Good morning, everybody, and a warm welcome to all of you participating in today's First Quarter 2022 Earnings Conference. I am Christian Weiz, head of IR at hGears AG. On the call with me today is Daniel Basok, our CFO, who will present an overview of our first quarter 2022 results. We will also give you some color on the trends and tendencies we are observing in the market. If you have not yet received our relevant earnings documents, you can find copies on our website. Before we begin with the presentation, I would like to draw your attention to the disclaimer displayed on the screen, which sets out our legal framework under which the presentation must be considered. Please do take the time to read it. With this, we consider our disclaimer being read. Following the presentation, Daniel will host a Q&A session.
I will now hand over the call to Daniel.
Thank you, Christian, and, good morning everyone also from my side, and Welcome to Our First Quarter 2022 Earnings Conference Call. As you all know, and as we already indicated during the 2021 full year release, the start of the year was challenging. With the first quarter again being characterized by ongoing impact of the COVID-19 pandemic and the fallout of the war in the Ukraine. The consequences were that we continued to see shutdowns and disruptions in some of our customers' operations, rising raw material and energy costs leading to a rise in inflation. However, despite this, we have remained resilient and have managed very well the rough start to the year. Illustrative like for like comparisons attached to this presentation in appendix clearly show that despite this turbulent and challenging operating environment, we have continued to deliver operational excellence.
We are pleased and proud to say that we have continued to remain a trusted and reliable partner for our customers, which is evident by the significant incoming demand that we are seeing and our recent customer wins in the first quarter of this year, both new and existing customers. I will talk about it in more detail later on the presentation. With each and every customer win, we strengthen our order book and bolster our future incremental revenue base, both 2022 and beyond. As we look to the rest of the year, our order book visibility remains strong, and this in turn underpins our confidence in reconfirming our full year 2022 guidance and midterm targets today. Turning to slide 6. As we mentioned at our full year 2021 results, we worked hard over the course of last year to maintain ongoing dialogue with key customers.
The result of this hard work was the acquisition of 5 new e-mobility customers, all with significant increased scope of supply, fostering our future e-mobility revenue base in 2022 and further. Not only does this demonstrate our business development efforts and strong market positioning, but it also highlights the strength of our core development capabilities and that our investment in engineering is paying off. As we previously stated, these successes are across various customers in e-bike applications, from mountain bike to cargo bike to all bike types with different revenue potential across each, as you can see in this slide. As of today, start of production across all these new wins remain unchanged and on track for 2022. We continue to expect them to contribute towards incremental sales from second half of 2022 onwards. However, let me give you some additional flavor with regards to the ramping projects.
Customer one, as we mentioned back in March, one of these 2021 wins, it was a German customer for the development of a mountain e-bike transmission, similar to what is currently state-of-the-art in the market. Serial production for this customer has already started, and we consider the potential here to be very relevant given this is a micromobility division of a well-known industrial company with solid financial and after-sales capability. Customer three, also here as mentioned during the full year 2021 call, recently a major famous sports car manufacturer acquired a significant stake in this company, thereby confirming our positive perception of this excellent product. As a result of this cooperation, we already see a surge in our order book for the next years and expect this customer to generate revenues for many years to come.
Last week, our engineering department received highest superlatives from the customer immediately after the transmission successfully passed long durability test with an excellent result. Just to make it clear, we have already secured the required machinery for this project and already have the required capacity as well as enough manpower to deliver on them in the second half of 2022 as planned. Coming to slide 7. We are pleased to communicate that we have won two more important customers in 2022, providing proof that we continue to work hard on winning additional business and fueling growth while maintaining an ongoing dialogue with our key customers. Due to this ongoing dialogue and focus on maintaining tight ties with our existing customers, we successfully secured a multi-year contract extension with a major e-mobility customer beyond 2024 to produce the next generation of mission-critical gear components.
In total, three contract wins in 2022 so far are the result of strong business development efforts and market positioning. Please allow me to go in a little bit more details with regards to our recent wins one by one. New customer win one. With our full year 2021 results release, we have already announced the win of this French blue-chip tier-one automotive supplier. However, the addition of this customer demonstrates the strong positioning of our company and further solidifies our status as a leading European manufacturer of high-precision gears and components. This customer is very well known for its best-in-class ESG rating.
Therefore, we are delighted to be selected not only based on our engineering and manufacturing competencies, but also due to ESG evaluation that the customer performed during the supplier validation process. We are in the last validation phase of the manufacturing process, and we'll start production in a few weeks from now. With that, let me comment also on our second customer win. Our latest addition is a renowned Finnish e-bike industry player, and well, I mean, we are very excited about this customer. In the search for a reliable manufacturer through demanding supplier evaluation process, we came on top. That is mainly due to our strong focus on e-bikes, our ability to fulfill the highest quality requirements, and due to our ability to manufacture very demanding components and systems at scale.
This deal provides another evidence that our decades of acquired knowledge with electric e-drive application enables our customers to optimize the product development process. We can factually support them with a broad set of manufacturing know-how. The new customer's renowned innovative transmission concept will create a new breed of e-bikes, and has the potential to even revolutionize e-bike construction, while having the potential to become a transmission system also for other micro mobility solutions in the future. Now comes the best part. hGears will be the sole supplier for an entire transmission system. This means that we have the full share of wallet for this project. Let me give you a little bit more bone, meat on the bone with regards to the potential of this new project by sharing some market insights. The company has recently presented this revolutionary transmission.
At the end of April, our CEO, Pierluca Sartorello, went to the bike festival in Riva, the Lake Garda in Italy. With 60,000 visitors in 2022, this was again, one of the most important events of the international mountain bike scene and ultimately of the e-bike scene. During the festival, Pierluca met CEOs of big OEMs, and it is clear that the product is very well accepted by the market. The system has huge potential and may even be, sorry for the cliché here, a game changer for the whole industry, with the market currently awaiting the next prototypes to be manufactured by hGears. Moreover, many OEMs explicitly mentioned that they are pleased to know that this customer chose hGears as their industrialization partner.
We clearly see how our reputation as market leader for high quality gears and components in the e-bike market pays off for our customers and for us. It goes without saying that we are very proud to be selected by this company as their manufacturing partner of choice, and very excited to co-develop this unique product. Both new projects will play an important role in contributing to future incremental sales, with the first project, as mentioned, already close to start of production, and the second project set to start in the second half of 2023. We didn't stop there. The quarter also saw a great success with existing customer. Our know-how, high quality products, excellent market reputation is not something to be overlooked and is an important factor when considering the unique specifications required by many of our customers.
On the back of this solid market reputation, we are pleased to announce that we successfully secured a multi-year contract expansion with a major e-mobility customer way beyond 2024 to produce the next generation of mission-critical gears and components. This is a major customer with which we continue to have a strong business partnership, and we're happy to see that they value and appreciate our know-how, and we look forward to continuing our relationship with them on new projects, as well as supporting them to develop next generations of transmissions with our components. This new and existing customer wins, along with those secured in 2020 and 2021, are expected to play a critical role in achieving our midterm targets. I can assure you that we will not stop there.
As we progress through the year, we will continue to develop our pipeline and look to enlarge our e-mobility portfolio even further. In summary, the latest wins underline that we are holding to our word and that we are very well on track to deliver growth. Moving to slide eight. This slide shows you our revenue progression since 2019 and in coming years. Yes, we stick to the top line targets that we set at our IPO. Why we are so confident that we will continue to grow despite the challenging economic conditions? Our business already delivered proof that it is highly resilient. Even in the COVID-19 crisis years, 2020 and 2021, we were able to deliver 3.6% and 6.9% revenue growth.
This has been achieved due to focus on fast-growing end markets, but also due to diversified portfolio and localized supply chains. It also underpins the agility of our business model. We enjoy the advantage of scale and flexibility, meaning most gears and components can be produced on the same production lines no matter which customer or end market is supplied, e-Tools, e-bikes or e-cars. This provides a high degree of flexibility in utilizing our assets and reallocating production capacity when needed. Meanwhile, we consider this an important observation and one of the main takes from this call, we recognize the changing perception of inventories by some customers in the industry in the sense that some tier one suppliers want to be prepared with high levels of inventory when demand picks up again. This basically means when supply chain constraints are resolved.
Actually, our observation has been confirmed also by an article in the German business newspaper, Handelsblatt, on the weekend. The industry seems to have learned the lessons from the last months and does not want to be caught on the wrong foot this time. Our customer base in e-mobility continues to increase. We have secured five new e-mobility customers, as I mentioned, in 2021, and already won two new customers in 2022. The order backlog for e-bikes in the consumer market remains feasible and ongoing innovation will continue to fuel demand. With that, we do not even fully address additional growth of future demand related to other micro-mobility divisions. We produce mission-critical components, which means that our customers trust us as reliable long-term partners. The most recent renewal of contracts beyond 2024 with a major customer reassures that.
Our illustrated first quarter 2022 results on a like-for-like basis reflect that we adapted very swiftly to the challenging macroeconomic environment and thereby delivered operational agility. Thereby, we were able to achieve good results even under tough conditions. These reasons, paired with our strong order book, gives us a lot of confidence that we can deliver on our 2022 and midterm guidances. Flipping to slide 10. I think it goes without saying that we are all aware of the economic and geopolitical situation that we and many other companies have encountered in the first quarter of this year. Therefore, I will not spend too much time talking about that, but I will instead run through our first quarter performance. Revenues declined by 7.1% compared to the prior year period, which was one of the strongest in the company's history.
As expected and as indicated as our 2021 results call, January and February were impacted by customer-led delays in deliveries due to unexpected COVID-19 related shutdowns. However, we experienced a significant pickup in March. For illustrative purposes and to make our good underlying performance more apparent, we have calculated and presented like-for-like numbers for the quarter. For more details, I would like you to refer to the appendix to this presentation. For revenue, this means that we have excluded the price impact resulting from our pass-through clauses. The implicit 11.5% top line decline reflects mainly the volume decline caused by production disruptions in our customers' assembly lines. Our gross profit also fell as a result of the lower sales as the price increases resulting from our pass-through clauses only cover the higher input costs but do not mean additional earnings, the so-called dilutive effect.
Furthermore, the delivery delays for our customers in our e-mobility had a drag effect in our mix. However, as you see on a like-for-like basis, when stripping these elements out, which means excluding the price and mix effect, our gross profit margin would have reached 58.3% in line with the previous year's level despite the current tough conditions. Similar to our gross profit, these factors of course also had an impact on our adjusted EBITDA and adjusted EBITDA margin. However, the lower volumes had a more significant effect as the adjusted EBITDA also reflects the absorption of the fixed costs. As we anticipated at the full year, the margins in Q1 remained relatively low.
This is due to high personnel expenses for new hiring in sales and advanced engineering to support the production ramp up in the second half of this year, and due to adoption of the cost base to stock market listing reflected in higher advisory fees. For example, for legal, investor relations, ESG reports, and annual general meetings, and so on. As such, on a like-for-like basis, which means excluding the price effect, mix effect, and volume effect, our adjusted EBITDA margin would have reached 17.5%, which is a good result in given market conditions and shows our potential for margin expansion when we will be in full ramp-up mode. That was a short overview of our key PNL items for the period under review. I would move now to slide number 12.
As we look to the rest of 2022, we expect uncertainty to remain in the markets. The coronavirus pandemic may affect supply for certain product categories again. At the same time, we expect the current high prices seen for raw materials, energy, and logistics services to still be a factor for this year and maybe also for the next year. However, as a supplier of mission-critical components, we have been able to mitigate inflationary pressures by executing the pass-through clauses for raw materials and energy within our customer contracts. As we continue to monitor the situation to identify and compensate for possible negative impacts as early as possible. The war in Ukraine has increased the volatility affecting global economic and financial markets.
We reiterate that the overall economic and geopolitical impact and their short- and midterm effects may impact the financial position and earning situation of the hGears Group going forward. However, despite this very challenging operational environment, we remain confident in our ability to achieve our 2022 guidance and midterm targets, and this confidence is underpinned by four key factors. Factor number one, our order book remains strong. We are seeing this with the ongoing expansion of our customer base and the confidence that our existing customers have in the quality of our products that support the long-standing nature of these relationships. We are also seeing this relationship evolve, leading to an increasing scope of supply. In turn, this is resulting in us becoming more embedded in our customers' projects. It doesn't stop there.
We also have good order book visibility with start of production unchanged across all our 2021 customer wins and the ramp-up of all projects on track. We remain well-positioned for future wins. The second factor, we already have the installed capacity to ramp up our 2022 projects. The lead time for manufacturing equipment is around 10-14 months, and therefore, it was extremely important to secure deliveries of equipment for the second half of this year. Operationally, we continued to gear up, expanding our sales and engineering teams in 2021 in line with our expanding pipeline and customer base to capture future growth and demand. The third factor, market trends continue to be supportive with the e-mobility market continuing to remain a fast-growing market with significant further profitable growth potential.
Policy favoring electric vehicle continues to increase across the globe, and currently there remains a sizable order backlog in consumer market. We are also seeing this further expected growth in the market confirmed by our customers in terms of quantities ordered and changes to their inventory management strategies. Factor four, as a supplier of mission-critical components, we have to a high extent a downside protection. Our decision to find local suppliers and rely on local supply chains provides us with a strong hedge against logistical disruptions, and we continue to see stability from that perspective. We are not the bottlenecks. We also enjoy the advantage of scale and flexibility, meaning most gears and components can be produced on the same production lines. This provides a high degree of flexibility and underpins the agility of our business model.
Moreover, in recent years, we delivered proof for operational excellence even in challenging environment. While the market backdrop remains uncertain, our fundamentals remain unchanged, and we continue to aspire to be the supplier of choice for best-in-class precision gears and components for e-mobility applications. The strong commercial performance that we saw in 2021 continued in 2022, and based on this expanding customer base and solid order book, we are confident in reconfirming our full year 2022 guidance of high single-digit revenue growth and an adjusted EBITDA at the previous year's levels. We are also confident in reconfirming our midterm targets of EUR 250 million for group revenue and EUR 150 million of which e-mobility revenue. Again, supported by the ongoing expansion in order volume with existing and new customers and the growing contribution to revenue and earnings for 2022 and beyond.
As mentioned, we operate in markets that are not only growing rapidly and faster than expected, but where we, through our positioning, continue to have great potential for further penetration. We will of course monitor the tough macro environment carefully, but despite this, we remain strongly confident in our growth agenda. This concludes my presentation. Thank you for listening. I would now like to open the lines for questions and hand back to the operator.
We will take our first question from Martijn den Drijver from ABN AMRO. Please go ahead.
Yes, thank you. Good morning, Daniel and team. I'll start off, if I may. By the way, can you hear me?
Yes, Martijn, good morning.
Thank you. Yeah. With regards to the supply chain and those disruptions, what are you guys seeing? What are our customers telling you about how things are developing? Is there a light at the end of the tunnel? Is it stable? What can you tell us about the supply chain? Not so much, obviously, your supply chain, but the supply chain of your customers and their customers. That would be question one. I'll do them one by one.
Currently, we don't see any additional information on the supply chain in comparison to what we have discussed also one month ago during the full year results. We see that maybe the only changes that we see in China, the supply chains are becoming longer than they were in the past. From our side, as we have an Incoterms, FCA Incoterms, we also hear from our customers that they often opt to use an air freight for the components of that they need to source from us. Moreover, we see, as I said, during the call, we see a very different perception on inventories from our customers' side.
Customers are ramping up inventories for the sell-out and for the future sell-out. They don't want to be caught again in the bottlenecks that maybe where it persisted on the market in the last quarter of the previous year and also the beginning of this year. As this is a fast-growing market, especially when we are talking about e-mobility and e-bikes, it feels that it is for all our customers and customers of our customers, as you asked, want to make sure that the next sell-out of e-bikes will be smooth.
You're suggesting that the issue is mainly getting product from components from China or Asia to Europe, not so much the availability of the product itself/components?
Yes.
Is that the way to look at it?
Yes.
My second question is on your order book. You seem quite confident. You've obviously won another customer. How long in advance do your customers tell you what to produce next month or next quarter? Just to get a bit of a sense of how secure that order book is that you're referring to.
The order book as of today is very secured. Usually, as we always said also in the past, we receive this information one year up front, but the order book is secured for at least 12 weeks. It means that, there should be no cancellation within 3 months period, 12 weeks period.
Okay. Typically, if a customer would change anything, they would need to tell you three months in advance. Okay. Got it.
If I may just add to it.
Sure
Mart, why we are saying that our order book is why we are very confident about the order book, because the demand in the order book comes from customers, for which we know based on our experience that they are solid in providing their prediction, first of all. Second of all, the e-mobility part of the order book is reconfirmed several times by the customers due to the fact that they are ramping up inventory for the following periods.
Okay.
We know that one of the major customers that we have increasing their assembly line or doubling the capacity on their assembly line for the second half this year. This is, again-
That's one of your large.
Like a positive sign.
That's one of your large.
Yeah, that's one of our large customers in e-mobility. This is again reconfirms also the current situation of the order book.
Okay. That's interesting. Now moving on to a different topic, if I may. e-Tools had a relatively slow start of the year. You've been guiding for, if my memory serves me right, high single digit, low double digit. Growth in Q1 is rather modest. What's the reason for that slow start in e-Tools?
In e-Tools, the phasing of the year 2022 is basically until now as planned. It was less flattish than maybe you have expected. There are some. It is also second half loaded, so it is more towards the second half of the year. Basically the growth in the first quarter is more or less also what we have expected. It is also on the level of the previous year. If you can compare it to the Q1 2021, it is on the historical levels and the ramp up or the additional quantities shall come in the second part of the year and in the following quarters.
That is again confirmed by your order book and what your customers are telling you?
Correct.
Okay. I have two more questions. On your new Finnish client, the highly innovative Finnish manufacturer.
Is there a risk that Revonte and its product can actually cannibalize or take away market share from Bosch? What's your view on that? I see the innovation. There are, by the way, multiple innovations like that available in the market. But if this one is really that attractive, what would be the impact on the likes of, you know, the market leader, Bosch, but also the other top five, top ten players which are currently also in your order book. So, for example, Brose. How do you see that developing if they're successful?
I think, first of all, we haven't mentioned that it is Revonte. It is your assumption.
The market growth is in the following years will be so high. I don't see cannibalism there. I see that in the next 5, 6 years, the good products will find their share of the market. This Finnish customer has the potential to become a very successful product
I see the same light in Luka's eyes as I saw when we started the production of the Valeo customer that has been recently acquired by the famous sports car manufacturer. The product is excellent. Yeah. Of course, as a new company, they needed to find a strong industrialization partner. We are very happy and very excited, to be very honest, to participate in this project, especially because we are going to provide, as a sole supplier, the full transmission for them.
I mean, Is there any way?
Can you share a little bit what that share of wallet would be? You've indicated in the past what it is for Bosch, your largest e-bike customer. What would it be for this particular Finnish customer? Are we talking about EUR 50, EUR 90, EUR 120? Just a bit of a ballpark range would already be helpful.
We are talking about a very high three-digit amount. I mean, we were going to be the supplier of the whole transmission. We are talking about the cost of a full transmission. I would prefer not to disclose this number now.
No.
I think it's easy to Google it.
Sure.
It's by far.
Okay.
It's by far, much more than what we have so far in terms of providing components. Yeah.
Got it. I have a few more questions, but I'll leave some room for others. Thank you.
Sure.
We'll now take the next question from Christian Glowa from Hauck. Please go ahead.
Hi, Daniel. Good morning.
Good morning.
My first question would be on current trading. You basically said that March revenues picked up quite notably. Can you provide some color on what does that really mean? Are we talking about high single digit growth or are we more talking about growth in line with overall market expectations in e-bikes, 20%+? Maybe you can also provide a bit of color on April figures and what that does sales pick up, what actually did it do with your margins in March and April? That would be my first question.
When we talk about March pickup, if I look at the historical levels, March 2022 was on the record level in terms of output and in terms of sales in e-mobility and especially in e-bike. Also in April, this trend continued in e-mobility. We see, as I said, very strong demand reconfirmed several times by the customer for the full year. The quantities that they're demanding are reflecting our almost max capacity for what we can deliver to them, also in light of the other projects that we need to ramp up in the second half of 2022.
In terms of margins, we see a very positive development in e-mobility and also in other business areas. If I strip out the dilutive effect of the pass-through clause. In terms of absolute margins, we see very positive development, and that will basically based on which we are reconfirming also the guidance for 2022 in terms of profitability and in terms of sales. We expect this demand to stay strong until the end of the year.
Yeah. Fantastic, Daniel. That would actually my second question, related to the sustainability of that revenue pickup, talking about potential supply disruptions. First of all, I would like you to comment on your e-Tools business in China in April, basically. Have you seen any disruptions here in your production? Can you comment on how that might have developed in April? Second, my second question related to the sustainability of your revenue pickup, since March in your e-mobility business. I would like to refer to page eight of your presentation, where you basically say your customer behavior has changed quite substantially, supportive with regard to inventory levels.
Can I translate this, what you just said, basically into the following: Bosch is willing, piling up inventories quite substantially, and therefore you can continue to produce on your March run rate, and therefore you are confident that you meet your targets despite supply constraints? Is that the right way to look at it?
Let me start with the last comments about the inventory, maybe, and I would prefer not to comment on the specific customers, but we do see, of course, this change in behavior of our customers. The customers are willing to have more inventory on their side, much more inventory on their side. They're also willing to make sure that they are not turning to be the bottlenecks for the OEMs. As I also mentioned to Martijn, in terms of capacity production, there is such a high demand for e-bikes, and there is such a big backlog that has still not been delivered in the past, that our customers want to supply this demand in the following quarters, and therefore, they're renting, building new buildings. They're increasing the assembly line capacity.
They are prepared for the period when the supply chain constraints will be out of the table, yeah, or out. Therefore, this is why, as you can imagine, we have reconfirmed several times the order book for 2022, because as you are probably, as everybody else in this call, we also read the newspapers, and we also feel that there is uncertainty, uncertain environment. This has been reconfirmed several times with our customers, and the order book for e-mobility is very strong for this year.
Plus, the customers are willing to provide a commitment for the order book, because when we said, "Guys, we need now to secure the raw materials for you or to make sure that we have the raw materials for you for Q4, and due to the macro environment, we need to do it now." We basically received the confirmation from them that, yeah, if needed, they will provide us with a sort of in addition to our existing contract for their commitment to 2022. Yeah, this is currently the situation in e-mobility.
Tools maybe in China.
What? Yeah.
Daniel, regarding China.
April.
Yeah. Yeah. April in China, we saw in the first week reconfirmation from our customer for the full year order book, due to the shutdown of the Shanghai port. We also contacted the customers and made sure that they are reconfirming the order book for 2022. We received this confirmation. We know that the customer is currently trying to find a way to also optimize their inventory. Means that they are reviewing what can be delivered or what can be delivered oversea going forward and what is considered to be mission-critical component and, you know, and they need it now. Immediate. For the things that they need now, we saw already a trend of European customers and South American customers that they're opting for air freight for components.
We explicitly were asked not to reduce any output due to the lockdown to Shanghai's lockdown because they reconfirmed the order book for the full year. If I need to be a little bit careful here, I would say that the e-Tools order book for 2022 will probably see an adjustment in the following quarters. I don't expect this adjustment to be very significant or to change anything, you know, in terms of our full year guidance for the full year total revenue.
That's very clear, Daniel. Thank you. My last question before I jump back into the queue is a follow-up on your customers' willingness to actually increasingly tie up cash in inventories. Does that change anything to your contract? Do you potentially have to provide now higher price concessions on it, or is pricing pretty much unchanged with your customers, and therefore margin?
No, we don't see any change in prices.
Clear. Thank you very much, Daniel.
Thank you, Christian.
There are no further questions in the queue at this time, but again, as a final reminder, please press star one. We will now take a follow-up question from Martijn den Drijver from ABN AMRO. Please go ahead.
Yeah. Just to follow up on SG&A. You've indicated that there was higher hiring, legal fees, higher IR fees, annual report. First of all, what would be the one-off element in that SG&A? Are we talking about EUR 100,000, EUR 200,000? What's the one-off in Q1? And the second question on SG&A, if you take out that one-off, the level that you are left with, is that the level that we should take into account for the next three quarters? Or will there be incremental hiring still impacting SG&A?
The same level of the SG&A will continue also in the following quarters. I mentioned also during the presentation, current SG&A level represents basically the ramp-up that we have made in 2021, at the end of 2021, with hiring more sales and engineering, and engineers, and with also higher costs and higher non-recurring or higher non-one-off, yeah, but recurring costs that are related to the fact that, we are now a listed company. If you compare it to Q1 2021, in Q1 2021, we were still a private company, and we had a lower cost base, of course that is related to additional costs for legal or annual general meeting, IR costs, SG&A
ESG reports, and so on. The level of the OPEX that we have now, or SG&As you call them, is basically the normal level of OPEX that we expect to see through the year. Of course, when the volumes will kick in, we will have a better absorption of this fixed cost, and we will be able to generate also a higher profitability on the adjusted EBITDA level.
Got it. A follow-up on e-mobility. Maybe you can shed some light on the breakdown between e-bike and EHV, so electric and hybrid vehicles. Should we assume that the EHV segment was stable and that the year-on-year decline was only in e-bike due to the supply chain disruptions, or was it more evenly spread between the two? Maybe a bit of color on that.
No. That is correct. The EV remained to be stable, and we saw a reduction in e-bikes that was basically due to this unanticipated shutdown on the assembly line of one of our major customers.
Okay.
that we also communicated during the full year results.
Can you just remind us then, the phasing within EHV, because we've got the high-end sports car contract now starting to contribute. We have the electric brake components starting to contribute. How should we think about phasing in of EHV throughout the year?
This project started on time, and they will start to ramp up through the year, towards the end of the year.
Okay. There will be.
I mean. Yeah.
Okay. We should assume that.
I think in terms of proportion, it will remain pretty much the same because also the e-bike business will ramp up towards the second half of 2022.
Sure, sure.
In terms of proportion between EV and e-bike, it will more or less remain the same. We will see significant change next year when the famous sports car manufacturer will increase the volume, so we will see a little bit more EV in comparison to e-bike. Again, in light of the e-bike project that we won, I would provide more details as we get closer to 2023.
Okay. Those were my questions. Thank you, Daniel.
Thank you, Martijn.
As there are no further questions, I would like to hand the call back over to your hosts for any additional or closing remarks.
If there are no other questions, I would like to thank everybody on this call, and I'm sure we will meet soon, or I hope we will meet soon. Thank you very much, everybody. Have a good day.