Good afternoon. This is the call conference operator. Welcome, and thank you for joining the Sogefi first half 2018 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Laurent Hebenstreit, CEO of Sogefi. Please go ahead, sir.
Hello. Laurent Hebenstreit speaking. I am together here with Stefano Canu, Investor Relations, and Yann Albrand, Chief Financial Officer. Laurent Hebenstreit, Chief Executive Officer of Sogefi. Welcome to this first half year 2018 conference call. I would like to use page three of the presentation, which is called First Half Year 2018 Highlight. We are pleased to report revenues at constant exchange rates up 3.2% at EUR 139.1 million, outperforming the market. The world market production for passenger cars and light commercial vehicles grew by plus 1.7%. This is a significant outperformance for Sogefi. The EBITDA at EUR 104 million at 12.4% came out lower than last year with two main effects, to which I will come back. One is the foreign exchange, the other one is the increase of the steel costs. EBIT, for the same reasons, came out at 5.3%, EUR 44.4 million.
Net results at EUR 17 million compared with EUR 19.4 million. We can say on the P&L side that despite negative headwinds from foreign exchange and from the increase of the steel prices, steel costs, Sogefi results come out with a net result at EUR 17 million in the first half. The free cash flow came out at EUR 3.9 million. We had a very strong cash flow last year of EUR 19 million in the first half. We will come out later in the presentation on why we have this difference. Some of it comes, of course, from a lower profitability, which we have mentioned before, and the others mainly from effects of investments. The debt to EBITDA ratio came out at 1.3 compared to 1.5 before, which is a positive sign that the financial situation of the company overall continues to improve.
Two positive highlights, overperformance of the sales, improvement of the debt on the EBITDA ratio. On the negative side, pressure on the foreign exchange and on the steel. If we look now at page four, what we see on page four is the sales by business unit. We insist on this because we have, in this first half year, divergence in the performance of the business units, which starts with the sales. At constant exchange rate, Suspension was growing 7.1%. This is where we have the major negative impact on the steel. Suspension is impacted by the foreign exchange. You see that in the difference between the 7.1% at constant exchange rate and the 1.9% growth as reported. On Filtration, we had a growth of 2.7%, still higher than the market.
We see also the impact of the foreign exchange because we report at current exchange rate a decline of -4%. Last but not least, Air and Cooling at constant exchange rate is showing a reduction of 1.2%. At constant exchange rate, the effect is mostly due to North America, where in the first half year, we had a reduction of our sales, which is linked to the phase out of a product and the phase in of this product which will come in the second half. It's an air intake manifold for the North American market. Due to foreign exchange impact on Air and Cooling, the decline at current exchange rate was 5.1%. We also highlighted Q2. We are ready to answer your questions on the second quarter compared with the first quarter, which was quite different than last year.
In the second quarter, actually, we had an increase in activity compared with the first quarter. We had more activity, we had a much stronger impact of the foreign exchange. Moving on to the revenues by geographical area. What I would like to highlight is mainly North America, which is at constant exchange rates, growing 1.6%, whereas the reference market has been declining by -2.9%. This refers also to my comment on Air and Cooling, which is more exposed to North America before. As far as Asia is concerned, we still have a nice growth at 13.5% at constant exchange rate. In South America, with reference production market at 10.7%, we can look at the glass half full or half empty. Half full is at constant exchange rate, 13.5% increase. At reported change, current exchange rate -14%.
Our exposure to South America is, of course, higher exposure in terms of foreign exchange impact due to the fluctuation of the Argentine peso and the Brazilian real. Moving on to the results on page six. We just highlight here that the value of the impact of the exchange rates in the first half is EUR 5.4 million in terms of results. The negative impact of higher steel prices is EUR 6 million on the first half, which was EUR 3 million in the first quarter, EUR 3 million in the second quarter. Therefore, we're at EUR 6. Unfortunately, we have not been able yet to close the gap on the steel, which is impacting negatively. As you see, our EBITDA is going down EUR 10 million. We have here two variances of EUR 11.4 million compared with the EUR 10 million reduction which we are showing.
On the net income, just commenting on the fact that this was after EUR 11.8 million of tax expenses in 2018, down from EUR 14.9 million. We are in line with what Yann indicated as a normalization of our tax expenses going forward. Moving on by business unit on page seven. The results, we are missing EUR 10 million on EBITDA, actually, Air and Cooling is improving in percentage very significantly from 15.5% to 16.2%. Filtration is improving slightly despite the negative impact of the exchange rate. We see clearly that our problem is in Suspension, where the main issue is steel. We also have other negative effects as far as productivity is concerned in Suspension. Moving on to the free cash flow. Maybe, Yann, you would like to comment on page eight.
On free cash flow, the main difference is the start of two new plants. The main one is Morocco, which we already commented with a cash burn in the first half of EUR 9 million, which of course didn't exist a year ago. The second is the EUR 3 million cash burn for an extension of a plant in Slovenia. These two new plants explain EUR 12 million out of the EUR 15 million adverse difference versus prior year. The rest is partly linked to less profitability, but mainly to working cap impacts, which we are going to improve in the second half.
Thank you, Yann. Moving on in terms of perspectives beyond the financial results to provide a broader perspective. I would like to go to page 10. In the last three years, we have been doing three things at Sogefi. We've been improving profitability, currently facing some headwinds on steel and on foreign exchange. We have been investing in new plants to build a competitive footprint for the future, and we have been refocusing our efforts on technology and growing with Daimler and with BMW. We are pleased to report here growth with Daimler, which is very satisfactory. This is mainly driven by Air and Cooling, where we have the start of a new engine, which is an engine which is common between Daimler and Renault-Nissan-Mitsubishi Alliance group. It is a gasoline engine where we supply the air intake manifold.
This is a market share increase for air intake manifold at Daimler. This is satisfactory. I'll be happy to answer if there are questions on the variations with the other customers. Moving on page 11, as far as product and leverage. We put an overview of our position in terms of the different positions we are having with products where we are in the harvest strategy, which is mainly the fuel filters. The positions where we are in a challenger, where we have more growth opportunities. The positions where we have clear leadership positions, being number 2 worldwide in the manifold, number 2 in Europe on stabilizer bars, number 4 worldwide on the oil filters, and number 1 in France in the aftermarket with the Purflux brand. We continue our efforts to increase profitability with four elements. We've changed a little bit the presentation here.
Purchasing has not changed. Shop floor, we've included our efforts on Industry 4.0 and digitalization. I will come back to that. We've changed the wording on the point number 3 which we call pricing power, which is not just a change of wording, it was program management, which was then number 3. The idea is that our efforts on pricing not only are focused on programs but are also focused on current products. The case of the steel is a good case in point, we are also having a broader initiative which we will deploy during the second half of the year on working on the pricing power of the three business units of Sogefi, as we anticipate the continuation of the tensions on the raw materials, as well as the energy costs and the labor costs going forward.
Therefore, that's why we've changed the orientation of this initiative to be an initiative on pricing power. On point number four, indirect cost reduction is continuing. As Yann was saying, we are starting two new plants. Of course, this has an impact of increasing the cost, but if you look at the cost in the existing plants, we continue our program on reducing the indirect costs. As far as the cost reduction plan, which is on the shop floor, which is item number two of this plan, if we move to page 13. We have recalculated the perspective of the cost reduction that we plan to extract from the plant, and we now project EUR 75 million of cost reduction targets over the next five years. That means out of the EUR 100 million of addressable costs, we have now targeted EUR 75 million in the next five years.
Continuing with the digital initiatives, on page 14, we have been successfully rolling out automated guided vehicles in Montréal. We are moving on the dematerialization of production boards. We are deploying several initiatives on the Internet of Things. We now have multiple cobots, which are robots which are human-friendly in the plants in Orbey, in Lutila in Sant'Antimo. We are developing smart vision in Vire, in Douai, in Vesoul, and in Marciac. And 3D printing in Orbey, as we believe that the air-cooling products include where we could see a real impact of the digitalization initiatives. If we go to page 15 now, which is our two main initiatives as far as competitive cost country, the competitive footprint. Mexico is continuing its growth, mainly for Suspension. As Yann was saying, the cash burn for penetration Morocco is EUR 9 million.
We had almost zero sales in the first half of the year. We expect the sales for Morocco next year to be around EUR 25 million, with much higher profitability than the average of Sogefi today. Moving on, page 16, we continue working out on the Suspension Eastern Europe plant project. To give you an update on that, we've narrowed the choice between Hungary and Romania for the large plant in Suspension. As we are currently negotiating with both governments, we cannot announce more in here. The goal is to have this plant being in operation, producing the first parts for pre-series in 2019, with significant volumes coming up in 2020. As far as business news, we are actively working on the evolution of the powertrain evolutions. We remind on page 18 that we are working on four categories.
We are working on pure internal combustion engine, on hybrids, which are also using combustion engine, on battery electric vehicle, and on fuel cell electric vehicles. A short reminder on page 19 of two press releases. One on the battery pack cooling manifold for Renault-Nissan-Mitsubishi Alliance, which was an innovative solution which we developed for Renault-Nissan-Mitsubishi Alliance. One on the engine coolant pump for hybrid engines, a new generation of engines for Volvo, which is optimized for hybrid and where Sogefi was chosen, which is interesting for us as it is both a premium customer and a leading customer as far as going to new energy vehicles. This will be produced in China. Moving on to the last page of the presentation, which is the outlook.
Despite the current uncertainties of the world car market, the group confirms the expectation that it will moderately outperform the market at constant exchange rates. Although you've seen that in the first half, it was more than a moderate over-performance. Thanks to the growth initiative in Mexico and in Morocco, the group also foresees a net result on a full year basis in line with that of 2017, despite the increases in the cost of raw materials and the adverse exchange rates. Thank you very much for your attention. Yann Albrand and myself will be happy to take your questions.
Excuse me. This is the current call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question comes from Monica Bosio with Banca IMI. Please go ahead.
Good afternoon, everyone, thanks for taking my questions. Actually, I have a few ones. The first is related to Europe in the second quarter. Can you please comment a little bit on the performance of Sogefi in Europe in the second quarter, which at constant exchange rates was at the +1.3%, while the reference market production was up by 4.7%? The second question is related to the EBITDA margin in the second quarter, which is set at 12.1%. If I remember well, in occasion of the first quarter results, the company was expecting a trend in line with the first quarter, which was at 12.6%. I can imagine that this is due to the raw material prices and to the fact that there is any kind of reversion so far.
I know it's a difficult question, I would appreciate if you can give us some highlights on what do you expect in term of margins for the second half of the year. The second question is on restructuring. Restructuring were quite low also in the second quarter. I'm still wondering if you stick with your target of a total restructuring of maximum EUR 10 million for the full year, or are you guiding for something lower? The very last is on the total CapEx. Can we imagine a total CapEx tangibles and intangibles by the end of the year in the range of EUR 130? The tax rate, it has been particularly high in the second quarter. I remember that Yann guided for something in the region of 30% by the end of the year. I just wondering if this is still the case. Thank you very much.
Thank you, Monica. Hello. On the Q2 sales, you're right. One of the factors which explains the variation in Q2 is aftermarket.
In aftermarket in Europe, one of our large customers has pulled forward the promotion, which was usually done in the second quarter, which was done in the first quarter, actually. This is an important factor. I remind everybody that in the Filtration, aftermarket in total represents 60% of the sales, OEM represents 40%. If we compare with car production, in the case of aftermarket, the comparison is difficult because the sales in aftermarket, basically, they have nothing to do with the production-
of the period, they have to do with the car park and with other factors. What has happened is, as I mentioned, we had a pull ahead of the sales in aftermarket in Q1 rather than in Q2. This is one of the factors which explains why the sales come out lower than the evolution of the market.
Okay.
Now on the EBITDA in Q2, you are right, this is mainly the steel impact because we have, again, a negative impact of EUR 3 million remaining in our numbers. What I can tell you is that towards the end of the second quarter, but not booked in this quarter, we started to have some limited progress on the negotiation on the steel pricing. I don't know, Yann, you want to answer now or later on the H2 EBITDA indications.
On the EBITDA, we plan to beat the EBITDA of last year in the second half, slightly above.
As far as the comparison, Monica, you also have to remind that last year, the gross margin of the second quarter was quite good, actually.
Much higher than the gross margin of the first quarter or the variable margin. When we compare quarter to quarter, there is an effect of last year, both in terms of volumes and in terms of percentage of gross margin.
Okay. Sorry to interrupt you. I didn't catch Yann answer, unfortunately, because the volume was really low. For the second half?
Monica, what we plan to do in the second half is to beat the EBITDA the second half of last year.
Okay, thanks.
On the restructuring outlook, Yann?
On the restructuring, we plan to be roughly in line with the restructuring we had in a year ago.
One year ago. Okay.
On the full year.
Full year.
Yeah.
On the CapEx, now we have in the CapEx, the tooling, which due to the [inaudible], which is changing a bit the understanding.
If we are talking of tangible CapEx outside of the tooling, which is the first important element. Due to the fact that the cash generation situation in the first half was not as good as we expected, we've been focusing on limiting our CapEx. On tangible CapEx for the full year, we are aiming to be flat, whereas in the first half, we have an increase of EUR 4 million.
That's for tangibles. For intangibles? We were expecting, in general, total CapEx, including intangibles, well above EUR 100 million. I was wondering if you can give us some indications also for the intangibles.
On tangible plus intangible, we are still going for slightly more than EUR 100 million.
Okay.
Not EUR 130 million. Not EUR 130 million.
EUR 130 with the tooling.
With the tooling. What you have to take into consideration is due to the IFRS, now tooling is in CapEx.
Yes. EUR 130 with the tooling.
It's slightly above EUR 130 including the tooling.
Perfect.
The main element Laurent just mentioned is that on tangible CapEx, we decided to limit our capital investment during the second half of the year in order to land roughly at the same level as last year on a full year basis.
Okay.
As far as intangible, what we are talking about is the capitalization mostly of R&D. We have continued to increase R&D during the first half year. The fact that we have headwinds on foreign exchange and steel does not prevent us to continue to take the right decision as far as the future of the company is concerned on increasing the R&D investments in line with the technology presentation of last year.
Okay.
On income tax, Monica, last year we had a global ratio of 43%.
We are still shooting for an improvement. It's not going to be as good as we planned. It's a question of where we generate the profits and where we generate some losses. We are more shooting for an income tax rate on a global basis between 0.37 and 0.38.
0.37. Okay. Thank you very much.
The next question is from Renato Gargiulo with Fidentiis. Please go ahead.
Yes, good afternoon. My first question is on European market, looking at the second half of the year, if you expect to narrow somewhat the gap with the total market. Related to this, if you are seeing any further disruption related to the new rules for emission tests. If you are seeing any disruption also related to the potential duties on European car makers, U.S. duties. My second question is on profitability. Apart from the steel costs, if I understood, you were talking also about some issues on profitability for the Suspension. Could you please give us any more color on it? My third question is on M&A, if you just can give us an update, if you are seeing more opportunities around or some types of valuation. Thank you.
Thank you. What we are projecting as far as volumes in the second half is, I would say, according to IHS, at a worldwide level, a little bit more growth than was in the first half. In the first half, we had 1.7% growth of the world market, and we project for the full year 2.1% for the full year, which means that the second half, like for like, is a bit more growth at the worldwide level. You are right, there are some uncertainties on WLTP and the new test cycle and emissions. We do not see major disruptions for Sogefi right now. The disruptions which the customers are having with cars they put on car park waiting for emissions is so far not impacting us. From the latest release we received from the customer in July, there is no sign that there will be significant disruptions.
We are expecting to know more beginning of September, I would say beginning to mid of September, when the customers will release their forecast for the end of the year. By now, we will see more of what's going on. So far, we do not expect significant disruptions for Sogefi on volumes on H2. On the profitability of the Suspension, you are right, there are two issues. The EUR 6 million of deterioration of the steel impact is not the full story, because we also have in Suspension, higher quality requirements from our customers, and this is generating, for the time being, more quality walls and more costs inside the company. The quality we deliver is according to what the customer expects, but at higher cost for Sogefi. This is something we are working as a priority to resolve over the second half year.
Coming to the mergers and acquisitions, what we see is a continuation of the trend with some players going pure play on powertrain, with the move of Continental announcing that they will separate their activity for powertrain, following the move which Delphi has done already. So far, what we observe on the market is there are not very many transactions coming through. For probably reasons that a number of investors or firms look at the market as being probably towards the peak of the production volumes worldwide. Although we continue to have some growth, there is no expectation of significant growth, potential downsides. Therefore, although there are more assets for sale, we receive more files, there are not more deals coming through, as everyone is more watchful.
I confirm that we continue in the logic that was communicated last year by Monica Mondardini and this year again by Rodolfo De Benedetti to look at various files. Nothing new to communicate at this point to investors.
Thank you. If I may, just one follow-up. On Morocco, you are targeting EUR 25 million sales next year. I was wondering when you expect to reach full production utilization. Thank you.
Our initial plan for phase one of Morocco was calling for EUR 30 million. I think we will be in the full rhythm. There's EUR 25 total for the year, it will be lower at the beginning and higher at the end. I think we'll be full speed in 2020 in Morocco.
Thank you. Thank you very much.
The next question is from Alexandre Raverdy with Kepler. Please go ahead.
Yes. Good afternoon, gentlemen. I've got two questions. The first one, could you please confirm that you expect for the full year global production at 2%? Because I think you were slightly more cautious on that side. The second one, what is the impact from the start cost on the P&L? Because I saw the impact on the cash flow, but not on the P&L. Thank you.
Thank you. I'm not sure I heard correctly because the sound is not very good, your first question. Could you please repeat the question? The first question?
Yeah, sure. It was on your expectation for the auto production this year. Could you please confirm that you expect 2%? Because I thought you were slightly more cautious.
We expect 2% growth for the car production worldwide, yes.
Okay. Thanks.
Which is IHS. It's not specific to Sogefi.
Okay.
It's easily used as a base. On the start of costs on the P&L, Yann, we said EUR 9 million for cash impact. For how much in the P&L?
In the first half of 2018, we had fixed costs without revenue of roughly EUR 1 million in Morocco.
Okay. Thank you.
The next question is from Martino De Ambroggi with Equita. Please go ahead.
Thank you. Good afternoon, everybody. On your net profit guidance for the full year, which please stop me if I'm wrong, now is in the region of roughly EUR 27 million, in line with last year. That's the starting point. Just to understand, first of all, which is the underlying assumption of EBIT that you have in your mind for this net profit guidance?
Martino, we said in terms of EBITDA that once we were EUR 10 million down in the first half, we expected to beat the year-to-go numbers in the second half. That's what we have stated. In terms of EBIT, it will be slightly different because in the second half, we'll have one-off impacts below EBITDA.
Referring to?
Recurring operations.
I'm trying to reconcile the net profit. You mentioned tax rate now is 36%, 38% for the full year. In my notes, I had a previous indication in the region of 30%. This is one of the reason why there should be such a difference. Am I right, the 38%, 36% is just for the current year?
Yes.
Going forward, which could be the normalized tax rate?
Normalized should further decrease. It already decreases in 2018 versus 2017, it's meant to still go down in the following years.
There is a point of arrival that you have in mind?
Between 30% and 33%, depending on the countries.
Okay. The difference between your previous indication and the current one is due to?
It's simply when you have a pre-tax result, it depends what is made of. It usually is a mix of profits and of losses. In some countries, we still are running at losses, and we have more losses, and therefore, the ratio between taxes and pre-tax at the end reads higher.
Okay, there is nothing structural.
No, it's structural. This is geographic. This is geographic. [inaudible] .
Yeah. Thank you. Always on the full-year guidance, what are your assumptions on raw materials? You had a EUR 6 million negative impact in the first half and the Forex.
What we have in the second half, as Yann said, as a forecast, is a moderate improvement of the situation. I would not venture into giving exact numbers as this is a continuous fight with our suppliers on one side and with the customers on the other side. As I indicated in the beginning of the call, towards the end of the second quarter, we get some more positive elements from the customers as far as taking into account the steel price increases. It's not a number that I'm willing to share publicly.
Okay. I remember in your previous call, you mentioned to be able to recover at least 50% of the increase in steel price. In your initial remarks, you mentioned that is probably becoming more difficult than initially expected. The impact you had in the first half and what you will have in the full year is mainly due to the it's not possible to recover the 50% you expected, or it's just a delay, but you are still confident in getting your goal?
Okay. Thank you for a precise question because it's a complex matter. As far as the percentage is concerned, we have achieved 50% at the end of the first half. The steel price has continued to increase in Q2, therefore, the negative EUR 3 million of the second quarter is higher than what we expected with the 60%, because 60% of X, if the X is higher, of course, the negative impact remains higher. What we are aiming at for going forward is not to stay at 60%, is to go more towards 70%-75% recovery for next year. It's up to us between now and the end of the year to obtain from the car manufacturer the recognition of 70%-75% of the steel. We see a continuation of the steel increase in Q3.
Therefore, that's why in order to improve our results, we need to improve the percentage of what we recover as well. If we would stay at 60%, the results would again deteriorate. I don't know if I'm clear in my calculation here.
Yeah, it's a difficult issue. A very quick question on Brazil. You didn't mention any impact, or you didn't quantify any impact from the strike that stopped the production for several days. It shouldn't be a relevant impact.
No. It was a relevant impact in the second quarter because during the month of May, we had a stoppage of basically 10 days of production out of normally 20 days of production in a month. We had half of the normal sales in Brazil from the month of May. It's part of the reasons why the second quarter was weak, is because, of course, we could not variabilize 50% of our costs within 10 days, meaning that this strike was a wild strike. It was not expected and not planned by anyone. This has impacted both the sales, but it also impacted in terms of cash flow because the shock of the strike has created disruptions continuing inside June, and part of our overstock at the end of June is linked in Mercosur with the strike, which has happened in May.
Therefore, it was a significant event of the second quarter.
Yeah, you didn't quantify it even roughly.
Just on Brazil, we had a cash burn of roughly EUR 2 million, which was linked to the general strike. We are going to have to fix in the second half.
Very last on the Indian put option exercise. No news. Always EUR 15 million to be cashed out in the second half.
Discussion still ongoing. Price to be more in the region of EUR 16 plus. Likely to happen in the coming weeks or months. Not yet finalized. We have not reached a full agreement on the final price of purchase the 30%.
Thank you.
As a reminder, if you wish to register for a question, please press star 1 on your telephone. The next question is from Gabriele Gambaro with Banca Akros. Please go ahead.
Yes, good afternoon. Thanks for taking my questions. Just a couple. The first one is on the free cash flow you expect for this year. Can you share with us a target you have in mind? The second one is on the Suspension plant you want to create to build in Eastern Europe, if it is possible to understand what would be the contribution in 2019 and basically at full steam in 2020 to your P&L. Thanks.
Maybe I'm going to take the one on numbers. On free cash flow in the second half, leaving aside cash in or cash out linked to variations of perimeter, I'm referring mainly to India. We expect a free cash flow on the second half, roughly in line with that of the second half of last year, which was EUR 15.4 million.
Concerning the Suspension plant in Eastern Europe, thank you for the question, it's a very important element. It is a bit early as long as we've not finalized the negotiations on the localization of the plants with other poles, give you a full package communication on the investment in the Suspension plants in Eastern Europe. Until now, it was Europe, Middle East, Africa. It's clear that it's Eastern Europe. It is between Hungary and Romania. I expect that before the end of the year, we'll be able to communicate a full scope on this project as we've been doing for the other projects. It's just a bit early.
Okay, just a quick follow-up on this. You have been speaking about this project since at least nine months. Is the overall process on time? Do you have any specific issue or, is everything okay with this?
Yes, it is everything okay with this. The reason why it's taking time before announcing is the fact that as this is a significant investment, we want to extract the best possible conditions from the host country. That is taking time to be finalized.
Okay. Thank you.
The next question is from Roland Kroenen with Value Holdings. Please go ahead.
Yes, good afternoon from my side. Thanks for taking my question. A follow-up on the question or your comment on the results for the second half 2018. I didn't catch it rightly. You said something about extra burden between EBITDA and EBIT in the second half of the year. Am I right or please could you be a bit more precise on that?
I was not too specific on what is going to happen to our EBITDA. What I said before is that we plan to beat the EBITDA of the second half of last year in 2018. We are working on an operation which will have an impact below EBITDA, but at this stage, I can't say anymore.
Okay, thanks.
Gentlemen, there are no more questions registered at this time.
Thank you very much to everybody for participating in this call, and look forward to be again in contact with you for the call at the end of October for the results of the third quarter. I wish you, all of you, good vacations as I guess most of you will take some days of rest before we start up again at the end of August. Thank you very much to everybody.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.