Earnings Call: Q2 2021

Aug 12, 2021

Quarterly report

Welcome to our conference call on the first half twenty twenty one. Following the publication of the preliminary figures and the guidance increase in mid of JUUL, lies the Board of SGL Carbon will provide further details of the business development today. On behalf of SGL Carbon, Thorsten Dyer, our CEO and Thomas Dippold, our CFO as well as part of the IR and the finance team will participate in the call. After our presentation, you have heard the opportunity to ask questions. Thanks. And it's time to hand over to our CEO, Thorsten Dyer. Yes. Good afternoon, everyone. I have the honor to start with the highlights of our presentation. And we had a very satisfactory 1st 6 months In this year. And you can see on this slide that our top line went up by 8.8% And our EBITDA pre, which is the key figure of our company, is up almost 71%. And the reason is very Simple. First, we experienced a recovery of our core markets. Semiconductors is up, automotive is up and LED is up 1st. 2nd, our restructuring program is perfectly on track. And third, we are running margin before volume strategy and this lifted our EBITDA up. The order entry we observed in all business units is very satisfactory and we were able to give price increases to our customers to compensate the rising raw material cost. As a consequence of this, we have Changed our guidance and improved our outlook. Our EBITDA pre on full year basis is now guided between €130,000,000 €140,000,000 And with this, I would like to hand over to Thomas Dippold, our CFO. Thank you, Thorsten. It's my honor. I warm welcome also from my side to present the figures in detail. On Slide number 6, you can see our top line and our guiding result key figure EBITDA pre. Our sales went up on a year on year comparison compared to first half of 2020 by €40,000,000 which is almost 9%. And our EBITDA pre increased as Thorsten just pointed out by almost 71% For another €30,000,000 up. This is a very, very good development. We are very happy with what we see here. And again, especially the margin improvement to 14.4% of our EBITDA pre margin compared to sales It's really going into the right direction at the last year's time. So especially Q2 was hit by COVID. We were at 9.2 percent EBITDA pre margin as a comparison. Now on Slide 7, you can see where the sales from business unit split is really coming from our largest business unit, which is graphite solution went up by €8,000,000 in the top line in sales, Which is mainly what half of it is due to the fact that we had this contract termination in Q1 as we already announced. Our Process Technology Business Unit is suffering still from a lack of order intake, various our 2 Carbon Fiber Businesses with Carbon Fibers and Composite Solutions are both up each by €20,000,000 in the top line And really show a very strong development. When we look at the underlying markets on Slide number 8, you can see that our graphite solution business has very strong sales and order intake In our semiconductor business, Process Technology is well almost single dependently on the chemicals Petrochemical Industry. And there we still see a lack of order intake or some postponement of project even. In Carbon Fiber and also in Composite Solutions, especially our automotive business is recovering from the shortfalls, which we So especially in the Q2 last year. And automotive is really booming with our product, and we are very happy with the development we see there. And I'm coming to the business units in particular, graphite solutions, as I just said, almost 4% up in sales or €8,000,000 if Go to the Europe figures. Where does the growth come from? Mainly from semiconductors and LED Business, Which grew by almost 20%. And this is also what we have to say a high margin business. And this is why also our EBITDA pre cigarette Grew by €8,000,000 or rose by 21.5%, if you look at that. Our EBITDA pre margin in our graphite solution units reached 20%, which is a very high figure and even exceeds the margin we have seen in 2019 in the pre COVID Times. So this is really a strong performance, mainly due to the fact that we have some savings restructuring and transformation projects, but also a higher utilization of our capital intensive assets. This both helps very much. We see some impact from higher raw material prices, but they were largely offset By the fact that the savings are far bigger than the raw material prices. Slide number 10, Process technology, as I just said, we are below last year. We have a sales drop of over 9% or €4,000,000 respectively. We still see a lack of demand from chemical industry. And but however, in order intake, we see a slight recovery, but we cannot see it here in the figures for the first half of twenty twenty one. There will be improvement in the second half of the year. And then we also think that our EBITDA pre will improve quite a bit and reach at least our internal expectations. So far, we are more or less Slightly above the bottom above 0, but we see a decline of 9% in our margin. And we do see some savings, but however, a drop of €4,000,000 in the top line could be offset by that. Coming to Carbon Fibers on Slide number 11, where we see the strong performance in the top line. We went up by 13% or €20,000,000 in growth, we see a huge demand from automotive, and this is about to continue in the second half of the year. We also have to bear in mind that First half of twenty twenty was a strong by the COVID impact, especially the second quarter Hit our Carbon Fiber business very much. So therefore, this rebound is was also what kind of expected. However, when we look at the EBITDA pre improvement, where we see us almost more than double of our EBITDA pre And increased by €17,000,000 This is a very strong performance. And there also our joint venture with Brembo, the BSCP Really paid in with some €6,000,000 improvement in their bottom line. This is also very good. In Carbon Fiber, we are very successful to pass through the raw material prices. Acrylonitrile, the prices really Shoot Through the Roof and almost doubled or tripled, it depends on the time. But this was Quite high when you look at the spot markets. However, we mentioned overall that the prices can be passed through to the customers. Last but not least, when we come to the last operative business unit, our Composite Solutions, there we also see a strong performance, sales went up from almost €40,000,000 to over €60,000,000 on a year on year comparison, €20,000,000 or more than 60% growth. This really shows that the strategy to go into some large scale solutions and projects, especially for automotive and the battery cases, it's really paying off. And this is a strong performance. And there we also see in the bottom line that we really achieved the turnaround and improved by €11,000,000 From minus €5,500,000 loss in the first half of the year twenty twenty to €5,700,000 And a 9.5% margin in the 1st 6 months of this year. Again, this is due to the fact that we have a higher cessation of our capacities, but also the product mix, especially with the large scale product, this really shows a strong impact. On Slide number 13, you see our corporate development where we bundle all the corporate functions and services. There the sales declined. How is that? We have sold some land and buildings in the second half of last year, Yes, which we rented out before. So after we sold it, of course, we don't see a rental income then anymore. And you also know that our corporate function, corporate services, charged some of their services to, well, Schubertenkru. But as they terminate the contract and left our plant in Meisingen, there's also no sales to be that can be charged to them. And therefore, we also adjusted our cost structure accordingly. However, this could not be 100% offset. So when you look at the EBITDA pre, it deteriorated from minus €5,000,000 to minus €10,000,000 However, this was fact that we only see one off issue, which is consultancy expenses, Which is due to the transformation program, which we haven't which we thought could be a restructuring expense. But however, it had to be shown in the operative result and this is in there. On Slide 14, you see our key figures and ratios That maybe also worthwhile mentioning, our equity ratio improved by almost 3 percentage points, which is due to the profit we made, but also the interest increase in the long run that we saw, which lowered our pension liabilities Quite a bit and increased the equity accordingly. Our total liquidity went up by €42,000,000 and reached euros 184,000,000 whereas year end was €141,000,000 And as a consequence also our net financial debt Went down by €40,000,000 and is now at 246,000,000 46, sorry. And our leverage ratio went down to 2.0, whereas at year end it was 3.1. We are very happy with our ROCE development. Our ROCE rose to 8.0% on EBIT pre basis. And the cash flow was also very strong, especially the cash flow from operating activities with €65,900,000 whereas the first half the last year was €50,500,000 CapEx is still very low with €15,200,000 We expect a lot to come in the second half of the year. So we will which you can also see in our guidance where we also say what the respective CapEx is. We still expect the CapEx to be in the range of our depreciation, which is around €50,000,000 €55,000,000 And last but not least, the total free cash flow, And you remember that in the last 7, 8 years, we almost every year we showed a negative free cash flow. And this year, in the 1st 6 months of the year, we have achieved a free cash flow of €56,500,000 and we are very happy with our investment movement of €20,000,000 My last slide to be presented before I hand over to Thorsten again is a few more key figures I'd like to highlight. Our net result also for we haven't seen that very often in the last years That in the 1st 6 months of the year, we saw a positive net result compared to the same period last year. We improved by 30 EUR 2,000,000 from minus EUR 13.8 billion to EUR 17.9 billion. I think this is a huge turnaround we also see in the very bottom line in the net We're very happy with that development. Our free cash flow, as I just pointed out, went up by €20,000,000 and our net financial debt went down by €40,000,000 accordingly. Again, we are very happy with that development. And with that, I hand over to Thorsten to give you the outlook. Thank you very much, Thomas. I'm going to start with the transformation program. As you know, we started the transformation program of SGL in the 4th quarter last year. The transformation program runs until 2023 and it is pretty much front end loaded. So We will have the majority of saving and measures realized by end of this year. In total, the transformation program is cut into 700 initiatives, And we have realized already 66% of it. And we had a very low leakage or slippage rate. That means we lost almost no savings, which we had planned, but we generated more initiatives in the time to come. The savings were planned above €100,000,000 and we are happy to say that we realized 60% of it. And along with this comes a headcount reduction. We wanted to reduce our headcount by more than 500 people and we Have already realized 84% of this headcount reduction. Next slide shows the price increases, which we observe coming from raw materials and logistics. And please look to the upper left box. These are the 3 main the effects which we experienced, raw materials went up by between 20% 50%. This is, for example, resin for our composites acrylonitrile, which doubled in price for our carbon fiber or pitch and coke, which went up somewhat around 20%. This is an absolute figure, a large effect. There is second logistics effect And we saw a tripling or container freight costs, which were 4 times as high. For example, from Japan to U. S. The container freight is 4 times higher and was raised from around $2,000 to 8,000 But overall, in absolute figures, this is a rather small effect and we can easily digest it. Energy is a zero effect. We did a nice job here. We hedged the energy prices and the net effect on energy will be 0. We have to secure availability of freight room and of raw materials and we did a good job so far. So no production reduction costs by raw materials or by missing freight room. What are we doing to compensate these increases. We have price increase programs in all of our 4 business units. And we will compensate the raw material price increases either by price increases, which goes into the direction of our customers or by additional savings. The rigor on pushing through the price increases depends on the utilization of the plants of the affected products. If we have a low utilization, we go for the utilization. If the utilization is high, we push through the price increase by 100%, because our key figure is absolute EBITDA, which we want to maximize in our company. And we were pretty good end of last year as we concluded a lot of contracts with raw material price clauses. Our big carbon fiber contracts contain an acrylonitrile price fiber, which means acrylonitrile goes up, price for the customer goes up and we have a zero effect. You see we are going a margin before volume strategy and we are very confident for this year that we can compensate the negative effects from rising raw material and logistic costs. This is why we raised our guidance. Old guidance and top line was €920,000,000 to €9 €70,000,000 and we lifted it up to around €1,000,000,000 in the top line. And our new guidance for the EBITDA pre, which is our key KPI was raised from 100 to 120 to now 130 to 140. And the reason for this is a successful transformation program, a very good order entry in all four business units and our margin before volume strategy. Our other guiding KPIs in 2021 are on track As well. And you can see that we focus on bottom line and cash. Our ROCE based on EBIT pre what's guided before as a slight improvement now we see a significant improvement. Consolidated net profit, previous guidance minus 20 to 0. Now we see the net profit slightly positive. As Thomas said, our investment last year was at a level of €55,000,000 and we see it now in the range between €50,000,000 60 making euro and the free cash flow was previously guided by €20,000,000 Now we see it at more than €20,000,000 Coming to our business units, here you can see our 4 business units and I start with the largest business unit graphite solution, which makes up 50% of the top line and the bottom line of our company. Here we see a slight increase in sales and a significant increase in EBITDA fueled by automotive industry and very strong semiconductor sales. Process Technology, €100,000,000 plusminus top line. This is stable both in sales Engine EBITDA and Process Technology suffers a little bit from a pickup in the chemical markets. But Since 2 months, we have very, very high order entry and we need some 6 to 8 months that we see the order entry In the bottom line and we are expecting a pretty good Q1 of next year from the order entry we see currently. Carbon Fibers. Carbon Fibers is a real success story. We exchange the business unit heads, the new business unit heads on board Since end of last year and this was focus point of our restructuring. And we see in both in Sales and EBITDA, a significant increase in the figures driven by wind energy. So we produce carbon fiber, which And secondly, we are seeing a very big recovery in automotive industry following the COVID quarter in last year. And last but not least, Composite Solutions, the 2nd turnaround story. This was negative in EBITDA the last years. And this was a year where we turned it around Significant increase in top line, significant increase in EBITDA pre and also driven by Automotive Ent Electromobility. So I want to close With the key takeaway messages, you have seen our transformation project is fully on track and we are very happy with the transformation program. We see a pickup of demand driven by automotive and semiconductors, and we are serving a very good order entry in all four business units. We have capacity utilization in most of the business units and this Leads to cost, depression effect and improves our bottom line. We are seeing higher raw materials and also increases in freight costs, but we are able to compensate it with either savings or price increases at our customers. Our liquidity improved by €40,000,000 and net financial debt is down by almost €40,000,000 And we have lifted our guidance for the full year 2021. This concludes our prepared messages and we are happy to answer some questions. Ladies and gentlemen, at this time, we will begin the question and answer session. Of of. The first question is from Anja Johan from Commerzbank. Please go ahead. Can you hear me? Anja Johan, Commerzbank. Yes, yes, yes. Okay. So I've got 5 questions. The first is, you budget higher turnover and higher profitability, EBITDA and EBIT, but the net profit you plan to achieve is just above €0, euros. Whereas you already achieved €18,000,000 in the first half year. This means that in the second half year, you plan loss reduced earnings after tax. This must be the result of a financial burden or something. So I Can I just trace the reason for this only slide above 0 budget, if you could spend this, please? Actually, it's just being conservative. When we announced that our guidance at And Andrew rose our guidance on the 13th July, which I could see at that point of time as we haven't consolidated everything that our top line and our EBITDA pre looks quite promising and that we want to inform the capital market immediately about that. We are very sure that our previous guidance will be well, will be a top. And at that point the time, we just said that our net result is slightly positive. And now that we finished our real, well, half year And you could see where the net result is. We definitely don't plan to get worse in the second half of the year. This is what we can promise for sure. For that reason, you can call it conservative from today's perspective, for sure. Okay. Then there is a second question I've got. The Acrylonitrile Business and Carbon Fiber Business used to be one of the most critical sections. And I wonder what factors make just make up the success, Which was at least in the first half of the year. I have understood the explanations of the automotive industry and the wind industry, they have higher demand, etcetera. I wonder why the turnaround has been so clear And how sustainable this turnaround is going to be? Is this not by accident or is this really a sustainable improvement? It's sustainable improvement. And we did everything what we can do. 1st, Carbon Fibers were focused of our cost reduction program and it benefited from this. We renegotiated a lot of contract And sometimes with multiyear contracts, so this is not a short term effect. And we did also value chain extension. What does it mean? In the past, we sold carbon fibers to the customer. Now we mill the carbon fiber and have chopped carbon fibers, we add a value step and sell it for value added price to other customers. So or we produce prepregs out of it. So we did extend our value chain in some cases. This was just an example. And This is not at all coming by accident. We think that we can continue this part. You've seen there's more backwards integration in this No, cobalt. Cobalt integration. Cobalt integration. Cobalt integration. Okay. You produce a Higher part of the value chain, understood and this is more profitable. Yes, and more value adding steps in the chain until it reaches our customer. But again, also a huge restructuring that the carbon fiber was all the plants of carbon fiber were really the target or the main target in our transformation and restructuring project. So we took out a lot of cost. We improved a lot of things there and this really pays off. Yes. And maybe, Andreas, the reason I forgot, last year was a COVID year and we were not fully utilized. And now the wind industry is running that well that we can sell every kilo we produce. So this It's also a cost aggression effect, but this will go on, yes. We have the Green Deal in Europe and we need wind turbines and the modern wind turbines can only be produced using carbon fibers. And all producers of Wind turbines are in contact with us and they ask for volumes. Okay, I see. And another thing, I read in the press that semiconductors are short there's a rate shortage, which prevents the automotive industry from producing. How does this shortage of semiconductors affect your graphics business? Yes. I'm sleeping better now with the shortage because we were so sold out. The customers wanted to have so much volumes That we in Germany you say we lift from hand to mouth. And now we can build up a little security inventory. And now our supply chain is a little bit more relaxed. But Despite the shortage of semiconductors, order entry and offtake is pretty good. So We don't see effect right now in our order books and in our top line. Okay. And last question, your if any annual report shows that you bought Part of the convertible bonds €8,000,000 I wonder what is the background for this transaction. I didn't really see it in the cash flow statement, but I read it in the text. So I want to know No, no, it's Apparently, you read it very carefully and this is true. We bought back a little bit of the convertible. We were offered some €8,000,000 there. And we thought the offer is attractive and our liquidity situation is quite Well, quite good. So we decided to lower our debt fair as well and also to show that we are willing to Reduce our debt accordingly. And this is we just used the chance which we were taking. Okay. That's were my questions. Thank you very much for answering them. Sure. Next question is from the line of Benjamin Fanasvaro from Berenberg. Please go ahead. Hi, good afternoon. Good afternoon. A few from me as well, please. Perhaps starting on the restructuring program, This seems to be progressing very well in terms of the cost savings. You target the completion by end of 2023, but I guess realistically you get there Before that. So my question is, what's the kind of next steps after this? Can you give any Or shed some light on your thinking around this. Is there more initiatives or more cost savings to be realized? So I try to give you an answer on this. Almost every week, we develop new initiatives, this, but not in the extent that every month we have 100 new initiatives, maybe 5 initiatives, 10 initiatives per month. So the savings are growing from months to months, but the majority will be done By end of this year or mid of next year. And of course, we are thinking about the next step. We did The strategy project for the whole company, which we call strategy recap. And we reviewed the strategy of our 4 business units. But I'm very sorry that I do not want to disclose anything yet. We will come up later on maybe at the Q3 figures for what is strategically planned. Of course, after doing the restructuring, We want to reenter the growth phase again. Sure. Okay. Thank you. And My next question, you spoke a bit about margin before volume strategy and price increases where capacity utilization is high. Can you give us an idea of current utilization Across the company. This is We are so diverse in processes and plants. We are running 29 production sites. It makes no sense to give you an answer. We are pretty fully loaded in isograftides. We are fully loaded in carbon fibers. In Process Technology where we produce heat exchangers, utilization is slow at 70%, 80 But we have a very good order entry and it will be refilled during this year. But I had to answer this for all our business segments and to give Q1 answer makes no sense. Well, maybe from when you look at the top line, then you can probably also deride it a little bit. In 2019, we had a top line of €1,087,000,000 And now our current guidance is €1,000,000,000 So there would have been just in case we grow just proportionally and prices would also be the same, Another 8% if you just compare it to 2019 to go without capacity increases, but it's exactly as Thorsten was saying. We do have overall some idle capacity also compared to 2019, but especially in the markets we just described, We're running on full steam and we are 100% capacity utilized, yes. Okay. Thanks. And my next question would be on maybe a bit on next year. I mean, maybe it's a bit early to say, but Specifically looking at the Carbon Fiber division, how at this stage should we think about the loss of The BMW business for that division and do you think wind energy can compensate for that already next year Also from a margin perspective as well. So We are going to lose BMW I3 Business and this we communicated openly since 1 year. And we will end the supply of BMW with carbon fibers by mid of next year. And we will lose a very low double digit amount of EBITDA, but we are able due Very good running wind energy market to compensate this. And this is why we are doing pre marketing capacity expansion currently That we have a strong foothold in the wind energy market and absorb the released carbon fibers, which now go To BMW. And we try to keep the net effect in EBITDA as low as possible. And my last question is on the CS division. And you've seen a good recovery there. Could you shed some light maybe on the ramp of the new Business that you have there in terms of the battery cases and when you expect that to hit the full Output. Yes. And maybe you have read in the Internet or in the newspaper that a lot of electric vehicles starts to burn. And even steel cases cannot are not fireproof when a battery starts to burn. And this is why we developed battery case made out of resin and carbon fibers. And U. S. Automotive producer Put this in the 1st serial application and we also have interest from other OEMs and this is going to start in the Q4 this year. This is the main reason for turnaround and these are large amounts of battery enclosures. Okay. And the how long does that take to reach Full utilization would you say for that particular order in terms of the battery casing? You know the ramp up and ramp down Curves of Automotive Production, there's a lifetime of 6 to 7 years for this type of car And maybe needs 1 year or 1.5 year to ramp up to full utilization. But there are other projects already in the pipeline. So we're not just depending on just one contract as we where we were with the take or pay. When you look to the Carbon Fiber business, In our Composite Solutions business, we try to avoid this mistake just to rely on 1 customer in one contract. We want to broaden our production base also with other customers. And there's a lot of demand and a lot of design ins 4 battery cases, especially in e vehicles. And then maybe the next part of the answer is our leaf spring business. Leaf spring is a main spring in a car where the wheels are attached to. And there we replace the steel leaf spring. And this is made also out of resin and carbon fibers. And we see a lot of interest for carbon fiber based glass fiber based leaf springs and we are in some new cars also. And this is the reason for The turnaround in that business. And especially because we're in series production and not just manufacturing smaller lot sizes, This is really serial production that they go in there and there you have kind of the soft scale and higher asset utilization that really pays off this strategy. Next question is from the line of Lucas Spang from Tigris Capital, TMBH. Please go ahead. Yes. Hi. Good afternoon, gentlemen. Just one question from my side. You talked especially in the Process Technology segment about a strong order intake in the last 2 months. And I know it's not an official KPI of your company, but maybe you can give us an indication for the company at all how order intake was in the first half of the year or if you don't want to share this number how book to bill ratio was In the first half of the year and also compared to the last year. Well, Lucas, the question let me answer the following way. We reached already in the book to bill above 1%. So we are growing especially in the second half of the year and we see a recovery overall. The PT business, our Process Technology business will reach at year end roughly the same sales amount as last year, which was €90,000,000 sales. And this is what we think we can achieve also in this year, maybe top it a little bit because second half of the year we see also exactly as Soren Pointed out when you described the business from order intake to really conversion into sales, it takes roughly 6 months. And we saw a good order intake in May June. So especially in the Q4, we'll be quite strong for the PT business. And there we see a recovery and we hope to achieve if there were not any project push out into the next year or maybe even slightly exceed the sales of last year. And this is also why we guided this key figure as stable. And for the complete group? What do you mean complete group order entry? In terms of order entry or book to bill? No, this is something we don't disclose, to be honest. And for some businesses, it even doesn't make sense because I mean, in carbon 5, this is difficult. So far, we don't disclose that. It's not one of our KPIs, but I mean we indicated that we see a lot of order intake especially for the second half of the year And this will be also converted into sales later this year, but also I think we will have a good start into 2022. Okay. Thank you. Next question is from the line of Andreas Heine from Stifel. Please go ahead. Thanks for the opportunity to ask a question. I'd like to start with carbon fibers. In the last calls, you said that there are Very limited capacity additions to be expected in the next 1 or 2 years. Have that changed with the stronger demand? Do you see that There is more appetite from peers to invest in additional capacities? No. Growth in demand is higher than gross in So the market is going to shorten according to our view. Thanks. Second question. Did I understand right this battery case order that was not part of the sales increase in the first half? It's still Come, but was not the driver in the first half. Yes, right. They planned the SOP, I guess, in June or July and it was postponed to September and this is why it was not in the figures of the first half year. You were talking about the strong rebound in the automotive industry. Of Is that mainly coming from existing orders or did you had a success in getting new orders of New parts in cars and various Both. We see increases of existing business. Sometimes we have a 100% contract and they ask us to expand it to 130%. And Currently, we are hiring quite some people to fulfill these orders, but also new inquiries are at a very, very healthy level currently. But that is for existing parts, so that's not No, no, also for new. So existing parts growing and also quite a lot of inquiries from new business. And is that something structure you can share with us? What kinds of parts in cars in general are now where you see more interest in the For the Carbon Fiber Business. Yes. As we said, battery enclosures and leaf spring. They make up the major chunk of our composites business and there is strong interest, but we have also a variety of small parts, which we produce, for example, for luxury sports cars and there's a huge, very huge demand currently For carbon fiber containing parts. Okay, understood. So that these sharply growing business is really in the composite business, So not in carbon fiber and the prepackage is in the composites? Yes, but We still have the I3 BMW. Yes, of course. And the car is running pretty well and We have record order entry also there. Then one Yes, maybe only a housekeeping question. But in the corporate line, you highlighted why expenses are higher, the fees for consultants and Lower rent fees. Is there something you could share with us what the underlying level of expenses for this line will be in the second half of this year and maybe also going forward. Well, we've already anticipated the budget phase of Corporate Function, Corporate Services and this is also you called it house keeping, Andreas, and this is exactly what we are about to continue. We will adjust our overhead structures accordingly. We will You don't have any further. You know that from previous 20 corporate functions, we anyway summarized them into or bundled them into 10. And out of that, we try to optimize our processes and just focus on the most important things. There will be another reduction also for next year that we plan in our overhead costs. And you can fact that this amount that we see there as a loss that is going to almost double until the end You see the figure was minus €10,000,000 for the first half, but it includes a one off effect, as I said, with €1,800,000 which we couldn't classified as restructuring cost due to some accounting issues that our auditor mentioned. So it's in there. If you deduct it, then it's 8, take it times 2 because I mean the costs are rather proportional, then you're there. Okay. Thanks. And that's also something we should look forward for next year? Or did I get you right that you intend to decrease these expenses. You got me right, but we give our guidance for next year later on this year or beginning of It depends. But first, we have to finish our budget phase and we see maybe if we need some special projects, whatever we need. But this is the answer for this year. But as this, we try to streamline processes and to optimize our businesses, not just in the operative business units, But also in the corporate functions and services. Thanks. And then coming to the last question, looking on the size of business in carbon fiber and decomposites. It looks like that you have quite a number of sites For this business, is that necessary or does that open up also room for improvement? Yes, We were running a site consolidation project. And first of all, we separated our sites into heavy asset sites. For example, a carbon fiber plant is heavy asset. There are several 100 people working, a lot of CapEx you have to invest To build up such a plan, and we have so called light assets. Light asset is a machine shop with 10 people working there. And when we talk about sites, It's a mixture out of this heavy asset size where we have maybe 10 to 15 and the other half are small machine shops. And we might close down or divest a very, very small amount of it because The light asset size are all accretive and they make money. This is what we can say For the time being, a little reduction and we might keep some of the complexity. Very last one, sorry, very last one. Could you give an update how you see the Conversion of your site in Portugal from the textile lines to carbon fiber precursor line? Yes, we have now converted 2 textile fiber lines to precursor fiber lines. They run at full speed and serve our capacity in lieu of odds and a little bit of the the capacity in Moses Lake. The rest of the precursor is coming from our joint venture in Japan Mitsubishi. And currently we are in a make or buy analysis how the setup will be next year, but we would be able to convert next line, but we are not sure yet. Okay. Thanks. There are no further questions at this time. And I would like to hand back to Claudia for closing comments. Please go ahead. Yes, thank you. I also didn't see any questions. So I have to close the call. If you have further questions, Please, do not hesitate to contact the IR team, Jurgen or myself. And last thing I have to do is have a fantastic