of the major suppliers that, that will be a down cycle of maybe 2, 3 years, and then that goes up again for a couple of reasons. Are we in the, let's say, renewable energies? Yes, yes, we are. With diverse technologies, we do play a role in that, whether it's surface treatment, it's heat treatment, it's part of machines, yes, part of the parts we are machining are related to that. Is that a super significant portion in the turnover structure? No, it's not. Otherwise, it wouldn't be mentioned in the portfolio of markets. Okay. Thank you very much for being here, also joining the webcast people. And thanks for the questions. And we can still answer questions during lunch and after that. But also thank you to webcast viewers. Thank you very much. Thank you.

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