Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Q2 report 2019 conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, on Thursday, the 15th of August 2019 . I would now like to turn the conference over to your first presenter today, Alexander Kara. Please go ahead.
Good morning, everybody, and welcome to the presentation of NKT's Q2 2019 results. My name is Alexander Kara, CEO of NKT. Together with me, I have my colleagues, Roland Andersen, CFO of NKT, Basil Garabet, CEO of NKT Photonics. Further, Mads Bodenhoff , CFO, NKT Photonics, and Michael Nass Nielsen, Head of Investor Relations of NKT. The two gentlemen, Roland and Garabet , will be the main speaker today, but before I hand the floor over to them, I will give a short introduction about myself. As mentioned, my name is Alexander Kara, CEO of NKT, and I have started just two weeks ago, 1st of August, in Denmark . I am 58 years young, and I am a German and a Swiss citizen. I moved to Copenhagen and physically now work out of Copenhagen and work in the headquarter in Brøndby.
In the next couple of weeks, I will obviously spend a lot of time in visiting customer and visiting colleagues in the various factors and sites around the globe. I have a long career behind me, in ABB and hold several management position, leadership position, and one of them was the power cable business from 2012- 2014, which was then acquired by NKT in 2017. I have a lot of experience, and I have worked in different part of the organization and different functions in power transmission, power generation, and lived also in several countries and have a long track record and work also in turnaround units. I am looking forward very much to bring NKT to the next level and make it a success. We are working in an interesting industry, which has potential to grow, and I am optimistic that we can grow.
Today, Roland and Basil will do the main presentation of the results of Q2 2019, as I have just joined, and I hope you understand that. I will be more in a listening mode during this Q&A, and will be very happy to answer questions related to me. But please accept that operational performance questions need to be answered and handled by Roland and Basil. Having said that, I will now hand over to Roland and Basil.
Thank you, Alex. Let's jump into slide six. For the second quarter in NKT, we had a revenue of EUR 245 million, which was down from EUR 306 million in the same period last year. This revenue reduction is primarily driven by the expected reduced activity in our Solutions business. It also meant negative organic growth, driven by the Solutions business, despite a positive development organically in our Service & Accessories business. Our EBITDA ended at EUR 9.4 million. It was down from EUR 32 million in the same quarter last year, but up from EUR -2 million in Q1 this year. This is also primarily driven by the reduced activity in Solutions, primarily the Karlskrona plant. We managed to keep our high-voltage order backlog basically flat compared to Q1 2019, and we were awarded a few smaller projects here under the Gina Krog turnkey project to connect the Johan Sverdrup 2 platform.
After the Q2, we were awarded another EUR 90 million contract for the Viking Link project. Profitability in A pplications remain unsatisfactory. We have a mixed bag of growth performance across our countries where we serve with our products, coming back to that, and a new head of that business line was appointed during Q2. Service & Accessories delivered a satisfactory financial performance. It's driven both by growth in Service, but also in the Accessories business that is experiencing good traction in these months. This leads us to maintain our financial outlook for 2019. We still guide a revenue of between EUR 0.9 billion and EUR 1.0 billion and an operational EBITDA between EUR 10 million- EUR 30 million. If we jump to slide seven, our Solutions business. I think the Solutions business experienced a reduced level of activity and the financial result was as expected.
EUR 111 million in revenue and a - 29% organic growth with an EBITDA of EUR 4.3 million. Low capacity utilization in Karlskrona continued, and this is predominantly because we have seen a very low level of high-voltage projects ordered in the market during 2017 and 2018, and as expected, suffering from that during 2019. We have satisfactory production execution on our backlog projects. We have completed the pull-in of the last NordLink project connecting Norway and Germany. So the offshore part of that is basically done, and remains to do the onshore part down in Germany, and then expectedly conclude that project during the end of next year. Also, the Caithness-Moray project is approaching a finalization, and we progressed our Borssele project production in the Cologne factory. NKT Victoria was satisfactorily deployed during Q2, and we expect that to continue for the remainder of the year also.
If we jump to slide eight, a short update on our view on the high-voltage market. NKT won a few small orders during the first half of 2019, but a very few number of large orders was awarded in the market. As mentioned before, a part of the Viking Link was won after closure of Q2 in July 2019. We continue to have good progress on several tender processes across geographies and across market segments, predominantly in Europe and also in the U.S. We maintain our market outlook that it looks attractive both in the medium- term and in the long- term, and we still expect that the total value of awarded high-voltage projects during 2019 will be at least on par with the level in 2018, i.e., approximately EUR 3 billion. If we jump to slide nine, our high-voltage order backlog.
High-voltage order backlog ended at EUR 1.0 billion by the end of Q2, against EUR 1.10 billion at the end of Q1, so basically flat. A fourth of that will be delivered during the remainder of 2019, and 75% of it will be from 2020 and onwards. As we see from the list here, we have a lot of offshore wind, but still have to fill the factory, especially in Karlskrona, further with interconnectors. If we jump to slide 10, the Applications business. The financial performance in that business is still unsatisfactory. We had revenues of EUR 106 million, organic growth was -8%, and EBITDA ended at EUR 2 million. I think across the markets, we saw relatively healthy growth in some of our essential European markets, where we have suffered a little bit during the quarter in Denmark and to some extent in Sweden also.
We continued the implementation of our SAP upgrade, and we think we are on top of that coming out of Q2 2019. That first wave was done in the Scandinavian sites. If we jump to slide 11, our Service & Accessories business line, they posted a revenue of EUR 32 million with a + 9% organic growth, and that is considered as a satisfactory financial performance. There were positive developments in both segments. The Accessories business has performed well and has gotten a breakthrough in the Middle East market, but also in continental Europe. Our Service business successfully conducted a few repair orders in Q2 and also a sizable offshore power cable repair, whereas the onshore service business was less active. The development in our high-voltage accessories segment was below expectations, and that is primarily due to the market conditions in U.S. and in Russia.
With that, I will give the word over to Basil for a flash on Photonics.
Thank you, Roland. Good morning. Going through the key highlights for Q2 in 2019. Our revenue came in at EUR 17.9 million. That is up from EUR 17.6 million in the same quarter of 2018, mainly driven by imaging and metrology and sensing. That represents an organic growth of 1%, which is as expected in our planning. Q2 is going to be exceeded at Q3, and in Q4 with a higher increase. Our EBITDA came in at EUR 3.9 million, very satisfactory. That is up from EUR 1 million in the same quarter of 2018. It is the best quarterly result that we have had in EBITDA outside our traditionally high Q4 results. Our order intake was also satisfactory, came in at 4% growth, and it represents a positive book-to-bill. The financial results for the quarter are in line with our expectations.
In the quarter, we also launched five new products in the industrial photonics market at the Laser World of Photonics show in Munich, which happens every two years, and that was very successful for us. We do, however, see a global market headwind in our industry, but we are still guiding with organic growth of 15%-20% for the year and an EBITDA margin of 15%-20% again. If we move on to page 14, business development. In the three sectors that we report on, imaging and metrology was, as I said before, the main driver for the growth. It represents today 38% of our revenue, driven mainly by our supercontinuum laser and the U.S. market, both of which are moving very satisfactory in our planning. Sensing and energy had moderate growth in the quarter.
However, it is moving in the positive area, and a large part, again, of the growth was generated in our U.S. market. The third sector, which is material processing, is 31% of our revenue. We saw a slight negative movement in that. That really belies the way the market is advancing, and it is a significant part of what we're trying to do. But we are releasing new products, and we should see more positive growth in that in the next two quarters. All in all, a satisfactory quarter for NKT Photonics. With that, I'll pass over to Roland.
Thank you, Basil. If we look at slide 16 on the group's revenue bridge, just a few highlights. The low revenue is obviously driven by the development in NKT, with -17% growth in NKT and 1% in Photonics. We had a few swings from currency, and that's primarily the Swedish krona, but also a little bit the Polish and the Czech currency. Important to highlight, we disposed our railway business cable activities in February 2019. If you jump to slide 17, the income statement. Operational EBITDA Q2 impacted by lower revenues, profitability, and solutions, primarily due to the loading factors in Karlskrona and Photonics positively impacted by development in improved project profitability and also in more effective cost containment.
The implementation of IFRS 16 have increased our operational EBITDA by EUR 1.7 million across the group, and it is EUR 1.1 million from NKT and EUR 0.6 million from NKT Photonics. We have had a few one-off items, primarily related to NKT, and this is predominantly the execution of our cost program, but also a few strategic initiatives where we are running a production improvement program. If we jump to slide 18, the group's operational EBITDA. Margin was down by 1.6 LTM from Q1 to Q2 2019, driven by NKT. Important to highlight that the profitability improvement from 2015- 2017 was primarily driven by the acquisition of the ABB HV Cables activities, but also the divestment of the loss-making Chinese operations in NKT. Following the relatively low level of high-voltage projects awards during 2017 and 2018, the profitability for NKT has decreased since 2017.
If we jump to slide 19, the balance sheet. Working capital has improved during Q2, and main drivers for that have been a favorable development in the Solutions business, but also Applications have improved somewhat. In NKT Photonics, working capital was on par with Q1. Capital employed has increased, partly due to the impact of IFRS 16. Lease liabilities have gone up by EUR 33.9 million , has gone on the balance sheet. Also important when you compare to 2018, remember that NKT A/S issued a EUR 150 million hybrid security bond in Q3 last year, and the hybrid security is classified as equity, and thereby reducing our net bearing interest by the same amount.
If we go to slide 20, a little bit of breakdown on our working capital, where milestone payments and careful management of the projects improved our working capital a little bit from the order backlog into the Solutions business. Also, Applications improved during Q2, primarily because they had built up inventories in Q1, preparing for the higher seasons over summer. Important to note here that working capital will primarily depend on timing of payments and solutions, which will cause quarterly fluctuations around a certain level. If we jump to slide 21, group cash flow statement highlights positive EBITDA contribution for both NKT and for Photonics. Working capital was positive, driven by NKT. The investing activities were higher than the same period last year, and CapEx was mainly driven by NKT.
We have been operating some of the equipment in our Cologne factory, and we are also about to conclude our DC qualification in Cologne, expected to be done by end of 2019. Then there has been a smaller payment related to the acquisition of Onefive in NKT Photonics. That means the cash flow from financing activities at breakeven with no significant movements. If we jump to slide 22. Our financial leverage ratio, our NIBD, excluding the IFRS accounting impact, decreased slightly from the last quarter, driven by positive earnings and favorable working capital development. Accounting-wise, though, the implementation of IFRS 16 has increased our debt level by EUR 34 million of now capitalized lease expenses. The net interest-bearing debt is broken down into EUR 169 million of mortgage debt and EUR 133 million net on our RCF, revolving credit facility, under which we have available EUR 300 million.
Only the RCF here is subject to financial covenants. These include agreed remedies in the form of security over NKT Photonics and the vessel NKT Victoria. This development was as expected, and NKT has sufficient financial headroom to manage the lower level of activity expected in 2019. If we jump to slide 23, this leads us to reiterate our financial guidance for 2019. That means that NKT is set to deliver a revenue of between EUR 0.9 billion and EUR 1.0 billion, with an operational EBITDA in the range between EUR 10 million- EUR 30 million. NKT Photonics maintains their 15%-20% organic growth targets and an EBITDA margin of 15%-20%. With that, I think I will give it over to the moderator and open up for potential questions.
Thank you. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. To cancel your request, please press the hash key. Once again, to ask a question, please press star and one on your telephone. Your first question comes from the line of Artem Tokarenko from Credit Suisse. Please ask your question.
Good morning. Thank you very much for taking my questions. I have three, if I may. My first question is to Alexander. I wanted to ask about your initial findings on the business, maybe more strategically from high level, what are the main areas you see that need some improvement within NKT? Also, how do you think about the group's financial leverage, whether you think high leverage is a risk to future project awards or whether customers are happy with current levels? If you can give any comment on this, that would be very helpful.
Yeah, I can give some comments, but not to the financial leverage. As I said, the operational question will be answered by Roland. For me, I have worked in this business some years back, and if I look when I was leading cable business from 2012- 2014, I see today the numbers of projects which are in the pipeline, that opens great opportunities. Looking forward now, we expect that some large orders will be awarded in Q4 and Q1. We need to secure some of them. With this, we will build the backlog for Solutions, and that will bring us to higher revenues. This we need to execute in a professional manner. So I am optimistic that we will come up here, if we build up the backlog in the Solutions. That is a very clear target to win some of these orders.
Right. Thank you very much. My second question is around profitability. Given that you have very good visibility from your order books, could you give us some color about how we should think about profitability in H2 sequentially compared to Q2 in Cables and Solutions business in particular? Also, maybe if you could help us to understand a bit better the delivery of your order book for 2020 and what level of profitability is currently secured for 2020 in your order book.
Thank you for that question. I think with regards to profitability, our Q1 and our Q2 is exactly as expected. We are reiterating our guidance on EUR 10 million- EUR 30 million of EBITDA. As we said always back in November, there is basically no large orders that can realistically impact 2019. That' s also still the case. What we have done is that we have posted a few smaller orders during Q1 and Q2 that will support utilization in Karlskrona. Further, what we said about 2020, we are not guiding on 2020, but we said that 2020 will be better than 2019, and that is still the case.
Right. Could you give us a count on deliveries of your order book in 2020?
Yeah. The color we give on the order book is that we have about EUR 1.05 billion in the order book. About 1/4 of that will be delivered during the remainder of 2019, and 75% of it will be delivered in 2020 and onwards. The exact planning between the years are a moving target. That is why we are not more specific on that. That is also often something that we agree with the customers on when and how we can both produce but also deliver.
Is it majority of that 75% of 2020?
Beg your pardon?
Is it majority of that 75% to be delivered in 2020?
We are not guiding on that. Thanks for the question.
Okay. My last question is around demand for high-voltage cables. You have been very vocal previously that your material step up in 2020 earnings will depend on Viking Link project. Given current project pipeline and namely Crete-Attica, U.K. CfD , and SuedLink projects, which of those can potentially contribute to your 2020 earnings, and what is the timeline of those project awards, please?
Yeah. I think what we said about Viking is that it will of course be an important project for our 2020 earnings because potentially we could start early with that project. That means had we been awarded a larger part of Viking, the pickup in 2020 would have been higher than now, where we have been awarded a smaller part of that project. That means that the 2020 pickup expectedly will be slower than otherwise. I assume that is logic. Now, with regards to SuedLink, as far as we are concerned, we know what the projects are communicating. They are pushing for award in Q4, maybe Q1. If that is happening, potentially we can start production, I am guessing Q3, Q4 2020. So not a massive impact to our 2020 earnings.
There are a few other projects that we are working on that potentially can have a 2020 impact, and it is too soon to say before we know more exactly both award dates, but also financial close on those projects.
Right. Maybe on Crete-Attica, I know you do not like going into individual projects, but in terms of the way it is tended, is there any scenario where it can be produced in 2020?
Assuming we were looking at that project, we have, as it looks today, availability both for XLPE and also for MI open slots in 2020.
Right. And that project will be MI?
We don't know yet.
Okay. Thank you very much. Thank you.
You are welcome.
Your next question comes from the line of Casper Blom from ABG.
Thanks a lot. First of all, hi, Alexander. Looking forward to meet you. Then a couple of questions from my side also. First, a little bit of a broader question. You can't really open a newspaper without talks about recession, slowdown, and so forth right now. Do you see that as something that can potentially postpone projects, or would you actually argue that it is something that could accelerate projects as governments will want to stimulate economies? That is my first question.
I mean, this is a very broad question. Of course, I think if you look in Germany and in Europe in general, the CO2 discussion, I think that will continue, and that could have an impact in the long run that project may get accelerated in order to bring more renewable energy on the grid. That is just an assumption which could potentially happen. Then we don't know what will really be happened with the Brexit and interconnectors between U.K. and France and based on the financing. There could be a potential impact of shifting or maybe even that some project may get canceled.
Have you seen any sort of indications in the last three months or so that anything could be pushed out due to the increasing uncertainty in the world?
I think that mostly the green transformation is a little bit detached from the underlying economy, right? It is more political unrest that can disturb the larger projects, for instance, Brexit and so on. Where we are more sensitive is probably in our Applications business, right? Because that is closely correlated to the underlying economy and to the construction business. To the extent we will see a slowdown in continental Europe, then that business will suffer from that as well, but more well correlated than the solutions or the projects business.
Okay. That is helpful. Then secondly, you are doing some internal changes. I think it was at the full year you announced some cost cuttings and redundancies. Could you give an update as to how far you are in this? Then maybe in Applications also where there has been some IT integration, how far are you there, and what is sort of the roadmap towards your longer-term margin target within Applications?
Yeah. If we start with our reduction program, that is on target. We had a target of reducing the white collar workforce with about 130 people. We have concluded on the 60, and we are on target to conclude the rest over second half. Also, our general spending costs are on target. So we deliver what we promised for 2019 and also full year impact for 2020. What was the second question, Casper ?
Yeah, the IT integration in Applications.
Exactly. Okay, yeah. So that integration is basically done in the Nordic countries now. There is a little bit of leftovers in getting acquainted with a fully automated end-to-end production platform. So out of August into September, I think we are fully up and running, and then we will prepare for the next rollout where we install the same platform to Central Europe.
Okay, cool. Then, just my last question, which I totally understand if it is difficult to answer, but with regards to the Viking Link project, I think you got a little less than a lot of us were hoping for. What is it really that sort of decides that? I suppose since you got something, your product must be good enough. Does it come down to price at the end of the day?
I think the competitive situation was very fierce on that project. Exactly as you say, I think both we and also the customer think that we had a strong solution, if not the best solution. So, I think it is correct to conclude that the competition also on price has been fierce.
Cool. Thanks a lot.
Once again, if you wish to ask a question, please press star and one on your telephone keypad. Your next question comes from the line of Kristian Johansen from Danske Bank.
Thank you. Just a question on the growth in application. You mentioned that you saw sort of weakness in Denmark and Sweden. I just want to understand what is driving this and whether there is any sort of structural movement here we should be aware of. You mentioned this underlying cyclicality. Can you elaborate a bit more on, essentially the -3% negative organic growth in the first half as well?
It is a little bit of a mixed bag in Applications. I think, first of all, Q2, nothing has been strong in 2018, but Q2 was our strongest Q in 2018, so it is a little bit with the comp. But we have had issues in the Nordic countries and not only related to the IT platform, also a few production issues and so on, and the market in Denmark has been weak. There is nothing structural in that. I think the competition on building wires and then the low-end products is quite intense. There has also been delays in the customers' drawdowns in Sweden and so on. So a few issues in the market in Scandinavia that are not growth related. Then on the contrary, we have done slightly better in the Central Europe. They have actually had a good run in Q2.
It is a little bit of a mixed bag on the back of a relatively stronger comp in 2018.
These internal issues you are highlighting for the Nordics, is that going to remain in the second half of the year, or how should we think about the H2?
No, they have been solved coming into Q3.
Okay. So, growth should improve in the second half?
Yeah. Operationally, yeah.
Thank you. That was all for me.
Your next question comes from the line of Claus Almer from Nordea.
Thank you. Also a few questions from my side. The first is cash flow. On a positive side, you had a break-even free cash flow in Q2. Could you put some color to second half of the year?
We are not guiding on that level, Claus, but I think what we said in Q1 was that you can expect working capital to be at par with what it was coming out of Q1 by the end of the year. Then you take our EBITDA, right? And our financial expenses and also tax and so on. We have also guided that our investment level is most likely to be a little less than last year. I think then you have some of the parts.
Okay. Coming back to the Solutions, I guess the profitability level wasn't that bad despite a significant negative organic growth. Is that the result of these smaller projects having a better profitability than larger projects, or it is just timing? Could you put some more color to that?
I think the profitability drop was meaningful, by over EUR 20 million or so. That was a meaningful drop. But we have been loading Karlskrona with smaller orders. We have also had a little below-the-radar variation orders and so on that are profitable. So, a little here and a little there, I think we have managed to get through a relatively low utilization in Karlskrona quite okay considering the situation. But I think the earnings drop is meaningful.
Absolutely, just not as bad as one could have feared, I think.
Oh, okay.
Okay. Then just the final question is Photonics. Basil, you mentioned this slowdown. I think that's the first time in a very, very long time we hear negatives when it comes to market demand. Could you put some more color to what you are seeing? Should we fear that demand is more affected by the overall economy?
Well, the Photonics market is pretty much affected by the situation in China. Slowdown and trade wars in China do show some headwinds. Equivalent companies to us and much larger companies to us have seen headwinds in that and a slowdown. Our exposure to China isn't that big. Our direct exposure to China isn't that big, but there is always secondary exposure. We have not seen that yet, but there are headwinds that we are careful of, so we are planning for. But in general, because our business is also more diversified in various sectors, we are not seeing a direct thing. But obviously, we are planning in fear for a slowdown in that sector.
Sure. Then I can-
Is that the question?
Yeah , sort of. I understand the overall dynamics, but Photonics, the smaller player coming up with new products, you should be able to grow nicely, at least, even in a more difficult market, I would argue at least.
Yes, absolutely. We are still keeping our guidance. 15%-20% growth isn't too bad.
No. But again, just coming back to the more negative wording, it wouldn't be the first time a company coming out with some negative wording, keeping the guidance, and then one or two quarters down the road, guidance will be changed. I am just trying to figure out how concerned should we be about your more negative wording, especially ongoing to 2020? One thing is this year.
If you look at the market, we are just reflecting what other companies are saying in the market. There is no more to it and no less to it. Our planning continues as is. Again, direct threats we are not seeing at this stage.
Right. Okay. When part of the market is under pressure, sometimes you will see the price declines. Have you seen anything like that?
Not really, because again, as you mentioned before, most of the products we have are new products. So we are not competing with existing large infrastructure orders. We are into the new builds, so we are not seeing price pressure on our side.
Okay. Thank you so much.
Another reminder to ask a question, please press star one. We have another question from the line of Artem Tokarenko from Credit Suisse.
Thank you very much for taking a follow-up questions from me. Just to elaborate a bit on that working capital guidance by the year-end, could you give us some color in a scenario where there are no more orders won for NKT this year, how should we think about working capital?
As we said before, once we get orders in, we typically also get prepayments and pretty soon after, maybe milestone payments and so on. The more orders we get in, the more prepayments. The less orders we get in, no prepayments.
Yeah, I understand.
That is how we should think about the finance.
In a scenario where there are no new orders won in the next six months, how should we think about working capital from here onwards?
Then you should think about in the way that we don't get in any more prepayments. But I think what you need to note is that I am saying that the group's working capital expectedly is at par with the level we saw coming out of Q1.
Right. Okay. Thank you. My second question is around your cost savings. I think you have been targeting EUR 10 million of cost savings. From that EUR 15 million of cost savings from that white collar program, how much have you achieved already, and do you expect to achieve the full run rate by the end of this year?
Yes. We expect to receive the full run rate by the end of this year, and that means EUR 15 million for the years to come, and about half impacting 2019. We are on track to do that.
Okay. Thank you very much. I have two more questions. First thing I want to ask is, we heard from Ørsted that they had power outages in three of their wind farms, and all of them had export cables supplied by NKT. I wanted to ask if you heard from them anything, if you see this as a potential risk of some work you need to do to fix any problems there? Also to add to this, there were headlines in the press saying that river levels in Germany are again getting to low levels. What do you see in your Cologne factory, whether you see any logistics bottlenecks?
I think with regards to customers' issues and so on, I've seen what Ørsted is talking about, but it has not impacted us, i f that was the question.
Yeah. In terms of low levels of rivers in Germany, is this something which can potentially impact you again this year?
No. So far we have our logistics plans lined out.
Right. Okay. My last question is around FX, just housekeeping. Could you help us with the FX guidance for full year?
What was the question? On how currency will impact us for the full year?
Yes.
We are not really guiding on that, right? We have a Swedish krona exposure to a smaller extent in the Applications business and also a little bit in the Solutions business. The impact was EUR 3 million in Q2.
Okay. How much is going on the group level for you?
That I am not guiding on, but the EUR 3 million, have a look at how the Swedish krona has developed over Q2, and then you need to put your own prediction on the Swedish krona.
Okay. Thank you very much.
Just on that one, in general, we will be hedged up against euro. So we will be hedging all the metal exposures we have. We will also be hedging all currencies up against the euro. So in general, you can't expect large swings from currencies. But obviously from Applications factories that is based in Sweden, invoicing in Swedish krona, there is an underlying economic exposure that on the long run can't be hedged out.
Right. Okay. Thank you very much.
Welcome.
Now we have no further questions. So once again, to ask a question, please press star and one on your telephone keypad. We have another question from the line of Artem Tokarenko from Credit Suisse.
Actually, my last question is around Photonics book-to-bill. I think order intake slowed growth in orders slowed to 4% in Q2. So what is your book-to-bill for H1, and does that low single-digit growth environment in orders is indicative of revenue growth likely slowing down to low single- digit next year?
We are not guiding on orders. We are just only guiding on our organic growth, which is 15%-20%.
Okay. But the book-to-bill for H1?
We are not guiding on that.
Okay. No worries. Thank you very much.
It is positive.
Right. Thank you.
We have no further questions.
Okay. If no further questions, then thank you everyone. Thank you for participating. Thanks.
Thank you.
That does conclude our conference call today. Thank you for participating. You may all disconnect.