Earnings Call: H1 2018

Nov 21, 2017

Good day, and welcome to the Johnson Matty Half Year Results Conference Call. Today's conference is being recorded and time, I would like to turn the conference over to Robert McLeod, CEO. Please go ahead, sir. Thank you very much, and good morning, everybody. And, welcome to our conference call. I hope you had a chance to aid with our press release that we put out 7 o'clock this morning and watch our video, at 8 o'clock, presentation video that we put out today's clock. This is your time. It's your time to ask answer questions. I'm joined here by, the leadership team. So Anna John Jane and Alan. And so we're very happy to take any questions that you may have. So over to you. Thank you. Star 2. First question comes from Andrew Scott of UBS. Please go ahead. Morning, Robert. Good morning. A couple of questions from me. Number 1, I just wonder if we can go back to the licensing and 1st fill business in catalysts, slightly surprised to see that's still deteriorating. I don't know why I think I had the impression that the license income was now sort of flattening out. So And just sort of expand upon what you're seeing in both license and 1st fill and how much of each was in that minus minus 19. Second question is on Finechems. I've seen you reiterate the longer term target and the high 20% margin target from 1920, but how about next year? What are your thoughts as we look out over the next 18 months rather than the longer term? Thank you. Okay. Thanks, Andrew. So I will go first and answer the health question and then, Jane will answer the question on position that resources. So looking to help, we've said in the statement that we expect first half of this sorry, second half this year, sorry, the second half to be broadly in line with last, not second half, the whole year to be broadly in line with last year. Next year, as Ana said, and we said at the Capital Markets Day, we expect to see a modest decline in profitability. As the some of the legacy products, come off, off their, you know, off their high area and then before the new products come in place. So a modest decline next year, but we should be, for the full year of this year, broadly in line with last year. Is that clear? Okay. So, on the licensing for Phil, question, then basically, yes, I mean, of course, there has been a duration and the licensing businesses we've discussed in the in the Capital Markets Day and so on. And I guess this year, we're seeing the bottom of that. And so that's why it's lower again in that first half. I hope that you also notice that the refill catalyst, he's doing rather well and have picked up in terms of the the business there, which is also consistent with the message that we gave. Actually saw a double digit growth in the revenue terms. So I think it's consistent with the trends for cable, unfortunately, so, you know, it hasn't we're at the bottom of that license that we curve now and pumping along. Thanks, Andrew. The next question comes from Andrew Benson of CG. Please go ahead. Yes, thanks very much. Just on the, on the tech forward and Andrew's other question, but when do you anticipate or is there any sign on the horizon that that license income may, that may improve? If I could, I'll I'll ask a few if I may. Can you just give a shape for how you see the outlook for heavy duty in Asia or ATNX whatever it was, growth looks an enormous number. And secondly, net working capital, can you, Can you give us a view of where you think you'd be in the in the full year, particularly for the event that you control as well on PGMs? On the ELNO, are you going to make a patent filing? So I think that there's just one clarity on your, if you like your IP position there, I'll leave it there. Okay, Andrew. Thanks very much for those questions. And, I think uniquely, allowed me to pass it out to all my colleagues and not ask me one direction, which I think was fine. Very, very kind of you. Thank you. So I'll just go in the order that we you asked the question. So I'll start with, Jane, if I may, on licensing. Okay. So, well, the question about when my license didn't change, And don't anticipate any major turnaround soon in the licensing because of course, there is that overcapacity in the market. But if you run from the Capital Markets, I talked about the 6 subsegments, and there are some subsegments which are still interesting, for example, yes, and I'll remains an interesting sub segment where there is still some growth. But otherwise, as a general as a general rule of thumb, it would be fair to say there won't be a pick up in licensing. Our strategy does not depend on licensing in order to deliver. So obviously, that's part of what we've put into our forecast. And our strategy is not built around that. It is built around looking at those subsegments that are going to grow, making sure that we're growing our refill catalysts and so on, please. Okay. So hopefully that's, clear. I mean, if you look back in time, we'll have to be sort of oxo alcohols with a sort of big high value, licenses. Much more high value than say a methanol license. So because the number there was a huge amount of capacity built into, in China and particular, over the over the years. And so until that capacity is you guys, I think, that will take some time before that comes back. So hoping that answered the first question. John, do you wanna ask the question on the outlook for Asia heavy duty diesel? Yes. I think the big surge that we've seen in heavy duty in Asia has been mostly related to this enforcement of the truckway regulation in China. And that's driven sales very strongly as people have had upgrade the size of their trucks. That's kind of a one off that's not going to continue, but we do expect that our Asian heavy duty sales and China in particular will continue to to lead the market. And who is that? Well, it's it's it's it's one off. I mean, is it is it gonna fall in the second half? It's going to the rate of growth will slow down, but we will still remain ahead of the truck growth in China. Okay. Hopefully, that's good. Yeah. Thanks. For you, Andrew. Anna, your turn, working capital. Yeah. So our our working capital is somewhat phased through the year. And and and as you know, having followed a few years, It's always a little bit higher. At the end of part 1 in day terms as we make sure that we have the inventory we need in place to deliver a bigger rate too. So if you break it into what we can control, what we can control is the non precious metal piece I'm confident that that will be clearly in the 50 to 60 day range at the full year, and that there'll be some unwinding of the current position. With respect to precious metal, the debt has been credited today. We will absolutely manage, and I would expect those to they generally show a little bit improvement through the second half. The bit, this is far harder for us to manage because it's a function of the liquidity in the precious the market. And our customers' choices around whether they looked at us at Sports Metal, whether they leave a metal with us is the precious metal fee. Here, I think we've seen the worst of the correction behind us with respect to the tightening in the market, and the reduction in liquidity. But it's always hard to know what choices our customers will make as we look forward depending on on what happens with national prices. So that is a long way of saying normal costs. We generally see improvement through the second half, but, you know, I don't have a crystal ball with respect to what's going to happen with the precious metal markets. So I'm I'm sorry. Yeah. No. That's great. Thanks again. Okay. And then, last but no need, please. Alex, do you want me to just, give a brief I'll pass things back to you. Sure. Thanks, Robert. So I guess what I'd start with is we always look to protect our information assets. Of course, protecting our ELML as a strategic concern for us. And today, just to confirm, we have filed for IP04 ELML, and we'll continue to file if possible and sensible as part of the business strategy. And I think we don't file everything. All our secrets because I think, Andrew, you need to get Alan, you need to get the mix right, isn't it, between how much you keep inside. As soon as you file a package, course, then you tell everybody what your secret sauce is. So sometimes you keep some of it, internally. Absolutely. That's a sensibility So it's part of the broader intellectual information asset management strategy. Thanks, Andre. The next question comes from chetan Udeshi of JPMorgan. Please go ahead. You know, coming back to the the metal inventory build, can you explain if if customer were to request you to hold inventory on on on their behalf. Does does does it change the competitive dynamics for you with the customer, does it, in other words, you know, how does it help in terms of competitive dynamics in the business in, say, mid long term in terms of customer relationship? And the second question I have is on efficient natural resources. I mean, the margin decline that we are seeing at this point, Is any of that structural? Because, you know, maybe it's just to change this business model less licensing more hard at least sales, or is it just a factor of cyclical weakness in some of the markets and so margin might recover at some point, say, mid term back to the levels you had few years, back points. Sure. Thanks very much for your questions. So on metal management, we are well known for our PDM management. We are the PDM company of the world. But I don't know who wants to answer this directly. I'm looking at Jake, do you want service? Don't I have a go at both of those? Go on. So are you with respect to medical management? I mean, it's all part of the regular service that we provide to in industry, and not only looking after metals, but, of course, we are also the world's leading secondary, refiners, Michigan. So it's all part of complete service that we provide. And it isn't really a, it doesn't change in any way, particularly the relationship with any particular customer. Which is all part of the overarching firms to be provided in the market. Well, it's fundamentally done. If you think about their cash flow as well, because for network prices are very high, they need to look at their cash flow into the implications. And, of course, we we, work with them through the through the cycle. And, of course, having refinery really is helping us too. And, it it doesn't really give a massive competitive advantage versus, say, our our, emission control competitors, except that we have security of supply. And that security of supply by having access to metal is absolutely vital. And for John's business, the fact that we have the world's largest PPM refinery, is absolutely fundamental to help us. And so that has the fact that there's been a squeeze in the market is not a big issue for us, but delivery to our customers, which of course is the biggest competitive advantage that we have. Okay. And then, turning on to the question on licensing, and that was a change in business model. It's not really a change in business model. It is just part of the normal cycles. I think the question is it's going to be a lot slightly longer cycle than we've seen in the past. There is a big amount of overcapacity. In, the market overall. So how long it lasts, it's very difficult to predict. And then it's slightly long before I could have normal but it is no different to, a regular a regular flight from this whole chemical space. I can follow-up on that question. So do you think the restructuring that you're doing in that business will help us So the margin curve in that business improves, from from sort of the weaker levels we are at the point in, say, first half twenty eighteen? Or is it more like, you are trying to offset some of the pressures at the moment in the business a quick pressure with with restructuring to just maintain the sort of margin structure at this at the card itself. Prioritize where we are on margin. We are impacted by lapping the end of the licensing business that that is done this so we're not lacking it going forward. We are also impacted in the half and in the year by some destocking that we have chosen to do to manage our efficient better. Both of those things impact our margin. And we see the normal movements in the market fundamentally, this business is exactly where we expected it to be, and where we described it to be at the Capital Market Day. This is just about managing through coming off the back of the licensing income, which has a set margin and to be something that we have chosen to do as we run the business more efficiently. The restructuring sets us up in a position to deliver on, the the growth that Jane described at the Capital Markets Day going forward. And if you remember, the greatest results there, James also, was that we would grow our sales faster than the market by a percentage point. So and continue to grow our margins as we drive efficiency. So I think hopefully that answers all that answers your question and give you the clarification you're looking for. Thank you. Thank you. Next up. Adam, Collins. Please go ahead. Yeah. Good morning. I have 2, please. So so first of all, going back to HTD, John, I I hear what you're saying about the, upgrading cycle in China, but the statement also refers to a strong growth in Japan and India. And I'm wondering if you could just walk us through what's driving that. Second area related area is on the trajectory of the improvement in light duty Catalysis that you're talking about. Could you give us a sense of, how the market share gains that you've talked about, the onethree increase by 2018, 2019 in light duty diesel, Europe, how that kicks in in the next few quarters? And then finally, the statement, on efficient natural resources, when talking about margin decline, alluding to, increased price competition as well as the impact of fewer licenses. I wondered if you could just walk us through what the price competition you are referring to is about? Thanks very much. Good questions. And, I think it's probably best. These are quite detailed questions in my hand and I can both, John and Jane. I could answer them, but I think it's better to hear it from them. John, do you want to answer the couple of questions on your business? Yes. So on heavy duty in Asia, I guess you're right, Adam. There probably were a few more moving parts that I didn't talk about when I zoned in on the truck late limit. We're continuing to transition to some of the Euro5 catalysts right now. And as you'll see in Asia, the catalyst size is increasing. And substrate and sales are starting to have an impact in our sales as well. So there's a couple of things that are driving our sales number in Asia. In India, as you say, they are also getting ready for this transition, to be able to move from Euro 4 to Euro 6. And we continue to to grow our our diesel sales there. And then Japan, Japan has been very strong, and that's just kind of winning with the customers thing. The customers that we, are with in our Japanese heavy duty business have been doing very well. And the combination of all those factors has contributed to that strong sales growth number. And John, glad to say that the statement Alan, just to be clear, when we talked about Japan and India, it was a it was a light duty comment rather than a heavy duty comment. I think you asked the question in the context of heavy Oh, okay. Absolutely. Otherwise. Okay. Japan and India was very much a comment about the light duty market, but I don't know everything. But John's comments about Japan and India, I hope you're at the end of that. And then in Europe, Yes, the trajectory in Europe on the light duty diesel side of things, we continue to hold to our guidance that we gave Capital Markets Day. We expect to have a strong second half in Europe And that will be the beginning of some of the new sales, the new business wins that we expect to see. That will continue through 2018. And I think that will also carry over a little bit into 2019 as well. So that's when we're going to start seeing that in the second half of this year. And that'll continue for quite a number of quarters after that. Clear on on the on the John's business, Tina, Adam. I think so. Maybe just just one for on March. To what extent would the business benefit also from the, advanced NUCs control shipment as we move further into the regulatory place on a new drive emissions. Is there an additional quick time for that in the next few quarters? Well, I think there's still this transition where people are trying to get ready for the 60 final legislation. And some people have already made their technology decisions. And some people are still in the process of making their technology decisions. So I think there's still a little bit of a mix effect that could happen when these final decisions are made for the Euro 60 final. Okay. So we move on to the international results in Spain. Do you want to talk a little bit about 5 Okay. So the question was around, you know, increase the increase in price competition. And I think here, We saw an increase in price competition in a couple of subsegments, so, particularly harsh and gas processing, and those segments, it depends a bit when the business comes up because, you know, Catalyst business isn't something that you get every week, typically. You know, it's it's with discrete pieces of business. And if they come up with some of the strategic pieces within a certain time and there are pieces of business that naturally, we will ensure that we we do windows. Generally, I would say that a trend towards significant increase price competition is not seen across the board. And what we're seeing here is particularly out of the ordinary, you know, we're not going to face invested market. And, we usually win on the basis of certified the technology, etcetera. So in those couple of sub segments, we do see some pricing pressures. Otherwise, there's nothing out of the ordinary, I would say. Okay. Thank you very much. Thanks, Anna. We can speak to you. Next question from Nicola Tang of Evercore ASI. Please go ahead. Hi, good morning everyone. Thanks for taking my questions. The first one is on LST. I just wanted to clarify, when you talk about sort of shift to high energy material. Is that to NMC or is that something else? And, when you talk about sort of expanding, you know, alternative growth opportunities for LSC. Can you give some examples of what that might be? And secondly, I saw some headlines yesterday about a patent case between BSF and Jay Mart, being revised on US HDD. I was wondering whether you could just remind us about that, and, you know, any update you've given that. Thank you. Okay. As far as the the pattern case concern, I'm I'm afraid I'm not gonna give you anything on that. If you can comment on, ongoing discussions And, that will get sorted out one way or another over time, but, you know, we don't comment about active. Casey? Alan, do you want to talk a little bit about LFP or what's going on there? But if you remember our Capital Markets Day, you talked about having a portfolio of products, of which, LFP is 1 and and in arsenic and nickel oxide and other. But, you know, specifically talk about LFP, Sure. So, Nicholas, just back to your first question. What we've seen what's changed predominantly over China is the number of the tax incentives and subsidies and schemes there, changed in December January, so starting late last year and then early this year. And it really rewarded a a shift to NMC. So what we've seen is that for plug in hybrid systems as well as full battery electric vehicles, the market has shifted from LFP into NMC. So it's not any other materials, principally NMC 532 and a little bit of 622, but most of what we're seeing today is primarily 532. When we talk about expanding growth opportunities, also what we said during Capital Market phase, while we see the overall LFP market expanding and that's, we've certainly seen that to hold true over the last few months as well. There is a narrowing of the applications for LFP. So we see that narrowing primarily focused on smaller battery systems, the systems that we go into mild and micro hybrid applications, 12 volt applications, for example, as well as narrowing towards larger applications, So say, bus applications where safety is a fair amount important. So we're seeing the the market change and shift to kind of each end, if you will, of those powertrain platforms moving forward. And we continue to work with our customers and develop materials to supply those into the segments moving forward. Okay. Thanks. And if I could quickly follow-up with a question, also I'm not out power train. You talked about in there was a, you know, boost in fuel cells because of a specific customer. Is that something that was, one off? In other words, how should I think about alternative powertrain for H2 with the sort of LSC impact and the fuel cells impact? Yeah. I mean, we field sales had a had a very strong start to the year to that, to date. And, you know, I think moving forward, we're still very optimistic on the business around field. So Again, a lot of that was driven by a growth in the stationary market. We're still not seeing much in automotive market other than a a few small niche areas and applications, but we're continuing to broaden out that customer base. So it's a bit more diverse than just one customer. And I think you just gotta remember that, the PuleSoft business is still a pretty small part of the overall jobs in that big group, but for a change, which is something that, haven't had before, it is a profitable part of the group whereas previously, it was loss making parts of the group. So small, but the least is profitable. The next question comes from Stephanie Boswell, Bank of America Merrill Lynch. Please go ahead. Presentation earlier. I have two questions both on the Clean Air division. The first one is on the European Heavy G business. Or you had a very strong plus 16 percent constant currency growth in the half. In the release, you highlighted part of that was due to the ramp up of new business wins in the last financial year. So I was wondering if you could help us perhaps understand how much of that new business wins are now within the DS number to get a sense of how the growth looks like into the second half. And then the other question was on the European light duty business. Specifically the European business, where sales were down 5%. Can the release you highlight that volumes were flat for diesel catalysts in the half, but with a negative platform mix and the negative effect of substrate pricing. Could you possibly split those two items for us, we can get a sense of, what the negative platform mix contributed versus that of the pass through on the substrate prices. To get a sense of again of what the, the Institute factory looks like. Thank you. Okay. Just very quickly on the, and John, the heavy duty 1, I'll ask you to answer. But on the light duty side, more than half is to do with soft freight pricing, and And and as you know, the substrate price substrates, sorry, straight pass through for us. So that, doesn't, doesn't impact the profitability all. And so those, lower lower prices of the substrate then flowed through into ultimately therefore lower sales. Didn't impact profitability at all. And as you said, more than half of the impact of that sort of mix between volumes and sales, it's caused by substrate pricing. Does that answer your question? Okay. Sure. On the European heavy duty diesel business? The European heavy diesel business the business plans that we're talking about are in our, extruded business. And There's business wins. We started manufacturing some of those products, couple of months ago, and that will continue. The ramp up will continue through, 18, 19. And then we expect some further wins. So, you know, we do expect that growth to continue in that part of our heavy duty business for, over the next year or so. So just like a follow-up. Sorry. Go ahead. I'm just going to say in terms of the magnitude of, so the 16% versus the underlying European truck. Production in Europe, you would expect, to be able to outperform to that degree as we go into the second half given those business wins are still ramping up. No, I don't think we will continue On you go. So we will continue to outperform the market. I'm not sure that we'll remain at this 3% level, but we'll continue to outperform the European heavy duty market. Sorry. There's a slight gap between, John and me because John's, out of the country at the moment seeing customers, but, I think, so what we're trying to say is that as we've ramped up, we should continue in the second half to outperform the growth of the underlying market is but it will be nothing like the 12% outperformance we saw in the, in the first half. The exact number, I'm not sure it'll depend upon exactly what happens in the second half, but it will be, some way lower, but more than 4. But whatever the absolute underlying number is, it will be greater than the underlying growth in the market. Thaston Bray of Berenberg. Please go ahead. Good morning, and thank you for taking my questions. I just have a few please. The first would be on the Euro 60 opportunity emerging for Johnson Matti and Autocatalyst next year. Could you perhaps give some guidance of how much front running of this aspect of legislation there has been how much of this opportunity is still there to wash through numbers. And as a quick follow-up to that, any indication of the sustainability offer growth rates in U. S. Line duty in auto travel this would be helpful. Do you expect to continue to outgrow the market? Second question is a simple one on restructuring costs, aren't there going to be any running through the P and L next year? And finally, on the new market segment. Could you perhaps give some guidance on how you expect profitability in this division to develop over the next 2 to 3 years giving the forthcoming investment in battery materials? And then, and then let John answer the first one. So firstly on restructurings, in the E and L next year, I mean, unfortunately, I can't give you an answer at this stage. We don't plan to have restructuring every year, but we certainly plan to have a restructuring. This year, we talked about should we talk about it 6 months ago, the full year. But we continue to drive the business forward and look to take our cost where appropriate, and as we try to improve the efficiency of our business, I mean, we talk to the Capital Markets Day, And I think the words we use as a relentless focus on operational efficiency. And sometimes with that, relentless so You do take out costs for a good reason to drive future performance. And, and that is, what we will continue to do whether that will end up with any restructuring next year, it's hard for me to stay at this stage. And on the profitability of new markets, going forward and a and a projection for the next, 2 or 3 years. I'm afraid I'm not going to, give you that. Not because I try to be difficult, It's just that I think we need to, we need to see how this market evolves, particularly on batteries and the level of investment required. In the market and how it evolves. We it could be assured that we will continue to do the right level of investment to give ourselves the best long term opportunity And we need to cut our clock accordingly, but we won't, we're not going to give guidance at this stage of exactly year on year on year what our profitability is going to be. So sorry to, I'm not sure if I've answered either of your questions. I'm sorry, but, I mean, everything is consistent that we said at Capital Markets Day, I would go back to that. So it sounds like a bit like a tough record that we keep coming back to the Capital Markets Day, but we try to be pretty clear about our guidance and where we're going. And we are continuing to drive the business forward, particularly in new markets based on milestones. Those milestones are as we drive the business forward, have we achieved certain things as the market develops in certain ways? And if we if those things happen, then we'll continue to invest and invest strongly. And that's the way we're driving that business. Understood. John, over to you on the on the two questions, if I may, on euro six fee, and I think North American light duty outperformance. In Euro 6 C, we haven't really seen much of that come through yet at all. So that's kind of good news for the future. So we expect some of the filters on gasoline cars to start coming through in our next fiscal year in 2018. And that will continue over the next couple of years. You know, and as we've seen, we've talked a little bit about some of the filters that are out there right now are uncoated filters. They don't have a catalyst coating on them, but we do expect more and more customers to move to coated filters again to meet those the 60 final legislation as well. So, that will continue in 2018 2019. As far as the, light duty diesel, some of the light duty business in Europe, we've seen strong growth in our light duty diesel business related to diesel pickup truck sales in North America, and we continue to see that trend, you see that trend continuing. And, you know, I think we'll we'll stay on that trend line in in North America, you know, for the upcoming period as well. Thank you very much. Okay. Thank you. Next question from Alex Stewart of Barclays. Please go ahead. Hi there. Good morning. To get back to the Capital Markets Day guidance, which I know you've always had noise in the back and produced for helping all ground, but you gave an indication that the margin in FENA would come down as a result of the investment grade. Grow your market share in UHN margins. That hasn't really come through in the first half. It doesn't sound like you're expecting a service type of any virus in the second half. Could you give us some idea when that 100 basis points of generation might have seen in P and L. And then the second question, but it's a little bit less because I I apologize that that his talk of a methanol build out in Iran, downstream methanol. Can you just tell us what your approach is to business in Iran, and whether it's something you would consider that became available or whether it's off limits given the sanctions or the other disputes. I'll tell you what, why don't I do the Iranian question first? I think the short answer on Iran is, of course, we do business in Iran. We're not anti doing business with Iran. And in fact, it's entirely, you know, it's it's, the fact there are no sanctions in place anymore, for certain there are for the technology in which we operate. But what we need to be really, really clear about is who our customer is what who our customers are and understand that everything is done in a absolutely ethical and compliant way. And assuming we can satisfy ourselves and all up all of those issues, of course, we'll do business in Iran, and you would expect us to do that. The other challenge sometimes in in Iran is access to cash, and getting your cash out of, out of the country in, again, in an ethical and compliant way. And the banks are you know, but they not only do we do quite a lot of work in making sure we understand our customers and, but then the banks require not only to see what we've done, but they also want to see if they're even more. So it's quite hard to, to do business in Iran today, unfortunately. That we will only do business the right way, and not chase it just because it is an opportunity and then end up regretting at leisure. So, for that answers your question. And on the margin point, since it was, Anna, the very clear to go the statement of the Capital Markets Day, I think it's and as you want to, give the color again. Yeah. So so what we said at the Capital Markets Day was that, the 2020 it's a share gain that we've made in European Land GT has come with some margin erosion, and up to a point of margin erosion. Is that fair to say through? We've got the share gain come through in the second half. And as we've guided in the context of our full year this year, we will see a slight duration in margin, in 3 there, in the second half. So they were in the first half, but, you know, slight. Is that okay? Next. Next question from Andrew Benson from Citi. Yes, thanks very much again. Just on the page 7 of your release, you've given production and sales numbers for light duty and heavy duty. And in both cases, the production is materially ahead of sales. So I'm just wondering how you see the outlook do you do you see any, destocking at any point in account customer industries over the next 6 months, through the year or so? Sorry, Andrew. Andrew, sorry. I'm not sure. So when you say that, I mean, I'm looking at the data on page 7, if I look at global light duty, I'm seeing the changes 1 and 1. I mean, are you talking about the absolute numbers? Yeah. So the sales sales 42,700,000 units and production 45,500,000, or is that just a normal normal thing? There's a normal delta there. There's a normal delta there. There always is they're able to record, production in a much more accurate way than sales and of course there are other parts of the of the globe as well. It's been like that for many, many, many years. Thank My question comes from Matthew Hampshire with Credit Suisse. Please go ahead. Hi. I just had a quick question on the note on contingent liabilities on page 15 of your report. I understand there's obviously legal constraints around it. But I was just wondering if you could give us a bit more detail on what that's about, what part of the business, sales exposure, any companies involved that you can mention? Any detail would be good. Thank you. Well, I'm afraid you're probably not going to get too much detail from me, but, of course, this is the situation that we've been, added as a defendant to existing, contract notices in the US. Alongside the supplier to where we am. It is a, in in the Clean Air segment, where we've supplied a coated substrate. Because you know, it's one of the the components at the end of our treatment system. So we're not the primary supplier here. And, the key point to note that I would, again, draw your attention to in the notes is that we don't believe we'll have any war we don't believe we have any warranty liability here. And of course, we will, as a result, vigorously defend itself. I'm afraid, as you'd expect in this sort of situation, with ongoing mitigation, there's not much we can say. And of course, we'll update you, any any in the future if there's anything further that we can or should say. Thank you very much. I should actually just go back and just reiterate on that last point. We haven't made any provision either in the accounts associated with that issue. Are there any other questions looking to the IR team? Nothing at the moment? Okay. Well, look, thanks very much indeed. I just thank you very much, a, for, dialing in. Hopefully, you've managed to answer all your questions. Look forward to seeing, many of you on the road show that Anna and I will be doing it, with the IR team over the coming days. I think just one thing to remember, of course, when you look at our statement that we've reaffirmed our full year guidance, we do expect to see, stronger sales in the second half and to deliver a full year growth of around 6%. And, again, broadly flat operating profit on a constant currency basis. As the operational momentum that we had in the second half of last year continues and some of the cost savings that we've made will offset the non cash pension charges, that post retirement medical benefit credit, last year, and that we're lapping, of course. And, would you put the interim dividend up by 6% to reflect our confidence in the long term future that we talked about at the, Capital Markets Day? Anyway, look, thanks very much indeed for your attention and your questions. I look forward to seeing you again soon. Thank you. That will conclude today's conference call. Thank you your participation, ladies and gentlemen. You may now disconnect.