Earnings Call: Q4 2020

Mar 22, 2021

Dear ladies and gentlemen, welcome to the Conference Call for Fiscal Year 2020 of TradeN SE. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. And after the presentation, there will be an opportunity to ask questions. Please note the disclaimer that you will find at the beginning of the presentation. I now hand you over to Rolf Ola of Triton, who will start the meeting today. Thank you very much, Ms. Hi. Hello to everyone out there. Thanks for participating in today's conference call. Together with me on the line today is Matthias, our CEO Christian, our CFO and the usual representatives from Legal, Finance, Treasury and IR, as you are all aware, our most important KPIs were already released on January 22, and that was with the announcement Because in particular, net cash flow was very strong. And then on March 10, we published our Annual Report 2020 and today is the Today, we will provide you with some more details on the group's performance and what We expect for the running fiscal year to come. And before I hand over to Matthias and Christian, I have to get back to some housekeeping items. First of all, the material for today's call, I hope everyone has seen it, is the press release on the Battery Electric Initiative on TRATON's side as well as the annual report and the IR presentation. If you didn't receive them, please go on our website, tratonir, and then you can grab all relevant documents from this site. As Ms. Moore has already said, there is a disclaimer On Page 2, which you should carefully read, I will now bring it to you. And after I'm very happy to hand over to Matthias, who will guide you through the first section of this presentation. Matthias, the floor is yours. Thanks a lot, Rolf, and a warm welcome from my side, I hope you're all healthy. I think that's the most important issue these days. To start off, let me make some remarks on 2020, which was a year of 2 phases. We started into the year with rather low expectations because of the record year 2019. We have seen a dramatic situation because of the COVID-nineteen And the next question comes from the line of David. The first question occurred in April, and almost for the entire month, all our production remained closed. With no doubt, the first half was extremely challenging, not only for our industry. In the second half of twenty twenty, However, we saw an accelerated momentum. Market demand picked up. Production capacity was ramped up and the recovery, especially in incoming orders, beginning of 2021. As everyone in our industry, we have focused and are still focusing on managing cost reduction On our way to become a global champion of the transportation industry and strengthen our technology partnerships. We reached a binding merger agreement to acquire Navy Star. The closing of the deal is expected for mid-twenty 21. Trade and Heno signed Joint venture agreements for e Mobility to develop electric vehicles and relevant components. Trade and M2 Simple agreed on a global Our trade and brands have introduced strong products during this year With the new M and N truck generation and the new extra heavy truck Metio in Brazil, we have a state of the art portfolio in place on our Stania, for example, introduced their first range of electric trucks in 2020. As you can see, despite the challenges we were facing 2020, it was a year with a lot of progress for TRATON. I'm on Slide 5 now. Since our figures for 2020 have already been published and most of you are familiar with them, I will not go into the details here. As you can see on the chart, Despite the recovery in the second half, our numbers were negatively impacted by the pandemic situation. However, With strong team effort, we managed to achieve a positive operating result and generated a net cash flow of $676,000,000 in the Industrial Business Please have in mind, last year's investing cash flow was supported by a couple of extraordinary items, Amongst others, the sale of the power engineering business. Excluding this, the swing year on year was positive and amounted to 157,000,000 Let me raise some quick highlights on the performance in the second half, which you can find on Page 6. As you can read on the left side, We have witnessed a noticeable market recovery in combination with increased incoming orders. In the second half twenty twenty, incoming orders were up 47% compared to the first half twenty twenty. Very impressive is Skane with a book to bill ratio 1.4 in the second half of twenty twenty. Unit sales recovered strongly as well, up 45% in the second half of twenty twenty Compared to the first half. Thanks to all these developments and other actions like strict working capital management, we generated a strong net cash flow in Industrial Business of EUR 1,023,000,000 in the second half of twenty twenty, significantly above the first half. We reduced capital expenditure in primary R and D in 2020 significantly. All this resulted in recovering sales and improved As you can see from the chart on the right. On the next slide, we have a detailed view on the brand level for the second half versus the first 2020 to outline the two phases of the year. As you can see, we significantly improved our performance in nearly all relevant KPIs in the second half of twenty twenty compared to the first half. Major highlights are Scania, I already mentioned, had a book to bill ratio 1.4 in the second half. Incoming orders were up strongly by 70% compared to first half twenty twenty. Unit Sales and sales revenues recovered significantly. Operating return on sales was more than 8% in the truck and bus business, And again, very good in comparison to competition on a similar basis. M9 was strong on volumes and sales revenues followed. The operating loss declined €266,000,000 in the second half. This was achieved despite the ongoing dual costs For producing in parallel the new and the old truck generation. This testifies that we are making already good progress on the cost side. Main also benefited from an increase in unit sales. Our vehicle sales revenues were clearly impacted by the exchange rate, But generally speaking, Favico improved compared to first half in all key figures. Having said that, I would like to hand over to Christian, who will lead you through the outlook session. Christian, please. Thank you very much, Matthias, and also a warm welcome from my side. I'm on Slide 9. Here, we are providing more details with regard to our outlook for the financial year 20 21, after global growth collapsed in 2020, the International Monetary Fund is expecting a noticeable recovery for 20 However, this upturn will vary by regions. You all know that China has found its way back to the growth path very early, Already in the second half twenty twenty, the Eurozone, which is very important to us, is recovering at a slower pace Initially expected, the IMF has already had to lower its expectations here in the last couple of months. This all shows that while we can expect growth in 2021, the economic environment remains volatile. If you look at the right chart of the slides, the registrations of 16 ton trucks in Europe follow the macroeconomic developments. It went up very quickly after the corona slump, but after that, the growth slowed down. All of the European market heavy duty has returned to the positive. In direct year on year comparison at the end of 2020, we have seen in January 2021, Again, a negative year on year development. Moreover, the market has not yet reached pre pandemic levels. Bear in mind that exceptional Strong year over year change in mid-twenty 19 was helped by the pre buy effect in the light of the introduction of the digital telegraph and pre buy of some extra volumes in expectation of a hard Brexit by the time. All in all, we will stay vigilant and focused. Yes, the business climate worldwide is brightening. However, increasing infection rates and shutdowns in Europe reoccurring, there is still a high degree of uncertainty for 2021, Even though the lockdowns are limited to social rather than to industrial life. I'm now on Slide 10, Where we can see the development of our unit sales and incoming orders on absolute on the left hand and relative level on the right hand of the chart. Overall, the positive development of vehicle utilization in most regions since May 2020 continued also in Q4, Especially in the long haulage truck business. The market recovery went faster than we expected it to happen. Incoming orders were likewise recovering faster than anticipated. In each of the 6 months of the second half of the year, The group's incoming orders were above the respective prior year month, restarting a 21% increase in incoming orders in the second half of 2020 compared with the second half of twenty nineteen. As you can see on the left graph, the decline in unit It's also slowed significantly in the second half of twenty twenty. The gap to previous year's levels narrowed considerably. With almost 63,000 units sold, we nearly even reached the prior year 4th quarter level. Looking at the year over year On the right graph, we see the unit sales are following the incoming order momentum, which was strong in the second half of twenty twenty. By comparing incoming orders with unit sales, you can see that our book to bill ratio was well above 1x for industrial business throughout the second half of 2020. Overall, the graphs show V shaped momentum in the further Q4. However, as mentioned before, we still have to be careful As we all see the pandemic development. Having that said, we can confirm that the start to the years saw these trends not abating. This prudence also is true for the worldwide truck market outlook that you can see now on Page 11. Clearly, the economic down Trends triggered commercial vehicles markets globally to contract in 2020, with only the Q4 standing out of this trend. From that low basis, all is set for a firm market recovery in 2021. However, This development will be uneven distributed across markets and amplitudes could vary for each market in the light of the before described developments. More forecasts foresee an increase of the truck market in Europe, which should range between plus 10% to plus 25% for the year 2021. For South America, the range is even greater and goes from plus 10% to plus 40% as you can see in the middle chart. As shown on the lower chart, the truck market in North America is forecast to grow between plus 5% to plus 20%. We are undecided how strong the recovery is taking place, but would not see the upper end of these ranges being reached in 2021. We are not believing that we end 2021 close to the peak levels seen in 2019, but we'll see them being reached not before 2023. This might also partly explain our forecast on the operating margin in 2021 on group level. After elaborating on truck market developments for 2021, we are now focusing on the expected development of our group for 2021, which you can see in the last column on the right. As you've already seen from our press release of the 2020 annual report on March 10, After the decline in 2020, we expect a sharp rise in unit sales and a substantial increase in sales revenues for 2021. Given that all our major truck lines are renewed, we are in firm belief that we emerge stronger from this crisis than we have been before. For the return on sales, we are forecasting 5% to 6%. This depends very much, as said on the slide before, on the development of the end markets. In line with the improved operating performance, we're assuming a cash conversion rate in the range of 25% to 35%. Just as a reminder, our outlook do not contain any expenses or expenditures for the M and A truck and bus restructuring program And any effects from the planned acquisition of Navistar. The forecast is subject to no further increase in the number of cases due to the COVID-nineteen pandemic And that no associated countermeasures are taken by the affected countries as well as subject to any potential impact on our production and supply chains. However, the distinct brand performance, the new truck lines, the introduction of the common base engine And other benefits should all help achieving this goal, which brings me to the next slide. What are the focus areas for TRATON in 2020 1st and foremost, the planned acquisition and integration of Navistar. The deal accelerates our global champion strategy by Creating a global leader across key truck markets. Nevertheless, that will not be our sole focus for this year. MAN has initiated a comprehensive realignment program, which will allow for structural changes in its cost framework. On top of the introduction of the new truck generation at MAN will be completed in the second half of the year and will allow MAN to further reposition its brand. First benefits were already realized in the second half of twenty twenty. After 5 years of development, We will introduce our common base engine into the market in the second half of the year. Scanner will start to roll out the brand new 30 liter engine in Europe, which will set the new standards in terms of fuel economy and efficiency. By leveraging powertrain components across our brands, we can realize significant cost savings over the years to come. We are best positioned with our new truck lines and the new engine to exploit the key transportation innovations. Very important, With the renewal of all our truck lines and with finishing the development of the CBE, we completed the bulk of the CapEx budget dedicated to new products And can concentrate now on new investments for future technologies. That means we will continue to further speed up Our electrification activities and expand our positions on alternative drivetrains. Now I'm on Slide 14. I'd like to provide you with some more details on the MAN truck and bus realignment. The executive Board and General Workers Council agreed on a framework paper to enable the company's rigorous and sustainable reorganization of the production and development network to EUR 1,700,000,000. On the left chart, you can see that it specifically aims to achieve an improvement in overhead and personnel expenses of up to EUR 5 €2,000,000 Material costs are to be cut by around €700,000,000 as a result Improving cooperation with our suppliers starting as early as the concept design phase for products. The company Also aims to generate around EUR 450,000,000 through additional sales efforts, among other things. The measures planned also entail cutting around 3,000 5 hundred jobs across all areas of the company in Germany by the end of 2022. The Steyr plant in Austria, which has around 2,200 people, is still being discussed. We are reviewing all options in this Including the possibility of selling or closing the site. In total, the restructuring measures are currently expected to result in costs Of high triple digit €1,000,000 amount for the entire restructuring period. This is including the measures in connection with the Steyr site, Which are still to be defined. What we can witness, there is a clear momentum now at MAN truck and bus, And benefits will occur already in 2021. You will be able to follow that on a quarterly basis during 2021. On Page 15, some details regarding our planned acquisition of Navista. As you know, we signed the binding merger agreement with Navistar in November 2020. On March 2, a clear majority of Navistar shareholders approved the acquisition at the Navistar's Annual Shareholder Meeting. The planned acquisition of Navistar marks another important step Consequently, we, the TRATON management team, are very much convinced that a combination of TRATON and Navistar will create sustainable value for our business partners as well as for our shareholders. Unchanged closing is expected for mid-twenty 21 And subject to regulatory approvals and customary closing conditions. The delisting of Navistar is a village to take place shortly after closing. Going forward on this deal, we will put our focus on the successful integration. One more topic I would like to highlight on the next page. The trend towards alternative drives is no longer reversible. Trading positions itself early on. We want to take a leading position here. Climate protection is an elementary goal for us. Since last year, electric buses from Scanning and MAN Electric vehicles will account for around 10% of Scania's volume in Europe. At the same time, half of MAN's new buses will have an alternative drive. By 2,030, every second vehicle sold by Scania will have an electric drive. At MAN, at least 60% of Page number 17 confirms this objective. The future of the trucks will not be shaped by diesel. However, Clearly from Electrified Drivetrain Solutions. This firm conviction leads us to significantly expand our research and development budget for e mobility. We now plan to spend SEK 1,600,000,000 in the period up to 2025. So far, we have earmarked an amount of SEK 1,000,000,000. This increase is made possible because all brands are shifting their budget from conventional to electric drivetrains. This doubles the share of product development for e mobility by 2025. In return, less than 20% We still go into the product development of conventional drivetrains. Kraton becomes electric, not overnight, But step by step, sustainable and in line with the necessary grid expansion because of our charging infrastructure, this would not Thank you, Christian. Yes, that concludes the general presentation. As Christian has mentioned, There is extensive backup available with all the details and data you need in order to feature models. And I'm very happy that Ms. Moore can now start the question and answer session. Thank you. From Baust Schneider, Bank of America, your line is now open. Please go ahead. Yes. Good afternoon, and thanks The first one that I have, you can imagine that relates to the guidance that you Put out, which surprised me a little bit, how cautious you are. So when I look at the market guidance range, for example, Then, I mean, it's a pretty broad range that you define here, for example, for Europe, so plus 10% to 25%. Maybe you can explain what's the lower or upper range depends on what's your view now since you since we have started the year already and you got already the order intake from January February, I mean, what do you think is more likely to reach upper end, lower end? And then again, on leverage as well And margin as well, why you're not more bullish then on the margin? What are your key assumptions there that you remain in this 5% to Thank you. Christian? Thanks, Lars, for your question. I mean, obviously, there's a point to discuss. Look, I mean, on our end, we've had a very good second half when it comes to order intake. And as you rightly said, compared To some of our competitors, we are less bullish on the market outlook, in particular, for Europe. And as I have described on Page 11, This is in some regard supported by third party thinking. But for us, it's also you need to keep in mind, MAN still has to cope with the ramp up of new truck generation and still has some dual ramp up costs to handle it. We guess that it will be fully implemented on the NTG side in the Second half of twenty twenty one. And this would be the time when we then introduce the new engine, the production and delivery On the scaldia side, and as I said before, I mean, given the current situation on COVID-nineteen and also the situation, especially for the Q2, at least for a temporary effect on the semiconductors, leads us to the fact That we are, since we are prudent people, a little bit more cautious when it comes to our expectation there on the market. Look, however, I mean, if you see the development now in Q1 so far, we do see that there's a strong momentum still That we have seen in Q4, order intake continues to be strong. And so we cannot rule out that we will be Maybe at the end of the year on 2019 market levels, but again, do not want to commit here. I mean, the momentum needs to be But upper end of the guidance seem to be reachable. Sorry, a quick follow-up on that. So the semiconductor impact, impact, can you quantify that for Q2 maybe? No, we can't. I mean, we saw on MAN already 1 or 2 smaller stops here. Scanner so far hasn't had any. We are closely aligned within the group. We do foresee for the Q2 some disturbances That would stretch the supply chain or maybe even the production also on the scania end. But we think it's just temporary and that we could catch up Most probably in the second half of the year. But definitely then H2 is going to be stronger than H1 in terms of margin and then you'll see after H1 where you end up, right? If the visibility improves, then As I said before, let's see the first and second quarter and the situation around COVID, and then we'll Okay. All right. Good luck, yes. Thank you. Thanks. Thank you, Horst. The next question is from Klas Bergelind, Citi. Your line is now open. Please go ahead. Yes. Hi, Matthias and Christian. It's Klas at Citi. So a couple of questions. I will take them 1 at a time. First On investments, you're increasing the e mobility investments for good reasons from SEK 1,000,000,000 to SEK 1,600,000,000 through to 2025,000,000,000 And then you're saying you're scaling back investment on the conventional side. But just to confirm, there is no creep upwards in Total R and D nor CapEx at 2025 as you see it now. The reason for asking, Christian, is that obviously, Skania is now investing to go local in China As well, so obviously, there is incremental CapEx on that side. So just to confirm that. Yes. So, Klas, I mean, the discussion is, as you know, we are out with around €1,100,000,000 on CapEx and €1,300,000,000 on R and D. As you have rightly elaborated, We will ship within the 1.3 since the new truck lines are all established on MAN, on Scania and now with the METEOR and the updated delivery also in Brazil. CBE1 is developed will hit the market in the second half of the year. That means the majority of our classical R and D investments Have been executed, and this is why the Board still commits on the level of around the 1.3, as you have rightly guessed. And secondly, on CapEx, the same thing. I mean, the foundry on the scania end is running now. The production of the CV1 is established. And we will use within that 1.1 going forward also the extension of certain investments. Now it depends on the China strategy going forward. In the current setup, we will continue to be on the 1.1, but that's basically in the foreseeable future. You cannot judge what comes in the next No, sure. But you can understand why I'm asking, right? Yes, yes. I mean, there are questions on this. So yes. Of course. It's a series, yes. My second one is on the battery side. What kind of, if any, margin headwinds can we see once you start to roll out on deliveries here? We know that CapEx and R and D, rightly, as you say, might not be as aggressive on the way up as on the pass car side, but I'm still thinking about production disturbances as you roll out, Lost aftermarket revenues on the eye side, increased launch costs. Or do you see, like in the case of Volvo, that the length of the service contract with increased, Obviously, equipment as a service sales will compensate. So I'm interested in your thoughts on potential headwinds as we roll out on the battery side. Of course, I mean, first, as we have rightly said, after sales and service are a significant contributor to our margins. And since business models are shifting, we invest a lot of, let's say, investigation in expanding our business on that end. I mean, if when it comes To downstream business, we need to assess future possibility there. We do this. We have ideas there, but it's too early to comment on it. There will be certainly Some headwind in the beginning. I mean volumes today are quite small. So if they are ramping up, assuming that battery costs will go down and that we will improve on the product cost side, The impact will not be as much, but we need to see what we can compensate on the, let's say, holistic services and downstream side. Thank you. You're welcome, Klas. Very good. Then we go on to the next one. The next question is from Mr. Engelhard, Handelsbanken. Two questions from me. More starting off on the market. I think that In the second half of twenty nineteen, it was pretty clear that both Europe and North America truck markets were peaking as From looking at being above 300,000 units for some time, having around very young active truck fleet and also some oversupply, I guess none expected 2020 to come out the way it did. But my question is then on, is it what's your view on the trucking cycle here in terms of aging perspective, Subtai and the manor haulage and how to think about maybe 2021 having an overshooting on the upside as 2020 had an overshooting on the downside. And what risk do you see if 2021 comes out stronger than expected Second question is regarding to the press release you sent out here. Maybe I'm getting things wrong here, but My perception from reading it and looking at this is that it seems like you have a bigger business case on battery electric rather than hydrogen trucks. And that, I guess, puts you more within the Tesla segment. I'm talking about also for long haulage sharing battery electric, so power is flying Thank you. Behind that, those are my two questions. Thank you. Maybe I'll take that question. When it comes to the market, there's a significant difference Between the North American market to the European market, the sheer number of miles or kilometers in the U. S. Driven is the track much more In Europe, so that's why the replacement cycle, my expectation would be earlier to come back in the U. S. So rather already Partially in 2022 and in Europe, which will take really until 2023 until we are back at better market volumes, as Christian presented in the beginning. When it comes back to battery or your question hydrogen, you know that this is in the end not what we want. In the end, it's about our customers. With what kind of products We'll have our customers the best benefits in their business model. And it looks like when we calculate our models and the models are getting better and better, we learn On our way, actually, we see that in 2025 will be the turning point that we actually see that the best vehicles We'll give the overall total cost of ownership position for our customers will be the better one than the legal engine. This you can also achieve with the hydrogen, but green hydrogen Then Audi should cost you about EUR 3. Then it's actually on par, and this will come later from our perspective. But if you compare again then battery electric vehicles, Hydrogen vehicles. We see that for our customers, the benefit in most of the use cases, not in all of them. There are some use cases, but definitely The hydrogen truck is giving a better result to our customers because, for example, they wouldn't be allowed charging infrastructure somewhere in Australia. Then hydrogen But overall for Europe, we see the best vehicle as the mainstream vehicle, also in long haulage. The next question is from Rajesh Singla, Societe Generale. Your line is now open. Please go ahead. Hi, good afternoon. Thanks for taking my questions. Maybe a couple of them. So the first question is on your outlook for 2021. And if I look at the Slide number 12, so where do you see yourself in 2021, when we are saying that there would be a substantial increase in revenue as compared to 2019, because in 2019, your revenue was like 19 Higher than FY 2020 and probably the unit sales were around 25% higher than 2020 and margin was around 7% in 2019. So what is the major driver of these lower margins in 2021? Like how much is the raw material cost Is it responsible for such a lower margin in 2021? So So thanks for your question. I mean, I tried to answer that before when I answered Horst's question on the guidance. Look, I mean, we need to see the insecurity we are currently in when it comes to the market development First, now I said before, MAN until the end of the second half needs to introduce the new track. There's some dual ramp up costs with maybe Some disturbances if COVID situation is getting worse. Then you ramp up a new engine in the second half of the year for the group starting with Yes. And that at the end of the day means that you basically need to be careful when it comes to the development of the efficiency there. Matthias and the team On the MAN side, I have just recently now aligned on the MAN restructuring program, which also starts now in parallel to the, let's say, finish of And this brings up to the point that we, as I have said before, are just prudent people and just take it quarter by quarter here. Okay. Christian, may I add, Christian, I think you managed the right thing. We really do this time A really holistic restructuring of MiM. That means we touch every site and we change the content more or less of every site. This somehow will also have an effect on the organization. I think this is very natural. What kind of raw material headwinds you are seeing in 2021 in terms of the margin? Like maybe like 50 basis point is already built into these margins? Like If you can share some insight into the raw material pressure already built into these margins? I think it's very difficult for us to declare details on how much of the risk portion is already there included. I don't know exactly where you're heading to quite honestly. Okay. Okay. Maybe the last question with respect to your the long term guidance, which you had given in the past, the over the cycle Margins of around 9%. So where do we stand on that? Or we still think that we would be able to achieve that by maybe 2023 or 2024? Any time line on that margin guidance? It is exactly like we said. It's over the cycle target. Now I mean, we had a down cycle in Europe last Here with the V shape recovery as I've outlined before, now let's see how the cycle will develop, but the target is 9% for The trading group, 12 for Skania over the cycle, 8 for Camunis and 8 for MAN, are still valid. And as Matthias said, Building up now, these efforts in the restructuring is an important part of that. Okay. Thank you very much, sir. Thank you. Thank you, Virgil. The next question is from Nikolaj Kempt, Deutsche Bank. Yes. Hi, Nicolas, Campere. Thanks for taking my question. So the first one would be on the order intake. And Kenya did Pretty good in the last quarter, but MN, the all intake was basically flat, while the margin was up by over 30%. So Can you give some color why this was not a case at And the second one is on the batteries for your electric lineup. Volkswagen Group has announced some business plans to build up the sales capacity. Can you source battery cells from Volkswagen? Matthias, would you like to take it? Yes. I'll take the batteries and you do order intake. I can take both. It's not a problem. To the order intake on the MAN, you saw in the restructuring focus that we actually want to improve On the measures of €450,000,000 on the pricing and net revenue side, we have now the opportunity, the first time in ever end, we have a complete new setup. And we want to position that new product right in the right way from day 1. This is why we are not striving for market share. We're striving for product positioning and a clear price point we want to have, yes? This is the first point. And we will see that Continuously now on the EMI side. You're going to see a much better price discipline than in the past. When it comes to batteries, we're actually thinking in 2 ways. Yes, let's work together with Volkswagen. Let's have that huge volume somehow incorporated in our discussions. But we do it in a splitted way. We have it On the one hand, on the Scania side with Norfolk, there are also other passenger car brands in. So overall, we have a good volume there. And then we do it with some other passenger car brands on the MiN side. So not having, let's say, all eggs in one basket, but let's say, use the opportunities of the group here. And we feel very confident with that. Nicolas, everything answered? Yes, that's answered. Thanks. Very good. And the next question is from Jose Asumendi, JPMorgan. Your line is now open. Thank you. The next question is from Jose Assumendi, JPMorgan. Your line is now open. Please go ahead. Thank you, Rolf. Hello, Matthias and A couple of questions, please. On the CV side, by when do you expect the full rollout, Maybe by region or by brand to be executed. That is the first one. 2nd, hydrogen fuel cell, I get the point that you are We'll go more towards hydrogen fuel cell drugs. Can you speak about your ability to react and what you have in terms of in house technology, please? 3rd, Kristian, can you talk about restructuring cash outflows 2021, if there's any guidance for that, please? Yes. And I've got a final one, but I'll leave it for these 3 for the moment. I've got another follow-up, please. Thank you. Okay. I'll take it Please, Christian, and then you can talk about the cash side. The CBE, it really starts now with the second half of twenty twenty one at Scania and that it will continuously ramp up. We will be, let's say, roughly 24 second half. We're going to be on a very, very good volume base and 25 is a full year of CB1 being almost in every second track of our organization globally. When it comes to hydrogen, no, it's not like we're actually not investing in the hydrogen. We really need to understand the technology. We're building our prototype, so we are actually quite good in that. And that's why we actually have the joint venture With the Hino and with the Toyota fuel cell. And in the end, if the market would Shifts, which we don't believe based on all the informations we have. Nevertheless, we have all the capabilities. All the surroundings, the e And whatever the components, you actually anyhow use for both trucks, use for the fuel cell trucks as you use it for the battery vehicle. So most of the components are any are the same. It's really the storage of the electric energy, which you do in a different way. But we are prepared for the market shifts we are capable. We have the technologies. Thank you. So when it comes to your other question, Jose, I mean, obviously, now since the agreement was just recently signed, We will book not on the cash side, but we'll book on the EBITDA and accrual in Q1 and basically for the $3,500,000 in In Germany, and as soon as we get an agreement whether on booking or selling Steyr, we'll then do this in the Q2, I guess. When it comes to cash outflows, Pretty much stable, I would say, in the next 2 years because those 3,500 people go with different measures. Some take a package, Some stay on with, let's say, part time, whatever. So you will see those cash outflows for the first portion In the next, I would say, 24 months, most probably. That's great detail. Thank you. And Matthias, back to you on a follow-up, please. The Chinese market is A huge opportunity, obviously for the group and for Scania, and I'm sure it will be a big topic of debate in the coming 1st months. Can you just Elaborate a little bit more, what has changed? Because the Chinese truck market has been there for a long time and very, very important obviously. What has changed structurally for you in the last 14 months And now, Sam Li, you're accelerating your competitors are also, by the way, accelerating their new dedicated heavy trucks for the Chinese market. But what has changed for you specifically and specifically within Scania? Thank you. The segmentation in the Chinese market has really changed. Not only in the last 14 months, I In the last two years, we could really see that, that it's not anymore the mid or the lower end of vehicles from a technology perspective. It's more that the, Let's say, upper even into a little bit into the premium segment, where we see the market shifting. So the product and our potential of And that's why it's now the time for us to really invest that shift will continue to go on as the transport Getting more, let's say, more systematic and more qualified in China, there will be a significantly bigger market segment for us, And that's why it's time now. It's broader for us to actually invest. And most probably, you will see a much bigger story than only It's Kania Skouree from Clayton in China. Sounds great. Thank you very much. Thank you. Thanks, Jose. And we continue. The next question is from Bjorn Enarson, Danske Bank. Your line is now open. Please go ahead. Yes, thank you. And I was also on the same topic on China. I would like you to talk a little bit more about the expansion in China and in Asia Overall, if we can get some more color on how much you invest and if you can get some of your own expectation of I can do this quickly, Christian. Our focus in the moment, yes, I understand that, is really the team wants to now get the Navy Star deal then consolidate the company. So that's quite a big And that's the major focus because the second half of this year, trade looks very different. Our focus next, we've started with this Kania Investment and discussions will be on Asia. And it's not the time now to give you a clear answer, but it will come this year that we will And my second question is on MAN and the major restructuring there that we have been waiting for. Can you give us some details on how your progress timing wise would look towards the 8% EBIT margin, is it a lot tilted towards the end of your forecast? Or is this a gradual improvement? It's actually this time really a quite complex restructuring because we're really taking each of the sites and have newly identified and Fine. What we're going to do, cos I'd but this also in that moment means that, for example, we have to move the production on light duty, medium duty drug from Austria to Poland. We have certain cabin manufacturing, which we do today in Munich. We're going to move to Poland and so on. So some of the engineering functions From Austria, I have to go to Germany, to the Hamburg site or the Munich site. We will rework completely Salzkeben and our logistic functions and so on. This will take some This is why it will take us these 2 years to actually implement all of that because it's a true restructuring. But you will see, as Christian I described before, gradually quarter on quarter, you will see slight improvements, and we will report back what we have achieved. But for some issues, it really take the 2 years because we first have to do an investment, for example, in Poland before we can shift the production and so on. But we are on a good way, And we actually know exactly what we do this time. Great. Thank you. And last question on the IMU pricing. Is there anything you have said about The impact on volumes and what kind of potential drop in market share you are likely to accept for this? Or do you expect to keep the MOX just unchanged medium term? Will you, Matthias? Or No, you can. I mean, look, I mean, it's market by market. I mean, there are some markets like in Germany, where MEN has also very Established market position also on the premium side. For us, it's, as Matthias has alluded to before, margin before volume. So we know that the new Truck has 8.2% fuel consumption improvement. We see that customers do pay for that, that margins Start going up and we are and as I said that in the last quarterly calls, let's say, reducing the ramp up Speed of the new truck, in particular, in order to safeguard the margins. So we'll see there, as Matthias has said, also quarter by quarter particular improvement. And you know, so far, we have tried before at MRN with the oil truck to actually increase share or increase Pricing and it didn't work. But now this time, we have the chance. So we need to make right we have the right margins in the product. It's worth it. The product is really great. Okay. Thank you. Perfect. Thank you very much, Bjorn. There's more. The question is from Xing Zhu, UBS. Your line is now open. Please go ahead. Hi, thank you. Hi. Hi, thank you for taking my question. Hi, Zink from UBS. Just your first question is just on the MAN. Just following up on the earlier question on the MEN, I guess, earnings improvement. The personnel overhead Savings of $550,000,000 that's probably quite clear coming in over the next few years. Maybe could you expand a little bit on what is required for you to achieve kind of Cost savings on material costs and sales efforts and what kind of phasing we could expect there? I guess, is 2 years enough to I think it's 2 years are not limited when it comes to material costs. Now look, it had a 20 year old truck. You don't get your suppliers buying into huge material cost And now this track is being launched. Most probably, the lounge is concluded now by the first half of the year. So this is an initiative that will go on. And also then by the time when MRN then will also take the engine and transmission and the aftertreatment system from the CBE platform, It will continue. So it's an effort that is not limited to those 2 years. I was referring to the 2 years when it comes to the cash flow for the headcount measures for 3,500 people here in Germany. So this is going to continue. And as Matthias had alluded to, we will report quarter over quarter How the company will develop, but it's a journey. So we won't be finished in the next 2 years. Absolutely. Understood. Thank you very much. And my second question is really just on the CBE. Could you maybe share how much of Kind of energy efficiency you could expect to achieve for customers and thereby any pricing tailwinds that we could expect And generally, I guess, looking at the general kind of market uptrend, do you expect any positive pricing to come through in 2021? Of course, I do. And Pierre does as well. I think quite honestly, we know how much fuel consumption improvement this new platform will bring. And of course, Since our customers are into TCO improvement, we expect to get pricing realized, but we can't unfortunately, even if we like you guys, We will do so once the product is launched into the market, right, Matthias? Yes. And we expect happy customers. That's the only thing we can Okay. Got it. Thank you very much. Thank you very much, Singh. I hand back to Ms. Moore. Are there any further questions? There are currently no further questions. Super. Yes, it was. Great. Thank you very much, Christian. Thank you very much, Matthias. For the remainder, if there are any open topics, we know 240 Pages often in your report are always difficult to digest. Whenever you have a question, please ring the team in Munich. We are very happy to answer In the meantime, you know that the close period for the Q1 will start soon, Mainly in early April, April 10, if I'm not mistaken. And then actually on May 10, we will meet each other again, Hopefully, with even better numbers than we could provide for the second half of twenty twenty and look very much forward then to the Q1 conference call. Thank you very much for being with us today, and stay healthy and speak soon. Bye. Thank you very much. Thank you very much. Our pleasure. Bye bye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.