Good day and welcome to the Cargotec Corporation Financial Statements Review 2015 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Paula Liimatta. Please go ahead, madam.
Thank you. Good morning, ladies and gentlemen, and welcome to Cargotec's Financial Statements Review 2015 presentation. My name is Paula Liimatta, and I'm Head of Investor Relations. Today, we have a live audience here in Helsinki, as well as people on the phone lines. We will start with a presentation by our President and CEO, Mika Vehviläinen, and CFO, Eeva Sipilä. After that, we will begin a Q&A session. Mika, please.
Thank you, Paula. Ladies and gentlemen, good morning. 2015 was a very good year for Cargotec. It was also a watershed year and brought end to the phase 1 of our transformation to become the leader in intelligent cargo handling. 2015 gives us a strong base to build our strategy and execution for 2016 and beyond. If I look specifically at the highlights of 2015, the market situation for Kalmar and Hiab remained healthy, especially in USA, but very challenging for the MacGregor, especially, or actually in both in merchant as well as in offshore industries. I come back to the market situation a little bit more in detail slightly later in the presentation.
I'm very pleased with our development in earnings per share that doubled from EUR 1.11 to EUR 2.21 in 2015. Our order books decreased by roughly 10% to EUR 2.064 billion. This was entirely due to the MacGregor order development due to the market situation, and we had a good progress, and order book was stronger, both in Hiab and Kalmar at the end of 2015 than it was in the end of 2014. Our sales grew in all three business areas, all together by 11 percentage points, and our revenue ended up being EUR 3.729 billion.
Our operating profit had a very satisfactory development throughout the year and ended up at EUR 230.7 million versus last year's EUR 149.3 million at the 6.2% of our sales compared to 4.4% last year. Including the restructuring cost, operating profit was EUR 213.1 million. I'm also very satisfied with our cash flow. It was very strong from our operations, ending up at EUR 314.6 million compared to EUR 204 million last year. That actually brought the gearing below even our own expectations at the 46.4% of our, sorry, gearing.
We also launched at the end of the year the new strategy aiming to become the leader in intelligent cargo handling. I come back to this one briefly during my presentation. Whereas 2015 altogether was a very satisfying year for Cargotec, we were not entirely pleased with the progress during the Q4. This was especially true with the MacGregor results coming from the EUR 11 million settlement and some of the one-off type of indirect costs that Eeva will elaborate more in detail during her presentation. The good profit development continued both in Kalmar and Hiab during the Q4. The results improved year-on-year. However, MacGregor profit was obviously below our expectations as well.
This was really primarily burdened by the EUR 11 million settlement cost that we had announced earlier, as well as the sort of, single high million of number of different indirect costs that were one-off in character. Orders totaled at EUR 824 million. This was down from the quarter a year ago. This was entirely due to MacGregor, their orders declined quite strongly. Both Hiab and Kalmar actually had a good order intake also in the two-Q4. Sales were roughly at the last year's level. Operating profit was burdened again by the development in MacGregor. Whereas the operating profit at Kalmar and Hiab improved from one year ago. The Q4 operating profit was at EUR 52.1 million, down from the same quarter last year.
Cash flow was very strong from operations at EUR 87.3 million. Also in Q4, this was primarily due to the good collection we had from all of our operations. If I look at briefly at the market environment in 2015, the demand for container handling equipment and services in the ports, as well as the interest for automation solutions remained at the very high and active level throughout 2015. The actual growth in the container flows was very modest, roughly at 1 percentage point throughout the year.
However, as we have discussed already earlier, the driver at the moment for port investment is not coming directly from the increase in container flows, but from the expansion of the Suez Canal and Panama Canal, the new arriving larger container vessels, and an increasing interest in automation to drive efficiency and safety and sustainability. Also, in Kalmar, in industrial side, the demand and activity remained at the high level, especially in the USA. In Hiab also, the US market was very strong throughout 2015, and healthy in Europe, where we, of course, saw very high variations between the countries. For example, UK having a very strong demand throughout 2015. We started to see the demand recovering in Southern Europe throughout the year as well.
The marine cargo handling equipment overall was weak. The bright spots were clearly the cargo handling equipment for the larger mega vessels that remained strong also in the second half as well. The demand for cargo handling solutions for bulk carriers and offshore vessels was at the very low level, especially towards the end of the year. We also saw demand for Ro-Ro and some specialty vessels related cargo handling equipment being in a healthy level, obviously that's a smaller segment compared to the overall bulk carrier market in the industry. With that one, few words of the overall numbers we have gone those through already. Maybe I just want to point out one number here, which is the net debt that was brought down to EUR 622 million.
Again, as I said, gearing was very satisfactory at roughly at 46%. As well with that one, I'd like to hand over to Eeva, who will go through the results of the different business areas.
Thank you, Mika. Good morning to everyone on my behalf as well. I'll start with commenting the business area specific numbers and starting with Kalmar. Order intake of EUR 395 million in the quarter. As we indicated after the third quarter, we weren't really expecting any bigger orders to materialize in the quarter, and that ended up being the reality as well. We're obviously satisfied with the roughly EUR 400 million of base business number, which gives us a good, healthy order book going into 2016. Maybe one comment at this point already on the 2016 and the order book.
It's good to note that the delivery timings of that order book are such that we will actually have rather low first quarter sales down from a year ago. Then the volumes will then pick up in the coming quarters. Sales growth of 4% year-over-year to EUR 468 million. A clearly good delivery quarter, very, so a good speed on that and a similar sort of push as a year back. Profitability for the year of 7.8% was obviously as Mika Vehviläinen already mentioned, good development and progress.
Looking at the quarter 7.7, it does pale a bit in the comparison with the third quarter, partly due to the fact that it is a tough comparison. We had a very, very good mix in the third quarter and then somewhat lower quality mix in the fourth quarter. However, and also an additional point to note is that whilst we've been talking about the importance of our R&D spending in Kalmar and our intention to continue to invest in software and automation. The R&D spending between quarters is not necessarily linear, and we actually had EUR 4 million more of R&D cost in the fourth quarter than we had in the previous quarters of the year.
That obviously had an impact on the margin. However, it is something that we're looking forward to sort of seeing a payback then in the coming years of that investment. Going into this year, we do expect R&D to slightly continue to go still up, but there this sort of quarterly variation is something that is difficult to sort of predict well in advance. As said, sort of good close for the year and a good start for 2016. Moving into Hiab, we're very happy with seeing the order growth of 8%, so EUR 250 million for the quarter.
Again, here we have a better order book situation than we had a year ago starting 2016. We had sales growth of 18%, so also a very good delivery quarter in Hiab. And we're very sort of satisfied with the 12.3% margin for the quarter. 10.8% is a very good progress for the full year. But certainly the sort of fourth quarter was then the highlight of the year. We look forward to further developing this business now in 2016 and 2017. Moving then into MacGregor. Obviously the 41% order intake decline says it all about the market.
It is a very challenging market, both in merchant and offshore. Our order book is down to EUR 883 million now at the end of last year, that obviously means that our sales will be clearly down from the EUR 1.1 billion when what comes to 2016. This is something we already discussed in the capital markets day two months ago. Just to sort of remind you once again of that. Sales, EUR 259 million in the quarter, still sort of coming, starting obviously to come down, but still sort of quite high deliveries.
As said, that number will now continue to come down. We're certainly not happy with the profitability. A negative number is not acceptable. We have the EUR 11 million pre-announced settlement cost in the number included. Additionally, so they're clearly high indirect costs, and sort of not good absorption levels either. We're happy with the gross margin that is stable, but as said, it's, we know what we need to do in order to address what comes after that restructuring measures taken last year are now in full effect since first of January.
We're confident that this number will be better. Obviously it will, this business area will continue to sort of be a challenge for us in 2016. One of the highlights for 2015 is absolutely the cash flow, especially that we were able to sort of have a very solid cash conversion throughout the year in every quarter, and have a clear visible improvement on what comes to accounts receivable and inventories at the year-end balance sheet. As was already mentioned also, obviously this helped ensure that our gearing came well below our 50% target.
We're now in that sense also sort of ready to do sort of develop the company further in line with the strategy announced some months ago. Looking at the geographical mix in sales, no really big changes on the group level at the numbers. Still sort of continue to increase in Asia Pacific and Americas, whereas Europe and Middle East and Africa were a few percentages point down. This is now still partly reflecting the high sort of sales in MacGregor. The share of Asia Pacific will come down as the share of MacGregor in the Cargotec portfolio will come down in 2016.
The business area specific geographical spreads we've tended to publish at this point to give you a sort of real indication of the changes within the business areas that are clearly obviously reflecting the strong market we've seen in the US and in both Hiab and Kalmar. Earnings per share, as our CEO already mentioned, a doubling of the earnings per share, so EUR 2.21. Pleased with that and that then is also enabled the board to significantly increase the dividend. The 36% payout ratio is reflective of the plans we have as a company to develop the business further now.
Also invest in the business going forward. Looking at the key metrics from our financial targets, so return on capital and operating profit margin. We're obviously delighted on being able to clearly demonstrate the turnaround being behind us and completed now in the past two years. We look forward to continuing to improve these metrics in a line with the new financial, new financial targets. With that, Mika, it's back to you.
Thank you, Eeva. I also want to take this opportunity to kind of, put a closure on the Must-Win Battles that we had announced for the 2015 and reflect how we did in there. Overall I would say that we are very pleased, on the progress we have made in all five of our Must-Win Battle areas. If I go through them quickly, one by one, obviously the Hiab results speak to themselves, so we are very happy with the, having now clearly the best-in-class profitability and especially clearly better capital return than any of our peers in the industry. This gives a very solid foundation for Hiab further strategy to start to look for growth now.
Obviously, we are not satisfied with the MacGregor result level, if I look at underneath that one and the progress we made in the profit improvement programs, that will actually start to yield results in 2016. Forward, I'm very pleased with the progress we are making there. In terms of the services efficiency, very clear progress and improvement in profitability and revenue in 2015. Obviously the mix will further improve due to decline in equipment business in 2016. The efficiency efforts that we have announced earlier will bear fruit in 2016, and our cost level, fixed cost level will be clearly lower than it was in 2015. Our cross-selling initiatives and design-to-cost initiatives will also start to bear fruit in the years moving ahead.
Also extremely pleased with the, our, progress in our mobile equipment, which is the single largest business segment within the Kalmar. We were able to safeguard our market leading position and our market share remained stable whilst we were able to improve the margins and profitability of the business. Also in services, good progress. All three business areas were able to grow their services business in 2015 and improve the profitability and also laid foundations through the different programs for further improvements in 2016. In automation, we were very pleased to have a number of expansion orders for our existing customers from TraPac in Los Angeles, and London Gateway in U.K. and two of the Australian ports that show customers' confidence, I think overall into automated solutions and then confidence for Kalmar as a delivery partner for those projects.
The interest for the automation project is at the high level, and we have a number of active cases going on. However, we do not expect any larger automation orders to land, at least in Q1 as generally, these projects are very long-term and move at their own pace. If I look at the strategy, the overall 2015 and progress in the Must-Win Battles has created a good foundation for us, and we are well-positioned now to become the leader in intelligent cargo handling. If I look at overall the logistics industries, there are clearly the digitalization and the further customer need for much improved efficiency, safety and sustainability will drive the need. It will drive need for further intelligence and software in the solutions, and it will drive need for further services to improve customer efficiency.
Excuse me. As we have announced, our target is to have 40% of our revenue in software and services by 2020. Our execution capabilities, shown by the profit improvement programs are in place, we are looking forward to be able to execute the strategy now. We will be investing into leadership position. For example, if you look at our R&D costs from 2014 to 2015, we increased our R&D expenditure by roughly 24%. We keep on investing to ensure the leadership position in the changing industry and competitive landscape as well. We are shaping our portfolio to drive growth and shareholder value.
One example of that one is the INTERSCHALT acquisition that we announced in January that will further enhance our MacGregor service offering and makes Cargotec also the leader in software for cargo storage and cargo planning in the shipping side as well. The Must-Win Battles that are supporting that strategy for 2016 is to further build a world-class service offering. We believe that services offering, services revenue and services profitability will drive improvements and move the needle in Cargotec progress very much in the next few years. We invest further in the digitalization through various programs and projects and capabilities, and we are further enhancing our world-class leadership and build even better performance culture for Cargotec. The long-term financial targets we announced in our capital market day end of the year in London are still very much, of course, in force.
We expect all of our business areas to provide 10% operating margin over the cycle and grow faster than the markets. On the group level, our gearing target remains below 50%, and I'm very pleased with the progress we made with cash flow in 2015. We expect our return on capital employed to be 15% or above over the cycle. Our dividend policy remains 30%-50%. We want to ensure steady good, dividend improvements for our shareholders over the years. If I look at then outlook for 2016 in terms of the revenue, we expect the revenues to remain roughly at the same level as 2015 or slightly below. This is obviously entirely driven by the MacGregor market situation.
You have seen the decline in the MacGregor order book, so we expect MacGregor revenues obviously come down, but that will be compensated by the improvement and the growth both in Hiab as well as in Kalmar businesses, which is of course evidenced by the improvement in our order book in both businesses. This will obviously then have an impact positively into our mix. Actually we expect the Hiab to be a larger business than MacGregor in 2016. We expect further improvements in our operating profit in 2016 over the 2015. If you look at overall our sort of results expectations for 2015, there are a number of drivers. We are further investing into R&D. We will be investing into different programs and projects to improve our capabilities in digitalization and services.
We are investing into our platforms and systems to drive even better performance. At the same time, as I said, the mix will be improving and the profit improvement programs in all three business areas will be driving further profit improvements in those business areas. With that one, I'd like to conclude the presentation and hand over to Paula for questions and answers.
Thank you, Mika and Eeva. As Mika said, we are now ready for your questions. Let's start with the questions here in Helsinki and then continue with those on the conference call participants. Here in Helsinki, please wait for a microphone and state your name and company to benefit the conference call listeners.
Manu Rimpelä from Nordea Markets. First question would be on MacGregor. I think you at the capital markets there you said that you expect improvement in the EBIT margin in 2016. I would like to see understand if you still believe that is the case and also if should we use the kind of 5% in MacGregor in 2014 margin as the base or the new 2015 margin, which obviously is quite a bit lower with the Q4 results. Also on MacGregor sales outlook, I think you said that you had 80% of the sales in the book for 2016. Can you just give us an understanding how the order book, how much of that will be delivered in 2016?
How do you see the kind of orders that you expect to book during 2016 to come into the sales for this year?
Right. If I started on MacGregor margin, first of all, we expect that to improve from 2015, as we stated before. The number of factors, as I already talked about the profit improvement programs in terms of the efficiency drive. We expect, if I now remember correctly, the fixed cost in MacGregor to be roughly EUR 9 million-EUR 10 million below the 2015 level. We expect improvements in terms of our services. Obviously, the mix within the business will improve significantly where the services are growing and equipment businesses is then declining and the other programs also starting to yield results. In terms of the revenue and the order book, yeah, about 80% of the revenue is in the order book at the moment.
Obviously the services will be a significant contribution for the revenue in 2016 as well. When I look at the order book margin, that's roughly at the same level as it was in 2015. As well, obviously there are risks related to cancellation. But then again we are expecting some of the new business still to be arriving there. I would say in that sense that order book outlook is fairly balanced.
Okay. A follow-up, looking one year ahead into 2017 in this business, where do you see if you look at the latest GPR orders for the last three, four months? They've taken another step down from levels where it almost feels like there's no more way to come down. How much do you have in the book for 2017 at the moment? Is it that kind of 20% of the order book is delivered in 2017?
Yeah. If you take 80% of the order book, in there, that's about 20%. If I look at 2017, for the merchant side, 2017 and 2018 are still very high delivery years for the large container vessels. Actually, the 2016 delivery levels for the container, large container levels are relatively low. The peak delivery years for the sort of 20,000 TEU ships could be in 2017 and 2018, and that will drive the, I think the orders as well as the revenues in the merchant side for us in the coming two years. Obviously, I still expect the bulk market to remain at the low level, even in 2017.
For offshore side, you know, your good guess is almost as good as mine because that really depends very much on the oil price. You can also see, many of the experts commenting on the fact that the people expect 2017 investments to recover from 2016 purely by just if you want to even kind of maintain the current production levels, you need to start to invest back into the offshore environment as well.
Okay. Final question, just on a broad group level, we should expect that the two other divisions excluding MacGregor, you believe that they can still improve the margins from the at least in Hiab in a relatively high level at the moment?
We still expect the improvements in all business areas.
Pekka Spolander from Pohjola Bank. First about Hiab, could you talk about the forex exchange effect on the fourth quarter result?
Yeah. The benefit from in a transaction format was around EUR 5 million in the fourth quarter. We hit very close to the sort of EUR 10 million for the full year 2015 effect as we discussed already some months ago, so.
If the currency exchange rates will remain at the current level, what can we expect for 2016 in Hiab?
Well, I think this what we've seen is a relatively balanced now currency rate of around 1.10 roughly plus minus now for many months. We're not necessarily expecting if that doesn't change, we're not expecting any further improvement, but no further sort of negative impact either. Again, currencies are very difficult to estimate. If you remember, our hedging is roughly four to six months, so that there's no change in those dynamics.
2015, the first two quarters we had some hedging effect still on that one. Obviously it's not coming through anymore in the first two quarters of 2016.
About MacGregor service business. In fourth quarter, the service sales somewhat declined year-over-year. Is anything special or normal variation between the quarters?
Sorry, I didn't-
The MacGregor service sales, they were down in fourth quarter compared to the previous year.
Nothing specific. It's a sort of timing of some of the larger services and maintenance deals.
Thank you.
Okay. Operator, we can now start with the questions from conference call participants.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We take our first question from Antti Suttelin with Danske Bank.
Thank you and hello. You know, Kalmar, you say that your business is not at all driven by, you know, container handling. It's all about the new ships and automation. I would like to know, however, that if we look at your order intake in 2015, EUR 1.8 billion, how much of this was because of ports expanding their capacities?
Thank you and good morning, Antti. First of all, we are not saying that it's not at all driven by. Obviously, in the long term, these things tend to correlate closer. What we are saying that what we are seeing right now in terms of activity is more related to the port expansions driven by the changes in the traffic flows, which are then driven by the changes in the Panama Canal and Suez Canal especially. Secondly, by the expansion of the infrastructure to provide for the larger ships. Thirdly, on the automation. Then obviously also the replacement sales are a big driver for us, especially in the mobile equipment side.
There clearly there has been underinvestments after the financial crisis, and that's now coming through in our revenues, both in U.S. as, as in Europe as well. It's very hard to put a specific number on that one. Eeva, I don't know if you would have a guess on that one?
Yeah, we sort of, we tend to have a sort of average of 20% to 30% coming from. It can be both brownfield and greenfield, but kind of expansionary investments. I wouldn't sort of assume that in the last year was very different from that sort of longer term trend.
Would you expect that the slowdown in container throughput is not having any impact on order intake for Kalmar?
Well, obviously, it's very clear that if our customer business is slowing down, then, it has a long-term risks and concerns for us. The container flow, growth rates are expected to pick up again in 2016 from 2015, more than double in terms of the growth rate. I'm a bit more optimistic about that one. It's obviously a concern that we need to follow through, but we have no indications. If I actually look at the sort of prospect list and the sales funnel in Kalmar, it's been continuously growing throughout 2015. It looks quite strong at the moment.
Okay. Then on Hiab, you are really now the best in class. Do you think you can still improve the margin from 2015 level?
I would say so that the focus now from Hiab is shifting partly from the margin expansion more towards gearing for growth as well. We are looking at the obviously growing the markets. We are looking at the number of different expansions potentially into developing markets, et cetera. The profit improvement is probably coming more through the increasing revenues and then absolute profits rather than the margin expansions anymore.
Okay. Then, then finally on MacGregor, one-third of order intake in 2015 was offshore, if I understand correctly. Would you expect, I mean, it seems to me that, you did really didn't yet have the full hit from low offshore contracting in 2015. Should this part of order intake continue to weaken in 2016 as you see it?
Very good question. The difference, of course, to some of the other companies operating offshore environment is that our products are primarily used in the production phase. Obviously the production still continues in there. That partly explains why we still see order intake. We still see a number of actually potential contracts. We see also expansion of the offshore technology into some of the new areas, such as wind farms and some of the technologies used in research vessels and others that will partly compensate there on that one. My own guess would be that 2016 be relatively slow year in offshore. There are some indications due to the just, as I said, maintaining the product service, et cetera, that we might see some recovery in 2017.
Of course, the oil price is a big driver there, and that's very hard to predict at this stage.
Okay. That's all from me. Thank you.
Thank you. We take the next question from Paul Kepler.
Good morning. Could you just explain, in more detail the change in mix at Kalmar in Q4 and where exactly you saw the deterioration in margin there compared to Q3, please?
Thank you for the question. Well, first of all, I think we still had an improvement in margin year-on-year rather than a deterioration. Clearly, as Eeva was already saying, below the Q3 levels. The different businesses and products in Kalmar have quite significant differences in profitability and margin, and that explains partly on that one. I would say the two sort of revenue streams that they're particularly high in the Q4, one was the logistics industry in U.S. with the so-called terminal tractor products, which are fairly simple products. It's a profitable business for us, but the margins are tighter in there. It's a relatively low-cost product, that had a very strong revenue stream in Q4.
The other area that we actually did quite a bit of business in China, in the mobile equipment side on that one, and the price competition around that area in Q4 was quite tough. We did very well in terms of actually taking market share and maintaining our position in there, but that had a certain impact into the margins in Q4 as well. Those were probably the two would I would kind of single out. Anything else, Eva, to add?
No. No, I think those would be the sort of ones to note. As said, then the third quarter was a very tough comparison.
Then, of course, on the fixed cost side, the increase in R&D cost is coming through, and then there is this Finnish peculiarity in terms of how do you book fixed cost due to the holiday costing between the Q3 and Q4, and that together with the somewhat increasing R&D cost over those quarters had an impact on the fixed cost side.
Okay. Thank you. Just looking ahead, looking at Kalmar still and automation. Firstly, did you have any new orders for expansion of new projects in 2015 or was it just expanding or doing phase two of for current customers? Then looking ahead to 2016, you mentioned that you don't expect any automation orders in Q1, but you have a number of active discussions. Can you just give some more sense of how you expect these to materialize throughout 2016?
We had one new customer in 2015, the ICT in Australia. We had a number of repeat orders from our existing customers. I view the repeat orders actually to be very positive because they kind of confirmed customers' experience with the automation and showed they are moving the right direction. Obviously it confirms our delivery capabilities towards them as well. Another important breakthrough related to automation for us was the announced deal with the Navis in the HHLA. HHLA being the large German port operator, there they're actually replacing their current own IT and operating system infrastructure with the Navis system. This is a big breakthrough for us where we actually start to.
I think you see the industry trend that we have seen in other industries, where the in-house applications and systems will be replaced gradually by off-the-shelf commercial software. That's an important sort of opportunity for us as well in the Navis side moving forward. There are a number of active cases, partly related to further expansion of our existing customers, partly for the new customers in 2016. Overall, if I look at the number of interested ports, we talk about sort of I think we gave the number in the Capital Market Day of 87, if I remember correctly, of the active ports looking at automation.
There are a number of active cases where we are engaging already on commercial and technical discussions, but these tend to take time, and then we do not actually expect any of these deals to land yet in Q1, but potentially already in the Q2 in 2016.
Okay. Thank you. Then finally, one last question if I may. Are you seeing any demand for port infrastructure renewal in Latin America or Africa, given the bigger container ships that were on the East-West route that are now moving on to the North-South route as the very large super container ships come on market?
If you look at the areas around the Panama Canal, Panama itself, Colombia, et cetera, we do see demand impacting from the Panama Canal expansion. Of course, the further south you move, the less impact. I would say sort of, and you move towards Brazil and south from there and the market is fairly quiet at this stage. Africa, yes, I think long-term potential obviously move from a very small base in there. The challenge in Africa is not necessarily so much related to the port infrastructure, but actually the infrastructure beyond the ports in terms of actually capability to deliver the freight onward from there.
Okay. Thank you.
Thank you. With this, I would like to turn the call back over for any additional or closing remarks.
Thank you, operator. Do we have any further questions? Okay.
Yes, one small technical issue. Very low tax rate in fourth quarter. What is the behind that?
Yeah. We're happy on the level as such. It's very much coming from the sort of turnaround phase, dependent on where we make profit, and then we've been able to now with the profit improvement in the business also make profit in the right countries from the sense that we're able to use previous previous losses against and overall that balance helps. Maybe a bit better than sort of what you should expect for 201 6.
Thank you.
Okay. If there are no further questions either here in Helsinki or from the conference call participants, we are ready to conclude this session. I would like to thank you all for your attention today. Thank you.
Thank you. This will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.