Schaeffler AG (ETR:SHA0)

CMD 2020

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Nov 18, 2020

Dear ladies and gentlemen, welcome to the Shetfel Group Conference Call. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. At our reserved customers' request, this conference will be recorded and a replay will be available shortly after the call on the website. May I now hand you over to Renata Casado, who will lead you through this conference. Please go ahead. Thank you, operator. Dear investors, dear analysts, good afternoon. Welcome to the Schaffer Group twenty twenty Capital Markets Day. This webcast is conducted in audio mode only with synchronized slides. The PDF of our presentations will be uploaded later on our website around three p. M. CET. You have received last night our midterm target 2025 via ad hoc communication. The CMD is dedicated to illustrate you the strategic direction behind the target. With me and my Investor Relations team today in Amsterdam Arafem are our presenters: Mr. Klaus Rosenthal, CEO, Schaffel Group Doctor. Klaus Patak, CFO, Schaffel Group Mr. Matthias Sink, CEO, Automotive Technologies Division Doctor. Jochen Schroeder, Head of Immobility Business Division Mr. Michael Gilding, CEO, Automotive Aftermarket Division and Doctor. Stefan Spindler, CEO, Investor Division. Our agenda for today is quick, and we will have time for your questions right at the end. The discussion today will be conducted as usual under the disclaimer. Without further ado, I hand over now to Mr. Kraus Rosenberg, Shuttle Group CEO. Kraus, the floor is yours. Thank you, Renata. Ladies and gentlemen, welcome to our Capital Markets Day twenty twenty, and thanks for joining this conference call. The purpose of this Capital Markets Day twenty twenty is to share with you our strategic direction and take you through how we want to unlock and create sustainable long term value for Schaeffler Group. The basis for this is our new Roadmap 2025 that the Executive Board has finalized during the year 2020 and that is being implemented. Today, want to deliver on this task in basically four steps: where we stand, where we play, how we win and how we create value. All my divisional colleagues will use the same logic for their presentations. Let me start with where we stand from a group perspective. You all know Schaffler is more than just an automotive supplier. We are an automotive and industrial supplier with a strong joint core that comes from our technology and innovation. We excel because of our best in class manufacturing technology. Our business is well diversified, not only from a customer point of view, serving 10 customer sectors, but also from a product point of view with a wide range of components, systems and increasingly services. With our global footprint and also a strong team of people, but also from a regional point of view. As you see from the chart today, 36% or more than onethree of our business is in Asia, in our two regions in Asia Pacific and in China. And with 23% of our sales coming from China, China has become the second most important region for us with the fastest growth track record, driven both by automotive and industrial. And we see significant potential not only because of the just newly signed regional comprehensive economic partnership in the region Asia Pacific. The year 2020 was, for us, a challenging year. It was a stress test for any organization and also for us on all levels. I think we can say that we managed this crisis well, and we are proud that we have achieved what we have achieved not only regarding health and safety for our employees, business continuity, but also regarding fast forwarding new ways of cooperating within the company and with our customers and business partners. Our focus in coping with this crisis was clearly in two directions. On the one hand, as you know, we implemented a range of tactical measures, a transitory response to the crisis situation. And on the other hand, we in parallel focused on the necessary structural measures, the transformational response in shaping the future of Chefler. And this has then led to this final Roadmap 2025. You all remember that we wanted to share the strategic direction with you already at the beginning of this year, but we had to shift gears because of the crisis. And that clearly gave us a chance to sharpen the concept and also integrate with Doctor. Klaus Patza coming on board the new aspects, the new risks and also the new opportunities that are part of the new normal that the crisis has brought to us. Our new claim, we pioneer motion, was already unveiled to you during our Annual General Meeting. But with hindsight, I think it's fair to say that it has now even gained more in its meaning and its intensity for us as a guiding claim into the future. And you will see from the presentations of my colleagues how we want to pioneer motion across our businesses. The three directions of our new Roadmap 25 are best represented by the words transform, focus and execute or as you see on this next page, nicely represented by the structure of my presentation going forward, where do we play, how do we win and how do we create value. On that basis, let me already at this point in time summarize and illustrate how we want to do this and what it means in transform, focus and execute going forward. Transform clearly goes to the main key strategic priorities of our three divisions. And you know that Schaffler is more than simply three pure plays. In Automotive Technologies, and Matthias will explain that to you, we want to accelerate and we are determined to accelerate the portfolio shift to e mobility. In Automotive Aftermarket, and Michael will illustrate this, we want to secure and maintain our high margin and at the same time, open the business for more third party repair solutions. And in industrial, Stefan will outline that we see a significant opportunity to enter attractive new growth fields, but we will stay focused on further enhancing our profitability and bring it to best practice levels. These are the three main directions for the businesses. But once again, Scheffler is more than just three pure plays, and that has to do with our core competencies. In this environment, we will focus even more on these core competencies. We'll focus on realizing the synergistic benefits that this company offers across the divisional businesses. And we will deliver very important the impact that sustainability needs by activating all levers. The third topic, execution, clearly is something that we want to continue our operational discipline and remain consistent and forceful in our implementation. It has to do with the relentless focus on free cash flow as our main differentiating factor, and it has to do with a compelling capital allocation strategy as well as our M and A strategy going forward. And all of this shall lead to a long term sustainable value creation. Let's go to the second chapter, where do we play? And here I want to back up for a moment and talk about the key trends for us as Schepler Group, sustainability and climate change, new mobility and electrified powertrain, autonomous production, data economy and digitalization and also demographic change. And I think it's fair to say that at least three of these trends have been amplified by the crisis and give us even more support going forward. The trends then lead into focus areas. Here we have worked as part of our roadmap quite a bit to determine the areas where we want to focus on. And don't just take these areas as one to one links into the divisions. CO2 efficient drives is not only cars, it's also trucks and buses, and it may even be extended into off road, rail and other mobility devices. And the same holds true for chassis. Chassis is clearly something where we want to excel in the car and light commercial vehicle area, but also rail offers chassis applications. Three and four are more industrial areas. Industrial machinery and equipment clearly goes and is driven by the autonomous production. Stefan will talk about this. And the whole area of renewable energies is not only wind, but also other opportunities that the new environment offers. That together with aftermarket solutions, but also the services that go again across the three divisions explain these focus areas. I would also like to highlight that we are not only present in attractive markets, but delivering our solutions, our value to a broader customer base is crucial. And here, we think we serve 10 joint customer sectors where we align across the divisions and try to bring best value to our customers by focusing on these five focus areas. Let me take this one level further. Delivering value to our customers is a function of meeting customer requirements. And this is where you see what you see on this next page with the customer and product metrics. It's all about leveraging our technological core competencies. And here we see five key action fields. The push the further push into electrified powertrain and mechatronic systems, opening up the aftermarket for third party products, new markets and channels, driving system and services solutions in industrial applications across the board and further sustained investments in the whole area of renewable energies. And on top of this, there's a fifth opportunity that comes from the whole hydrogen area. We want to harness this opportunity as a joint automotive and industrial growth initiative. My colleagues will explain this in more detail. If you look at these five key action fields, where else do you get an automotive supplier that is determined not only to conquer a leadership position in e mobility, but also offers a preeminent position in the wind business? You all know that e mobility only makes sense if the energy that is needed for the electrification comes from green sources. And here you see the beautiful end to end perspective that Schaffler offers, both from the e mobility to the wind business in industrial. Let me give another prominent example coming back to hydrogen, how we as an integrated supplier create value across the divisions. And I think it's fair to say that hydrogen offers, for Scheffler in particular, a unique opportunity. Why is that? Because hydrogen goes to the heart of what we do best and it goes to the heart of our best in class production and manufacturing technology, metal sheet forming, unique coating and surface technology and deep understanding of different materials. Why is that important? Because both in fuel cell and fuel cells are used for are determined for usage of hydrogen, but also in electrolyzers that are determined for the production of hydrogen, the core is a bipolar plate or something similar. And the bipolar plate is nothing else than a function of our core technology. And it's not only the manufacturing excellence here that counts, but also the proven excellence of Schaffler in the industrialization of these small components. We are the ones that can deliver in quality, but also in scale at levels that others can't do. And that's why we feel strongly that Schaffler is a key partner and will be a key partner for best in class components and systems, both in the fuel cell, but even more so in the electrolyzer world. So hydrogen is a perfect example to show why this company is more than just three divisions. Let me go from there into how we win. And how we win is always a question of what are your core competencies. Here, once again, you see our main manufacturing technologies from forging, cold forming, heat treatment to coating, winding and assembly. But it's not only the manufacturing technology that counts, it's more than that. We have not only one USP, we think that four USPs are characteristic for Schaffler. On the one hand, the strong innovation power second, the superior quality we offer to our customers with a long, long track record the manufacturing excellence and then last but not least, the comprehensive systems understanding, both in automotive and in industrial, also covering the aftermarket business. If we combine these four USPs to one unique strength, then we are in the right place. And then we will be able to even more so leverage the synergistic potential that sits in this company. And here, it starts again with the scope of the independencies of the different businesses. We're using same production technology. We have equal materials and components. And we have a comprehensive intellectual property and research development that is shared among the businesses. But it's not only the scope of the businesses, it's also the economies of scale that play an important role. This scope allows us to procure jointly and to leverage our supply chains. It allows clearly for shared services and shared functions. And we enjoy since years a complementary regional presence and a global footprint that also makes us stronger together. What then on top of this makes it even more interesting is the potential for technology transfer between the divisions. We have as part of our new roadmap defined eight dedicated innovation clusters that go across. We share the electrification and mechatronics know how. And here, robotics is a great example where elements that were developed in the automotive area are now used for a growth initiative in industrial. And clearly, systems understanding, our simulation capabilities, our market expertise across the sectors is a key element of why this company offers such potential. Our new claim, We Pioneer Motion, expresses this logic and it's clear that also the brand, the Schaffler brand integrates this and should help us to push this company forward. That then goes into the most important aspect of every business, and that's high performance culture, but in particular, people. We know and we are determined to share that with you. Our people drive our success. We will invest further in qualification as we've always done. We like the aspect of diversity and inclusion. And we will clearly use also the new normal to foster collaboration with more interdisciplinary approaches across the various divisions. Qualification, diversity and collaboration are key success factors going forward. Even more so is sustainability. On this next page, you see our commitment, our sustainability goals. We want to make this company carbon neutral in its production in 02/1930. That's the committed sustainability goal next to the five others that are listed on this page. The Board has clearly subscribed to an integrated approach across all divisions, functions and regions. We have set up a sustainability committee and accepted sustainability targets and integrated them into our Board compensation, also cascaded them down into the next levels. We have a roadmap, a structured approach with clearly defined action fields. And this approach covers the entire value chain, suppliers, operations and products. And even more so, the sustainability is not only about compliance. It's not only about all employees driving impact every day in production along with supply chain. It's very much a business opportunity for us, I mentioned that before, to deliver innovative products and innovative solutions to our customers in all our divisions. That leads me to the next chapter, how do we create value, how we want to create even more value. And that starts with reinforcing operational discipline. We have done quite a bit in the last two years to make progress in that direction. I think you would agree with me that the execution of the various efficiency measures, reducing headcount has been a continuous effort. The digitalization has been stringently initiated implemented in 2018 after initiated in 2017. That now gives us a solid structure. And also the divisional efficiency programs, RACE, GRIP and FIT, that you know, gained traction together with the new comprehensive structural measures announced in September 2020. On top of this, our capital management logic that we introduced in 2018 with the reinvestment rate as the main KPI has been implemented. It shows impacts. The trends from the last years has been reversed, where the reinvestment rate was significantly above 1%. And we are clear and determined to further drive this capital allocation logic into the organization and into the next years. So I think we can say there's a proven track record of successfully implementing efficiency measures. That leads me to our free cash flow. Since the listing of Schaffler, we always stressed that free cash flow is the area where we want to differentiate ourselves. We focus on free cash flow, not only in our compensation, but as a key driver of our new financial framework. And the compelling use of cash remains key to build on the strength and to generate value going forward. You all know the cash formula and you know the drivers behind this. You also know that we have implemented and started a new comprehensive restructuring program announced in September with around €700,000,000 of restructuring cash out. That's known to the market. With our free cash flow generation, we will be able to fund this, and Claus will explain this in more detail. When it comes to the usage of cash, I just would like to confirm at this juncture that we are determined also going forward to pay a decent dividend out of free cash flow that we generate. More to come on M and A and the other aspects of this formula that is, if I may say so, not a rigid hierarchy, but a good formula to understand sources and uses of cash. If me come to the next page and that then all sums it up. At the end of the day, it's all about capital allocation. And we introduced to you some time ago the portfolio management logic, but also the new capital allocation framework that links the reinvestment rate on group level also to the portfolio elements, the different portfolio strategies. Matthias has been very good with that and introducing that in his divisional strategy, and we will continue with that strategy. The credo of our capital allocation process remains earning the rights to grow, and that's a very good yardstick to determine where capital should go and where it should not go. Let me, before I come to my final slide, say some words on our M and A strategy. As shown by the latest acquisitions that we did, we clearly focus on compelling M and A. We want to stay very disciplined in that respect and do M and A if it complements and strengthens our business portfolio. We have our radar on with seven search fields. We will continue to focus on small and mid sized bolt on acquisitions. We believe that the market is likely to present some interesting opportunities within the next twenty four months. These acquisition opportunities are proactively screened across all three divisions. And I can assure you that we will do this process as we will do the execution process in a very disciplined manner with clear guidelines that Claus will explain further. So Schaffler is well positioned to capitalize not only on the organic growth opportunities but also on attractive external opportunities. Now before I hand over to Matthias, let me come to my final slide and just quickly briefly explain the rationale of our midterm targets that Claus will share with you in more detail. Our midterm targets are, from my point of view, comprehensive because they cover the group and now for the first time also the three divisions. They are bold because we give you, in an uncertain environment for a five year period, a walk, a direction for each of our businesses. And they are balanced because they include free cash flow at group level, and this is the main differentiating factor for Schapler as well as the return on capital employed as a key measure for capital efficiency and value creation. And let me finish by saying, I also believe that they are robust because we have found we have given you a strong floor. We want to guarantee to you that we have a dependable floor, and we are determined to also overachieve the ranges that we have given you. With that, Matthias, I hand over to you for the second part, Automotive Technologies. Yes. Thank you, Claus. Ladies and gentlemen, where do we, Automotive Technologies, stands. Together with established and new customers worldwide, we are proactively shaping the transition to innovative propulsion systems and to advanced chassis technologies. We are and we will continue to be both a component and system supplier, and we are well regionalized with more than 20% of our sales in Greater China and The Americas each. Following our full year 2020 guidance, our sales will decline by 13% to 14.5%, while still achieving a positive EBIT from 1% to two percent. The market out there is still highly uncertain, as Claus already elaborated. Therefore, we have decided to plan conservatively to secure the floor. And we took here as the Scheffler base scenario, the pessimistic IHS numbers as a basis. Hence, we will be operating with maximum cost discipline, but at the same time with maximum flexibility. As you can see here, we have extended our power drain scenario to the year 02/1935. We believe that hyperlization will reach its tipping point in about 02/1930. At the same time, we are convinced that electrification will accelerate strongly up to 50% of the new vehicles and that we, as Schaffler, will play a decisive role in shaping this transformation with our USPs. Ladies and gentlemen, where do we play? A strict and consistent management of our portfolio will be the key to making this transformation a success. Therefore, we have divided our business into two clusters, the mature business being the foundation and the new business. As you can see, we also have some business fields that are even completely unaffected by powertrain technology. We call these agnostic. Within those two clusters, mature on the left side and new on the right side, the businesses are further divided into the four categories shown here, namely harvest, exit divest, build and growth. And I now will likely take you through a few of these examples. For harvesting, we have a very strong and innovative portfolio in our mature business, building the foundation for the future. And we will continue to optimize this for the hybrid and as well ICE powertrains. Our priority in that field is to secure the margin and to generate cash to fund the future, but also to leverage skills and existing investments. For the new business on the right side in Electrified Power Drains, Doctor. Jochen Schroeder will show you the latest successes in a bit. We delivered on our promise, and I already now can conclude that we will increase our order intake target to €2,000,000,000 to €3,000,000,000 per year. We will also intensively develop the other two key areas, exits divest and build. Since 2018, we have intensively pushed ahead with a consolidation of plants in Europe with a focus in Germany. We are removing complexities in the organization and we are consistently phasing out expiring businesses. At the very same time, we are further strengthening our capabilities in the power electronics field by realizing our new three in-one projects for CRM production. And together with our industrial colleagues and Stephane, we have started a broad initiative on hydrogen. All our resources we handle in a sustainable manner. We have now trained more than 1,000 of our long standing experienced employees from the mature business for the new businesses. Next year, we will inaugurate our factory for electric motors in Hungary. This factory is being built as a lighthouse factory for sustainability. And at the same time, we are modernizing our existing mature sites in Duhl as an ultra efficient factory for electric motors, and we have our competency center for e mobility there under the management of Doctor. Schroeder. How do we win or how to master or better how to lead this transition? We see four core USPs at Scheffler being key for this. We are and we will continue to be innovative with more than 2,000 patents filed per year. With our system understanding, we discuss with the automotive manufacturers at eye level and can therefore develop and deliver innovative systems and components. Quality is and remains to be a top priority in everything we do, and we are in the single digit PBM range with all car manufacturers and we receive numerous awards. And as Claus said, our vertical integration integration and manufacturing excellence makes us very strong in implementation of things and products. This slide illustrates the relevance of mature business as the foundation for the new businesses. We will continue to develop and to supply components and systems as said. We see significant content in all powertrain types. And as said, we will take advantage of our exceptional production knowhow as this makes us strong in implementing products. And with that, I would like to hand over to Doctor. Jochen Schulder. Thanks, Matthias, and good afternoon, ladies and gentlemen also from my side. It is my pleasure to now share with you the progress we are making in the transformation towards e mobility. Two years ago, we clearly communicated our ambition to become an e motor maker for electrified powertrains. This is because, a, the e motor is the heart of every electrified drivetrain and b, because the e motor perfectly fits to our DNA. Schaffler is strong in the industrialization of innovative and technologically demanding mechanical products. And we are able to realize a deep vertical integration in e motors. And we deliver on our strategy. Our order intake on e motors is exceeding €1,000,000,000 We use our own e motor in multiple system projects, and we start to deliver e motors in mass production to our customers end of next year. And we are building our global footprint with e motor production lines in China, in The USA, in Europe, like for example, in Hungary, as Matthias explained before, with a new e mobility production plant that is currently under construction and also in Google in our headquarters e mobility, where we will also produce e motors in the future. And in our e motor product portfolio, we are following a modular approach, strongly enabled by our vertical integration to realize scale effects. In last year's Capital Market Day, I explained to you that with e motors, we are able to deliver two in one systems: gearbox plus e motor or in a hybrid module e motors combined with torque converters or clutches, for example. However, market needs and our strategy goes beyond two in-one to three in-one systems. That means with power electronics, PU and software integrated into the system. Last year, I promised that we are ready to make the step and that we want to take it. Today, I can report we did it. Since last year, we achieved an order intake of around €3,000,000,000 in three in-one system from multiple customers, for pure electric vehicles with e axle and for hybrid vehicles with our Schaffler DHT multimode. This is the first visible evidence that Tesla has managed to transform. We achieved know how in power electronics. We are able to manage and to master electronics in the electric powertrain. Our main model today is to specify the power electronic and to work with a partner. In software, we always have at least a share in all projects, and we do the software functions relevant for the differentiation of the system in house in Schaffner. And maybe also important to note, in one of the three in-one projects, we do not only specify the power electronics, but we will use our first in house design power electronics and will bring this into production. The three in-one systems of Schaffler are not only Me. Two products. We differentiate with our innovative technology. On the right hand side of this slide, you see an example of our three in-one EXFO. Here, we do a 800 volt system with silicon carbide inverter technology with two speed seamless power shift capabilities and highly innovative e motors, setting a benchmark in power density. And we do not only do one e axle system, but we will produce a modular kit and we are able to serve a variety of power classes in a scalable design. Besides light vehicles, electrification and heavy duty vehicles is also gaining momentum. And we decided to enter this market segment as well because of high synergies in the e mobility products. One example for these synergies is again the e motor. We can use the same production machinery as for light vehicles and same base materials. In particular, our wave winding technology that we developed with ElmoTech Strathermart also offers advantages in the truck segment because of its very high efficiency and power density, making it very attractive for heavy duty application. I am happy to report that we already achieved the first nomination with our weight winding e motor for heavy duty in The U. S. Truck market. In the electrification of the truck segment, pure battery electric solutions will have limits, especially for long haul years. Here, fuel cell technologies has advantages, and we believe that we will see fuel cell trucks at relevant volumes towards the end towards the second half of this decade. Therefore, we decided to enter the truck hydrogen fuel cell business also, but not limited to trucks, also for light vehicles and our industrial sectors, as explained before by Claus. But certainly, trucks will be one of the leading applications for fuel cell. The way how we approach fuel cells is similar to how we approach e motors. The core of every fuel cell are bipolar plates forming a stack of several hundred plates in the fuel cell system. A bipolar plate is basically a stem part like the metal sheets in the E motor, with surface technologies, welding technologies and other technologies brought together. In a nutshell, all technologies needed for bipolar plates are core technologies of Schaffler, and we are well prepared to go into this field with our industrialization competencies. Fuel cell systems also offer opportunities beyond bipolar plates and stacks. We can also use, for example, our thermal management modules from combustion engine and adopted to fuel cells, our system know how and capabilities and also various other components around the fuel cell. Last but not least, we are also looking beyond the powertrain into new growth areas around chassis systems. In particular, new mobility concepts and autonomous driving requires innovative products like steer by wire systems or our corner modules. In particular, with our steer by wire technology, we are making good progress with our joint venture partner at Schaeffler Paragon. And also with our rear wheel steering system, we are close to entering the market together with our partner, Bosch. The steer by wire technology is not only limited to passenger cars, but it is technology relevant and interesting across various sectors and applications also in industry. We are working here on several projects and see good growth opportunities for the future. With this, I want to hand back to Matthias. Thank you. Welcome to Jochen. Ladies and gentlemen, how do we create value for our customers and for the group? With €19,600,000,000 we see in the middle our order intake of the last eighteen months and its structure according to ICE, HEV and HCV. With this order intake structure, we anticipate our assumed powertrain scenario. First and foremost, we will fund our growth and the realization of this order intake from the mature business side and thus generate value. Therefore, we adjust the R and D quota, the CapEx ratio and the overhead ratio accordingly. At the same time, we leverage skills, intensify the R and D and CapEx spendings for the new business and we commit ourselves to a higher order intake. Thus, for a while, the overall profitability will be a blended mix of both business segments. Dear ladies and gentlemen, my team and I commit to a continued outperformance of 2% to 5% as we are convinced that we will continue to deliver superior products in the future vehicles. And at the same time, we commit no matter what to achieve 4% to 6% adjusted EBIT margin latest in 2023, while actively managing the transition by ensuring profitability in mature business and fostering strong growth in the new business area. Ladies and gentlemen, with that, let me conclude. IT and I are up to conquer a leading position in new business for electrified power drain and advanced chassis application. Thank you very much. Happy to answer your questions later. So thank you, Matthias. Please allow me now to talk in the next fifteen minutes about the automotive aftermarket. Where do we stand? The automotive aftermarket is very well positioned in both major channels, the OES channel as well as the independent aftermarket channel. Due to the nature of our demand structure, we are predominantly represented in the independent aftermarkets because the sweet spot of our business is with cars older than four years, around ten years. The heart of our business is in Europe and The Americas with a fast growth in Greater China and Asia Pacific as well. And as these markets are growing in future, this is one of the further growth potentials that we're going to look at in a bit. The twenty twenty year proved that our business is quite resilient with regard to revenue but also EBIT streams. And therefore, automotive aftermarket is a good contributor to the short term success. The fundament of our business is the global car park and its growth. As new car sales at present are declining, the good news is that the sweet spot of the business is even growing faster than the overall car park. If we look into the main trends that are describing our markets, at a first glance, what we see is three of these trends are supporting the independent aftermarket business. The car park as such, its growth, its aging and specifically the growth in the region China. New players are showing up to name fleet as one of them with a closer look to total cost of ownership and life cycle management. In other industries, we would call it predictive maintenance. That will give us additional tailwinds going forward. And the digitalization in terms of platform and e commerce, we see as a very good trend that supports our growth. One trend that we see and that Matthias and Jochen Schroeder have elaborated on the hybridization and e mobility will not reach our markets significantly in the next couple of years to come, which is why we see it useful. Many of the trends are accelerated due to the appearance of COVID-nineteen. And this is also true for a further pressure on the profit pool due to the consolidation of the markets and increasing visibility and the integration of activities. But all in all, the trends are more supportive than creating additional friction. So where do we play in the independent in the automotive aftermarket? We are proud to say that we are market leader in two of the three areas in transmission as well as in engine. And on the chassis side, we have to say this is the growing market because regardless of the propulsion technology going forward, chassis applications will be needed in any type of mobility. So that is the heart of our business. When we come to the soul of our business, obviously, we are not just producing parts and shipping them from A to B. We have various growth drivers that we tackle and make the most out of it. The share of wallet in order to increase our business relation with the existing customer base across all the offerings that we have. The solutions and service offerings generating more turnover and value add with on the back of the existing portfolio and the way to market next to traditional channels in the independent and OES sector in new business models and e commerce activities. And there are various drivers and fields of actions on the enabler side, investing and benefiting from the digital competencies as well as making the most out of our operational excellence. All this is meant to increase customer experience and with that also customer satisfaction. Please allow me to give you some examples that serve helping us in these different areas. And one of the growth drivers in the area of share of wallet, I mentioned it earlier, is the investment into wheel bearings predominantly for passenger car. And this is not only a question of a product as such, this is a question of a future relevant portfolio with high performance parts and also repair solutions. And the second bucket, as is mentioned here, advanced repair solution and services. We are proud to say that we have already our first repair solution for hydro vehicles. There is an example here in the area of front end accessory drives. So we are preparing ourselves the very moment there is a demand and need for repairs in the area of hybridization and e mobility. When it comes to the way to market, we invested heavily into our ETC platform in China, and please allow me to give you more insight on that one in a minute. With regard to digital competencies, our WebExpert service offering is meanwhile available in more than 50 country versions and language translations that go along with it. And it helps our customers on the workshop level, on the garage level to get the information at the place of business under the hood of the car with the very moment that it is needed. And to the operational excellence, also with regard to the Aka OPs, allow me to give you a bit more insights in the next couple of slides, which now brings me to the question, how do we win in our markets? And the first, it does. ETC China. So what does ETC stand for? You can translate ETC into engine, transmission and chassis, which easily explains our product offerings. But you can also translate ETC into electronic toll collect, which is the fast lane on congested motorways. And that simply explains with the status quo and the reachable situation that we are striving for. In China, we find a very, very fragmented market with many different players and many different layers of distribution. And ETC is offering a connection, a business to business trading platform connecting all those players into one ecosystem, one language, one decision making process and one delivery to the demand. By China, I already said it in the beginning. China is the fastest growing car park that we see at present. China has, as a starting point, a very huge fragmentation, very far away from the distributor consolidation that we see in other markets. And our ETC system offers the cut through technology on the high complex product niche. And if you look into the numbers that ETC is already offering, more than 100,000 stock keeping units are available already on ETC, while Schatzler core business is less than 20,000. So already today, there is an offer on that platform that is by far exceeding our own offerings. And it enables our customer and is not disrupting their business in partnering up together with us to build and form this ecosystem going forward. The other deep dive that I want to offer is related to the Aka O. We reached the point to open it. That is what we disclosed already. And the Aka O fulfills and supports all our activities. It addresses the logistical issues to increase delivery service level and customer satisfaction. It is future ready to integrate end to end processes connecting customers with production. It supports financial ambitions with regards to inventory, working capital and costs. And it also supports our story with regards to sustainability going forward. In a short period from now, 60% of our worldwide inventory will be consolidated in that one place, and it will help us to run the best in class benchmark logistical solution in our industry. So with that regards to value creation, let me cut it short. We from the automotive aftermarket commit to deliver to a sales higher than global GDP growth rate on the top line, and we commit to deliver profitability in the area of 13 to 15 percentage points latest in the year 2023, perhaps a year earlier already. This brings me to my summary and conclusion. My contribution to the Schettler value creation is to maintain a high margin better business and expand our share of wallet and expand our reach. And with that, I hand over to you Stephane. Thank you very much. Yes, Michael. Thanks a lot and hello to everybody. It's a pleasure to inform you now about where we stand and where we will go with the industrial business. So let us start with where we stand. A key element of our current portfolio is, as you all know, a strong component business. And this arises from the key competencies, which Claude Rosenthal has also described, a superb manufacturing know how combined with R and D. And we are offering both. We're offering high performance components and we're also offering very cost attractive components, combining the product know how with the worldwide global setup we have also utilizing best cost countries. As Michael has said, components, bearings, they are a future relevant portfolio. Wherever you have motion, both rotative and linear, you will need bearings and linear technology products. It doesn't matter if machinery is driven mechanically, hydraulically or in any other way. So besides the component know how, we do have a high level of expertise in terms of designing these components into our customers' machines, and we know how they operate. And this leads more and more to the fact that customers ask us to offer modules and systems, for example, also mechatronic systems and mechanical systems, but also service solutions because improving the efficiency of operations at our customers is critical. When you look at the worldwide setup on the left hand side of this page, you see that with Greater China, 20 Percent of the business Asia Pacific, 16 Percent of the business and these are the 2019 numbers. We do 36% of our sales in Asia. And the trend is growing, as you probably have seen from the Q3 numbers in 2020. So looking one level deeper, you know we have the eight sector clusters plus distribution, distribution representing the indirect channel and the eight sector clusters, that's the business which we do with the OEM customers and also with end customers to a certain degree. And if you structure these eight sector clusters into areas, you see that we are significantly contributing to the energy and infrastructure operations, mainly with our wind business, but also with our raw materials business, including mining, metals, oil and gas. Transportation, and that's both, that's transportation for people but also for freight, contributing to the megatrend of growing population and growing transport needs, highlighting our aerospace and our rail business. We all know that aerospace is currently affected by COVID. But if we look into the medium to long term, that's certainly going to be a growing business again. Mobile machines and equipment, off road being a part of that with the focus areas of agriculture and construction, two wheelers, which is not only motorcycles, but all kinds of special equipment and power transmission to a high degree also contributing to this machinery, e motors, hydraulics equipment, pneumatics. That's about a good 20% of our business and also significantly contributing to the growing population requirements to the infrastructure construction requirements and to the necessity of agriculture and food for the population. Industrial Automation, we all know that there is a classical area of this business, machine tools, textile machines, printing machines. But there is also areas which do show significant growth like robotics and medical. So it's a complex area. Some of it is affected by the current crisis, but some of that definitely also has some very attractive growth potential. If we then look now at the market. The industrial business was affected in 2019 and late twenty nineteen already by a weakening market. And then, of course, 2020 corona came and you all know the impact scenarios. We believe that the post COVID baseline now will show a market decline in the industrial production of about 8%. When you translate that into the industrial business, you know that in addition market effects, there is destocking effects, there is cost cutting in the service business of our customers. So we believe that we will see a decline of 9% to 10% of sales in the Industrial business in 2020. But this will pick up in 2021 again. And we also see that if we look into the next five year period, we will see a steady growth as you see it here by the green line. So how does COVID and the current market situation, how is that reflected in the outlook for the sector clusters. And we are breaking this down here on this chart. You see the pre COVID scenario and you see the post COVID scenario. And of course, there is a certain impact. It's not like COVID doesn't have any impact. But on the other hand, the good news is that when we look at wind, for example, and that's a strong part of our business in absolute numbers, but also in terms of relative growth, That is basically not affected. It is growing significantly also this year and it will continue to grow. And I'm going to show also an example on that. Raw materials is affected. But then when you look at aerospace and also rail, we do see growth despite the current market environment and also off road, two wheeler power transmission, everything around mobile machinery, we see positive signs of growth. The two pluses are, by the way, an area of 3% to 4% and the single plus is an area of 1% to 3% of growth. Industrial Automation, if you take everything on average, it's a rather flat business. But if you look at the individual sectors, which are accelerated by certain trends like robotics and medical, there we do see strong growth. And we will show you based on a few examples how we want to take advantage of that. So having talked about the regional business and the sector business, we of course also talk about sustainability. Besides the broad sector coverage, which we have with our products, we definitely put a strong focus on this topic on sustainability. You know that wind plays a strong role. If you translate that into what does Schaffler mean for the wind industry, every second to third wind turbine is supplied with Schaffler product. So if we didn't have Schaffler, the wind business and worldwide renewable energy setup would look quite different. When you look into green transportation, railway will continue to play a major role in transportation of people and freight. And this is certainly to one degree a volume business. It's also a service business, but it also is a business with high requirements, especially when you go into high speed trains. So it's technically challenging and it's a growing business, plus it has service relevance. Low friction is something which is technically basically part of our backbone and it's more and more required when you look at energy saving driveline technologies. And then when we come to the service solutions, of course, our customers, they also must make sure that their operations are sustainable for two reasons. They must operate cost efficient And they also don't want to have breakdowns also for reasons of sustainability requirements. So service solutions and subscription based service models are playing a more and more important role also for us. Coming to the question where we play. And basically, with this chart, want to summarize the eight sector clusters and the products and the applications in which we create value. And what you see here at the bottom part of the picture are six examples. And I would like to explain these examples to you, so that you get an impression of how we push growth in our core business. Those are the examples one, two and three. And how we also drive innovation and Claus Holzentzel has mentioned it, there is a lot of crossover of technologies from the group technologies and from the automotive technologies, which also helps us to drive innovation in the industrial business. So how do we win? And let me come to the examples. And also, let me explain to you how these examples match with megatrends, which we do see in the industrial environment. On the wind side, you all know that climate change is a key issue. Renewable energy is a key issue. And when you look at the recent announcements, China wants to be climate neutral or CO2 neutral by 02/1960. The U. S. Wants to double renewable energy within just a few years, the capacity of renewable energy. When you look at the forecast which we have here and that doesn't even include the recent announcement of China and America, you see here the forecast is within twenty years, the wind power generation will develop by the factor of five. So it's definitely a growing business. And it's also technically demanding business. Turbines are installed offshore. The components need to run reliably for over twenty years. We're talking high power, we're talking big sizes of machinery, bearings of more than three meters of diameter. So durability, reliability is key here. And that means R and D competence of Schaeffler is required. And we're convinced that continuing the growth strategy and continuing the investments in these areas also based on the strong footprint which we have with our international factories that will be a growth driver for our industrial business. Coming to the second example, railway bearings. It has a certain similarity with wind, of course. The trend is a different one. The trend is the rising population and the rising demand for infrastructure and transport. Technically, we also see here pretty harsh and stringent requirements in terms of the operation profile, in terms of the safety criticality. So high performance engineering is needed. And we do have a lot of experience in the railroad industries and we have seen very nice recent successes. Also, interesting topic about railways is that it has a high service relevance, which we see here by the example you sell one new bearing and this leads to eight bearings in service because some of them are reconditioned and some of them are replaced by spare bearings over the lifetime of the train. So a strong long term market outlook, a strong position of Scheffler technically and a good megatrend for us, also a promising growth area for us. The second example, I would say, with the more conventional core products which we have. And let me show you the third example here that's from the agricultural technologies. Of course, supplying food to growing population is another megatrend. And in order to supply food, you need to seed grains. And in order to process the seeding in the most efficient way, You need mobile machinery and you need also sensors and mechatronics to make sure that you don't waste any seeds during the seeding process. And the combination of offering products, which of course are also under cost pressure, but for that we have ramped up our factories in India and in Vietnam specifically for those products. And combining these cost effective products with high technology sensors and mechatronics solutions gives us a good position in this very attractive growth area. So now coming to the fourth example, and that goes to Robotics. Robotics is a business which has been known for a long time, but that's mostly the classical industrial robots market for automated assembly, automated manufacturing. What we see is that there is a growing cohort, a collaborative robot market, because of course, manual work in some areas is seen more and more critical for various reasons, for cost reasons, for safety reasons. And collaboration with robots will play a more and more important role. So you see a pretty attractive market development here. That's the cobalt sales in 1,000 units, which is basically growing by the factor of 10, if you take the number between twenty seventeen and twenty twenty five. And we're actually the strategy is that we sell components into this business. We sell also systems into this business. We are taking advantage of the gear technologies, which we have in the group and which our automotive colleagues have developed. And we're also taking advantage of the electrical drive technologies, which we have in the group. So the target is to supply systems into this application. And the other side of the strategy is that we're also utilizing these robots more and more in our own factories, starting with pick and place tasks and also going into sensitive assembly jobs. When you think a little bit further, you can even look into service robots, which is not a market now, but which can be a market in the future. The fifth example is a product that's a service product, which we have announced and launched at the middle of this year. It's a condition monitoring system, but it's more than the classical condition monitoring. It's a service solution. And please look at the right hand side of this slide that shows basically the whole cake shows all the machinery which is in production and operation. And then you see 94% of these machines are not monitored or they are manually monitored. And it's not like every machine is already automatically monitored with sophisticated monitoring equipment. A lot of it is just monitored with handheld units. And the target is to for safety and for reliability reasons and also for cost reasons to replace this manual monitoring with automatic monitoring. And that requires an easy to install system. It requires a system which does not have to be with a high degree of complexity to be an intellect with the IT systems of customers. So easy to install, cost effective and we have launched this system. We have a very good reception from the market and that's our entry into the subscription based part of the service business. And we're looking forward to growing that in the coming years together with our end customers. My last example is also here the contribution or the example to the hydrogen strategy, which is an overall Schaffler Group strategy. Matthias and Jochen have talked about the fuel cell side of this business. The fuel cell is also relevant for industrial markets. In addition to the fuel cell, there is electrolysis, as Claus has said. And basically, the nice aspect is that the technologies and the products which we are developing here, they are based on the same core competencies: metal forming, coating, material science, production technologies. When you look at the market outlook, we are today at something like less than one gigawatt of installed electrolyzer power. When you look into 2,040, that's the number on the right hand side, the green pillar is supposed to be 2,040. So it's a factor of 1,000, a factor of 1,000 of installed electrolysis powered within twenty years. And that means we're going from, let's say, a classical workshop style of manufacturing into an industrialized high performance series type of manufacturing. So it is an area which is ideally suited to what we can do. And if we take our competences from all divisions and from our corporate technology development, we believe that we can play a very attractive role and make a very interesting step into this business. So this concludes the examples. And please, ladies and gentlemen, take it as examples. It was definitely not all we're doing, but it was six typical examples to show you what we're doing both on the component side, but also on the systems and service side and what we have in the pipeline also technologically. And of course, are many more examples, but those which I've shown are, let's say, pretty relevant of what we're doing in general. So let me please conclude and talk about how we create value for our customers and for the group. And I have summarized that here in these four categories: strength in technology leadership for bearings and new technologies, I have explained that based on the six examples you have seen, and that is a core element of the approach. Another core element is reinforcing our customer excellence. When you look into the recent publications, you see we have launched a new digital customer platform, Medias, which is a pretty classical name for our product catalog. And we're developing on the basis of this product catalog now a fully fledged e commerce platform, so that we make sure that due to the diversity and the complexity of our customers, everybody has a fast access to Schaffler, everybody gets the right explanations about our products and everybody knows about where and how can the customer buy the products and how can they be ordered automatically. So that's a key enabler to drive also the growth in the business. FIT, our operational excellence program. We have talked about that in the previous sessions already. We have launched it. We are continuously executing it. And it's an operational performance program and will pay a contribution to the growth and the profitability story. And then, of course, something which I have not explained in detail during this session, but we have done it previously and we have also, of course, informed about it in other sessions and we have announced it publicly. The consolidation of the footprint and the reduction of the overhead, that's a key element also when we look at the Industrial business over the next five years. We have started several years ago, and we did some first steps and we're now increasing these activities because creating value is both. It's growing, it's innovation and it's also, of course, cost optimization. So this then leads to the summary that we want to grow above the industrial production growth. If we look at the average of 2021 and 2025, and we stand behind our profitability target of 12% to 14%. We have said 11% to 13% previously. We have seen a setback now due to the market and the corona crisis. But in light of what we're doing in terms of growth initiatives, but also in terms of cost cutting due to our announced programs, we see 12% to 14% as the margin range, which we will have latest in 2023. And that brings me to the summary and the conclusion. So the market decline of 8%, that's our environment and the COVID pandemic. The market is expected to recover and grow by 3% per annum. That's the current forecast. You saw that by the green curve. We industrial production. If we look at the midterm horizon, 'twenty one to 'twenty five, we see hydrogen as an opportunity beyond 2025. And creating value, do by both, by pushing our core business and by driving innovation with systems and services. And we will reach an EBIT margin of 12% to 14% latest by 2023, and we build on the strength which we have created over the last couple of years. Of course, M and A and partnering for dedicated areas provides further opportunities. So all in all, we see very attractive growth fields, and we will further enhance our profitability. And this concludes the industrial part. And then I would like to hand over to Klaus Patzak. Yes. Thank you, Stefan. Hello from my side. On the first slide, I will lead you through a general kind of thought. For me, actually, it's the fourth transformation experience I have. And while each of them was somewhat different, the general steering logic shown on this page proved to be useful. We started out with a scenario based anticipation of long term market and technology trends, derived from that a multiyear plan with midterm targets, and they got underpinned by concrete committed measures reflected in the multiyear plan and more specifically in the budget. And this is now followed by stringent execution with the credo focus, prioritize, execute and deliver. Next slide shows you about the focus areas of the multiyear plan. What is important clearly is to focus the mature businesses on profitability and cash, and on the other hand, improve the profitability of the new business. We have heard that specifically in Matthias' presentation. Second one is proactively adapt capacity and footprint. Third one is right size the overhead. With regard to the budget year 2021, we defined room for some flexibility. Specifically, we only approved 75% of the budgeted CapEx, 25% need to be reapplied for and will be agreed upon then during the year in light of the then current circumstances. Every material CapEx and R and D project goes through the Board and will be also measured against specific hurdle rates. Then the next one is on the framework and the divisional targets. The divisional targets have been already mentioned from my colleagues. I just want to comment on Automotive Technologies again. As it was said, the commitment to outperform the IHS light vehicle production growth by 200 to 500 basis points is one important pillar of our target system. On the other hand, Matthias also pointed out on Page 32 that our multiyear plan and the margin planning, which is coming from that is based on a more cautious market scenario. That means also that if light vehicle production would grow stronger, the outperformance percentages will hit a higher base and hence improve margin prospects. And then I was lucky to hear from Michael Sueding that he expects automotive aftermarket to reach the target then already one year earlier. And I think that also is a well based estimation. On the group level, we have two major KPIs. One is return on capital deployed, the other one is free cash flow conversion. You see the target ranges for these KPIs. For both of them, also it is valid that we want to enter the target margin ranges latest in 2023. And you will have noted that these targets on group levels are all in targets. That means they include also restructuring expenses and transformation needs. This calls for a proactive ongoing restructuring, which I believe is quicker, cheaper, less disruptive and easier to implement. Needless to say, the KPIs we have chosen are consistent with the incentive system and the group targets are founded have the foundation of the internal commitments of our divisions. On the next slide, you see the algorithm behind the midterm targets and the multiyear plan. I will run you now from one through six. I will start with the gross margin, which I regard as the health indicator of the company. Gross margin was roughly 25% in 2019, '20 '1 point '7 percent for the nine months of the current fiscal year. For full year 2025, we would expect the gross margin to be roughly stable with an improvement in industry. Drivers for that improvement, as mentioned earlier from Stefan, are the transformational expenses, which we have booked already in the current fiscal year and also in part also in earlier years, the volume increase you mentioned and that outweighs clearly price decline. On the automotive aftermarket side, we expect the gross margin to come down a bit due to what has been explained, the consolidation on the customer base, but also the ramp up of the new EPC business in China. And then you have the arrow for the Automotive Technologies business being flat here, an increasing shift from component to system business. And also price decline is largely compensated by footprint optimization, productivity measures and plans and purchasing savings. On the R and D expenses, we expect some improvement in the R and D expenses in percent of revenue. Historically, that was at 6%. We expect that number to come down actually in all divisions, most materially in the automotive technology side, where on the one hand, there's an increase in R and D spending and also an increased share for the new business, but that is more than compensated by a decline of investments in R and D in the mature business. So overall, R and D is roughly flat in absolute terms, but again, the ratio will be slightly lower. Next one is on SG and A. Again, here, we have a history of roughly 11%. We expect that number, this share, this ratio to come down, somewhat both in selling and also in general and administrative expenses. The plan includes on the one hand, the payback of the communicated structural measures and also the benefit from the AKO investment in aftermarket, but this is compensated by a material investment in digitalization and IT, the upgrade of our IT system to SAP S4HANA, which lead then to benefits mainly after the planning period. Next one is on CapEx. CapEx was, as a percentage of revenue, 7.2% in 2019 with reinvestment rate of 1.1%. If you would look back to the years 2015, 'sixteen, 'seventeen, 'eighteen and calculate an average that would lead you to a reinvestment rate of roughly 1.5 So that means there has been significant investment in the prior years. And obviously, we can benefit going forward from that. Therefore, the expectation is that the reinvestment rate will be until 2025 at roughly one or one point zero. And that this one basically also speaks for the years in between. So the average should be close to one. And not only the CapEx quota will be lower than in prior years, but also absolute amount is expected to be lower, driven mainly by Automotive Technologies mature business. Now on the working capital side, we had a percentage of working net working capital to sales of 17.5% in 2019. This is expected to be stable. On Industry, we are already above the benchmarks we are looking at. So that I think is already a very good performance. Aftermarket will improve further based on the benefits from AKO and also the structural business in which we had from EPC in China that will also help a bit. On automotive technology, we expect the performance to be stable. On the one hand, e mobility has a potential for somewhat lower net working capital to sales, but that will be more material in later years. And as a percentage, Automotive Technologies is already below the percentage you see here for 2019. Next one is on the parameters. On the left side, you see the leverage ratio that was in the later in the last years at around 1.2 net financial debt to EBITDA. In forty nine months, it was at 1.6. That number might come down for the full year a bit. And obviously, if you follow through with our plan without M and A, this number would go further down over the years. But we purposely defined for this parameter a larger broad band of 1.2 to 1.7 in order also to allow for inorganic growth despite the fact that the multiyear plan with regard to top line and margin and other KPIs is in principle based on organic growth only. Dividend policy is unchanged. Obviously, the Managing Board and the Supervisory Board are deciding on dividend proposal on a yearly basis, looking holistically at the situation of the company after the books have closed for the year. And then you will find on the right side yardstick for the financial evaluation of M and A. And we have defined two. First, accretive, one year after integration second one, ROCE above that two years after integration. And of course, if you could acquire something, we would also then inform you about the expected timeframe for the integration. Now, internally, we follow the progress by monthly performance reviews. There has been newly introduced. Focus in these reviews is gross profit overhead productivity, purchasing, CapEx, working capital management, plant performance and what is most important for me is also forecast quality. On a quarterly basis, we include also benchmarking with peers, names you probably know, including Timken, Esker, Espol, Warner, Valeo and the like. Externally, we will report to you on our progress when we close the year 2021. Obviously, we'll compare that with the guidance, which we will give you on 03/04/2021. Guidance format will be unchanged, but only and only enriched by a qualitative guidance for return on capital employed. In 2023, the Capital Market Day end of year '20 '20 '3, we will report to you that group and divisions have reached the lower end of the target ranges. That is our plan. And obviously, in the year 2023, as communicated earlier, the yearly benefit from structural measures as announced 09/09/2020 will be materially realized. And then finally, end of twenty twenty five, we will be then according to plan in a position to report to you that group and divisions are in target ranges and that also the sales outperformance has been achieved on average. And at that point in time, it might also give you the new targets for 02/1930. Now to sum up, I only want to highlight three points here on that slide. As mentioned, we have developed robust midterm targets that have been derived from a multiyear plan. They are fully cascaded into the organization. The group targets for growth here and free cash flow conversion are built on divisional commitments. We monitor the execution by monthly reviews. And finally, stringent capital allocation is key and that governs both organic and also compelling inorganic investments. And with that, I would hand it back to you, Claus. So it's a high quality company. It has a strong core, a strong technology. We are more than just three pure plays. There is significant synergistic value to be unlocked. We are fully determined not only to pioneer motion but also to unlock and create sustainable long term value. And I think we have demonstrated that this road map gives us the strategic direction. It's a clear direction. It integrates all our efforts into one framework with clear focus on capital allocation, portfolio management and free cash flow generation. You saw the three main directions for the three divisions: Conker leadership position in the new business for electrified powertrain and chassis application in Michaels business, maintaining the high margin level and expanding our share of wallet and reach and Industrial, while we are entering attractive growth fields, we will stay firm on further enhancing our profitability. The financial framework was very well explained by Clausen. The midterm targets clearly provide us with a rock solid floor that we will defend whatever it takes and we will where we are committed to do what we can to achieve, if not overachieve these targets. And last but not least, sustainability is intrinsic to everything we do. It gives us a unique end to end opportunity to grow our top line and fuel growth, as you saw from the hydrogen example. We are fully committed to deliver on that promise and activate all impact levers, not only achieve our midterm targets, but also our sustainability goals. With this, we come to an end here. I thank you for your attention. And I thank my colleagues for a great delivery of this complex presentation in time and with a strong team effort. Thank you very much. And back to Renata. Thank you very much, Claus. Dear operator, we can now open the Q and A session. Dear analysts, dear investors, please limit yourself to maximum two questions at a time in order to give your participation also to all other investors and analysts in the queue. Dear operator, I hand over to you. Thank you. We will now begin our question and answer session. You. And we received the first question from Henning Cosman, HSBC. Your line is now open. Yeah. Hi, good afternoon. Thank you for taking the questions. The first is for Matthias, please. And it's just really about the target margin range for the automotive OEM division. I'm going to frame it by saying it's maybe a little bit disappointing for some people just because the 4% to 6% range compares to what we last had as a consensus of 5.7% for 2022 already. So I just really want to understand it a little bit better. I think one way of looking at it would be that if you achieve the bottom end of the target range by 2023, as I believe you're indicating, I think we're talking about €400,000,000 or so adjusted EBIT. You made $490,000,000 in 2019. Revenue is supposed to be higher. You're meant to have savings of between 100,000,000 1 hundred 50 million euros on top. So it sort of implies negative operating leverage. So if you could just help us understand the moving parts in between a little bit. You talked, of course, about new business and mature business. Maybe you can help us understand a little bit the dynamics, margin dynamics of the two businesses, respectively, if that helps maybe regional dynamics, just really to understand that all a little bit better. And the second question, I'll just ask one other one because I appreciate that they're both a little bit long. So maybe the second one for Claus. Rosenfeld, in your very opening remarks, you talked about value creation. And maybe you allow me to sort of ask you about shareholder value creation because in my opinion, you've delivered three super strong quarters this year, not least with best in class cash generation that's again reflected in your outlook that you gave last night. You've now shared the targets through for the next five years. But somehow the market doesn't really seem to be understanding and certainly not rewarding what you're trying to achieve. The shares trading at about five times earnings 2022. So if you allow me, I'd like to ask you what you think the market doesn't get and what you think you can do to help the market understand and reward you more for what you're trying to achieve? Maybe Henning, first of all, you for the two questions. I will take the first one, Matthijs speaking, and then hand over to Claus. Understood your question, respectively, your comment on the other side. I tried to anticipate that a bit when elaborating on Slide number, I guess, it has been 32% if the deck is meanwhile distributed. And we took as a market assumption for our MYP a pessimistic IHS scenario. And this is not the actual IHS scenario as of October, November. By purpose, we took the pessimistic one. And that says the market is not going to be back before 'twenty four or 'twenty five. And if you look into the volumes of 'twenty two or 'twenty three, we have about 80,000,000 cars, if at all. And that we took as a base for our sales line or for our top line we assumed here. And that led us to this 4% to 6%. It rather was the idea to really secure the floor. And answering your question on second half of it, yes, there is upside potential if the market is showing upside potential as well. We said we link the outperformance to the IHS, whatever IHS is saying, the 25% are committed and the four to six percent is related to this pessimistic IHS. What comes better, comes better. But that's too early to say. I guess we should not assume a quick recovery of the market. IHS said there could be a second COVID even shutdown, and that's why we said, let's take that one. And just take the indications we see out there, they are not that far from it. So we said four to six percent is committed on this pessimistic scenario. Now talking about the blended mix, it's a little bit difficult. That's why we said that we'll be kind of seamless blended between the mature and the new business because we expect even a higher order intake that could be even a little bit more required time for a positive contribution of the earnings on the new business. But that's kind of even luxury problem we are in. We actually have really a good track record on the order intake. And at the same time, we did all these restructuring initiatives and all these cost focusing, and that's why we call it a blended 4% to six for this pessimistic market assumption. And with that, I would go to Claus, if the question is answered, Henning. Okay. Let me take the second question. Clearly, Henning, thanks for the opportunity here to answer that. I think you're right, we have had not the full appreciation of what we have achieved in the last twenty four months. I think the reasons are we, as Schaeffler, have probably not done enough to explain to the market after the rough ride also in 'nineteen and 'twenty that this is a high quality company. I think we have always been reduced to an automotive supplier with a super high combustion engine exposure. And there was always a lack of conviction that there is future opportunities. And I hope with our presentation today, we made that clearer. We made clear that this is a high quality company. We made clear that it has not only three distinctive businesses, but also significant synergistic value and that there are significant growth potential and opportunities from the key trends that we described, both in automotive, e mobility, in aftermarket, but also in industrial, where we're clearly on a good track. And that all leads me to the conclusion that we've hopefully now laid the ground also with this financial framework that Claus has predominantly designed for us to unlock consistently more value for you. Maybe I can just follow-up quickly on Matthias. So if we were to apply the actual IHS base case, right, and then say the midpoint of your outperformance assumption, then I still end up with something like negative operating leverage, if I also consider the cost savings that you're trying to achieve by 2023. So I just really would like to understand why you're modeling that. Is it really because of this large share of new business at very, very dilutive margins? Or are you just being extremely cautious in making absolutely sure what you say, whatever scenario, basically, the 4% is a definite flaw? I think, Henning, this is exactly what you said. And I stressed it also when I talked about this, in particular, on automotive, after the bumpy ride in the past and all the changes that are in front of us, the challenging market environment, we want to give you a rock solid floor that we will be able to protect in whatever environment we will see. And that's the purpose of this. And that's also why we feel good about sort of pushing this out today. But please be rest assured, we are determined and Claus spoke about the gross margin as the health indicator of the business. We are determined to overachieve this range, in particular in automotive. And I think the strong foundation that the colleagues have given you here gives us a lot of assurance that this is clearly possible. Thank you very much, both of you. You're welcome. The next question we received is from Victoria Grier from Morgan Stanley. Your line is now open. Good afternoon. Can you hear me okay? Yes. Great. Good, good. Very to firstly to your comments about your the areas that you are that you see as a build opportunity in auto technology. Power electronics is on that list there. What has been the decision to invest in Power Electronics when so far you have not got orders in that area? Could you talk a bit about how much you're investing? And what is the decision point for getting order intake there or not? Is there a point that you would stop investing there? That's the first one on the Power Electronics. Secondly, I wanted to come to the industrial margin range, excuse me, 12% to 14%. That's a level that, that business hasn't done since 2012. You talked in the slides a bit about the manufacturing consolidation that you're doing in that business. Could you give us a bit more detail for how we get to the 12% to 14%? May I suggest that Jochen takes the first question on power electronics, and maybe I'll just say one sentence. We see power electronics as an integral part of the three in-one offering. That's what Jochen explained. But it's not something where we want to compete now in a completely new area solely on Power Electronics. It's part of the integrated approach. And maybe Jochen can answer this, and Stefan will go for the second question for the walk from today to 12% to 14%. Yes. Then I will just add on what Claus was saying. Absolutely correct, yes. We are focusing on powertrain systems. And we see from the market side a demand for fully integrated three in-one system. And that's the reason why we take care about the power electronics. And we are going here in parallel in two directions. The first and the main direction is that we partner with power electronics suppliers. There are strong suppliers out there. And with our successes here in powertrain systems and also our very innovative design, we also see clearly that Schatzler is getting very attractive to power electronic suppliers to cooperate with us. So that's what we are doing mainly. And at the same time, we invest ourselves into building our competence there in this area. We have fully achieved the capability to manage power electronic supplies and to specify it for system integration purposes. And in addition, we are now building the competences for doing own power electronics, but not to a large extent, more as a first step to be robust also looking into the future as part of our system business. And any comments about the magnitude of the investment there? It sounds, I guess, relatively small if that is a bolt on part of the strategy? Relatively small, that's correct. That's part of our R and D budget that was outlined also by Klaus. Stefan, would you take the second part of Victoria's question? Yes, absolutely. Victoria, Stefan Spindler. The EBIT margin, which we saw in 2019, was 10.2%. If we have seen growth as we had assumed initially, we would have been up to something around 8%, taking into account the market development and also the headwinds which we have from FX, from the exchange rate in 2020, we are seeing the setback as we have it today. Assuming that we will get back on the 2019 sales level, plus taking into account the performance measures which we're introducing, we will be back on an 11% EBIT level. If we then take into account, if you remember my first slide, I said that in Europe, we do 46% of our business. But we have the structural situation that we have about 70% of the production capacity in Europe. This is something we want to correct with the structural measures. That means we will build up capacities in the regions close to the customers and we will restructure our European operations. That saves us cost with transportation and with customs. That saves us labor cost and it will increase our margin by a couple of percentage points. And that brings us into the margin range of 12% to 14%. Does that answer your question? Yes. Okay. And hence why we feel the low end of that range is 2023 because there is that consolidation work to be done. Yes. Yes, exactly. Yes. Yes. That's exactly right, Victoria. And maybe I add the structural measures that Stefan just mentioned are part of the measures we announced in September 2020, yes. Right. And the next question received is from Rasha Gommel from Jefferies. Your line is now open. Yes. Good afternoon. Thank you for the presentation and taking the question. The first one would be on value generation again, a bit what Henning asked. Can you quantify the synergies of having industrial and auto under one roof? And given the evaluation, don't you think that a separation of the two will generate more value for the shareholders? That will be the first question. Should I answer the first one or are you coming with the next one? I can answer the first one. I cannot give you a number here that says this is a number of synergies. What I can give you and what I try to give you is the logic for the synergistic potential. If you go back to the slide where I showed also on the left hand side and Industrial on the right hand side, yes, we can try to find calculations and put numbers behind this. But I think there are the obvious examples that I gave benefiting from scale on the one hand, but also from scope on the other hand makes a lot of sense. And if you then think about the on top technology transfer with the example from robotics, I think this is obvious. And I don't look at this as a sum of the parts calculation. I rather look at the underlying fundamental technological competence and how we can drive this forward. Just think again about the sustainability opportunity we have here. So please accept that there is no number, but there's a clear logic why this belongs together and why this is more than just three divisions. I see. And then just one follow-up on that topic. Is the tax situation of your major shareholder, is that a problem for your strategic development in any sense when it comes to M and A or any other development? No. The tax situation of our shareholder happens on tax on his level, but there are holdings in between. And again, we are a listed company that has nothing to do with our strategic direction. Okay. And then my second question would be on capital efficiency. I think you talked a lot about reinvestment rates being lower than in the past, really focusing on the right products and segments and regions. And yet when I look at your guidance, I get roughly to free cash flow in 'twenty three, but it's not so different to the cash flow in 2020. Is that against the conservatism you put into all of the numbers? Or is there anything I'm missing that your cash flow shouldn't be substantially higher in 'twenty three than it was in 2020? Well, maybe can take this, but you clearly need to incorporate in your thinking the restructuring cash out that comes from the €700,000,000 restructuring expenses. But maybe, Claus, you want to highlight the composition of the free cash flow again. I'm happy to. So first of all, before we go to 2023, obviously, 2021 and 2022 will be years where we have payouts for restructuring, quite significant payouts. So that needs to be said specifically in 2021. There will not only the payout of, I would say, EUR300 million for the measures which we communicated in September, but in addition also payout for previously announced restructuring programs of roundabout €120,000,000 So having said that, obviously, in 2023, there will be an improvement in free cash flow. And I mentioned also earlier that we expect also the leverage ratio to come down. Whether that would in 2023 already reach the level of 2019 still remains to be seen. We basically gave you a range for the cash conversion rate. Obviously, our plan is to be in that range. That's what I mentioned, latest in 2023. And if you and therefore, depending where we are in that range, obviously, it will be closer to what we delivered in 2019. So it's I think it's and this is then a consequence of, on the one hand, lower CapEx, which I mentioned as I mentioned earlier. And on the working capital side, we should be in 2023 close to the 2019 level. Thanks. Appreciate the answers. Thank you. The next question we received is from Michael Raab from Kepler Cheuvreux. Now first of all, I appreciate the level of detail you've given us for your midterm strategic and financial targets. That stock valuation is actually about absolute numbers and the reflection of value creation that you target is more or less the same. So as someone who's originated in accounting and controlling, I'm somewhat puzzled as to why you haven't given us sales growth and EBIT margin targets for the group level because I presume based on your corporate planning, you must have a bandwidth internally because that would make it much easier to reconcile your relative conversion ratio targets with the absolute numbers that are needed to do the valuation. And then secondly, perhaps besides explaining why you've created this missing link, can you please elaborate what the hurdle rate is that you benchmark your ROCE against, I. E, the after tax WACC you're using internally to do the calculations for projects as well as capital allocation? Okay. Then let me answer that. First, on the valuation topic. Obviously, I understand that the for valuation purpose, in the end, you need absolute absolute numbers. But on the other hand, what you have to also understand is that there is uncertainty about the growth momentum, specifically also in the automotive technology. Now if you look at IHS numbers from May to October, there was in five months a change of 5% for the next two years, something like that. And from October to November, it went down again. So and therefore, I think it makes sense to give a, for example, outperformance number in order to give you the possibility based on your own scenario of the market development to calculate what kind of absolute top line growth we would expect, right? So that's the one topic. Then you see when we have guided for return on capital employed, which is also based on EBIT, you see that we are making progress there. We are making progress beyond 2019 in return on capital employed. Obviously, if you do make a simulation based on the EBIT margin trends or a target ranges for the group, If you calculate that, you would see that you can calculate the EBIT margin for the group roughly based on certain assumptions. So I did this kind of calculation. I think it's positive, right? If you would have given just absolute numbers, I think it's up for just a change in the targets in a couple of years because you are very dependent then on the cycle in which you are then in. And the other topic was on the return on capital employed hurdle rates. So indeed, we have calculated the WACC. I would say that if you look post tax, you would be at the range of roughly 7.5%. That would need to be then and we would also then adjust that in specific occasions, that is M and A, but also major CapEx, R and D projects, would then adjust that for specific risk that could be country specific risk, that could be business specific risk. We would go also in that differentiation below the divisional level, right, because you heard about mature business, you heard about new business in automotive technology, obviously, that need also to be reflected when your talk graduates. And maybe, Michael, I can add one more thing on the midterm targets. I think you have to see these midterm targets in conjunction with also the guidance, the annual guidance. And I think there, gave you the template that we had at the beginning of the year for 2020 now. We'll give guidance for 'twenty one when the accounts are finalized for the year. And that, in conjunction, I think, is something that you need to then assess. Sure. I mean, don't get me wrong. I mean, I can do the calculations for the group level myself. Obviously, I have to do that every day modeling a company. I'm trying to say basically is that I think it would have been very helpful transferring the overall message with operators and we think goes into the right direction because now with a missing link here, it looks a little bit like the free conversion ratio targets are somewhat wishful thinking. If you argue with uncertainty, my counter question would be why then have you issued concrete guidance for the automotive only business, which obviously is besieged by the highest level of uncertainty. But that's just food for thought. But anyway, thank you very much. I appreciate. And the next question we received is from Horst Feider, Bank of America. Your line is now open. Yes. Good afternoon and thanks for taking my questions too. Mainly they are focused on Automotive Technologies. So I want to understand better your outperformance target and also your operating leverage assumptions. So when we think about this range that you're targeting, the 2% to 5%, and especially from the time frame 'twenty one to 'twenty five, and given the fact that we see a significant increase in electrification and potentially we see also stricter CO2 targets in The U. S. But also in Europe, Is it fair to assume that the outperformance will basically decline then over the years, that it will be initially stronger and will come down then? Or is there a certain pattern we should assume regarding the outperformance? Then the other question that I have is regarding operating leverage. I mean, it was pretty good year to date. I understand you also had some one off cost savings. But what is a good general assumption on operating leverage? And in that context, maybe also you could quantify what level of extra cost savings you had this year will bounce back next year, for example, in SG and A. So I just want to understand how we should model the operating leverage. Should it be rather 25%? Your guidance suggests it should be rather something like, I don't know, 10% or Henning pointed it out, it could be even negative. So I mean regardless of the volume assumption, can you maybe better make us understand this operating leverage factor? Maybe I take the first one, this outperformance, that is a mix of different trends. So and definitely that will continue. First of all, we see in every transmission, we see automation of transmission that increases the content per vehicle even on the mature side. We see more mechatronics on the valve train even on the ICE side. Plus we see the hybrids, plus we see the immobilize. So the content per car definitely will increase. On the flip side of it, we said we factor in a certain price down. We take the gas as well to give up the one or the other not profitable business. So that would be the flip side of it. But all in all, we definitely see continuation of this outperformance and not a decline or stagnation down the road, not the next five years and not the years after. That's why we said two to five is pretty valid, but as well-being a bit selective on the projects, be it the matured ones or the new business ones. And the other one, would hand over to Gloyn, there is One addition to what Matthias just said. I mean, you have a market that rebounds, and this is something that we expect for 'twenty one, then typically your outperformance is not as strong as in a flat market. So you ask how this unfolds, that's also why we have given the 2% to 5% because there could be different situations in how we are coming out of this strange COVID situation. And I think I would like to give you that as a thought, but that's what we have at least seen in the past. When we looked at the historic analysis of what was the outperformance, Matthias, it was obvious in markets that rebound, the outperformance typically a little bit lower than in markets when it's more stable. And don't forget, there's also the Chinese element that plays an important role for outperformance. Maybe with that, I hand over for operating leverage drop through rate for Yes. Well, first of all, when we talk this drop through rates, will refer to drop through rate on a gross margin level. And before I look out into the planning years, let me just say that what you have seen in the third quarter, that is not something that you can extrapolate, right? Because there is a combination of factors which impacted specifically the third quarter, including that we sold out of inventory that we currently have very cheap raw material prices and a great mix from a very, very strong China business. That is something which helped us now in the last quarters, will help us probably also in the fourth quarter. And still there is short term growth benefit, which will not be there. And there has been also some postponements of customer projects, for example, then with regard to building prototypes and things like that. And obviously, low discretionary spending, as you know, from other companies. So therefore, third quarter drop through rate cannot be extrapolated. If I look at the plan, I would say that, in general, I would expect a drop through rate of around about 25% in average, right? But that is then a combination of several things, including also the mix impact, right, which has been explained earlier. So it's not only operating leverage in the sense that you have additional revenue and then basically have a profit because you do not scale up immediately the fixed cost. Also have to then consider the mix impact, and that is not only the mix impact between mature business and new business, but also the regional mix effect. And maybe add to this, Horst. I think we have you have seen us restructure when we need to restructure. I think that flexibility and Claus talked about continuous optimization, continuous restructuring being the cheaper, more efficient version, We are clearly committed to do that. If there is a new situation again and no one expected the COVID crisis, whatever happened next, you can be rest assured that this management team is determined to take this upfront and proactively do the right things. Can I sneak in another follow-up, just yes, more question? Sure. Yes. If now the CO2 targets would get stricter in U. S. And in Europe, would that change your R and D and CapEx assumptions for the next few years? Well, maybe I say something upfront because we had this chancellor summit yesterday. What you hear at the moment coming out of Europe and Parliament is still discussion. There is no final determination what's going to be what it's going to look like. And it's, I think, absolutely clear that things need to be feasible. And you can determine whatever you want. If you can't achieve it, it doesn't bring any value. And therefore, it's clearly premature now to say what happens if we are in a discussion situation. We are very much linked into this discussion from the various sources. Matthias is a member of steering committee at the CLEPR. We follow that very carefully. But now to give you what does that mean, it's definitely premature. What we can tell you is that we are 100% determined to conquer a leadership position in the electrified powertrain. And I hope that came across strongly with what we have been doing and what Jochen has built. We have a superb starting position here, and we will do what it takes here to really harness the opportunities that our customers give us. All right. Very helpful. Thank you. The next question we received is from Christoph Zasgari from Deutsche Bank. I'd like to come back a bit on the AutoE margin and also light of R and D spend. You point towards 2025 absolute R and D flat or relatively down. Do you see the investment need in the time until then actually increasing in the near term? I would guess because of the electrification is accelerating and also you are targeting to enter the hydrogen space, others are fairly advanced in that already, also players in Germany. Do you need to shift the budget potentially that was planned further out more into the near term? And could that weigh on the margins? That's the first question. Pierre, do you want to take that one? No, that's what I tried to show. I guess we really can as Claus said it in his presentation, Johannes Bartz said, we can work with a 6.x R and D quota. We it's rather the question, and that's what Jochen and the team already did, how we can requalify people we already have. It's not that we go from black to white. It's really a seamless transition from products we have. We have already mechatronics in engine, in transmission to requalify those people at the right point of time for Jochen's business. So it's not about completely starting from scratch with new people and new test rigs and all that. Like in factories, we have so many existing capacities, capabilities as well in R and D that we really trust to make it really 6.6%. If things would accelerate, we may see a spike for a while, but actually, we see this seamless handover changeover on the R and D quarter as feasible. And maybe one addition to the hydrogens area. The hydrogen one is, once again, not only auto. It's a holistic joint growth initiative for both divisions. That's, I think, the core of it. And whoever has announced joint ventures and whatsoever, this at the end of the day is about manufacturing excellence for us and industrialization competence. And I think there's no better player than Schaffler to demonstrate that industrialization competence. Thank you. Second question would be on M and A. We didn't touch on that, especially in the Q and A so far. You said there will be smaller bolt ons likely in the next twenty four months in several fields that you have announced. One part of the question would be the leverage target that you've shown, I guess, includes those small bolt ons. And if opportunity would come along for bigger transaction, would you stick to the leverage target? Or would you say it's not the time currently to buy a bigger asset? And among the pillars that you've shown, is there, say, a more pressing pillar that you would want to address? Or are all seven essentially the same? Well, it's a very good question. And let me start first and then Klaus can add to this. Yes, we have articulated this M and A strategy with the seven search fields. And if there is now one priority in the bolt on acquisition space, no, definitely not. We'd like to strengthen the power electronics, as Victoria asked for and Jochen explained, certainly we would. Is there ample opportunity to grow our industrial business and rebalance the portfolio a bit more? Absolutely. But we are not here today to talk about a transaction that is not ready to be announced. So on anything that is bigger that I would not, in principle, exclude, it's a function of the right situation, a convincing case, clearly disciplined in terms of execution. And therefore, I think you need to wait until we are ready with something like this. For the time being, we'll pursue our rearticulated M and A strategy. Maybe Klaus can add on the financial part of that. Yes. First of all, to your question, smaller bolt on acquisitions would be included in the range for the leverage parameter. And in case of a sizable M and A opportunity, we might also consider stretching the corridor in the interim, especially if we expect to get back to our defined leverage corridor in a reasonable timeframe. Obviously, that depends on the purchase price in combination with the expected profitability. And obviously, we would look at our M and A criteria, which I have explained. The next question we received is from Akshat Kaka from JPMorgan. Akshat from JPMorgan. I'll keep them to two. The first one is on the hydrogen opportunity. I'm basically trying to understand two things. First is capital allocation. Is it possible to quantify how much money have you already spent in the field of bipolar plates and fuel cell stacks? And how do you think about capital allocation in the coming few years? And the second part of it is basically the market potential and addressable areas. You do talk about the 240,000 trucks and buses by 02/1930. So we've seen a lot of suppliers talking about the market potential on a complete system basis. But in a lot of cases, we might end up supplying components only because what we're hearing from truck OEMs like Volvo Daimler, Trayton and PACCAR is that they want to do it in house. So very interested in your view on this opportunity. That's the first one. And the second one, a quick one on aftermarket. Is it possible to quantify the higher investments and costs that we should be mindful of, specifically in EPC? And when you reach the desired scale for this business, do you expect to get back to the 17% to 18% margin range for aftermarket? Let me start with hydrogen. And once again, I would like to emphasize that hydrogen is not only fuel cell. Let's give you just an idea of what the market potential of the electrolyzer size is. We showed you on the page in my presentation with the two hydrogen examples, a market potential for globally installed power of electrolyzers in 2,030 of 150 gigawatts. That 150 gigawatts, Stefan, probably equals to a value or sales of €30,000,000,000 across all technologies. It would include ALKALI electrolyzers and it would include also PAM electrolyzers. If we it would also include deployments. So if we exclude the deployment, we have probably two thirds of this, 20,000,000. If we then say what's in it for us and we just focus on the pen technology, that's probably 50% of this, then the overall sales in 02/1930 at a gigawatt level that's in the range in the middle of the range of what Stefan showed is somewhere around €10,000,000,000 I'll leave it to you to now determine what the market share of the Schaffler could be in this, But it would definitely be a significant opportunity and a significant addressable market. That's the electrolyzer side. On the fuel cell, don't reduce this to trucks only. There is fuel cell for other applications. There may be even fuel cell for cars. There is a single component, but up to the system. There is the ancillary business that comes with this. For example, think about certain bearing solutions. Think not only about the bipolar plate, the gas diffusion layer. So this is a broader field that is, as far as the plan is concerned, not really taking off in the planning period. It's taking off in the years thereafter. We're talking about something beyond the planning period, 'twenty five to 02/1930. It's about the future value of the company. You rightfully asked about capital allocation. Yes, we have spent maybe in the two digit million numbers here. And this is not only investments, also cost. We'll continue to do this. These smaller investments, the buildup of teams and all of this, this is definitely in the plan. But the real capital allocation will come in the planning period going forward, reaching out to 02/1930 when all of this is ramped up and then when the industrialization really kicks in. Is that okay on the does someone want to add from Stefan or Jochen Matthias on the fuel cell electrolyzer side? No, you're happy? Perfectly answered. Okay. Then Michael, on aftermarket, please. Is that okay for you, Ashton? Yes. Thank you. You're welcome. So Ashton, if I understood your question correctly. Number one, EPC, obviously, is a major investment, but that not only serves for the Chinese market where we have established it, China is going to serve as a pilot to help us understand better the rationale of creating digital platforms for all the markets. So the investments had an upfront investment that has already been in the numbers of the current years. We will not increase the investment rates there. But when it then comes to the question of the EBIT margin going forward, it is fair to say, in general, there is a margin pressure in the existing business in general by the consolidation of the customer base. Ramping up new business model, ETC is the best example there with a different will help us to generate margin. But we also have to understand that ETC is serving into a different business model, which means that in that business model, we are more comparable to other trading activities other than the manufacturing and distribution of parts as such. So with that, we do not think that we come back to the historical numbers, but the initiatives help us to defend the margin level that we offer to you. Understood. Thank you. The next question we received is from Sabrina Reeves from UBS. Your line is now open. Hi, gentlemen, and thanks for taking my questions. I just have two, I think, a follow-up ones. We spoke about the outperformance a bit already on the auto side and what that's driven by. But in the past, you've given us on slides, you've given us some idea of what you think what your content per car will be for ICE cars and also for the e mobility, so for the EVs and for the hybrids. Could you maybe give us or shed some light if that is unchanged, your assumptions? Or if you have a bit of a different picture on that? That would be my first one. And the second one, I don't know if you answered it already because I had some technical issues earlier. So if you already have, sorry for repeating the question. But could you shed some light on how much of the CapEx you intend to spend for the legacy business and how much for the new businesses? Can you give a rough split? Is it more a 60 to 40 split? Or is it more a 70 to 30 split? That would be helpful. Thank you. Maybe first about the content per car, I guess, Renata, we didn't talk about that today because while clustering this business here in the mature and in the new, we said, well, on the mature, we can talk about content per car because that is, yes, as the name is saying, it's a mature situation, it's a stable situation, And there, we trust you all about content per car. With this new business, I guess, are a lot of overpromises in the market on that content, and we purposely said we don't want to participate these. We want to focus on acquiring interesting and challenging orders. We want to build the know how there and by that outperform the market. This is why we purposely didn't talk about the content per car, and we still think it's reasonable. And on top comes that this is this seamless transition from the one to the other business or close. Adeel, let's stress this point that you made with Jochen together on the order intake. I think the message here is the EUR 2,000,000,000 to 3,000,000,000 instead of a lower number in the previous years that we will go for. And that's the right way to look at this. Order intake counts together with the Corporate Health indicator gross profit margin. That's how we look at this at the moment. And any artificial content per vehicle calculation that may be sexy in terms of presenting it, we said it's not the right way. It's the order intake, margin in conjunction with the delivery of the business and the quality of the business. Maybe second half or second question of you about the CapEx quota, that's a little difficult to answer because actually we are invested on the mature side for about 90,000,000 vehicles per annum, and we see this year 75,000,000 or 73,000,000 So there is CapEx on the mature side available. There is CapEx on the mature side going out of depreciation midterm, mid time. So now to give you a quota, it's difficult. We will invest what we have to on the new business. We said there is a reinvestment rate agreed with Klaus Bartzak and the team of higher than one. That's what we indicated, and we will be less than one on the mature side. That's the corridor, Klaus, actually we'll be talking about. And maybe to add on what Matthias just said, also in this transition and the smooth transition for the new business in e mobility, we are using a lot of existing machinery that we have and that we just take from mature to new business. This is possible because of our vertical integration. So we can use a stamping machinery or other equipment directly for new products like the e motor. And therefore, it is not all about new investment, it's also about reusing things that we have already in our production plants today. So we have no So I hand back to the speakers for closing remarks. Well, then we are on time, 03:30. I would like to thank all of you for listening to us, for supporting us in this meeting with all your questions. We have, as you know, virtually roadshows, both in Germany, in The United Kingdom and in The U. S, together with the banks that support us. We look forward to further explaining our Roadmap 25 to you in these roadshows, but also IR. We all are available for further comments and questions whenever you need. Once again, thank you very much for your interest, for your questions and for your support going forward. Vanessa, you want to say a final word? Absolutely. Thank you, Claus. Thank you very much to all participants for your time today. You have the slides on the website. The replay of the entire event is scheduled for tomorrow afternoon, so in twenty four hours. Next week, you will get the customary booklet where the slides are plotted against the transcript to the famous commented slides. As Claus just mentioned, we have three year old shows scheduled with Mr. Rosofred and Doctor. Fastrat in the coming days. And for sure, the next QMD will be November 2023 to track our progress towards all these targets. But in the meantime, not only November and December, also next year, there will be more road shows in the virtual or as we hope, in person. Until then, goodbye and stay healthy. Goodbye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.

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