Dear ladies and gentlemen, welcome to the webcast of Helix Steel. At our customers' request, this conference will be recorded. After the presentation, you have the opportunity to ask questions via the telephone lines. May I now hand you over to Verena Nicholas Kronberg, Head of Investor Relations, who will lead you through this conference. Please go ahead.
Many thanks and yes, hi everybody. Welcome to our Q1 results presentation. Thank you for joining via telephone webcast. Today, I'm here with Mark. He will update you on our operational and financial performance in the 1st 3 months of 2021 and As usual, we will only highlight the main messages to leave enough room for questions.
With that, over to you, Marc.
Thank you, Verena, and good morning and a warm welcome from my side. Here at Analyst and Investors, we have seen a fantastic start to the year. During the Q1 of 2021, we achieved a strong operational and financial performance throughout actually all our business. EBIT and adjusted net income are up 14% 19%, respectively. Our synergies ramp up is unfolding as Despite ongoing COVID-nineteen restrictions, COVID-nineteen did also not have any real impact on our other operations, which is in line with our expectations.
This gives us a lot of confidence for the remainder of the year. On the deleveraging plan, we are making excellent progress. We are fully on track towards achieving our target of a debt sector between 4.8 And 5.2 times already by the end of this year. Our pension provisions have improved by €1,700,000,000 Due to the seasonal pattern of our operating cash flow, this massive improvement will only translate into our economic net debt numbers during the course of the next 2 quarters. You should actually be familiar with that by now that Q1 brings a seasonal buildup in working capital, which then fully reverts in the second half of the year.
In essence, I can fully confirm our guidance for 2021 As well as our midterm delivery plan, including our synergy target of €780,000,000 by 2024 and our dividend commitment. Before I update you on the operational highlights of the quarter, let me spend a few words on the new E. ON Management Board remuneration And we put up for resolution on approval at the upcoming AGM next week. One of our priorities at E. ON is sustainability.
Sustainability is the integral part of our corporate strategy and guiding principle for all our decisions. As a consequence, It is obvious that the sustainability performance of E. ON should be part of the long term incentive of E. ON's board remuneration. With the proposed remuneration system, the following sustainability dimensions are planned for the 2022 long term incentive tranche.
First of all, climate action. We measure our progress of carbon emission reduction. Secondly, diversity. We will further increase the share of our female executives. Thirdly, health and safety of our employees and therefore the reduction of The 4th dimension is our performance in key ESG ratings And therefore, an overarching element when it comes to sustainability.
In this context, I would also like to point out And as a financial performance element, we will include a return on capital employed component next to the established total shareholder return into the long term incentive for our management board. I'm confident that investors will appreciate the new elements of the remuneration system And largely results from the approval of the plan for our AGM next week. Let me now turn to some operational highlights In Q1, we further beg our confidence on guidance delivery. In Energy Networks, we are committed to grow our power up Sorry, I repeat, Energy Networks, we are committed to grow our power up by 4% to 5% per year for many years to come. With a record demand in Germany for connections in newbuild residential areas As well as for renewables connections, we are very confident to deliver on this pledge.
We are also very happy with the progress in customer solutions Due to several positive developments. First, the nPower customer migration in UK has been completed. We have started to close down Npower Systems with a majority of people leaving by end of Q2 And the full NPower wind down expected by the end of 2021. In parallel, the migration of E. ON UK customers It's already significantly progressing with currently already around 500,000 E.
ON customers migrated to E. ON Next. We expect that number to significantly increase over the coming weeks. We plan to have migrated the majority of ER customers by the end of this year already. We are also fully on track to renew our IT stack in our German retail operations With more than 4,500,000 customers having been migrated so far.
2nd, we see a significantly growing demand for our future energy home services. In Q1 alone, we have sold about 30,000 additional units from PV, batteries to efficient heating systems. We already have more than 1 point 2,000,000 active service contracts, which makes us confident that we will be able to double the earnings contribution of that business in the course of this year To more than €60,000,000 Some may say this is small. I say the momentum is great and we're just at the beginning of this market to evolve. Thirdly and finally, in our Energy Infrastructure Solutions business, we were able to fully monetize from the colder weather With excellent availabilities of our heating plant, especially in the Nordics.
A good example is Hulte Vitorpe in the Stockholm area With 97% availability in Q1 2021, operational excellence matters and we are just good at it. Now let me move to the financial performance of E. ON in the 1st 3 months of 2021, on Page 4. EBIT came in at roughly $1,700,000,000 which is an increase of 14% or $200,000,000 compared to the same period last year. I have already elaborated on our strong operational performance.
On top of that, we also benefited from a weather related recovery in margins. You may recall that last year, our financials in Q1 were significantly impacted by extraordinary mild winter months. In contrast, weather conditions this year were pretty much in line with expectations. Also, the impact from COVID-nineteen As expected, including bad debt provisions. On the segments, Earnings in Energy Networks are roughly stable compared to last year.
In Germany, the year on year earnings increase from normalized volumes was largely compensated by The Central Eastern European and Turkey segment benefited from the first time consolidation of VSE in Slovakia after the acquisition from RWE in Q3 last year. Customer Solutions' earnings momentum was strong with an increase of almost €300,000,000 year on year, doubling the EBIT relative to Q1 last year. Apart from normalized weather conditions, the U. K. Benefited from our restructuring efforts And the full migration of NPower customers onto the new platform.
With an EBIT of €86,000,000 in the Q1, We feel very comfortable with our target of above GBP 100,000,000 for the full year. Be reminded that especially in the UK, Seasonality is usually very pronounced towards the beginning of the year. Q1 earnings of our non core businesses are down by roughly SEK 80,000,000 year over year. The decline is mainly attributable to the negative impact The purchase of further production rights for our German nuclear operations. Be reminded, We continue to appreciate the production rights that we eventually obtained for free based on successful settlement of Nuckel Norsus until the very date of law becoming effective.
The legislative procedure is fully on track with the 1st parliamentary reading already concluded. As Indica indicated, we will most likely adjust our guidance in Q3 already. The result of our Turkish upstream joint venture was negatively affected by lower hydro generation and an adverse FX develops. Let us have a brief look what the earnings development means for our bottom line. Our adjusted net income came in at more than €800,000,000 for the 1st 3 months 21, up 19% versus last year, reflecting largely the increase in our operating results.
Economic interest result, income tax rate and minorities are fully in line with expectations. Let me now turn to the development of our economic net debt. Compared to full year 2020, economic net debt is largely unchanged. While this looks boring from a headline numbers perspective, there is a lot of positive momentum below the headline. Pension provisions improved by roughly 1 point 7,000,000,000 over year end 2020.
The decrease of the defined benefit application due to an increase in pension discount rates 40 basis points in Germany was accompanied by a better than expected planned asset performance. This is temporarily compensated by our operating cash flow, which reflects the usual seasonally low cash conversion in the Q1. In our B2C commodity sales business, high energy consumption during the winter period causes a negative cash balance for us in Q1 As the cash inflow from installment payments is equally spread across the year. In our Networks business, likewise, The redistribution of feed in tariffs for renewable generators in Germany results in a further temporary increase of our working capital. As usual, we expect the seasonal effect to fully reverse during the remainder of the year.
Backed by our Q1 performance and assuming interest levels to stay at current levels, we are on good track To achieve our debt factor target of between 4.8x and 5.2x already this year, once the settlement of the nuclear lawsuit Let me conclude by presentation with our outlook on Page 7. Backed by a strong start into the year, I'm happy to confirm all our targets for 2021 and our midterm delivery plan until 2023, Including synergy delivery and our dividend points. Furthermore, let me also reiterate that we feel very confident with our EBITDA target $7,600,000,000 to $7,800,000,000 and our EBIT target of $4,600,000,000 to $4,800,000,000 for 2022. Thank you very much for your attention. And over now to Verena for the Q and A session.
Many thanks, Marc. We will directly start with the Q and A session. Please be reminded of the 2 questions per questioner rule in order to be able to First one on the line is Alberto from Goldman. Alberto, over to you.
Verena, thank you and good morning. I'll stick to the rule of 2 questions. I just wanted to ask you the following. I mean, I appreciate you just Gave a guidance like 6 weeks ago or so. But if I take your Q1 and I add back Q2, Q3, Q4 From last year when COVID, trading losses, warm, lower synergies, you broadly get to the mid range of the guidance.
So I guess the question is, what does it take for you to guide in the upper end or revise upward the guidance altogether? Or is there anything that Concerns you during the rest of the year we should think about? That's the first question. The second one is on Customer solutions, again, very strong underlying. And I was wondering if you can maybe share with us More of the savings in terms of OpEx from migrating The U.
K. Customers to the new platform. And the U. K. Seems I wouldn't say the tip of the iceberg.
It's a big business for you. But How about replicating that to Germany? I guess that's not in the synergies target. How much savings could you achieve by doing The same as in the UK in the larger region. Thank you so much.
Hi, Alberto. Thanks for the questions. Let me start with the second one. Just to remind everyone that once we will have migrated all customers onto the YourNEXT Platform will not only then have shut down the entire NPower B2C operations, We will also bring then the legacy E. ON B2C operations into a further optimization mode And this will go hand in hand with further cost savings on the legacy platform as well.
All that together will mean that we will lower Our cost base in the UK B2C scheme by more than 50% on a cost to serve basis. With that improvement, U. K. Operations are then getting on eye level with the cost structure, which we already have And the answer therefore on your second question, Alberto, is twofold. The magnitude of efficiencies, which we are Seeing in the UK, no, they can't be easily replicated in Germany.
The good news is that we are in Germany already At the efficiency frontier also relative to key benchmarks and competitors. But be assured that we will further push The performance curve for the entire market going forward. And again, retail operations is not just about the level of OpEx, it's also about how you spend it, So how effectively you are engaging with your customers and how satisfied they are, which by the way is also an executive incentive for the entire management board, How satisfied our customers are. On the first one, the guidance, you can take away from my comments that With the start of the year, we actually have a lot of confidence. With regard to our full year guidance, Again, it's still 3 quarters out.
And generally, our portfolio is very resilient and robust as demonstrated last year. And I think it was as worse as you can imagine. I think this year, the only major Risk which remains is actually weather, I. E. 4th quarter temperatures.
Except for that, we are pretty confident with our guidance. But please also understand that we will not adjust now the guidance Continuously in the call. Just work on with the confidence, which I'm sending.
Thank you.
Thank you. You're welcome.
Thanks, Alberto. Next one on the line is Sam from UBS. Sam, please go ahead.
Hi, good morning, everybody. Thank you for the presentation and congratulations on a looks like a very good quarter. Mark, I think the question I wanted to ask was just coming back to the midterm guidance because you've reconfirmed midterm guidance today as well, Which is very helpful. But I think when you set it out for the year, you were already kind of indicating that From 2022 to 2023, the picture was quite flat. And I think now with Good outlook for 2021 and then also potentially the I think I might just say the nuclear compensation coming in Possibly on top before the end of this year.
The way it looks to some people is actually maybe quite a flat Growth outlook through the next few years. And I'm just wondering, is there anything that you can say about the longer term picture today in terms of Where you might be able to find more kind of EBITDA growth than we've currently talked about? Or should we think of it as basically Quite a flat picture, but very solid with a growing dividend against that.
Yes. That was a long run up. So on mid term guidance, actually no change, full confirmation. That means that our core business is actually growing every year, including 20 3, as you I would like to remind you that we will see the phase out of nuclear from 2022 to 2023. So when it comes to our core business, guiding set profitability from 2022 to 2023 means that the core of us It's growing quite nicely.
And that's how we are managing the company also beyond 'twenty three. But admittedly, I'm not in a position now to extend the guidance Today at 2024 or beyond for that you will have to wait until our Capital Market Day in autumn this year.
Okay. Thank you very much.
You're welcome.
Thanks, Sam. Next one on the line is Peter from Bank of America. Peter?
Yes. Good morning and thanks for taking my questions. So Two questions from me. Firstly, just following up on the U. K, can you maybe talk about what customer acquisition and churn Trends you've seen so far this year, especially as gas and power prices have gone up quite sharply in the wholesale market, is normally bad for new entrants.
And linked to that question, do you have a view of what a sort of And then my Second question is just on Sweden. I think the court there is off the regulators to go back and recalculate the allowed return. Do you have any visibility And the claim line for decision, have you included any upside in your 2023 guidance?
Yes, Peter. Thanks for the question on Sweden. Your second question, Don't expect the court case on the annual return and If you maybe might go on mute, I hear a lot of echo that maybe coming from Peter or someone else. Whoever That is maybe you can would be so kind to go on mute.
I have already muted the line, so please go.
Thank you very much. We haven't included any upside into our guidance. Our guidance It's based on the currently approved regulatory return. Any upside would come On the question with regard to U. K, we do not see at this stage A significant improvement in the market environment.
This means that we can see churn rates and customer trends In the same level as last year, this means that our E. ON branded products Our showing stable customer accounts and we saw during the 1st final quarter of migrating Npower Some minor losses still at the end for our brands. So total in total accounts in UK, we have gone Slightly down in the Q1, but again that was only due to the remaining Empower accounts. So message here is we are not Significant improvement. And again, we are restructuring the business With a target to deliver decent profitability even in today's market environment.
What is normal market environment and EBIT margins For U. K. Should be like, let us say, an almost philosophical question. If you ask What you should expect for a commodity retailer is something between 2% 4% EBIT margin, if you're an excellent operator like us, probably at the high end and you will also have some competitors at the lower end. And if you are then able to gradually transform your business into more service and solution based products, And then I would see that EBIT margin took off rather in the 5% to 10%.
I think that with regard to EBIT margins, But when that is to happen in the UK, I think it's a bit philosophical. And again, be reminded that we don't want to be active in philosophy. We will turn around the business without any improvement in the market environment.
Thanks, Mark. And sorry, can you just So to clarify, I missed the beginning of your answer to my question on Sweden. So you said a court case wouldn't bring about clarity before 2022? And is there a particular time during 2022, did you say?
Yes. Look, the first milestone To wait for is actually end of August. Currently, the regulator has decided to The first positive verdict by the courts in Sweden, The regulator also asked for more time to prepare the appeal and hence why we have this extended appeal line now until the end of August. We do expect that the regulator will bring up in a more refined appeal argument. And if the court doesn't turn that down, In that case, obviously, the court case would be done by end of August.
If the appeal is being admitted, then the Yes. And again, nothing related to our financial guidance as upside. Our guidance is based on the currently allowed returns. Thanks, Mark.
All right. Thank you, Peter. Next one on the line is Lueder from SocGen. Lueder, please go ahead.
Good morning, Mark. Good morning, Verena. Thank you very much for the very efficient presentation. 12 minutes, that must be close to a record, I think. My two questions are also with Customer Solutions division.
Clearly, a very impressive Quarter, but can you maybe quantify the volume impact a bit more? You mentioned normalized weather as one of the 4 Beneficial factors and that's applied across the regions. But if you look at the power sales volume you gave, They're down 2.6%, gas is up 3.2%. And it doesn't really look like a massive volume impact, but maybe this looks Completely different if you include the wholesale market. Could you just shed a bit more light on the volume impact, which clearly given the temperature difference should be And maybe also generally on the 4 factors you mentioned on Slide 15 that benefit that drove the performance Of customers' announcement, €92,000,000 Can you maybe give us a rough idea how this splits between those four factors?
Hello, Lueder. Yes, I should be able to give you some more insight and if not I'm invited to ask back. So let's start with the volume effect. First of all, be aware of when we look at our total volume numbers in terawatt hours, There is obviously always portfolio optimization ongoing, I. E.
On what segments we're actually focusing And you should expect that we are focusing on high margin segments. So when volumes go down, it is not automatically an indicator for low profitability. So that, 1st of all, it addresses the point where you felt that there is a disconnect between profitability and volumes. So we are optimizing the margins In our sales portfolio and with a very you should expect a natural disconnect also during further quarters. With regard to the volume development, on the profitability side, It's pretty much been a consequence of normalizing weather conditions as temperatures have moved back to normal expectations.
Overall, on the customer solution side, the normalized weather Stands for a high double digit, almost a 3 double digit €1,000,000,000 amount. And the key markets have been affected almost Then when it comes to the profit drivers on Page 16, the restructuring benefits in the UK, Given that we have seen an almost €100,000,000 improvement in the UK year on year, You can imagine that another mid double digit €1,000,000 effect stems from the restructuring benefits. The synergy ramp up in Germany has a similar magnitude and the other businesses It's basically growth, not so much on the commodity retail side, but very much In the solutions business across the various markets, which now start to show some momentum in our group numbers. I mentioned, Masjid, that the level is still low, but the momentum is extremely positive. I hope that answers.
Yes, very clear. Thank you.
You're welcome.
Thank you, Lueder. Next one is Deepa from Bernstein. Deepa, please go ahead.
Thank you. My two questions. One is Germany is now proposing to increase its decarbonization to 65% by 2,030 and Some say that renewables need to now be 77%. So I'm just wondering, obviously, there's been talk of increasing auction volumes and so on, but it seems still seems that volumes of onshore wind are far lower. So just wondering, obviously, in connection with your Ongoing discussions with the regulator and the investments needed, what do you think is really needed for Germany to kind of hit the targets?
And how feasible do you think these targets will be? And my second question is regarding the recent board change that you announced yesterday With the Head of the Customer Solutions division stepping down, I just wanted to again check with you that do you see any risk on the momentum in the Customer Solutions
Hello, Deepa. Let me start with the question on decarbonization. I feel I'm a bit preaching to the converted, so I will keep it short and crisp. So our 2 key messages when it comes to German politics is Do it market based. And so auctioning is the right momentum, but You know, make permitting much easier and that is the bottleneck.
So we have conflicting permitting Regulation, which even if you have market based auctions and a lot of investor interest actually to participate, You face that permanent problem, which is a political topic which needs to be resolved. For us, this is not a concern at all. As As I've pointed out in the past, our growth is built on a number of growth drivers and the renewals build off is only one of them. If I look just at the increasing customer demand from increasing digitization, data centers, if I look About the momentum which we are seeing in e mobility, our outlook on our growth opportunities It's unchanged and does not get affected by The situation around rest build out, which we have been listening. With regard to Carsten, Halston has decided to seek a new professional opportunity and challenge in with the economy, Based electronics retailer, which is something obviously something which we regret in the sense that he's leading on value side As it is with these personal decisions, we wish you more the best for this next step.
But what you should not do is take any read across now to what that means for E. ON. Our growth, our business is On many strong shoulders, as you could see, just our UK management team turning around the business And you can imagine that the corporate and management teams are around in all of our markets. So don't read And is there any threat from this? Also Govard Reports We'll consider how to replace Carsten and we are very confident to keep up the good momentum From the Q1 also during the rest of the year and the future.
Thank you. Thank you, Dieter. Next one on the line is James from Deutsche. James, please go ahead.
Hi, good morning and Well done.
The good results from me. Two questions from me, both on retail. So the first is that In the answer to one of the earlier questions, Marius mentioned that the German retail business was at the Efficient Frontier. I was just curious what you meant by that, whether you're whether when you say that you mean it's at the Efficient Frontier or the kind of bigger retailers or whether you think It's also at the Efficient Frontier if you include some of the very efficient digital new entrants. That's the first question.
And then the second question also on retail. I was wondering whether you could share some thoughts on what you think the key for the retail business is going to be over the medium term. Obviously, in the short term, it's delivering On the synergies, but over the medium term, is it just getting all the customers onto a digital platform? Is it being superficial? Is it Offering other value added services, I'd be very interested in and if you have some thoughts you could share on that.
Thank you very much.
Yes. Thank you, James, for your questions, and welcome to the call on And the German retail business and well, let's talk about kind of pushing the efficiency frontier. I think ultimately, that is a mindset with which we look at efficiency. And efficiency in the retest here It's not just about cost. It is also about while being cost leader, being able to offer The most flexible and best service and experience to our customers.
And that boils down So initiatives in Germany to also move the entire business onto a new IT sales stack, With which we are well on track. I mentioned the 4,500,000 accounts, which we have migrated already. By the end of this year, we will Surplus the €8,000,000 and then by next year, get the large part of the rest of the portfolio onto the platform. And that platform will then also be white label Cable, I. E, we will be able then on that machine And to also run operations for our other market participants.
And you are only able to offer your IT stack and service platform to others If it is really in the top quarter in the market, and that is the strategic logic behind that. I think that also is a segue into answering the second question. We're extremely positive about our customers and Lutens business beyond just realizing synergies. I mentioned this time in my speech that what we call future energy home business, which is above all the business around Residential photovoltaic battery business and energy efficiency, we are bringing that business this year At an EBIT level of €50,000,000 And this is obviously something where we Strongly leverage our existing brand and market position and then try to gradually improve The business and earnings mix in that business, and that's why we are so positive about it.
Thank you very much.
Thank you, James. Next one is Rob from Nordea. Rob, please go ahead.
Hey, thank you. So two quick questions from me, please. Firstly, given the 1Q result shines the spotlight Somewhat on the Swedish Heating business. And given recent multiples for such businesses look very interesting, to what extent does management see Any benefit in monetizing some of these unappreciated assets to reinvest more in E. ON's Heartland Networks?
And secondly, just a bit of housekeeping. Given the, I think, the surprising move in the pension provisions given the plan assets, Could you perhaps give a bit of an update as to where those provisions would be today given we've seen another 12 basis points of yield strengthening
Yes. Hi, Rob. Let me start with the pension provisions. The headline sensitivity for 50 basis That is about sensitivity, which you should expect and which Actually also, it's worked during the Q1 where we've seen a 40 basis points improvement in Germany and that has translated It's a bit more than the sensitivity we have shown, we are showing As normally, we would assume a slightly compensating movement on plant assets, but Q1 has been with the performance of plant assets also being extremely good. The 40 basis points during the Q1 have actually trended into a €1,700,000 more than the sensitivity, which I've given you In the case, but I regard the sensitivity as the more the better you have to take for future movement.
On 3G, that's a very simple question. The question is always, are you the best operator and best owner of the business? And for us, the business is the growth business. So our focus is on making sure that around the existing Heating networks, which we have and the existing municipalities and city networks, We have to gradually increase our footprint there. You also reminded that we have marked about $500,000,000 of CapEx every year Into growing our City Energy Solutions business and that is very much highly efficient heating solutions.
And so we are focusing on growing that piece And therefore, we are also a happy owner of those positions and are not reflecting about selling that. We want to grow it much more.
Fair enough. That's very clear. Thank you very much.
Thank you, Rob. Next one on the line is Piotr from Citi. Piotr, please Please go ahead.
Hi, good morning. Thank you for the presentation. I have two questions. So first one, I'd like to ask you about The gross margin for the customer solution business, because we only see one figure. Can you say broadly is that how much is The margin generated on the just selling gas and power and how much is from the Adiadsson businesses like services, Boilers, fixed shares and maybe selling financial products, how much is this now and how much is this going to be in the future?
Do you see a significant Change there. And your new platform, how well suited this platform is to cope? I understand this is a much more simpler platform that's why you can Reducing cost, but how well suited this is to cope with this potentially more complex products going forward when you'll have to compete more broadly with Different services, I guess.
Yes. Andre, with the second question, you are But I'm happy to repeat that actually because repetition just underscores how it's important it is Generally and how much it is in our focus. With renewing our IT architecture, it is not just about reducing updates. It is that simultaneously, you need to be able with a future IT architecture to be highly flexible, Which means on the timeline to be able to flexibly fast respond to market changes, But also to be flexible when it comes to customer offerings and broaden your offerings without inflating your cost base. And so again, that's a call for don't reduce our IT renewal to just saving OpEx.
It is as important to improve the effectiveness of our platforms. On gross margin, we are not releasing market by market gross margin levels. High level, it's a high level indication, so that you can broadly classify the returns of those Businesses, in terms of EBIT margin, for a residential commodity retail market, I would Typically, over time, expect profitability of the market segment to be between 2% 4 And obviously, we want to be for a quarter and so we are striving for the upper end. When it comes to more service based Offerings, EBIT margins, clearly lie above 5% and are backed up By longer term or medium term to longer term contracts. And then finally, on the asset backed Businesses like District Heating, Energy Infrastructure Solutions, their EBIT margins Don't really matter that much to us.
Our key performance metrics are there on capital return numbers. So, that falls a bit off The EBIT margin perspective as the asset intensity is high. So much for your questions. I hope that helps.
Okay. Thanks very much.
Thanks, Kjostar. Sam, I recognize that you had only one, however, very long question. So do you want to take another one?
I was going to ask a quick follow-up. Sorry for my first question was long, but I had a very short answer. So probably on average, I'm e grilling out. Mark, listen, I just want to come back on one point because you said in your introduction that You are bringing back ROCE into the management targets, which we talked about full year as well. I apologize if I missed something, but did you say What the Roachie target would be that you're building in?
Because that would be a helpful input for us as well.
Yes. First of all, it is about the approval for the system and it is how the corporate governance framework works Before we then will talk about the specific ROCE targets, so first of all, this is about The system where a Material component will be best point forward on return capital.
Okay. So that might be something
I guess then we get at the CMD.
Yes. And you're sure that we are well above our cost of capital.
Okay. Very good. Thank you.
All right. So there is no further question on the line. Thank you very much for your interest. And obviously, The Investor Relations team is more than happy to answer any follow-up questions that you might have. This concludes our call.
Thank you very much.
Yes. Also, thank you very much from my side. Have a nice day. Stay healthy. Bye bye.
Bye. Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.