Earnings Call: H2 2020

Feb 26, 2021

Good afternoon. This is the Coresco conference operator. Welcome, and thank you for joining the SJP Full Year 2020 Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask Questions. Star and 0 on the telephone. At this time, I would like to turn the conference over to Mr. Mauro Fenci, CEO of Sogepi. Please go ahead, sir. Thank you very much. So good afternoon, good morning. Before starting with the presentation of the 2020 full year, I would like to inform you, if you didn't see on the press, that I am today leaving Sogefi. So this will be my last call with you On this subject, on the other side, here with me, Viercoli, I have Frederic Cipailly, who today took Sothechain So before starting myself with the presentation, I would ask Frederic to have a couple of minutes of introduction to all of you. Frederic? Thank you so much, Mauro. And first of all, thank you also, Mauro, for everything you have done in the last 12 months for SoGES. So I am Felix Hipaille, 40 years old. I am at SoGES for almost 10 years now. I had first part of career as Controller, Business Unit Controller, then CFO of Air and Cooling and Filtration and then General Manager of Air and Cooling. And the last 2 years, I was in charge of Air and Cooling and Filtration business units. Before joining SoGESI, I worked 5 years at Phoracia and 3 years at Peugeot as Controller. So I am very excited to be with you today as a First, thank you very much. And thank you again, Marlo. Thank you, Frederic. So now we are straightforward to the point. I I would like to start from Slide number 4, which is reporting as usual. The last quarter highlights, Yes, we are talking about quarter 4 of 2020, of course. So let's start with the revenues. The revenues achieved in the last quarter EUR 364,000,000 as value which is very close to the Last quarter of the previous year, 2019, even slightly above last Yes, 2 years quarter results. The increase has been driven in SOGEP mainly by 3 geographical areas. China from one side, Thanks to the market recovery, which has been pretty fast and very effective. India for a similar reason. And then North America As well, in North America, as you would see later on, it's not only because of the market, but it's also because Sogeti is launching new projects that are Delivering in this period of time revenues as well. Going to EBITDA, the EBITDA is €39,000,000 slightly below the last quarter of 2019, is 10.7% on sales versus 12.3% of the last quarter 2019. But it's very useful to remember you that the EBITDA has been reached by a combination of an higher contribution margin, which in this challenging period has been a very good result, I think, and the lower fixed cost ratio, Thanks to all the actions that we implemented last year to minimize the cost and the cash out. This has been balanced by and higher restructuring charges, which are achieving EUR 13,000,000, but we are going to talk about this later. If you take the EBITDA without restructuring cost, the margin reached last 15.4%, which is higher than the previous year result, which was 13.4 Going at EBIT level, the quarter has shown EUR 4,000,000 positive result versus EUR 5.4 Same period 2019. Again, if we exclude restructuring costs, the EBIT at quarter level It would have been €21,000,000 equivalent to almost 6% on the sales versus a 9.4 percent equivalent to 2.6 percent in 2019. So this again is a very positive result of the recovery of the company done in the last period of last year. I think net income level, Unfortunately, the result is negative $12,000,000 But again, we have to keep in mind as well the restructuring cost, which affected the last quarter quite heavily. On the cash side, the free cash flow of the quarter has been positive €8,700,000 versus €9,900,000 of the last quarter 2019. And the net debt went to 291.3 percent versus 256 percent end of 2019. We have to remember that in end of September, the net debt was Almost EUR 300,000,000. So there has been a recovery. If we jump to the next slide, which is Slide number 5, We see the sales by geographical area. Again, we are talking about the last quarter. As you see from The table, we over performed everywhere with different ratio, slightly better in Europe, Very, I think, important over performance in North America and the same as well in South America and China. Going to the sales by business unit, which is Slide number 6. We see it again in the last quarter. Air and Cooling did at reported change An increase of almost 7.0 percent with respect to the 2019 numbers. So Erin Corning reached EUR €113,600,000 with a very good and positive trend on the sales side. Filtration as well Has been slightly below, but has been again positive as well with the 4% reported change increase. Suspension that I remember everybody, but we are going to talk about suspension later on is playing on geographical footprint, which is mainly European driven, has been affected On the side by the market and reported the sales in the 4th in the last quarter of 121.7 minus 4% with respect to last quarter of 2019. In Slide 7, We decided to show again the comparison quarter by quarter with the effect, the different effect of the on the breakdown. So you see that we did We had a 2.2% GAAP positive on sales. We have seen the sales volumes before. But what is also very positive is that we had also a 1.3% positive effect on the variable cost. I remember again that the period has been very challenging because of the, I would say, the stop and go of the production Tremend availability of components and raw material. Fixed cost contributed again in a positive way 3.5 €1,000,000 And then on the write downs, we had also contribution positive almost €5,000,000 As I said at the beginning, this has been balanced by the decision to go for restructuring and this is a negative value of EUR 13,000,000. Now having said that, I will leave Jan the task to drive you through Slide 8. Thank you, Maher. So Page 8, revenue, as Maher pointed out, up by 2% and as a reminder, plus 8.9% at constant exchange rates. Cost of sales and the variable costs, we improved the ratio from 68.8 percent down to 68.4%. And what's very relevant is A strong reduction of caustic costs, which are down more than 2 points versus Q4 of last year for a similar revenue. Manavo points us out that Q4 was impacted by far higher restructuring costs. As you can see, €17,000,000 of restructuring costs, mainly related to the Closure of the plant in Germany for suspension and the ongoing social plan in 3 Fresh in France. And as pointed out, this gives a better result in EBITDA if we take out The restructuring costs are far better than in previous year. D and A is slightly down, write down also down versus The same quarter of last year. EBIT, excluding restructuring, more than 3 points above last year. We have to take the hit, but you can see that the ongoing performance of the company is improving. Financial results, We are slightly heavier. Income tax, it doesn't happen often because we have very low income tax charge. The really important factor is the last but one line, which is the net income from discontinued operations. We have sold Filtration Brazil at the end of 2020, and we also have sold Our situation plans in Spain in January 2021 and these are the impacts of the 2 operations. So as a result of which, between the discontinued operations and the restructuring costs, We ended the quarter with a net loss of €12,000,000 versus €5,000,000 last year. Moving on to Slide 9. In terms of cash flow generation, you can see that we ended up a quarter Usually, Q4 is a good quarter for SoGES, slightly lower than last year for Q4. This is an exceptional year, and we had a very good recovery in Q3. As you can see, we have a less favorable impact in working cap, and we see that as well on a full year basis. And we compensated Thank you very much, Jan. Now we go to the full year. So we go to Slide 11. So at full year level, the revenues were slightly above EUR 1,200,000,000. In 2019, it was 1.464%. So it's down 17.8 Percent on reported basis and at cost exchange rate is down 14.2%. You will see later in the next slide that in any case, we over performed in all the regions. For example, in Europe, We went at minus 18.1 percent at constant exchange rate versus a market underperforming at minus 23.3%. At EBITDA level, full year 100 and 37.6 percent against 177.4 percent last year. Also here, we need to see that at percentage level, 2020 was very close to 2019. We are talking about 11.4% in 2020 against 12.1% of 2019. The volume impact negative impact has been again here mitigated by reducing the gross fixed cost. On the other side, at full year, we have more than EUR 30,000,000 restructuring cost. I remember you that in 2019, the same cost category was €9,000,000 For full year, we did an exercise. We excluded restructuring on EBITDA. And in this case, In 2020, we reached 14% against a 12.7% in 2019, so a much Better percentage on EBITDA if we exclude the restructuring impact. At EBIT level, again, at full year, we went at 7.2% against 48.4% in 2019. In this case, of course, the volumes so the revenues impacted The number and the also nonrecurring charges, as we said, went in the same direction as well. On the net income level, we closed the year with minus 23.2 versus 8.3% end of 2019. We are again to highlight a couple of points here. The tax charges are in this case minus EUR 3,600,000 against EUR 13.5 negative value in 2019. And as Jan highlighted before, there is also the impact of the sale of Brazil and the Spanish plant, which are impacted for an amount which is very close to €15,000,000 versus €8,000,000 of the 2018. On the free cash flow, here we talk about minus 34.1 But we have to highlight, if you remember that the last quarter on the free cash flow level went positive like the Q3 of last year. The net debt closed at €291,300,000 versus €2 6 of 2019. Also here, we were end of September at €300,000,000 On the next slide. So I would like to go to Slide 12. The slide 12 is just summarizing the actions, the highlights of 2020 About the footprint optimization has been already mentioned, affected mainly filtration business Because we are talking about 2 location producing filtration products. We did, Like we mentioned before, an action plan last year, which has been executed to Reduce the fees and cost as well, either using the social tools where available in the countries applicable like also using reduction determining the reduction Actions where possible. On the financing side, probably you remember already the presentation of the last quarter, we secured The medium term financing needs of the company, but we have a slide later on to talk about this point. I confirm again after having said this in the last calls that We decided to protect the investments for suspension on the Eastern Europe perimeter To be more competitive very soon on the market. This has not been affected by the emergency of last year. And we did also efforts to protect the new powertrain technologies development, Mainly in air and cooling in order to be on the market in the right spot and to of solutions that are in line with the market trends. Of course, I'm talking about EV And I'm talking about hybrid cars and power plants. Now we can go, I think, on Slide Yes, we see the favorable geographical area full year. Again, we over performed in all the geographical areas also at a full year level. Europe, in this case, has been Overperforming pretty well, North America, South America and China as well even better. I remember you that on Europe, SOGEPY at group level is doing revenues for Almost 60%, 62% of the full revenues. Now we go to the next slide, which is slide 14. As usual, I present you the trend Customer by customer, year on year. Every time I remember you that The development time of our products are pretty long, so the effects of the other acquisition are coming usually 2, 3 years later. The fact is going the direction that I discussed with you in the last calls. So we have the German Premium brands like Daimler, BMW, which are growing, as you see already considering 2019 and the U. S. Brands like Ford and GM are doing the same with a very positive trend. Going to the sales by business unit, which is Slide 15, at full year Air and cooling went at EUR362,000,000 against EUR 4 26 almost of 2019. At cost exchange rate is minus 11, Filtration minus 8.1% and suspension for the reason I told you went at minus 22.7% on year by year comparison level. On the business awards, I'm going to Page 16 now. Also here, I have to Confirm what I told you already during the last quarter call that Sojapie in 2020 signed New contracts in line with the previous years. So despite of COVID, the order acquisition didn't suffer. The second bullet is I already presented this last time. We got from a premium general OEM For including a relevant order on the Manifold side. This is very important for two reasons. 1 is because it's Strengthening the leadership of the division in this technology. And second is also using aluminum, Which is the new trend for most of the OEMs, so it's really confirming the good trend of the business unit. On the same business unit, almost 25% of the order acquisition are for hybrid and full electric applications. The suspension business got a very key order from North America full EV OEM. And also the suspension business is getting a relevant portion of orders on the same type of technologies, which are hybrid and fully electric. On Slide 17, we show Again, the same EBIT comparison between 2019 2020 with the breakdown. Of course, the volumes affected pretty heavily EBIT side on this year, reaching €85,000,000 gap. But again, also at full year, so not only the last quarter, but this is also at full year level, fixed cost actions Amounting at €44,000,000 and efficiency on variable costs, which are amounting at Almost EUR 6,000,000 have been able to balance partially the gap that we had on sales. Write downs are positive of €12,000,000 and restructuring we talked about are affecting €17,000,000 on the opposite side, the GAAP analysis between the two years. Now Jan, if you want to comment the P and L. So Page 18, We are not going to hide it was a tough year with sales down 18%, especially after Q2, which was ugly. If you remember, we have sales down by 56% in Q2, but the company reacted fast and We have described to you in previous calls all the efforts which were made. And thank you, Fred, for the work You did integration in that end cooling because these are where most of the action took place and Action to reduce gross fixed costs. You can see that the gross fixed costs went down more in the sales And all the restructuring plan is aimed at lowering the breakeven point of the company by fixing our industrial footprint. So all in all, of course, less EBITDA than last year. But if you exclude the restructuring costs, as Mario pointed out, 14% EBITDA versus 12.7% last year. So really preparing for the future, and you will see that Obviously, answer by quarter. Same in terms of write downs because when You clean up your operations and decide to optimize your footprint. We have to do some write downs. As you can see, we had €13,600,000 of write downs, that's to say more than €4,000,000 more than in the previous year. All in all, EBIT, excluding restructuring, still below last year at 3.1% versus 3.9%. But as you will see, we don't show better in the second half of the year. Financial results above last year, let's just say, it is a cost for us. But we took all the financing we could in the midst of the crisis. And now we are safe with medium term financing, which I will describe later on. Saving on income tax, I could have done results because we had less revenue. What is important is the split of the net income because you can see we ended the year with a net loss of €35,000,000 of which €15,500,000 linked to discontinued operations. So This no longer will be with us last year. And the net income of operating activities is a loss of €20,000,000 That's after €30,000,000 of restructuring and €13,600,000 of write down. If you move to Slide 19, I think it says more, Slide 19. It shows how ugly the first half of the year was, Face very much down with an immediate impact both on EBITDA and EBIT. As a reminder, we closed the first half with a negative EBIT of €12,000,000 And even with restructuring, we had a loss In terms of EBIT. So very difficult second quarter especially, like most companies in the automotive. Q3 from better. Although the volumes were not yet totally there, you can see that EBIT, excluding restructuring, was at 6.7%. As a reminder, last year on a full year basis, 2019, We closed at 3.9. So 6.7% in Q3, 5.8% in Q4. So as I said before, all the company was focused on improving its operational performance and preparing for a future, which still is uncertain. That's to say, we are preparing the company to fight against And I believe that the EBIT level This restructuring showed that we are going in the right direction. Net income, As you can see in terms of operating activities, let's just say, the short Sojapie of tomorrow, a loss of €21,000,000 in the first half and slightly positive in the second half. Free cash flow, of course, the first half was ugly. The cash burn results IFRS16 of of €71,000,000 a good recovery of €28,000,000 in Q3 and still a good performance in Q4 with cash generation of €9,000,000 If we go to Slide 20, this is the cash flow on a full year basis. Of course, the first line tells you, okay, less volume, it means less funds generated by the operations. We fought against this cash strain by reducing our CapEx. You have seen we reduced our CapEx by €20,000,000 versus the previous year. Despite the investments, we haven't touched The investment of the new suspension plan in Eastern Europe. This plan is key for Restoring the profitability of suspension. So this was safeguarded. But nonetheless, overall, The savings of €20,000,000 versus the previous year. And what you can see is that the main impact all in all of the year is a working cap impact. Mainly, we carry less suppliers at the end of the year than in previous year. On the other hand, as you can see, the net of the factoring is quite similar than it was at the end of last year. And so all in all, A free cash flow pre IFRS 16, which is a cash burn of €34,000,000 but you can see €32,000,000 from the working cap. And I believe we shall recover this negative impact in the coming years. And at the end of the day, We end the year with net debt of €291,000,000 versus €256,000,000 last year, with us a good recovery in the second half of the year. If I move to Page 21. As I said before, The top priority was to secure new financing. As you know, in October Last year, we signed and cashed €135,000,000 of new loans, medium term loans. So these are loans with final expiry in 2026, as a result of which, at the end of 2020, The group has committed lines in excess of €340,000,000 This is not an unusual surplus. As a reminder, euros 100,000,000 of the 3 4C will be used when we repay the convertible bond in May of 2021. Thank you very much, Jan. Now as usual, we covered the business units. So if you don't mind, we go to slide 23. As usual, we start with suspension. On the sales side, on the left, we see the reduction from between 2019 2020. We have already seen it in the previous slides. We are talking about a minus 22.7 percent at constant exchange. And again, I remember you that the geographical footprint on which suspension is operating It has been last year much more difficult than they are in us because we are talking about mainly Europe and the second area is South America, Which has been strongly affected by the volume reduction. Nevertheless, on the right, you see the EBITDA of the business unit excluding restructuring. And you see that there's been the business unit has been able to keep The same percentage compared to the previous year 2019, which is 9%. This has been really possible for many reasons. 1 of it That is the material cost that up to year end were in the favorable direction. Restructuring, I think we talked already. The new Romania plant, again, has been protected and on the BCBA level, Unfortunately, the negative impact of €2,500,000 And then on the total gross cost, We have to remember that the business unit is operating was operating last year with the 22,900,000 which has been a decrease compared to previous year. But unfortunately, an increase in percentage year on year because of the volumes decline we had. So now if you don't mind Frederic, maybe you can talk about Filtration and the Recalling, yes. Sure. So Slide 24, we can start by filtration. So as you can see, the sales are down by 8% at constant exchange rate. This performance is thanks mainly to our aggressive attitude Yes, and aftermarket, which helped us to recover the loss on the OEM markets. We had also a major decline on The South American market and in the mainly in the quarter 3 and quarter 4. But when we look at the percentage of EBITDA, excluding You can see that in percentage, we have been able to increase by 2% with decreasing volumes. What does it mean? It means that we have flexed much more the fixed cost and also improved our profitability in gross margin, much better than the sales of the decrease of sales. The good news, the decrease on fixed costs that you can see of €20,000,000 is down, As Mauro mentioned, we have some structural actions sorry, contractual actions or actions that we shall help get from the government and the countries, But we have implemented long term and medium term reductions and that will help us as a carryover in the coming year in the coming months and the coming quarters. So on filtration, we have been very aggressive during this tough period on the fixed cost reduction in order to restart with lower breakeven in the coming years. When we look at the Slide 25 for Air and Cooling, The decrease of sales is at 11% at a constant exchange rate. In Europe and North America, We have been, of course, impacted by the COVID. But in China, we recovered everything we lost in the Q1 of 2020, And we have done much better sales than 2019 by almost 20% to 25%, mainly thanks to new businesses we acquired in the last years on the cooling part of the business unit. The EBITDA, we have been able to improve one more time at 19%, thanks to strong reduction of the fixed costs again and also a good profitability on the Stability on the programs that we acquired. The EBIT is at 5.4 versus 5.8 in 'nineteen. Of course, the to amortize the depreciation is more difficult with lower sales. Thank you very much. That's it for a quick thank you, Mauro. Thank you very much Frederica. So now as usual, the last Couple of slides, I'll talk about the future. So I will go to Slide 27. As usual, we show in this slide the last IHS forecast. Here we are talking about Because the situation is changing month by month, so it makes sense to highlight. We are talking about February, So the last forecast AHS did, February 2021. On the left, you see the comparison between the full year 2020 and the last quarter of the year. You see the recovery pretty well in this slide. While on the right side, you see the forecast of the HS year by year measure with respect to the previous year. So let's talk first of all about the current year, which is 2021. Before going to this number, I remember you and I will remember you as well in the next slide that the visibility on the market by the way Still remains pretty challenging because of the situation. COVID is not over, unfortunately. But AHS It is on 2021 forecasting a recovery, which will be Quite important on North America. You know pretty well that North America is a very dynamic market. They suffered a lot during COVID, but if you look at the recovery last year in the third quarter in the last quarter has been impressive. So they say that the recovery will continue, There is a 25%, 24% positive improvement with respect to 2020. If you go to the comparison between 2021 2019, North America is forecasted to be at recovery level at the end of the year. This is not happening on the other Two regions, which are Europe and South America. Unfortunately, both of them are below are expected expected to be well below the 2019 levels in 2021 Europe at 10% negative and South America at Almost 8% negative. South America, as you see on the left side, has been strongly impacted By COVID on the market, you see that among the regions has been the worst last year on the market side. So the recovery should be, as you see, quite aggressive, but nevertheless, They will not reach the same level 2019 at the end of the year. A different picture, of course, is on China. China, As you see, already recovered, if you want, almost everything at the year end last year. So the recovery will continue And on this side, the account is showing even a slight increase 21% on 2019 because they are talking about 1% more. If you see the coming years, Of course, the visibility is it is what it is. So when we talk about 2022, 2023, 2024, it's much more difficult To be right, I would say. Nevertheless, also here the recovery is expected to continue in 2022 almost in all the regions, while in 2023 and 2024, The recovery in Europe and in North America is expected to be less effective. In South America, the recovery will continue also in 2023, while in 2024, you expect to be a little bit less positive. China is expecting to grow 4% year on year in the coming 3 years on the period we are talking about. Now, which is the outlook on 2021 we see at Sojapie? We had a very strong recovery as you have seen in the last two quarters of the year. But this should not really be considered too much positive for the future because the visibility As we discussed, is very low. And still the COVID rules are even if vaccinations are Starting and give a little bit of from this point hope for the coming months, but The visibility is also quite difficult because some lockdowns could be implemented, for example, in Europe pretty soon. In the last couple of months, additionally, The raw material availability and price has been very unstable. So we have seen difficulties in having the material in quality on time in some areas. And also the price is showing a very nervous trend in the last period of time. On top of it, I think that the Automotive market today is also affected at customer level by the availability of Very small component, but very key for the car, which is a semiconductor. This semiconductor is very difficult to be found. Some of our customers are Showing some difficulties in keeping the production rates in all the plants for all the models as expected. And this is also combined with the last difficulty, which is transportation, so logistic, Mainly from, I would say, from China, from Asia to Europe and North America mainly. Today, it's very difficult to be fast and effective in the transportation as well. On the other side, as you have seen, HS is forecasting air bound this year, Pretty important. And Sojapie has been again quite careful Because as incorporating the expectations, of course, in higher market, we Back to 2020, but still lower globally than 2019. I think that what is very important to highlight, as Jan and Frederic said before, We implemented actions in all the business units in order to lower The fixed cost. And this will, of course, help this year even if maybe the volumes would not be at the level expected. And this would be, I think, very conservative and important to remind you. Of course, Having said that, Sogefi is expected to return in 2021 into a full year positive result. So now I think we went through all the slides of the presentation. I think we are on time. And as usual, I leave the last part of the call to the questions you may have on this challenging year. Thank you very much. Excuse me. This is the Corusco conference operator. We will now begin the question and answer session. Please pick up the receiver when asking questions. The first question is from Monica Bosio of Intesa Sanpaolo. Please go ahead. Good afternoon, everyone, and thanks for taking my question. Good morning. Nice to meet you, Frederic and hi, Maro and Jan. The first question is On the outlook, I know that it's very difficult to make projections for 2021. But with a +13 percent increase in car production, the first question is, do you expect to perform at please in line with the car market production trend. And the second one is on the EBITDA margin, 15.3% in the last quarter of 2020 and 14% in the entire 2020. I know that in 2021, the Grupo will have to face Raw material prices increases, transportation cost increases, bottlenecks from the cheap in the sector. But Can you give just a rough idea of what could be the EBITDA margin before restructuring in 2020. Can we take as a proxy the 2020 levels or maybe Raw materials will penalize more than this. And the very last, can you give us an indication about the potential restructuring charges in 2021. Thank you very much. So I'm trying to reply on the three questions. About the outlook. As I said, Monica, The outlook today is and the visibility is pretty low. So the situation is getting a little bit better. We expect, Of course, the peak of crisis last year. But on the other side, we are adding Challenges and challenges Monica because the lack of material at OEM level There's been a new point coming out, as you probably know, in the last, I would say, 4 or 6 weeks. And by the way, we don't have visibility on when this problem will be really over because it's a very critical component going to the electronics of the engines. And there are very few producer globally that can do it. So What we did on the outlook has been, Monica, to be as usual quite conservative on the volumes. So we But what is more important that as we go to the second question that we protected the EBITDA with reelections on costs. There are actions on cost, Monica, that are giving feedback A positive feedback along the year, along with the current year because they're running at the moment. So The brand of cost will improve month by month. And with this, we are quite, I would say confident to deliver a good result year end. Even if visibility, the market is what it is. Because to be honest, as I said, the lack of components is a new point, which is Was not known after 6 weeks ago. About the last question On restructuring, Monika, As you may have seen, we have done our homework in 2020. We have booked €30,000,000 of restructuring costs. That's the result of which for the time being, we do not plan to have much in terms of restructuring costs In terms of P and L in 2021, probably lower level than in usual years. So lower than in obviously 2020 is not a reference year, but lower than the previous year? Yes. Okay. Sorry, the line is a little bit noisy and I cannot hear you well. But Monica, it should be below EUR 5,000,000 next year. Okay. Thank you very much. I come back to the queue. Thank you. Thank you, Monica. The next question is from Martino De Ambroggi of Equita. Please go ahead. Thank you. Good afternoon, everybody. The first question is on the strategy because we saw a couple of divestitures, Small but loss making. Should we expect any additional similar action going forward? This is on the strategy. And the second is on the issue you already commented, Steel plastic transportation costs. Could you remind us what is the coverage policy you are able to Because I remember still you are able to recover it, but we've some lag. And In any case, not 100% and probably the same for plastics. Tia Martino Maro speaking. So let's go To the phase we did last but also this year because Spain has been executed in January. At the moment on 2021, We are not forecasting any other sales like the ones you have seen. On the other side, I do not exclude them in principle. But in our Yes, we didn't include any additional actions like this. About the coverage, I don't know if I got 100% your question, Martino. But I try to reply then you tell me if I was right or wrong. If you talk about the raw material fluctuation cost versus the customers, There are, of course, contracts and contracts in our business, depending on the customer and the project we Most of them are covered. Of course, the coverage You need to discuss with the customer and some of them are automatic, but some of them need some efforts. It's a difficult period for everybody, including our customers. So the discussions are unfortunate in the last couple of months on the table Almost every day, Martino, because the price fluctuation It's pretty dynamic in this period of time. I don't know if I replied. Yes, if I may, just a very rough indication on what could be the percentage of Raw material costs covered by automatic adjustments, although with some time lag. And what is the and cover the percentage very roughly. Martino, it's very difficult to give you this indicator because Contract by contract, the type of coverage is different. And there are gray areas too. Most of them are covered by the way, Tim. So we are on the right side of the But it's also a difficult period as well because also the customers are suffering the same issues. Yes, yes, that's clear. If I may, a question for Frederic. Welcome. So being responsible for the filtration and the air cooling, What is the normalized profitability in, let's say, normal time once they will be for these 2 divisions in the medium term. Thank you for the question and nice to meet you too. So it's quite difficult to answer because what was normalized before 2020, I'm not sure the norm will stay the same after the COVID situation and after 2020. So I think it would have been very easy for me to answer before 2020. Right now, the norm is very difficult to evaluate why because Basically, the normalized profitability is based on the acceptance of the company to get some business at one profitability or to let go some businesses when we don't reach this profitability. And right now, it's very difficult to estimate the impact of the COVID crisis plus all the CO2 regulations, the electrical car rates, the hybrid cars that are coming and what will be the impact on the profitability of the customers and de facto the pushback that will be on us and on our shoulders. What I can see is everything what Mauro said is totally right. It will be our business model. In 2021, we will have crisis of supply chain, crisis of material to solve. I think we will be able to manage the situation. At one point, there will be a stabilization, both of the shortage and the prices. So right now, the first one we are preparing is to, let's say, to be able to have a squeeze neutral, means if the materials are increasing, to get back as much and as quick as possible from the customers. Then as we said before, we have done a lot more from the fixed cost point of view in 2020. There will be a carryover on 2021, but we will not benefit from all the helps we get from the government in 2020. So we are missing this in 2021, and we will need to get it from actions. So I don't know if 2021 will be the year where we can beat in Air and Cooling and Filtration in percentage what we have done. Nevertheless, a good target for me could be to keep the percentage we have been able to do in 2020 with much higher sales, which de facto will convert in EBIT. I'm sorry, I don't unswear with a sharp figure. Why? Because I have been appointed a few hours ago. So give me a few weeks and a few months before fixing the standard profitability of the group and the business units. And second, because we are in a very, Let's say, strange period where everything we knew is changing. But I don't see that, let's say, Of course, it may be a risk, but I see more opportunities than risk in all the change that I foresee. Okay. When you talk about it's difficult to repeat the same profitability of last year for the Air and Cooling, are you referring to margin as a percentage on Sales or in absolute terms? No, not in absolute. I was speaking in percentage. The factoring in absolute terms, We would be helped in theory by the recovery of the volumes. In our encoding, if you look at 19% of EBITDA, Of course, we can always look for a few points more or maybe we can have a few points less. When I say a few, it's 0.5, 0.5. But the real question, for example, of Air and Cooling, I think, is not if we can have 20% or if we will have 18%. Is trying to keep in percentage the same profitability, what we can invest from an R and D CapEx point of view in order to prepare the future within 3 years, 4 years when the electrification and our good addition will increase. And that's what I'm doing for a few years now in our end cooling. It's not just to deliver a correct percentage year after year. It's also invest and prepare the future, which is very important in our business, as you know, especially in the engine side. Thank you. If I may, very quick question on CapEx projections. Jan, we have I don't know if we have a figure. I'm sorry. I don't have the answer right now. CapEx, We cut very sharply in 2020. We believe we should be roughly at the same level In 2021. Okay. Thank you. And Mauro, all the best. Thank you very much, Martino. The next question is from Alexandre Roberti of Kepler. Please go ahead. Yes, good afternoon. Thank you for taking my questions. I have 3, please. The first one relates to the color that you gave on the Electric vehicle order intake. So I appreciate the color. Could you please give us the split between what is pure EVs versus what is PHEVs? So that would be the first. The second one is on the fixed cost savings. So when I look at the bridge, I see that you Had savings of €44,000,000 How much of that can we expect to be carried over into 2021? And the final question is about the tax rate. Which tax rate could we expect for 2021? Thank you. It's Alexander, now speaking. About AV and pure With respect to hybrid, for the time being, the amount we are talking about Pure EV is pretty low. We are talking about a few points percent. But it's also tough to give you a reply because When we talk about this, sometimes, many for example, when we talk about Customers with the same platform with the V and hybrid solutions. Sometimes we don't know really Very well the final split of the products we deliver between hybrid and full electric. Our suspension is even more difficult because maybe the same Pension is working for traditional and EV and hybrid vehicles altogether. It's growing pretty well. It's growing pretty fast. I have to say that what we are learning is that also the suspension business is Somehow affected by the electrification because, of course, they are not impacted like air and cooling and filtration, but some of the solution needed for full electric and diarics for the suspension mainly for the stud bars are quite different with respect to the traditional vehicles. About the second question and the third one, Jan, if you can? So, Alexander, good afternoon. As Frederic pointed out, in the first Two quarters of the crisis were helped by the government incentives, so much to go in Italy, so similar schemes which are not going to be there forever. So when you look at recurring savings, They tend to increase in the last part of the year because in the last quarter, we didn't benefit as much from temporary incentives as we did in Q2 and Q3. So overall, Let's say that on €54,000,000 cost savings, we estimate that roughly 26%, 27% of return. Yes, maybe we have to tell also One additional information. On the last quarter, we presented Q4. We used very, very In very, very few cases, the social tools. So if you look at the last quarter, you see a quarter As a result of which, When you look at the cost savings in Q4, roughly it's 50% structural and 50% nonstructural. So in order to answer your last question, we used to have an unusual tax rate. It is unusual this year, but for other reasons. As you may have seen, when we are doing our footprint rationalization, Of course, we go for the loss making operations. So our tax rate is going to improve because we are disposing of loss making entities. So I'm not sure we'll be at 30% next year, but we are aiming at it. Okay. That's very clear. Thank you very much. All the best and Thank you very much. Thank you. Thank you. The next question is from Francois Robillard of Intermonte. Please go ahead. Hi. Good evening, everyone. Welcome Frederic and I, Mauro as well and Yan. Both of my questions have been taken already. Can you just come back on the last question from Alexandre on the target Tax rate, I didn't hear the number quite well. And second question was Romanian plant. It's going to start to be effective quite soon. When do you expect it to run at 100% run rate? And if we connect the dots as well with the various messages you gave on targets for 2021, so with print optimization. And you mentioned as well that you will not be able to replicate. So as a furlough measures like Cafe Integration or Schonage technique. If we connect the dots a bit on this one, does it mean that we can expect Some actions on suspension plans in 2021? Thank you. So I start with taxation. With taxation, Francois. As I said, we are shooting for the loss making operations, one of which was Filtration Brazil. So as we dispose of loss making operations, we are going to significantly improve our tax rate. And so the objective is to be as soon as possible around the 70% tax rate. So Francois, as I go to the second And third question, Romanian plant, Francois, I don't know If you know that the plant we have in Rodea He's starting production for the first two customers, German customers, at the end of the year. I'm talking about the end of 2021. So the plant He is preparing himself in order to start the production between November December this year. So next year 2022 will not be at full speed because there will be a ramp up. We expect to have a full speed the day after. In 2 years. The Romanian plant Today, as I said, is under commissioning. COVID unfortunately Push the team into some challenges because As you know, also Romania has been affected by COVID pretty heavily mainly in the last period of time. But I would like also to take the opportunity To say that the team did a great job in keeping the timing of development And also the prototype phases with the customers in place in this challenging time. The last point, the reply would be yes. Thank you very much. The next question is from Davide Meloni of Etradius. Please go ahead. Yes. Good afternoon, everyone. I have a question about the debt repayment in 2021. In the Balance sheet disclosed on your website, the current portion of medium long term debt is €170,000,000 I think that most part include The bond, which will expire in May and should be refinanced by €100,000,000 However, there are other €70,000,000 expiring in 2021. And looking at the cash flow, both in 2020, that, of course, was affected by the COVID. But also in 2019, the cash flow generated by the operations was almost absorbed almost fully absorbed by the CapEx since I have understood that also in 2021, the CapEx To the vet also in 2021, the CapEx you're planning should be around over €100,000,000 How do you think you face such a reimbursement? I don't know, maybe with the contribution of shareholders or something else. So good afternoon, David. With the current financing, we see absolutely no issue of financing in 2021. We even have visibility covering 2022 without taking new financing. The next question is from Roland Koonen of Value Holdings. Please go ahead. Yes. Good afternoon from my side. Thanks for taking my questions. I have 2. One is just an update and then Follow-up question on the Romanian plant question. As you showed in your presentation, Romania had a negative EBITDA contribution of minus €2,500,000 will this be a bit higher in this year in the phase of the ramp up For the start of production in Q4 or will it be lower? And the second question is a bit of special question. Maybe can you give an update on your light battery project with the Lion e Mobility and when we will see their meaningful sales and earnings contribution for the group. Thanks a lot. Nava speaking, Nava. So thank you for your question. Let's Start with the first one, which is Romania. The Romanian number We showed in the slide is in the GAAP bridge between 2019 2020. So it is not really, I would say, represented in EBITDA of Romania. It's showing The difference between previous year and this year. Romania is in the middle of the development phase today And the revenues are unfortunately very low. So it is was already forecasted by this. And we'll go on until year end, we will have the revenues from the first ramp ups. That was already forecasted like this at the beginning of 2020. About Lion, I think maybe on this also, Frederic can step in. I start saying that the collaboration with Lion Mobility is a very good collaboration. Eren Fuling is working with them since, I would say, more than 1 year in the Alfa. We started with the collaboration helping each other. I mean, We are helping them on the industrialization side because they have limited experience, maybe in automotive, not only. And they are helping us because of the new technology. And I would say, giving us an opportunity to sell this product to our current customer portfolio. It's a good collaboration. As I said, the company is growing. It's growing in Technology maturity and is growing also in attention from the customers. So my Best forecast, but then Frederic can step in, is that this year will be a key year to decide what to do together. Denis, do you want to add? Yes. I share what Mauro said. It's a great company. I know them for a bit more than 3 years in fact because I met the Chairman of Lion when he was at Remax and then we had good relations and he went to LION. We know very well the shareholder too. My teams are working with LION on a daily base, both in Europe, but also now in the other side of the world in USA. So I am confident about the technology of Lion. They start to have really good contacts with the customers. And for sure, I would say that the months to come will be key in the collaboration with Lion and SoGESI. As it is becoming more and more concrete with the customers, for sure, it's one important point that we will look how to continue to work with Lion, I hope to collaborate, but I trust best technology and their products. And the fit between the teams are very good. Sometime when you collaborate with another company, And here we are speaking about a young technological company. I would say, compared to an automotive company, sometimes you can have a gap of future And you know, egos start to fight and so on. And then the collaboration is dead from day 1. Here, what has been very good That myself, I have very good relations with the top management, but also all my teams from a technical point of view have a very good match with the Alliance team. So I'm sure from that, that we will have a good analogy to develop this business side in the coming months. Okay, great. Many thanks for the answers and all the best for the future. Thank you so much. Thank you. The next question is from Gabriele Gamarova of Banco Acros. Please go ahead. Yes. Good afternoon, Thierry. Just one question again on the fixed costs, EUR 215,000,000 In 2020, we've a good carryover on 2021 and Other actions like the one on the German plant. I was wondering if you can provide us provide me A target you have in mind in absolute terms for this number. So these EUR 215,000,000 of fixed costs, how they may evolve in 2021? Gabriela, it is not Again, easy to give you this target. As I said, the plan As we prepared, I don't know if you attended already the other calls in last year during the period of between May June, I would say. Between May June, we prepared the plan in order to lower the fixed cost year by year with actions. And every 3 months, the plan is revised and supported by additional actions, which are running in this period of time with also confidential actions too. So it's not from this standpoint feasible To give you target for sure, the company is doing a great job in this respect, Gabriela, because The actions are starting giving really and you see this from the last quarter of last year. The first results even if at the beginning Of the phase, because we started the actions, as I said, I would say after August last year. If I may add, Gabrielle, what's important is the ratio between gross fixed cost and Ms. Faitz, we have reduced this ratio in 2020 versus the previous year. We have benefited from local incentives. Our objective is to further reduce its ratio in the coming years, not to increase it. Because gross fixed costs, They are the right ones in a way because the more volumes you have to produce, the more things you have to put in your plants. Our objective is to keep on reducing year by year the ratio to the sales. And this is our objective for 2021. Okay. Thank you, Jan and Malo, Very helpful. And second question from my side and the last one is on networking Cartica. There was this cash strain of 32,000,000. Do you think it's doable to recover it already in 2021 with this, let's say, rate of recovery of rebound IHS It's forecasting or it is too optimistic? We are in a growth of uncertainties. You've seen in the outlook. It's common to see there are many uncertainties. Nonetheless, I believe the starting point for 2021 in terms of working capital is a good one, Especially on the supplier side, we have reduced The balance of our suppliers more than usual. So I think this should give us a good head start in 2021. I'm not sure we'll recover all that amount, but we should recover all of it. Okay. Thank you very much and all the best tomorrow and welcome to Frederic. Thank you. On your telephone. The next question is a follow-up from Davide Meloni of tradios. Please go ahead. Yes, sorry. I had a problem with my microphone. I couldn't reply either. Thanks for your feedback. I could hear your feedback, but I didn't understand it. I didn't understand how do you We plan to face EUR 70,000,000 debt repayment in 2021. David, as pointed out in the presentation, at the end of 2020, we have an excess of committed lines of €340,000,000 of which €100,000,000 will go with the repayment of the convertible bonds. So you can see that even with the repayment which are scheduled in 2021, we have ample space. And for the time being, we don't see any issue in 2021 and limited ones in 2022, Even assuming we don't take new financing. Okay. So you think you will use your headroom currently available? We have a lot of headroom at the end of 2020, which we'll start using in 2021. Thank you. Gentlemen, there are no more questions registered at this time. Very well. So again, I thank, as The opportunity to thank you for your time and the attention you pay on the company. And then a special Bye bye from my side to all of you. Bye bye then. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.