Earnings Call: Q1 2012

May 9, 2012

Dear ladies and gentlemen, welcome to the Pentac AG Results Call Q1 2012. This call is being recorded. As a reminder, all participants will be in listen only mode. After the presentation, there will be an opportunity to ask questions. I now hand over to Mr. Holland. Please go ahead, sir. Hello, everybody. Thank you very much for dialing in for our review of the Q1 twenty twelve earnings, I'm on the phone together with Jurgen Buchsteiner and Georg Muller, and we'll be happy to take Your questions after the presentation. For the Q1, our group delivered continued growth in earnings in a less volatile but slower growing economic environment as mentioned by industrial output. Gross profit growth of 7.4% resulted in operating EBITDA growth of 6.3% on a constant FX basis. We were able to continue to develop organic growth as well as a positive earnings contribution from our acquisitions, especially Zhongyang in China and Multisol in Europe. Based on the average conversion rate of Q1 2012, The U. S. Dollar is stronger than Q1 2011. Consequently, the as reported growth rates are higher than the FX adjusted growth rates. Considering this positive translation effect from the stronger U. S. Dollar, we show an 8.5% as reported growth of EBITDAO operating. Operating expenses include a €10,000,000 non recurring expense for implementation of an efficiency enhancing measure program in Europe, partly compensated by the release of a provision of €7,000,000 after the final settlement of a third party claim in Europe. Disregarding these nonrecurrent expenses, operating EBITDA amounted to €174,500,000 Asia Pacific segment is still impacted by the flood effects in Thailand, but we clearly see improvements month over month. I'll just come to the operating highlights. So how does this translate into a full set of numbers? Gross profit totaled €475,000,000 7.4% above previous year on an FX adjusted basis. Operating EBITDA totaled $171,500,000 6.3% above previous year on an FX adjusted basis. Adjective of the €3,000,000 negative one off effects, the Q1 2012 EBITDA Operating amounts to €174,500,000 Free cash flow generation was strong in Q1 2012, And an increasing of working capital due to the usual seasonality, but also influenced by higher average prices. Still free cash flow totaled €77,900,000 compared to €47,900,000 in Q1 2011. I just came to the late start with The change to management forward. As you can see on the slide, Jurgen Buchsteiner is good our current CFO of Plentech Group We'll move to a new responsibility for Asia Pacific and mergers and acquisitions worldwide. And this underlines the strategic importance that we apply to both Asia We're delighted to welcome Jorg Muller, who will replace Joerger the CFO when Jurgenmec has moved to his new role in Asia Pacific M and A. Okay. Moving on. In terms of our free float, Rackham acquisitions SCA placed a total of 11,500,000 shares in 2 tranches And our free flow has therefore increased from 64% to 86.3%. The transaction was led by Goldman Sachs. At this point, I'd like to hand over to Jurgen. Thank you, Steve. Let's have a look at Page 9. We see the detailed financials for Q1 reflecting the continued positive development for our business. I don't want to talk too much About the numbers, just briefly mentioned gross profit totaled €475,000,000 representing a 7.4 Percent FX adjusted increase, important here. We'll talk about this later in more detail. All regions contributed to the growth Of gross profit, few words as to the expenses. Expenses grew at a higher rate than gross profit as a result of onetime For the acceleration of our efficiency improvement measures in Europe, These costs were partly offset by a release of a specific provision after the final settlement Of a 3rd party claim in Europe. And as mentioned, adjusted for these €3,000,000 Onetime effects, the conversion ratio continued to improve compared to Q1 2011 for Europe as well as for the group. So the related savings in Europe that will kick in Q1 Q2 and We continue to grow over the remainder of the year, should improve the conversion ratio further. So in summary, the operating EBITDA totaled €171,500,000 and represents an FX adjusted increase of €6,300,000 adjusted for the Mention onetime effects in Europe. Our net expense of €3,000,000 the adjusted EBITDA It's at €174,500,000 for Q1 2012. Let's turn to Page 10. Depreciation for the quarter was €22,800,000 so in line with the historic levels. Amortization amounted to €8,600,000 in Q1 2012 and includes base for our acquisition was €6,700,000 amortization on software with €1,100,000 and other amortization elements with a total of €1,000,000 in other amortization elements with a total of €800,000 The financial result Total EUR 22,600,000 As mentioned in our last performance call, Our financial result in the past were partly impacted by a technical effect related to the outstanding Payment obligation for the remaining 49% of Sohneong. And in this quarter, this effect has been negligible. The strong reduction of our financial result in comparison to Q1 2011 is mainly attributable to our successful refinancing in mid-twenty 11. Overall, earnings Before taxes amounted to €117,600,000 15.2 percent over previous year. For the quarter, we record a tax rate of 32.5%, which is below the level of the expected tax rate of 34% to 35%, which we generally indicate. Consequently, profit after tax amounted to €79,400,000 18.7 percent above previous year. Now some new information, which we added here as to the EPS, which we show at the lower part of the slide. Earnings per share for the quarter totaled €1.54 an 18.5% increase over the previous year's quarter EPS. And as you know, our earnings per share are impacted by amortization expense And the effects from the revaluation of the Sonaeon liability, together with a wide range of analysts, we think these effects Are not really relevant for valuation purposes. And therefore, many analysts adjust the EPS calculation for these effects. And in order to support this analysis, we also state the earnings per share excluding amortization and the Sonnong liability effect. And for Q1 2012, the adjusted EPS amounted to EUR 1.66 It was 0 point 12 percent higher than the as reported figure. To the next page, some cash flow information. We show the details of the operating cash flow. And overall, the cash flow From operating activities amounted to €26,200,000 And if you review the cash flow statement line by line, You know that the income tax payments remained on the level of Q1 2011. We talked about the lower quarter Tax rate here. In addition, positive benefits from our interest payments, which decreased following the refinancing mid-twenty 11. On the other hand, we had a higher outflow for current assets and liabilities in Q1 2012 compared to 20 11, important to note, this is mainly driven by the increase of non trade asset and liabilities. There then the outflow Flow forward trade working capital in Q1 2012 was at €80,700,000 and therefore significantly lower than the Q1 20 11,000,000 cash out for working capital, which was at €97,400,000 On the next page, some information to the investment. Cash flow spending for CapEx in Q1 12. 2012 was at €16,500,000 Here just to note that in the cash flow statement, we show a spend for purchases Of consolidated subsidiaries and other business units of €700,000 which are related to the final determination of the purchase price for Multisalt. You also see the debt repayment of €103,100,000 which relates to the repayment of The part drawn part of our revolver credit facility and we funded this out of liquid funds at the end of January. This lease has now almost a full €500,000,000 revolver for general corporate purposes. Page 13 briefly. You see the information on our balance sheet. Please refer to the footnote. There you See that out of the €2,000,000,000 intangibles, an amount of €1,200,000,000 is related to the BC Partners acquisition of Pentac and not to the acquisition performed by Balance sheet and leverage on Page 14. Net debt decreased during Q1 by €39,000,000 to €1,450,000,000 Compared to the end of 2011, the group's leverage for the quarter is at 2.2 times, Which is slightly below the leverage end of 2011, which was at 2.3 times. Page 15 for your information, you can see the development of our leverage since 2,007. Page 16, Steen, you get the information on our maturity profile, which we believe is patient enough To leave us sufficient time and flexibility and gives us no pressure to refinance On a short term basis, Page 17 includes working capital information and Working capital amounted to roughly €1,000,000,000 at the end of the quarter. We turned the working capital 9.2 times on an basis in Q1 2012 and this level is this turn is at the level since this level since Somehow 2011. Briefly on my last page, Page 18, to the free cash flow, Q1 2012 Delivered a free cash flow of €77,900,000 after €47,900,000 in Q1, 2011. The increase by €30,000,000 or 63 percent is driven by the EBITDA increase. And as I mentioned earlier, the lower spending for working capital compared to last year's Q1. With this, I would like To turn over to Steve to give us some information on the performance of our regional segments. Thank you, Jurgen. Okay. So let's now to Page 19. All the regional segments contributed to our growth in Q1 2012 As they had in 2011 over 2010. In Europe, we grew our gross profit by 4.8% on an FX adjusted basis And the operating EBITDA by 1.5%. I've already mentioned that we incurred a net one off cost of €3,000,000 If I adjust, the operating EBITDA growth was about 5.4%. We are in the process of reducing European headcount by around about 4%. Agreements have been reached with more than half the effective individuals and we expect to conclude the outstanding agreements shortly. Where €10,000,000 of expenses have already been booked, we currently expect approximately €2,000,000 more to come in Q2. Starting Q2 of the quarter, personnel expenses savings before restructuring costs will amount to roughly €2,000,000 Higher and an increase quarter by quarter to reach approximately €3,000,000 in Q4. Europe had a relatively slow start in 2012. The business is Growing and obviously it benefits from the acquisition of Multisol. While growth especially in March was better than earlier in the year, we will continue to monitor the situation in Europe closely and take further action if it should prove necessary. In terms of North America, North America continues to be a pro form a in the quarter with an FX adjusted gross profit growth of 10.1% and operating EBITDA growth of 12.3%. The The business continues to develop well across the continent. Also in Latin America, we saw Latin American business perform very positively. The segment delivered a 9.4% FX adjusted gross profit growth and 11.6% EBITDA growth. Just coming to Asia Pacific. Asia Pacific shows a 16% gross profit growth and only a 5% operating EBITDA growth. The difference in growth rates between GP and operating EBITDA growth Due to the flood impact in Thailand, but we did not adjust our structure as we deem the situation to be temporary. In addition, we continue to upgrade our Asia Pacific's headquarters in order to cope with expected future growth of this very important region. The Asian situation is still somewhat mixed. After a relatively slow Starting the year, our Chinese acquisitions on Yonge showed a very positive dynamic within the quarter. On the other hand, our business in Thailand still suffers from the The industrial production in the country has not returned to pre flood levels. Macroeconomic research indicates that the industrial production is still approximately 9% down In a year over year comparison and in time we had a reduction of $1,600,000 gross profit in Q1 over 2012 of previous year. However, this picture is slowly improving. March had the highest gross profit since September of the previous year almost fifty Higher than the flood month of November. Merely due to the Italian impact, the Asia Pacific was somewhat soft organically Q1 versus a very strong Q1 of 2011. So let me reiterate, our group's operating gross profit growth for Q1 2012 And operating EBITDA up to 6.3%. Okay. If I can to Page is 21, 22. We look at the outlook. We continue to have a very positive outlook in 2012. We expect macroeconomic growth, but at a slower pace and certainly with differentiation around the globe. We expect the outsourcing trends to distribution, The Brent Financial role of scale distributors and Brenntag's strong competitive position to provide further long term and sustainable growth potential. In consequence, we expect the group to grow sales and gross profits. The gross profit development will be driven by volumes and gross profit per unit, while chemical prices are less relevant in the context. We're also to continue to work on the efficiency of our group. As a result, EBITDA should grow stronger than gross profit. In addition to the organic growth, the acquisitions Undertaking the course of 2011 was the full year impact in 2012. We expect to give quantitative guidance later in the year we've done in 2020 sorry, 20 102011. So let me address the Trading environment, we are continuing our growth path also in April 2012. Gross profit and EBITDA are ahead of the same period in 2011. The acquisitions undertaken in the course of 2011 helped to generate gross profit growth. To some extent, the currently stronger U. S. Dollar also supports earnings developments. Gross profit per working day grew by 5.5% year over year in January, 4.3% in February, 9.4% in March Gross profit is still suffering from a relatively weak market environment. Southern Europe is clearly weak. Other parts of Europe are developing more positively. In Asia, talent does show a slowly improving trend after temporary weakness during the flood of last year and we continue to reduce our costs in Europe. We initiated a program to reduce the European workforce by 4%. Most of the actions have been taken in the Q1, but part is still to be carried over into Q2. We currently expect 1 off cost in the range of 1 year so one full year of savings. We have gone to a very detailed monitor through each and every function to determine the optimization potential available to us. We will update you again after Q2. In closing on the outlook for the full year 2012, we are confident that we can grow all the relevant earning parameters also in 2012 Organically and supported by the acquisitions that we've undertaken in 2011, the macroeconomic environment remains challenging, particularly in Europe More than any other region. However, our high level of diversification in markets, regions and industries underpin the growth of resilient characteristics of our business. Thank you very much. Do we have to take questions? Yes. Maybe the operator can help us and provide the participants with instructions how to 12. One moment please for the first question. Our first question comes from Mr. Rob Plante from JPMorgan. Please go ahead, sir. Thank you. First of all, congratulations to Jurgen and Kogan on new jobs. And relating to Jurgen, you've now taken over as Head of Asia as well as Head of M and A. The one thing I've been slightly positive this year For PhenTec has been the lack of acquisitions. I remember last year you saying that perhaps 40% of acquisitions could come from Asia Pacific And therefore, I'm linking your 2 jobs. I'm wondering if we're going to get some news on acquisitions, particularly in terms of Asia Pacific. Thank you. Rod, it's Jurgen here. Thanks for all the good wishes here, but also challenging question. Just Just a reminder, last year's acquisition came in end of Q2 and in Q3 and in Q4. So the Chinese acquisition in September and the Multisolar acquisition in end of November. So we are still working digesting these. On the other hand, think it's fair to assume that we will you will see some acquisition in Asia this year pretty soon. And would you still think that you could use perhaps 40% of your acquisition firepower in Asia Pacific as your confidence On the Asian acquisitions increasing? I would say yes. So but I would not Measure it on a quarter by quarter or year by year basis, it's an average over several years. And we still stick to our statement that we would see Roughly 40% of the available acquisition funding generated out of operating cash flow dedicated to Asia With the other regions, Latin America and Eastern Europe getting to 10% each And the remaining 40% then allocated to the more mature infrastructures in Western Europe and Northern America. Our next question comes from Andy Chu from Deutsche Bank. Good afternoon or good morning. Just a few questions, maybe some numbers ones. Just to clear up for March April, could you give us The organic gross profit per working day please, are they hovering around 1%, 1.5%? Georg, would you? Yes. Just a sec, Andy. Just messed up with my papers here. Okay. Shall I move on maybe to the another question? I could have it here. I think March That would be roughly 5% to 6% organic growth of GDP per working day. And April, you're right, it's hovering around 1% to 2%. Okay. Perfect. And just in terms of just finishing off on numbers. In terms of volume and price, So you're sort of I guess your 10% roughly FX adjusted top line, what was the breakdown please between volume and price? And maybe you could give us indication What volume and price is doing in Europe as well? Thank you. If I take That one volumes on the group quarter over previous year's quarter are up by a percentage point, organically down about 3, and prices are about up about 8%. The organic volume development in Europe is A little bit weaker than that of the group, but not materially so. Yes. And Andy, this is Steve here. One of the things that we do I've done in Europe as we looked at low margin business and that tends to be the higher volume business. And therefore, if We're not happy with the levels of return we're getting. That's what we would sacrifice. And so we're not so much driven by the higher volume business. So I wouldn't read too much into the volume at this stage. Okay. Fine. That makes sense. And then my final question is just sort of wrapping up sort of acquisitions in Asia. And I guess if I've made the calculation correctly using Q1 2010 pro form a numbers for EAC, The business over the last 2 years in terms of last 2 years from Q1 2012 has basically shown no growth on an organic basis In Asia, I just wondered your thoughts in terms of the spend going into Asia. Is it going More into Southeast Asia or the acquisitions going to be focused more on China? And then just a quick Question on headcount. And Steve, you mentioned sort of growth in Asia, but your headcount since the end of the year in Asia Pacific has By just less than 2%. So just wondered what's going on in headcount terms, please? Thank you. Yes. Pat, as to the performance, I think you referred to AAC. I didn't get all the information, but I guess the question was, Do we have you seen there significant organic growth of the business outside China, so the former EAC and Rodia business? I think over the last quarters, we haven't seen this reported on this. Major issue here is So relatively slow business in Thailand, starting with the flood in in Q For last year, we have seen significant recovery. The GP per working day in Thailand is significantly in March Sure. It was significantly higher than compared to the lowest levels immediately after the flood. So we see some improvement. But it's fair to say that the current performance level are still significantly below the top levels, which we have seen in the past. And we also have to understand That Thailand represents roughly 25% to 30% of our EBITDA generation In Asia, including China. As to acquisition targets, you probably would expect more bolt on acquisitions in Southeast Asia. Exactly for the reasons I mentioned. We have already relatively strong positions in Thailand, in Indonesia and even Vietnam. So smaller bolt on acquisitions probably would help us to broaden our base there and become more robust And independent from economic development in the focus of acquisitions Could be on China, but again, we define also Asia Pacific, including Australia and New Zealand. These are still very interesting areas where we have some position, but where we believe that with the right acquisition, We could improve the overall performance in Asia Pacific and also stabilize the performance more. And just in terms of the headcount movement in Asia Pacific, is there anything to point out on that front? No, not really. It's in general because we have seen some weaker performance in Thailand and some of the economies affected by this. We'll look at Indonesia, etcetera. So we did not go through any deliberate headcount reduction. We just didn't replace people leaving the company. And just coming back to Asia Pacific, I mean, maybe I was a bit long winded, but I So on an organic basis, the Asia Pacific has not grown for the last 2 years. And I guess you're making relatively expensive acquisitions sort of 10 times EBITDA type multiples being paid to secure infrastructure And growth opportunities in Asia, but that hasn't been the case, I guess, over the last couple of years. And should we be any Concern in terms of the future acquisitions going to Asia and your confidence of the ability to deliver growth in the region? Thank you. I don't really share your view that we haven't grown there organically over the last 2 years. We have seen some weakness beginning maybe Last year Q3, Q4 was flat. So and Thailand and we see some growth, but I explained the importance of Thailand. So I don't really see this and share your view. In addition to this, just To clarify, we didn't pay 10 times multiple for acquisitions. We paid just recently 7.5 times For our stake, 51% stake in the Chinese joint venture, yes, we paid 9.6 times Estimated 2000 I think it was 2010 results for EAC. But on the actual results achieved for 20 10, the multiple is significantly lower at roughly 7.5 times. And we pay higher multiples because we expect higher growth. And coming back to your point, we, of course, expect significant above Group average for Asia Pacific and see now right now some headwind around Thailand. Okay. Thank you very much. Our next question comes from Mr. Chang Liu from UBS. Please go ahead, sir. Hi, there. Just a couple of questions for me, if I may. I was just wondering if you could help us with the Asia Pac organic GP growth rate for the quarter, excluding Thailand, if that's possible? And secondly, just very quickly on LatAm. Gross profit growth including acquisitions was 9.4% in Q1 16.1% in Q4. Could you just quickly remind us when the AMKO International acquisition was consolidated? What Ampco's gross profit contribution within the quarter was? Gerd, do you have the details? I don't have them handy here. Yes. If Chinese gross profit growth in Asia Q1 over Q1, if I exclude Songhong and if I exclude Thailand is marginally negative, so in the range of minus 3% to minus 4%. Right. So I suppose excluding the Thai floods impact In Thailand, are there any other issues in other regions in Asia Pac that we need to be concerned about or that we should be monitoring? No, I would say No. We see that a number of surrounding countries like Malaysia, Indonesia are not doing that great Currently, but we basically see this as indirect flood effects from Thailand due to the economic interaction between all these countries. Steve here. Can I just add a little bit something to this as well? I think we've got to be a little bit careful here as far as Asia Pacific is concerned. Asia Pac It's actually still a relatively new region for us. We've really started making some significant progress in 2,008, 2,009 And we're actually establishing essentially a bridge head here to develop what is a very significant market opportunity for Bradesco going forward. And you've seen obviously the changes in the management board to reflect our view about the long term strategic opportunity that's in Asia Pacific. So whilst clearly on a day by day and quarter by quarter basis the numbers move around somewhat, longer term we see this is very much a very strong Organic growth opportunity for Blendtec is a very large market and we expect to participate fully. And I think during this even now We're still investing quite heavily into management in the region to ensure that we're well positioned for growth. So I don't want people to take a negative outlook on the Asia Pacific because we're certainly not taking that view. The Co acquisition, Shankh came on stream only January this year and it's a relatively small acquisition also in the context of Latin America. Did you have the absolute figures for Ampco's gross profit contribution within the quarter? No, I'm sorry. I wouldn't have that at hand. No worries. Because I suppose if it came into effect in Q1 without impacting Q4, then I suppose on an organic basis, would it be fair to say that you saw some deceleration in And if you could give any clarity on the main driver, that would be quite helpful. I think we would say that Very high single digit growth rate in LATAM is a strong growth rate. And the comparison to a little bit higher growth previous year Might shed a little bit of warm light on the situation in LATAM. Sure. Thank you. Cheers, guys. Our next question comes from Georg Ramshagen from Commerzbank. Yes. Hi, Al. Thanks for taking my question. And just a follow-up On the €7,000,000 provision release, could you just add a bit more detail on this? And I just realized in the quarterly report That the environmental provisions actually decreased by comparable amounts. So if there's related and if you could give us some more information on this. Thank you. Georg, do you want or shall I go? I'm happy to go. The provision release, which we are mentioning, which is stated in the Quarterly report as due to the settlement of our 3rd party claim is basically related to an older Fire that we had, you might remember from the IPO prospectus that we had the fire in one of our Spanish facilities late 2005. We provisioned for environmental and other damages. And because we see authorities and with the insurers, The case was ultimately settled now. We released the excess provisions. Okay. So The provision decrease in environmental provisions are actually related to this. Yes. Okay, cool. Thank you very much. Our next question comes from Mr. Gehad Algonas from BNP Paribas. Yes, good afternoon. I've got a question for you. Give us also the organic operating gross profit development in Europe Excluding Multisol and in North America. And if I look at organic operating EBITDA in Europe and adding back the €3,000,000 net expense from restructuring, But reducing maybe €4,000,000 to €5,000,000 from Multisol, is it fair to say that operating EBITDA was flat slightly down in Europe? Georg, do you want to go or Yes. We are hesitating To talk in too much detail about organic growth rates, basically once we start integrating businesses, it becomes a little bit an artificial So size, the difference between as reported and organic, sorry, between as reported and organic in North America is very negligible because we had In the relative to the size of the region, only a smaller acquisition last year, GS Robbins. Europe, yes, Multisol has an effect. On an EBITDA level and adjusted for the restructuring, Europe was still with a relatively small percentage up Organically Q1 over Q1. Okay. Thank you. Our next Next question comes from Mr. Sam Terlison from Credit Suisse. Yes, good afternoon, Steve, Juergen and Georg. Most of the questions have been answered, but just one last one. I would be interested particularly In Europe and North America, whether you've seen any trends within your verticals, I. E. In the different sectors your customers are operating in, Has there been any changes sort of over the last quarters in terms of that? Thank you. Sorry. Did I understand in terms of changes in customer industry profile, is that what you're saying? Yes, exactly. Right. Well, we do actually focus ourselves on particularly industry segments such as water treatment, pharmaceuticals, Personal Care and the Food Sector in addition to areas like adhesives and coatings. So for us In terms of any changes we would see, we would say, for example, the adhesives and coatings market, which is around decorative products such as And construction has probably been an area which has been more negative outlook as opposed to positive, but we see pretty large There's stability in quite a lot of the other segments which we focus on. And in fact this is really where our one of our strategy is We've tried to support such industry groups which do give us long term stability such as water treatment and food and personal care. I think probably the most marked effect would be in construction for pretty much obvious reasons I think. Okay. Thanks. Our next question comes from Mr. Barix from Merrill Lynch. Please go ahead, sir. Hi, guys. It's Toby Reets from Marig. I guess a similar sort of question to last one. Just could you within Europe, you talk about the sort of different regions and how those are performing? Yes. I think as we said in our briefing, it's clearly Southern Europe It's weaker than the rest of Europe in totality. And this has really been Pretty much the picture now for quite some time really. I would say sort of over the second half of last year, We saw Spain and Italy as being weaker markets. We weren't actually involved in Greece at all, but probably most people would be pleased to hear. But we do see some good performances in Europe as well. We don't want to paint a completely bleak picture here. You may have we find some surprising good performances In Northern Europe, and we are actually perhaps a little bit more optimistic than maybe we sound because we do see some real upside Potential for us in Europe. And I think what's really interesting at the moment for us is that clearly suppliers and customers are certainly adopting a more A conservative view in terms of the way they source their products and what have you, we see the typical Behavior which you would see in a recession coming through now where people are buying more often smaller quantities and what have you. But nevertheless the demand underlying demand is Still pretty strong in many industrial countries in northern parts of Europe. So it's a bit of a region two halves to some extent. And would that be sort of France, I guess France, Germany those are the sort of the key strengths. There's not been any change over the past quarter In any of those markets, no? Yes. I would say that I wouldn't say France is particularly a buoyant economy to be fair. But I would say that Surprisingly like the U. K, Benelux, Nordic regions, Germany, Really are very resilient. And is that assuming from what you said that's sort of more of a share gain than anything else is that right? Good question. Much of my competitors are losing market share. Good question. Well, we don't feel that we're moving backwards. So guess that may well be a market share increase. I guess the fact that it probably is, but we're not seeking to rush out there and grab market share. We're seeking to make sure what we do is profitable and hence seeing the measures that we're taking in Europe. Okay. Thanks very much guys. Our next question comes from Gerhard Oguornas from BNP Paribas. Yes. Maybe just one more question on your cost efficiency Program, in addition to letting go of your 2 50 employees, have you what are the other areas where you find that you can Cut costs, have you identified any other major topics as in warehousing for example? Yes. Certainly we have A very extensive review of all the European physical assets done and complete. To be frank, this is not work that's been done in the last 5 minutes. We are a planning organization. We've been looking at this for quite some time. And we're taking Currently to significantly improve the effectiveness of our transport fleet in terms of the levels of utilization, operational efficiency And certainly where it makes sense, we will consolidate warehouses and offices again where it makes sense. I think the important thing is that we don't see this as any sort of retreat at all. We're still very much configured for growth, but we will take through steps that It's necessary to improve efficiency as is absolutely obviously to do in the current market environment. But I would say transport is probably a Key focus for us and the warehouse is where it makes sense, but bear in mind that our business is very much a local business and our customers Appreciate the local source. Thanks. There are no further questions. I now hand over again to Mr. Holland. Okay. Well, ladies and gentlemen, thank you very much indeed for your time today. And thank you for all your questions. And I think that's probably the end of the call. So thank you very much. Ladies and gentlemen, thank you for your attendance. This call is being