Earnings Call: Q2 2020

Aug 13, 2020

Good afternoon, ladies and gentlemen, and welcome to Bilfiner's Second Quarter 2020 Conference Call. With us today are Tom Plates, our CEO and Kristina Jollandsson, our CFO. Before we go to Q and A, Tom and Christina take you through some of the key highlights of this morning's release and provide a bit more color around financial performance in the Q2. With this, I hand over to Tom Plates. Okay. Thank you, Burkina, and also from myself, good afternoon. If I kind of pick up where you left off at the end of Q1, I think we guided you towards a, obviously, dip in our revenue. Our year end guidance remains unchanged. So I think the message here is that things are developing more or less the way we expected, even if though we don't like them. But we'll live through it, and we'll get through it. So if I go into the headlines here, we are seeing some recovery. So the markets, the signals we're getting, but also our own top line is showing that we saw slow activity in April May, and then we see some pickup in June, okay? So they're long way from where we were last year. But certainly, the bumping on the bottom has now turned into a very slow upturn, which we think will continue. And we do expect further improvements throughout the second half of this year. Orders received in the quarter were minus 15% organically versus same quarter last year. If you couple that with the Q1 where we were more or less on target, then for the year to date or the first half year, we're at minus 3% organically. The corresponding revenue, minus 29% for the quarter. For the half, minus 19%. That gives us quite a strong book to bill ratio, obviously. And that book to bill ratio of 1.2 positions us for a bounce back going forward. EBITDA adjusted, minus €35,000,000 I think no surprise there, in line with the revenue drop. We have been doing a lot of mitigation efforts and executing well on that, as you'll see, as we go through this. I think the details, if you go further into numbers, will show that our losses are now more concentrated in a particular part of the company and, in particular, to underperforming entities and technologies where we began to implement strategic measures. I think you'll know what that means quite a while back, and we're well underway to executing on that. Free cash flow was very strong, dollars 129,000,000 reported. That's really a lot of internal work in managing the working capital, but also helped, of course, by the deferred tax payments and deferred social security payments by the government. Those payments are due at a later stage, so they're not eliminated, rather they're deferred. And we expect to roll back or pay back some of those in Q3 and Q4. Our balance sheet or our financial position is sound. And from what we see today, we do not expect the need for any additional financing. And with that, as mentioned at the beginning, we do reconfirm our outlook for the year. So that's 20% versus last year, yet a positive adjusted EBITDA. If we go into some of the underlying messages that we also have in our press release, I mentioned a quarter of past, present and future activity. Let me show you what that means. I think you will follow our Hinkley Point developments. On the next page, we'll go a little bit more into detail on that to show you how those contracts turn into order intake. But again, a great well done to the team. I think far exceeding expectations, again, as we'll see on the next page. With respect to the past, in 2009, we had that unfortunate accident in Cologne with the Mitchell Archives. And that case has been dragging on for 11 years. So it's been a difficult case, but very happy, very pleased to report that it's been concluded. Our share of the payment to the city of Cologne is €200,000,000 and all of that is paid by our insurance. So there's no impact on our liquidity nor on our earnings. And what it does mean, again, it's another project off the list that was distracting management's time. In the quarter, we also settled with our former executive board members. You recall this is the compliance case. It had to go through the AGM. The AGM approved the settlement, and there is a P and L effect of $17,000,000 which we did book into adjustments. Cash was received in July. So again, loads of books on that. Another project that was distracting management time and attention. In terms of the future, I think a lot of what we've done, and you'll see that also here in the numbers, positions us as a leaner, more agile company, not only in our SG and A, which is below budget, as Katrina will show, but also in the way that we've been able to reduce our headcount and give a second look at our underlying structure to again, as I mentioned, position us as a more agile cost managed company going forward into 2021 beyond. Regarding Hinkley Point, this chart takes you back a little bit to almost the same time last year. So on the left side, 2019, is what we thought at midyear 2019. We thought that by the end of the year, we would have signed contracts for more than $250,000,000 On the second curve you see there, we began 2020 with actual order intake only around €50,000,000 We have signed, in the meantime, contracts well over €500,000,000 dollars And those contracts are call off contracts. So once we've signed, we wait for the customer to then call off the activities. And our accounting systems only recognize the orders once those call offs have been made. So if you look at that commitment, it adds up more than $500,000,000 The actual order intake effect this year to date around $80,000,000 between now and the end of the year, another €150,000,000 and then in 2021, €250,000,000 So although our order intake line is performing well, there is yet more to come out of the Hinckley Point contract. And this curve, this is what's required to keep the project on track and on schedule. To give you a little more color on the overall market, beginning with E and M Europe, chemicals and petrochemicals, This is actually our main market. It makes up 40% of our revenue. And what's been reassuring and reaffirming to see is that our main market is in Continental Europe and that in that market, COVID has had less than 10% effect. So we're quite stable, continuing in Europe in chemicals and petrochemicals. Energy and utilities also showing a slight uptick there. I think no surprise, again, on the back of Hinkley Point. And interesting to see that a lot of companies now focusing on ESG projects, for example, projects to limit CO2 emissions, to capture and sequester CO2 or even to go further and look at hydrogen production. In terms of oil and gas, 30% of our revenue, we have been hit hard in the North Sea, the upstream market. I think we shared some of the numbers with you. We see 50% drop in revenue versus last year in that particular part. Major projects have been delayed. Turnaround has been delayed. On the other side, especially on the land side, other projects continue. So on the downstream side, for example, our project with BP in Kelsenkirchen continues as planned and is even expanding. So quite a mixed picture there, but we show red, red and we show the arrows being flat. So no immediate recovery, although within that, we have this mix picture. E&M International, chemicals and petrochem, again, a different picture. In the U. S, projects are being suspended or even delayed, whereas in the Middle East, the expansion programs, the modernization programs do continue, in particular in Abu Dhabi, around Ruwais and in Saudi around Jubail. Energy and utilities, Middle East also now looking at alternate power. So, nuclear has been on the agenda for quite a while. But also in Middle East, we're seeing more renewable power concepts. We're seeing some hydrogen electrolysis projects. So also there, we see and detect the shift in terms of ESG appreciation. North America, I think as before, wind and solar. And I think as the economy recovers, especially in America, we do expect the government to put money into infrastructure and to boost the economy through such projects. Oil and gas, for us, as I mentioned, it's been a hit. The 50% in the North Sea, if I compare that to the U. S, we see about a 40% hit on our business there and a 25% hit on our business in the Middle East. So overall, you do get a mixed picture, as I said. Technologies, there, energy utilities also driven by the entry point effect. We also see nuclear business continuing to perform. We do see new projects. Decommissioning does continue in Germany with additional projects, and we're well entrenched into that line of business. Pharma and biopharma, we're getting a lot of questions. Are you seeing an uptake in pharma production on the basis of COVID? No, not yet. We're kind of late phase in that chain, although we do expect to see it later. What we do see is that our customers are rethinking their supply routes and trying to be less dependent on China and on, let's say, supply chain routes outside of Europe. So that may mean more investment back in Europe. I think that's a quick run through the markets and how we see things. And I would then pass it over to you, Christina. Thank you, Tom, and also welcome from my side. Let's have a closer look on the financials for the Q2 2020, starting on Page 9. Looking at order intake, as already mentioned, we had a drop in the Q2. We achieved €931,000,000 which would be organically 15% less than in the same quarter last year. However, if we look at the comparable number year to date after 6 months, we only organically are 3% behind and which is a very, very solid performance. Also, if you then also add that, that number only includes EUR 80,000,000 from Hinkley Point so far. We have to say that we see very strong development in our base business. We see that we can partly adjust the volumes expected on the frame agreements and increase them, but there clearly still continue to be lesser order intake on the so called larger project side. Book to bill ratio, 1.2 in the second quarter, which is then giving us a strong position for the second half to start to recover, but also slowly but clearly building up order intake that will be generating net sales next year. As said, euros 80,000,000 from Hintle Point included in the first half. For the second quarter, we had €30,000,000 of that €80,000,000 included. And we are expecting to see around another EUR 150,000,000 in the second half of this year sorry, and then €250,000,000 following in 2021. Order backlog at the end of June, very stable at close to €2,700,000,000 euros Proceeding to Page 10, looking at the revenue and profitability. As already mentioned by Tom, we clearly, in June, started to see some recovery, April May being very rough. The focus during the Q2 has obviously been to adjust to the volumes and reduce our cost and prove that we have an agile organization, but also, of course, to have a strict cost management here. The group revenue in the quarter 2 fell down to 793,000,000,000 sorry, 29% organically less than the same quarter in previous year. And there were sharp drops, especially related to the North Sea Oil and Gas business, so Aberdeen and Stavania, but also a clear decline in North America as our major large projects are clearly coming to an end. Adjusted EBITDA decreased down to minus €35,000,000 We had, due to the underutilization, a very, very strong drop in the gross profit as revenue almost overnight were reduced. And we tried to cope with the underutilization through the programs, especially in Europe, the solo programs and also, to some extent, laying off people. But as always, when you have these strong drops in a short period of time, you're always a bit behind. Special items or adjustments slightly increased. We had EUR 16,000,000 of adjustments in the Q2 to be compared with EUR 15,000,000 last year. We had an increase in restructuring expenses due to COVID-nineteen and the lower oil price. And this amount in the Q2 for restructuring was €28,000,000 That was positively partly reduced by the effect coming from the settlement with the former Executive Board members, the CHF 17,000,000 that came out of the settlement paid by the insurance, P and L effect in June, cash effect in July. The special item for the full year after now have spent or booked €25,000,000 sorry, not spent, but booked €25,000,000 to P and L in the first half, has now been increased expectations for the full year. Due to technologies, we believe that we are no longer heading for €50,000,000 of special items for the full year, but more like €70,000,000 which is a very close number to the number we had last year, €72,000,000 last year for special items. And as I said, related to an increase in restructuring measurements in Technologies. Then proceeding to Page number 11. Gross margin, as I mentioned, due to the underutilization, dropped heavily in the 2nd quarter. We achieved €34,000,000 of gross margin percentage of 4.3 percent is to be compared with £7,400,000 in the 1st quarter and 8.5% last year in quarter 2. Year to date, we are at 6.1%. Looking then on the other side at the SG and A. Here, we were able to reduce the absolute cutbacks beyond clearly what we had last year, but also below the level that we had planned for. You see that the number we achieved in the second quarter was €73,000,000 That is to be compared with €84,000,000 in the 1st quarter or €91,000,000 in quarter 2 last year. Some of these additional savings, they are sustainable, and we are clearly targeting for this year to get to an SG and A absolute number for the full year around €310,000,000 that is around EUR 20,000,000 lower than what we have planned. A part of that is not sustainable, but something like EUR 320,000,000 will be the true number going forward. And as already said previously, we are targeting here to get below the EUR 300,000,000 in the year after. That plan is proceeding, and we are well on track here. Proceeding then to the 3 segments, starting off with the largest one, E and M Europe. That has, despite the COVID-nineteen and the lower oil price, they have been able in both quarters here to be positive. The orders received in the quarter 2 was 11% organically below what we saw last year in quarter 2. The book to bill ratio is 1.3. And we clearly see here from June onwards that we are starting off to recover. So we are quite positive in regard of what we will be able to achieve in the second half of this year in this segment. Revenue, rough, minus 24% organically in the Q2. A lot of that is related to reductions in U. K. In the oil and gas, onshore and offshore business, but also the Nordics with Stavanger and Belgium and the Netherlands. EBITDA adjusted, still positive as I said. So we had a €4,000,000 positive in the 1st quarter and now a EUR 2,000,000 in the second quarter. Of course, we are benefiting from all the programs for furlough that have been put in place. Some of them, with short notice in Europe, we are trying to use them to be able to compensate at least partly for the revenue drop and the underutilization for this period of time. Coming then to the 2nd segment, E and M International. Here, we had rougher developments. We look at the orders received. They dropped from €267,000,000 in the second quarter last year down to CHF 131,000,000 This year, that is an organic drop of 46%. A lot of that is related to North America, where we have not been able to win the large projects that now clearly are coming to an end. But also Middle East, that has been in a lockdown, in some countries still being closed for us to get in. Revenue reduced then to with a little bit more than 50% in the Q2. And also here, most of that related to North America. It was partly expected because we had a low order intake last year. But of course, with the COVID-nineteen and the lower oil price, the implications were larger than we a couple of months ago expected. EBITDA adjusted, clearly negative. We see we made a small loss in the Q1. Now we have a loss of €12,000,000 here in this segment. It sees the underutilization, even if we have laid off both in quarter 12, a lot of people in North America. And we have been trying to adjust our capacities. Obviously, in both regions, Middle East and North America, we haven't got access to the European kind of programs for furlough. The outlook is in regard of revenue, a significant decrease, But we are still expecting in the second half to be at EBITDA adjusted positive in E and M International. Then the last segment, Technologies. Orders received, they were rising slightly, so 3% organically up to the level of EUR 114,000,000. Here, we have a part of the Hinkley Point order intake going into the books. They are sharing this with E and M Europe. And we are also expecting here in the second half to see further improvements from HintiPoint. Book to bill ratio at 1.1. Order box backlog increased by 17% organically. The revenue reduced down to 108,000,000 dollars which is organically a reduction of 20%. Of course, impacts coming from COVID-nineteen restrictions, especially in Austria and France, where we had at least, for 2 months, quite a strong impact coming from lockdowns. Adjusted EBITDA, we had a minus CHF 20,000,000 in the 2nd quarter, minus CHF 5,000,000 in the first, a strong reduction in the profitability here as we had a lot of temporary underutilization, but also due to 2 underperforming legal entities and technologies where, as Tom mentioned before, we have taken already in the first half this year strategic measures to make sure that the second half will be stronger here than what we have seen in the first half. The outlook for the full year is a slight decrease in revenue. EBITDA adjusted, a significant improvement, a positive improvement in the second half. However, in total for the year, we will have a negative EBITDA adjusted in Technologies. We then proceed to the cash on Page 15. A very robust cash flow, thanks to active working capital management, but also helped by deferred tax payments and social security contributions. We have a very sound financial position and no additional financing needs expected. Looking into some of the details. Net profit, we are at minus €60,000,000 That decreased substantially, of course, mainly due to the lower EBITDA adjusted. But the cash flow development being an upside here, the combination of being able to reduce the working capital as the sales went down, but also using all the programs that a number of countries in Europe have put in place, which was noted, to defer taxes and social security contributions. These two elements have helped us to continue to have a strong cash flow generation. As mentioned, some of these programs for deferring taxes and social security will come to an end at the end of September. Some will continue in quarter 4. And we have a couple of countries that even at this point in time have promised that we can wait until next year to pay. Obviously, some of these rules are changing as we are proceeding, but we will expect to see that most of these payments that have been deferred during the year will be settled the latest in December this year. DSO, we are here now at a similar level as in March. So we have 88 days versus 86 days in March. Yes, we have reduced substantially the net trade assets. We have reduced the net trade assets with EUR 73,000,000 versus March and EUR 116,000,000 versus June last year. However, not at the same speed as we have reduced revenue. Therefore, the DSO is with 88 days still as high as it is. GPO, we are at 67 days, also a comparable number with the situation after the end of March, 69 days and slightly better than in June last year with 65 days. Net liquidity, including IFRS 16 liability, improved from minus €199,000,000 at the beginning of the quarter to minus €108,000,000 as of June 30, 2020. Measures in place to safeguard liquidity also going forward. The quarter 3 will be the stress test for the liquidity after having the lowest revenue and profitability in the quarter, too. None of our financing instruments has a maturity earlier than 2022. So we feel comfortable that we will also manage this situation going forward. Now back to Tom Leitz with the outlook for 2020. Thank you, Christina. So again, if I summarize, revenues down, but in line with expectations. We think we're through the bottom and we'll begin climbing slowly back up. Order intake has been good, 1.2 book to bill. We have a cushion going forward with equity points, so we think we're also there positioned for the bounce back. And we have the same cash flow, same cash development and balance sheet, which means that we're financed through this typical period, and we're confident. For that reason, the outlook hasn't changed. So we remain on what we told you at the end of Q1, in fact, in May, a decrease of 20% year on year on the top line. Nevertheless, EBITDA adjusted will be positive and free cash flow reported will also be positive. So with that, I would hand back to Bettina, and looking forward to your questions. Yes. Thank you, Tom. And now we're ready to take your questions. First question comes from Gregor Kuglitsch, UBS. Hi, can you hear me? Okay. Hello? Mr. Kumblitz. Can you hear me well? Yes. Now we hear you. Thank you. Excellent. I just got a few questions. The first one is, maybe they're kind of related, if you just quantify the benefit from furlough in the quarter and also related to that, the cash deferral element. So how much of the essentially, how much did you defer and therefore expect to unwind in H2? And then can you just maybe elaborate a little bit more on the technology situation? I'm not sure whether it'd be to the same businesses or same legal entities that were issued before and basically things have just intensified or if there's basically new ones. And I guess when you say strategic measures, what precisely you're doing? Are you shutting these businesses down? Or are you just restructuring? If you could just give a little bit more color. That would be helpful. Thank you. Good. Let's take the first question in regards of the benefit from furlough. We obviously measured the benefits for the 1st 6 months, but obviously, most of that is related to the Q2, maybe 1 or 2 weeks, to some extent, impacted from March. But in total, we have €25,000,000 of benefits that we have granted in the 1st 6 months, and we are expecting that we will have around another €5,000,000 still to come. That is mainly related to the Netherlands, where the rules around the furlough, they will look higher also that the auditors at the end of the year will approve the way we have calculated it. So €25,000,000 benefit coming from that in the first half, another around €5,000,000 still to come. This is, of course, based on that the rules will continue to be in place and also based on our forecasted number. Then Looking at the deferred amounts coming from social insurances and taxes, we are talking about a double digit €1,000,000 amount here at the higher end. And that is as far as I can say to help you with the cash flow. But it's a substantial amount, double digit $1,000,000 amount at the higher end. Got it. Thank you. If I take your question on the 2 entities and what do you mean by strategic measures, I think we also mentioned earlier on here that the scrubber market has gone to 0. No surprise there. The differential between high sulfur and low sulfur is less than $50 meaning that the payback on a 2,000,000 euros quota investment has gone from 15 months to something like 7 years. At the same time, tank utilization rates, vessel utilization rates have gone down. So customers are not only withholding their orders, they'd like to, in some cases, cancel existing ones. So we are ramping that business down. That's one strategic set of measures. And the other, I think no surprise, we're looking at the possibility to sell in inverted commas the entity. We have taken advises that process is in progress. And therefore, we see a finite end to both of those situations. Thank you. Next question comes from Stefan Bohnhagen, Metzler. Thanks for taking my questions and good afternoon from Frankfurt. A few questions. So my first question is that you say that in June there was a slight improvement in your sales performance. Can you quantify the exact decline in sales compared to the previous year in that month? My second question is regarding the tax code, if you can give their indication for fiscal year 2020. My third question is related to your oil and gas business. I think you were focusing a 5% CIGA for the business field before the pandemic in your strategic update. I think this growth assumption is no longer realistic. So what is your new growth outlook for this business area from a mid- to long term perspective? And do you see potentially that this business is returning to precrisis levels in the foreseeable future? If I start off with the first question, the slight improvement in June. I think clearly, we have to say that the slight improvement in June is related to Europe. And if we look at what we said about the quarter, the quarter 2, we said that we had, I think, slightly below 30% in the quarter lower sales. I would say the if I would compare month by month, June will probably be around 25, so slightly lower than what we saw in the previous months. Okay. You had a question, I believe, on the tax rate. Is that right, Mr. Bonn Harvey? Yes. Tax rate for this year. Mr. Bonnage, even also in this year, we do not see that we will capitalize deferred taxes from our German tax group. So the tax rate might still be over exaggerated high. Underlying, we have a tax rate of 27%. But as I said, still distorted by not capitalizing tax assets in the German tax group. On the other side, we also have experienced a little positive effect in the U. S. Where there was a new law allowing us to capitalize and to use old tax losses. So overall, distorted situation, underlying 27%. Okay. Then I'll try to tackle your last question. This is always a fun one because I do confess to being the oil and gas dinosaur here on the team. I think the 5% CAGR you referred to, this is from our Capital Market Day presentation, February 13, where we took our revenue base in 2019 and compared it to our expected revenue base 2024. We showed at the CASM market day presentation a total company CAGR of 5% and in line with that total company, oil and gas also growing by 5%. Now do I have a crystal ball that gives me insight above and beyond the market? Probably not. I can help you a little bit. When we entered into the crisis late March, early April, things dropped fairly quickly in Aberdeen and in Sabanger. And we were looking at 50% lower revenue on the year, and we thought it would continue at that rate in 2021. And more recently, we've been working on our short term, midterm updates. And we think compared to 2019, 2021 will be at about 75%. So, 25% drop on the baseline 2019 and then a slow recovery going forward. What do I base that on? Just dialogues with customers. We have won contracts despite COVID, despite lower oil price. We have won new contracts in the North Sea. So, life does continue. Will it go back to the boom days? I'm not sure. I think it will be a little bit demand driven. You saw that demand dropped to about 92,000,000 barrels a day from a high of 100 and 100.2,000,000, I think. So today's demand is somewhere in line with what it was in 2013. But of course, some of that dip is caused by COVID and people not moving or traveling or flying. So that's probably as much as I can give you right now. But what we are doing is we're looking at alternatives so that we don't rely on the oil price recovery to meet our 2024 guidelines or commitments, if you want. We're looking at alternative measures. So at this date in time, we've given you an outlook on 2020, and we are not changing our long term outlook for 2024. Okay. All right. Thanks. There are no further questions at the moment. Next question comes from Marc Gabriel, Bankhaus Lampe. Good afternoon and congrats to the team for managing the crisis as well. I have 3 questions, if I may. First of all, how quickly could you shift the levers again if the crisis is over? So how quickly can you get the people back on board, which you like of now? That's my first question. And second question is, when I look at the scrubber market, running back to 0 within 1 year, but you were extremely optimistic 15 months ago. It is naturally becoming increasingly difficult to deliver a sort of constancy in the business model. So the former real estate business was, of course, a solid rock solid anchor. What are the strategic lessons learned from this crisis? And in addition to that, what opportunities do you see to take the volatility out of the business model going forward? Thanks. Okay. Good questions. Let me begin with your first one, which is all around personnel, I think. So, we are a people company. And if you look at our makeup, more than 50% of our costs go into personnel costs. A large part not all of it, a large part is our own personnel. Some of it is temporary labor that we take on board to deal with projects, but also with seasonality. If you compare our headcount at the end of Q2 this year with last year, we're roughly 6,000 people less. So last year, we had, at the end of Q2, 37,469 sorry, the end of yes, sorry, the end of Q2. And this year, we're at 31,533. So that's a big drop. Within that, 31,533, we currently have 2,733 on stroller. So of course, these we can unwind fairly quickly overnight, in fact. And then as we go through towards higher levels of activity, we do call on temporary workers. And we're not waiting for that to happen. We're actually already in dialogue and planning additional workers through to the end of the year. So I think one of the lessons learned that you're asking is to rethink what is our manning model, how do we build more flexibility and agility into that. It's one of the lessons learned. 2nd lesson learned is around home office. Home office always sounds kind of cozy and easy. In our experience, it works when you have defined projects and people working to a schedule and to a delivery point for those projects. So, I'm talking about engineering, for example. It's a little bit more difficult when you have services where people have to be on call and work in teams. But home office is certainly a consideration with some parts of our business. And if home office is real and going forward, of course, it doesn't have to be restricted to a, let's say, 10, 20 mile radius around the office. Home office can be done from other countries even. So, opportunity there that we haven't yet fully explored, but that the crisis is teaching us to look at. Finally, I think, is the balance that we have between project and services. So, the effect of seeing the U. S. Is because we have a large project element there. I think going forward, and this is also part of our Capital Market Day presentation, we wanted to increase the percentage of service business that we have in the U. S. To be more resilient through these kind of not only COVID cycles, but also industry cycles. So I think volatilities, that kind of speaks to high frequency waves. We do think there is a cyclical nature in our business, seasonal nature, which we try to balance with a better organizational structure. And in terms of the industry cycles, by trying to have a larger element of service business versus project business. The scrubbers, you're right. We were very euphoric already 2 years ago on scrubbers, and it's really disappeared overnight. What are the lessons learned from the scrubber business? I think some of the lessons we already had going into this. So, we didn't actually want to build up our own resources on scrubbers because we always saw it as a wave. We saw as a rising demand being satisfied, and then the wave declining, maybe a second wave where other owners of vessels, tankers waited to see to what extent the governance of lower sulfur emissions was being policed or otherwise. So, in order to ride that way, if we didn't actually build up any of our own manufacturing, we outsourced a lot of that to a number of partners. And of course, in then backpedaling and shutting it down, that makes it a lot easier. Yes. Maybe one follow-up question. There are also other business opportunities, I would say, like CO2 storage or the steel industry is working on low carbon steel production, and it's investing a lot in combination with the government and others. Isn't that a field where you have engineering expertise to enter that market as well? Yes, we do. And before we start beating our chest, of course, we'd like to build some traction. But we have, I would say, a good core expertise in gas treatment. Some of the projects we announced evidence that. And if you look at electrolysis, for example, in producing the hydrogen, the oxygen, there is gas drying, there are flanges and systems. Yes, there we have expertise. We are also involved in various customer discussions around projects on green and blue hydrogen production, associated CO2 sequestering. We'd like to get a little bit more, let's say, traction to be able to reference more projects than just to put hopes out there. And so you know us as a very conservative group of people. We like to be boring, deliver exactly what we say. We don't like to raise expectations. Maybe scrubbers was one exception where we have to learn and not do that. The other area where we are also quite busy is on either recycling. So the circular industry, we had customers who are working on bioethanol on Woodside Power Stations. So there are things around the ESG theme that we're quite busy on. And we look forward to announcing some of those successes, but only late. Okay. Yes, thank you very much. The next question comes from Martin Okay. It seems we lost Mr. White house. Or if you get back, please press 0 and 1 again. It's Marcin Beutthild again, Bank of America. Arsen, you're on. Yes. Thank you. Can you hear me well? Or is there still an issue? We hear you well. Okay. So I will try again. Apologies. So just regarding your guidance for 2020, so you're guiding for adjusted EBITA above breakeven, which implies a big improvement obviously for the second half. But then in terms of revenue, you're guiding for minus 20% for the full year, so only limited improvement versus H1. So my question would be, I mean, are you just being conservative on revenue? What should really drive such a big improvement in profit in the second half? I obviously understand that profit recognition is seasonal in a way, but you don't have the support from a furlough and you have these underperforming entities in technologies. Is it because you took some one off costs perhaps in Q2 that will not be occurring in the second half and that gives you the confidence? Or is it just a conservative approach on revenue? Yes, happy to try to answer that. I mean, in the second half, obviously, we had we needed some time until we could adjust the E and M structures in Europe. So I think also as you proceed with topics like adjusting your cost structure, you get better and better months on months. But you can also see clearly that out of the results in the first half, a lot of the big dip came out of Technologies. And as we also mentioned, these 2 legal entities in Technologies hurt us quite badly here in the first half, and we're obviously making everything we can not to repeat that in the second half. That makes a significant improvement for the second half. But then also, of course, the underutilization month by month, that will help us. And as you can already see, I mean, the E and M Europe, both quarters heavily impacted by COVID-nineteen and also the oil and gas, but still being profitable, they are, of course, driving then also the improvements in the second half going forward here. So yes, we are still only saying that we expect to be positive at EBITDA adjusted. I think there is still quite a lot of uncertainty in the different markets. We have some assumptions in the presentations. We are not expecting, for example, a second wave that will conclude in lockdown again that we saw in April May be repeated in the second half. We are not expecting that there will be any further major delays of the turnarounds that are very important for the profitability. And we but we are also not expecting that the oil and gas will recover too fast here. So is there some potential to be better than that? Let's hope so. But I think with the uncertainty in the quarter 4 that we still have, it's wise to stay with the guidance that we gave in May and confirm that at this point in time. There are no further questions at the moment. Okay. So we conclude today's call. Thanks to all of you for participating. We wish you all an enjoyable rest of the summer. Stay healthy, and we'll speak to you again later in November. Bye.