Earnings Call: Q2 2020

Jul 20, 2020

Ladies and gentlemen, welcome to the Chelinberg Q1 Report 2020. Today, I'm pleased to present Peter Nielsen, CEO and Alf Bergenholt, CFO. Afterwards, there will be a question and answer session. Speakers, please begin your meeting. Thank you. Yes, Peter Nissen speaking. Welcome all of you to our interim report for Quarter 2 in 2020. As usual, when we are presenting the report, I will start Giving some overall highlights and also some comments on our different businesses. And then Ulf Will assist me with financing more financial slides, and then we finish off with a brief Summary and then opening up for questions. So and of course, also as usual, we're going to use The slides which has been on our website for yes, 2 hours roughly. So please, That is what I'm going to use as a guidance, starting with Page 1, which is basically only telling that this is the interim report and Myself and Ulf presenting. Turning to Page 2, which is agenda slide. Also as usual, starting with highlights, some individual comments on the business areas, Financials by Ulf and then a summary and also a little bit comment here on the outlook for the running quarter and then finishing up with the Q and A. Rapidly then turning to Page 3. Highlights of the quarter, heading This factory quarter under the circumstances, which I guess all of you know, the circumstances and the satisfactory quarter for us is that we even though We had, let's say, organic drop of 19% in the quarter, of course, dramatic. We managed to offset Quite a lot of that, not all of it. And then delivering for us seeing a rather solid margin of 12.3%, Then with the corresponding EBIT of some slightly shy of SEK 1,000,000,000 in the quarter, We had items affecting comparability in the quarter where we then accounted for SEK 105,000,000 And we'll be also adding some new guidance on that for the full year here of 2020, which I'll get back to and comment a little bit more on later. Cash flow for us very strong in the quarter and that is something we are Ulf will get back on that. But I mean we are Quite happy with the way we managed to take care of especially the working capital in the quarter. We're actually with this Fairly good result. I trust all of you also noted that we actually released inventory in the quarter, which means that we kind of on top of these results, we also underproduced in relation to the sales in the quarter, which is then turning into a, yes, very solid cash conversion of 120%, rolling 12% And also, which I already hinted or commented on, we are also now following this development of COVID-nineteen. And what we see in front of us, we also initiated some further restructuring measures. We did we're addressing both Kind of some production structures and sales structures, and we're going to, of course, throughout the year, Tell more of these incentives as they are being implemented, but the guidance for the full year is being apt From SEK 300,000,000 to approximately SEK 700,000,000, which we expect to be used this year and also commenting on that a little bit further on the next page. But before I do this also, we had here actually Friday An announcement of a new incoming CFO, Fredrik Nielsen is joining here The beginning of next year, Fredrik coming from AAK, where we've been CFO for them for It's a little bit shy of 7 years. Due to the fact that Ulf has accepted a challenge go outside of Krellenberg and joining another company, a private equity owned company to take up the role there as CFO for them. Then turning to Page 4, a little bit further comments on the Stra restructuring measures that we've been initiating. Of course, this is not really to address solely, of course, partly the kind of the Demand situation following COVID-nineteen, but maybe more important to change the setup in a few areas where we believe The kind of the environment beyond COVID-nineteen will be slightly different. So We are then, as I already hinted or told, that we are upping the restructuring cost to SEK 700,000,000 from previously guidance being SEK 300,000,000. We also guide that this SEK 700,000,000 will provide equal amount of savings. Then of course, this is cost Downs, which is not necessarily which is also partly to cover for a lower demand. But nevertheless, we are initiating savings of The SEK 700,000,000 on a full year basis with full impact from 2022 will take some time, as you understand, to get these measures implemented and done. This is also addressing all across the company. We're giving to you some guidance here restructuring costs roughly onethree between Industrial Solutions and Sealing Solutions and then the remaining onethree, which means then onesix Being for wheel systems and 1.6 being for business under development. We also want to guide here that this is not kind of an up being. This is extraordinary measures coming from this yes, the Just coming from this yes, the development during this pandemic. And we expect 2021 to normalize between SEK 200,000,000 and SEK 300,000,000 because of course, with the assumption that we're going to be able to continue To make acquisitions, which is also not that easy at the moment, of course. So that is something that we are Still working on and hope to conclude. But if this is happening, we will keep the guidance anyway to this SEK 200,000,000 for 20 21. So that was about this extra restructuring measures. Turning to Page 5. A few comments on organic sales development videography before Going into the individual business areas, reading the figures here, which I trust you already done, you see that the sharp downturn, Especially for us hitting us in Western Europe and North America, high number also for South and Other America, but that is kind of a smaller part of our sales. But for this, Close to 70% of our sales, which is being in North America and Western Europe, we have a hit here, as you say, 22% and 4%, so of course, dramatic and then a slightly better development, but still very high drops in other Europe and Asia and other markets within Asia Turning 8% down and other Europe, minus 13%. So there's still a dramatic drop everywhere, but with Major difference between North America and Western Europe in comparison to Asia and Central and Eastern Europe. Then turning over to Page 6 and the next item on the agenda business areas, then quickly Turning on to Page 7 to comment on Industrial Solutions, which is, as you know, is a fairly diverse Part of the diverse businesses here in Industrial Solutions, but overall, We have a heading temporary production shutdowns. I mean, we have been hurt all across Industrial Solutions by these temporary production shutdowns either by our customers, but also where have been forced to shut down due to either less a very low demand or also linked to different governmental Instructions or guidelines. Organic sales then turning down to minus 20%, a little bit structured growth Going against that, due to the acquisition that we did roughly a year ago, Signum is kicking in with some Positive sales. And of course, I mean, we are hurt by COVID-nineteen all over. I mean, this you will get from My comments on all business areas, but just to highlight it here as well. And also, in line with kind of my previous comments on geographical differences is the same here. Strong organic sales, negative in all regions with a slightly less impact in Asia. And of course, EBIT and margin is impacted by lower demand and this somewhat unfavorable sales mix also between the various parts of Industrial Solutions. And of course, also, let's say, common Recurring comment on all our business areas. I mean, we have been implementing very harsh measures To limit COVID-nineteen in all areas, working with furloughs, working with redundancies, working with salary cuts, Working with all kind of discretionary spending cuts. So this is kind of well implemented. I mean, we are satisfied With the actions taken by our different businesses in the quarter and that also applies to Kjellenburg Industrial Solutions. Overall then, as I say, minus 16% on sales, minus 38% on EBIT and minus 3 percentage points on EBIT percentage that is kind of developing the quarter for Industrial Solutions. Turning to the next page, comments on Sealing Solutions. Slightly higher organic sales drop than Industrial Solutions and also here some structural growth coming from acquisitions with 2 percentage points. There was the same development here as in the other areas, more severe Downturn in North America and Europe, while slightly better in Asia. Been lighting here that, I mean, Automotive and Aerospace has been Very weak in the quarter. Our industry also weak, but not as weak as Automotive and Aerospace, and that has been pushing us down Substantially in the quarter, also here customer shutdowns and planning making planning difficult, making deliveries difficult. And of course, this is pushing down the margin here as well. Roughly the same development, net sales down by 2019, roughly Slightly less than double of that down on EBIT and then percentage points down by a little bit north of 4 percentage points. Overall, Quite okay considering this 19% drop and, of course, delivering still a very strong EBIT margin at Almost 19% EBIT percent. And considering this drop, we are also satisfied with the development in this business area. Wheel Systems also, let's say, quite harshly hit by temporary shutdowns among the OEs, both the manufacturers, Factors and forklifts has been shut down for several weeks and in some areas a month pluses During the quarter, which, of course, has been hurting us in basically all areas, where we have been Satisfied with the development of this agriculture aftermarket where we're actually in the quarter, even though this dramatic 19% down in sales and 18% organic, We are still kind of recording slight growth in the aftermarket, and that has, I think, benefiting us also with the positive sales mix. And I must say, very successful cost measures, cost control measures and furloughs and a lot of other activities has been Well managed in wheel systems and the FI actually we are even though this drop of 19% in sales, we're actually able to deliver The same EBIT percentage and that means also that we have the same kind of EBIT drop as we have sales drop. So well managed in wheel systems supported by positive sales mix. Turning to Page 10, Business and Development, which an area we're working on, as you know, and treating a little bit special. And I mean, we are down also in this area substantially, but here, Somewhat different compared to the others, we are still, at least in this quarter, benefiting from very strong sales growth Within our oil and gas activity and that development is then kind of balanced with lower deliveries, both in printing blankets and these for 2020. Technical rubber operations in this area. But overall, then even though this 18% overall Sales drop coming 10% from organic and 6% from this divestiture of the Baltic Motor Components business, but that is Still turning into a positive EBIT growth, as I trust you understand, coming primarily from the good development in the oil and gas Also here, of course, same as in the other areas, we've been very tough and very, let's say, direct on doing all cost cutting we And making sure that we manage the cost side in the best possible way. So these were some comments on our various business areas and then agenda on Page 11, quickly turning over to Ulf then To guide us to the financials, please, Ulrik, go ahead. Thank you, Peter. On my first slide, Page 12, sales developments. And as you can see, the organic growth in the quarter was heavily impacted by the current market conditions and ended up on a negative 19%. All business areas were equally negatively impacted. No impact from currency in the quarter and structural growth was net 1%. Both Industrials and Sealing Solutions report structural growth, but the disposal of an entity My next slide, Page 13, describes the historical performance of our growth. The quarter really sticks out and will likely get down in history as one of the worst ever in Trelvoire history. On Slide 14, you will find the reported sales development per quarter as well as rolling 12 months. Slide 15 presents our EBIT development. Excluding items affecting comparability, our EBIT reached SEK 942 million, down by 29% versus quarter 2, 2019. The EBIT margin ended up at 12.3% versus 14.1% a year ago. The margin performance shows the strength in our The EBIT was negatively impacted from currency translation of minus €12,000,000 Slide 16 percent EBIT and the margin on a rolling 12 months basis, a stable EBIT margin looking back in time reflecting a resilient business model. On a rolling 12 month basis, we are currently at 12.1 percent EBIT margin. The next slide, Page 17 presents the profit and loss statement for the total group. Items affecting comparability was minus SEK 105,000,000 in the quarter related to restructuring costs. And due to the heavy impact from COVID-nineteen in the certain segments, we are proactively addressing an increase by SEK400 1,000,000 from our previous guidance. Financial net has been impacted positively by favorable interest rates. The tax rate was 22% in the quarter coming from a favorable country mix. Our guidance on an underlying tax rate of 25% for the full year Slide 18 percent earnings per share. Adjusted for comparability items, EPS was down 26% We'll to SEK2.47 for continuing operations compared with previous year. Slide 19 describes the development of our operating cash flow. Operating cash flow is reflecting the impact from COVID-nineteen that is a Negative impact on EBITDA, but the release of working capital. CapEx is in line with our annual guidance of around SEK 1,200,000,000. Slide 20 percent to rolling 12 months operating cash flow. Our cash conversion is reflecting well managed COVID-nineteen impact COVID-nineteen impact by our business area management. And Slide 21 shows the year on year development of leverage on continuous operations including or excluding comparability Net debt is impacted by negative translation difference of minus SEK38 1,000,000. We have a strong financial readiness Through a good central liquidity and a secured long term financing in place. Slide 22 describes the return on equity with a long term target is Capital employed in the reporting segment business under development in Q4 2019. And then finally, on Slide 23, I want to finish off this part of the presentation by repeating our financial guidance for the full year 2020. The CapEx, as I said, that is guiding €1,200,000,000 The restructuring cost is then raised up to €700,000,000 The underlying tax rate is 25% and then amortization of intangible assets that would be around SEK 400,000,000. So Peter? Thank you, Ulf. Back to the agenda. Slide 10 on Page 24 and quickly moving to some summary and some Comments on outlook for the running quarter before we opening up for Q and A. So overall, Page 25. Overall, sales decreased by 18%, organic down by 2019. Strong margin for us, considering this dramatic drop, keeping it at 12.3 percent. Some comparability items in the quarter, SEK 105,000,000, which This is in line with the previous guidance. But as I said before, we upped the guidance in this quarter since we are implementing more measures. Strong cash flow, well managed, especially since we are able to actually under produce in a quarter like this And still kind of keeping the EBIT on the level which we did. Cash conversion then running also very high at 120. And as I already commented on a few times, we are implementing new measures and upping as you will also comment on upping the guidance For restructuring from some SEK 300,000,000 to some SEK 700,000,000 but then, of course, also upping the savings coming from those incentives. And also, following the quarter on Friday last week, we announced that Ulf is leaving for another Assignment out of the group, and we have appointed Fredrik Nielsen coming from AAK to the new CFO and then starting kind of beginning of next year, and Ulf will finish off this year before he's leaving for his new challenges. So that was the overall. And also finishing off on Page 26 a little bit, nothing really Strange on this, but just to highlight our priorities for this year is, of course, to continue to address the market condition Following COVID-nineteen, I mean, it's still relatively high uncertainty where it's heading in certain areas and markets are various different markets are Moving in different ways, and we need to stay close to that, and we need to make sure that we continue to implement measures when needed. On top of that, of course, even though these Strange market conditions. We are, of course, continuing our review with the business development and working on the various alternatives To make sure that this business gets solidly improved or taken care of elsewhere, Continue to work on the portfolio management. We continue to scout for acquisitions even though the environment is somewhat challenging at the moment, But we continue to have that high end agenda and continue to address the possibilities both through Organic efforts will be more important for us to make sure that we allocate resources to the areas we want to grow and allocate less resources to the areas where we don't find That's interesting. And on top of that, of course, scouting for acquisitions to see if we can speed up the changes we are aiming for, At the same time, continue to invest in all kind of innovations and especially on customer integration is still very high end agenda using different kind of digital Tools in order to be a more efficient supporter of our customers. And then also integration acquisitions, even though it's slightly lower activity at that level, we still are pushing in Acquisitions made in the last 12 months. And as already commented on, we hope that we will be able to Get back working on even this kind of avenue of growth when the market gets Somewhat more stable. Page 27, our guidance for the running quarter. We believe That it will be slightly better in this quarter. In quarter 3, it will be slightly better in relation to last year compared to what we have Seen in quarter 2, but this is said, we still have a high Degree of uncertainty, as all of us know, I mean, our different society is opening up again, but it's also pushing in new closed down measures. So we have to wait and see how it develops. But once again, our guidance as of today and our Best estimate as of today is that we will get a slightly better market development in Q3 compared to quarter Nothing dramatically better, but somewhat better is what we are believing. Of course, with a slightly different move, I mean, we expect So some industries, aerospace, automotive, maybe to be slightly better in this quarter, while other industries, more kind of slumoving industries, some general industry segments will be Not better in Q3 compared to Q2. But once again, overall balancing everything, we believe it's going to be a slightly better quarter in relation to last year this running quarter compared to last year. So this is really our comments and then quickly agenda back again, Q and A and then turning on to Page 29 and opening up for a Q and A session. So please Go ahead, operator, and invite for questions and comments. Thank You may do so by pressing 2 to cancel. Our first question comes from Klas Beningard, Citi. Klas, the floor is now open to you. Yes. Hi, Peter Knollf. It's Klas Bergelin from Citi. 3 from me, please. First on the ag side, these aftermarket strength that we see here, to what extent is this market share gains that could reverse As competition opens up versus an underlying improvement. And the reason for asking is we have been waiting for this replacement cycle To kick in on the Ag side for a while, so that's my first one. Yes. We believe we've been gaining market share in the quarter. There, of course, been Some import limitations from India and China. And also, we have had probably a better exposure in terms of manufacturing footprint compared to And it's difficult to really give some Detailed impacts on these, but I mean, there are wins some market share gains, but whether they are sustainable or not, we believe they are Sustainable in a certain area, but of course, also we need to watch very much our competitors. So there is, Once again, some market share gains, but it's nothing really dramatic on that one. Okay. Also to say that, I mean, also we have also I mean, this is basically the Q1 we've been able you know, we've been investing quite a lot in Serbia, And this is basically the Q1 we've been able really to take the benefit out of this kind of increased efficiency, This new setup has created. So we have had also some market share gains based on better range and Better kind of availability of a few tire types. No, that's good. That's good. And then my second one is on the OE equipment side of Ag. So your exposure stand out versus others in the sector, at least here in Europe. And I was wondering maybe if the ag segment in wheels could see More growth than the pure industrial side in Industrial Solutions and in Ceilings. So looking into the second half, maybe there is more pent up demand, replacement That they could see ag outperforming industrial. And of course, it's fragile out there, but the relative assessment, Peter, would be great. That's speculation, Claus. It's difficult Speculate on it, but for sure, I mean, as you've commented on before, it's been kind of a subdued demand for quite some time. And We'll have to wait and see what happens. I mean, we are ready. And I mean, we are balancing here a little bit inventory side, of To be ready to sell if the demand is coming, but we firmly believe that we are in a good position both in terms of Brand positioning and efficiency in our operations compared to some of our competitors. But I mean, we are We have to wait and see. Difficult for me to comment exactly, but you know it, I know it, that the demand, Especially for the Ag Tyres has been a little bit pushed down in the last few years. Yes. Okay. Now that's clear. My very final one is on the cost side. So Can you help us with how much cost savings were temporary in the quarter, reduced travel bonuses and so forth? If that is tricky, Maybe I can ask this in a different way, Peter. The €700,000,000 of cost saving is 200 basis points at your guidance, assuming that Volumes next quarter will be down 13%, 14%. And obviously, you did 13% almost in the first half, so that's 15% margin target at current demand. So how should we think about this? If demand stays at the current level, how much should we give back In terms of temporary savings or do you feel like 15% now with these cost savings are sort of reachable? I mean, now we have to manage it day by day, to be honest. Of course, we've been pushing costs. Of course, there is some discretionary spending, Which will get back into the P and L later on, will be pushed in front of us. But we push that in front of us with the belief that the demand will be slightly better. So I mean, really to start to give guidance on the figures like you're asking for, I mean, it's very difficult, To be honest, because we need to watch this and we need also to start to see, it's a sort of pricing environment, which is quite uncertain at the moment as well, what's What happened with the pricing? We are also there confident on our positioning. But I mean, there's a lot of parameters In this equation to get to something. But of course, if the demand is coming back quickly, then of course, we will see we will have a as we had a Kind of well managed downside leverage will, of course, have a positive leverage also if the demand goes back. But we are not kind of Speculating or planning on a quick bounce back. And of course, this is the new reality. If we're continuing to run at this minus 20, then of course, we need continue to manage the cost, but it is day to day management. We feel very comfortable in doing. I mean, we have during Quarter, I think with the assistance of Wolf and his team on the financial community been able to create a lot of new follow ups, new KPIs and all of that, so we feel very confident that we have full control both on the cost side and not to say also on the cash side. So we feel that the model that we're running has been functioning very well, and we believe the model will continue to function very well if or when We see an uptick in the bond. No, we get a lot of questions on how much of the 12.3 is basically sort of discretionary cuts That can come back, but maybe it's difficult to help us with that. But it is a lot of it, of course. But I mean, the debt is the way you manage it. I mean, you're pushing costs. We have pay cuts among senior managers. We have furloughs. We have, of course, some government support. We have some It's a wide variety of measures. And we talk about vacation. We have encouraged people to take a vacation and All of these kind of cost measures and all of that is ending up in a big bag, which is then turning up towards the results. I mean to look at the individual components is not really a fair or a correct way of doing it. Also to note, I mean, we have been, as said before, underproduced, if we have been kind of manufacturing a little more, then of course, that would have been supported results. And we have not been doing that. Have been kind of adapting our manufacturing volumes to this new demand. So that is also a benefit. If The kind of demand gets back, we will also get benefit in a more efficient manufacturing setup. So there is a lot of components. And that is why, I mean, we have gotten that question already outside of the call about this kind of governmental support, but we don't want to comment on that because it's a lot of A lot of variety of measures and a variety of impacts, which is kind of impacting us in various ways. Got it. Thank you and best of luck, Ulf. Thank you very much. Thank you. Thank you. Our next question comes from Hampus, Hansel Banken Capital Markets. The floor is now open to you. Thank you very much. I'm saying, Johannes, Bank German. Three questions also from my side. Starting off from the restructuring, €700,000,000 would it be possible for you to maybe give some more details on how much of this is headcount and I guess other cost? Then second question is on if you could maybe give some comments on June development on the business areas on the year on year comparison to see How much of that kind of affected the second quarter results? And then last for me is Wind Systems, very impressive resilient margin here. And I understand it's partly driven by sales mix, and I guess that aftermarket much more profitable. Are there other elements in the resilient EBIT margin in which that you could highlight? Or is this just the sales mix effect with aftermarket? Thank you. Starting off with the last one. I mean, both we also have here, which I already hinted on, we have now the Q1 with all the benefits from our Serbian investments. So that is also bringing in a few 1,000,000 of saving compared to our previous So that is, of course, also there is some structural improvement in that. So we could not really explain everything by mix. It's also underlying structural improvement, which is Benefiting us. And then we maybe we talk about the mix. So mix is the One of the explanation, but generally, I must say, very well managed also from a cost perspective. So they've been running it in a good way In the quarter, and we'll continue to manage this in a good way. About the restructuring mesh, Sure. So I mean there is also some plant closures in this as well and there is also some kind of organizational changes. We are expecting a structurally Kind of lower demand, for instance, in aerospace, we are expecting also in certain areas a structurally lower demand in Automotive for some areas, we are also changing the organizational setup in both of these areas, but by taking away some engineering and Consolidating manufacturing in a few fewer factories or in a different way compared to before and also on top of that actually changing the organization for the Automotive setup in Sealing Solutions especially. So there is a few areas, which is more Structure changes more than headcount. Of course, there will be some headcount cutting in this, but the major savings It's not really coming from absolute headcount reductions because the headcount reduction is more kind of an operational changes than really restructuring changes So it's not really this this is not the explanation. And then about development in the quarter, for sure, April May was softer than June, and the June was then substantially better. But honestly, we do not expect the June development To continue into the quarter because the Johan development was, of course, benefiting from this quite extensive close downs in certain areas in April May, which is then, let's say, delivering some kind of pent up demand in June. So that's also why we decided not really to give this in order to not to send the wrong signals. But for sure, June was better Then April May. Can I add on the comment you made on auto Measures taking down capacity, etcetera? I mean, we also saw the light equal production numbers for 2nd quarter, especially in the trial being now 70%. And I know that you're very, very focused aftermarket here. Would it be possible for you to maybe indicate on how aftermarket, how resilient that was Compared to the light vehicle production number, and is it a lower activity in the aftermarket that is driving this? Or is it or how should we think about that? Yes. Unfortunately, it was not really made a difference in this quarter. I mean, aftermarket for us was down almost as much as the OE, which is kind of A surprise for us honestly, but I mean it seems like everybody was driving less and sending less cost for changing the brakes or whatever they do. So Well, we are and honestly, in the quarter, it was virtually exactly the same. It was probably the same it was the same development in both aftermarket and OE, which is A bit strange in comparison with what we have seen before, but that is probably linked to driven kilometers. We've seen it in the oil consumption, all of that as well. So in this quarter, no major difference between these two segments. Thank you. Thank you. Our next question comes from Robert J. Davies, Morgan Stanley. The floor is now open to you. Yes. Thank you. Thanks for taking my questions. My first one was just if you could give us a little bit more color in terms of the regional dynamics that you are seeing. If you could provide any additional color, particularly in sort of the recent trends you've seen out of Europe and Asia, that would be particularly interesting. And then the second one was just you mentioned that with the Aerospace and Auto, we're in a sort of difficult spot. Could you quantify the type of growth decline you were seeing Specifically in those 2 end markets, that was my first two questions. Thank you. Regional development, I mean, Asia is stronger. I mean, especially China is getting better and China has been very strong in the last, Let's say 2 months. While in Europe and Americas has been almost the same In the quarter, while we see probably a more little bit tougher environment at the moment in Americas and slightly better in Europe, but once again, it is Very high uncertainty. Unfortunately, it's high uncertainty, high volatility. So it's difficult to draw on here. I understand it's challenging for you And the challenge for us as well to get into some kind of overall trends here. It varies depending on political measures and beliefs. And I mean, we Seeing a huge fluctuation between individual weeks, which we have not really seen before. So it's very easy. But Generalized, I think Asia continuing good, Europe slightly better and Americas slightly better than we saw in the last quarter North America is slightly worse than we saw in the last quarter. I mean, if that is probably looking at Ulf a little bit, that's probably what we're guessing at the moment. Guessing, I should say, because it's really difficult to have because all the kind of KPIs that we're using with order books and confirmed orders and stuff like that, all of that has been a little bit up in the air and not really following the trends that we had Several years before. So I guess that was that one. What was the other sorry, remind me about the other? Yes. The second one was just on the type of growth declines you've seen on the Aerospace side. I mean, Both Aerospace and Automotive, of course, been higher in our group level and whether this also varies a little bit. But of course, here we talk about Tens of percentage points lower growth than our overall group development. But there also, I'm Reluctant to give you some details on that because that is also varying across The weeks and of course, the customers, but of course, it's been tens of percent of Further growth further loss of the decline compared to the overall group development. Thank you. Maybe just a final one. Just In terms of your outlook and commentary around demand, I mean, when you're speaking to customers, what is the biggest area of concern that just sort of The economic uncertainty is going to fundamentally weigh on demand and there's not going to be any follow through. You obviously mentioned that June was A bit of a catch up month post April May that you weren't expecting to sort of necessarily follow through. What is it in those conversations? Is it just that they don't know yet or that they're Sort of fairly sort of convinced that they won't see that policy. I'm just looking within your outlook statement for a little bit more clarity of Who is guiding? No, I think I mean, sorry, once again, uncertainty is high. And I mean, I think the customers as us are a little bit Kind of reluctant on speculating on the demand going forward. And we are I mean, honestly, if we look at the To be transparent on that, if you look at the order book, it looks fairly okay. The order book is kind of better than we expect Sales to be, but that was the same going into quarter 2. That was the same story as well. I mean, if we were looking So, Oleo, the order book going into Q2, then the sales development would have been substantially better. So that is why we have kind of Difficulties in judging. But overall, I think people are still concerned about, As I said, close down of societies, outbreak of corona again and all of that. So people are generally very cautious and they are only buying for what they actually need and they are not really focusing too much on A very smooth supply chain or very smooth operation. I mean, I guess, like us, Being more and more reluctant to manufacture for stock and to believe in the demand where the customers tell us So it's really a difficult environment. But overall, It's still kind of moving in a positive territory compared to running throughout quarter 2. I don't know if some Christophe or Ulf want to Give me some further flavor on this. But I mean, otherwise, it's really it is difficult to judge where we're going. But once again, if we look solely on the KPIs, It will actually be substantially better than we believe ourselves. Okay, great. Thank you for the call. Thank you. Our next question comes from Osmanska Veila, Mordea. The floor is now open to you. Hi, it's Agnieszka here. I have some questions starting with a follow-up on agri aftermarket. I appreciate the fact that you have been gaining market share. But can you tell us about the market development in the quarter? Was it growing as well? Was it flattish or The market was growing as well. So the market was overall growing. And do you think that it's this kind of change in the trend that we were waiting for? At the same time, of course, AE was dramatically down. So I mean, it's really difficult to draw some conclusions out of that. But definitely, the farmers are running the tractors. And Potentially, some of the guys who bought new tires, they probably would have bought a new tractor in a normal environment. So that is why it's difficult to Really draw some conclusions out of it. But I mean the farming season has been fairly okay and that they are Getting more confident. And I mean, you know it as well, Agnieszka. It's been a very kind of under buying for a few years. And eventually, they need to catch And I mean, now the catch up for the aftermarket is probably coming from both general Kind of localization of food production or whatever people are believing in and at the same time lower OE sales. So but it's a 1 quarter. So we need to be careful. It's a very, very strange quarter. So I mean, of course, we cannot really make a firm statement that we have turned a corner and now it's on its way up. I mean, we have to wait and see. Understand. And then a follow-up also on the restructuring that you are introducing right now. If I'm not mistaken, you have quite extensive production footprint with more than 100 production facilities. Will you take a chance now and consolidate the footprint? I mean, that has also because our factories is individual factories and that they are aiming towards So it's not like we are making the same in a lot of plants. So I think we're still going to see this has been fine tuning more than kind of overall restructuring. I mean, we're talking here, it's only a few plants we are addressing and it's not really going to be any dramatic footprint change. We don't feel that being efficient. We don't believe it's going to be working to consolidate Extensively. There will be some consolidation, but I mean, it's really minor in relation to the overall number of manufacturing units. Great. Thank you. And then maybe a question to Ulf, if you could help us with thinking about the working capital development in the coming quarters. Looking at your inventories level, I can imagine that you probably could take it down more, but then Probably you will build up some account receivables. Can you guide us a bit? The only thing what we said is It's kind of difficult to not difficult, but it's kind of you saying, have done a very, very good job, all of them. But at the same time, if you don't compare with the sales We still have too high inventory compared with the sales in the quarter. So they need to go in and adjust all the parameters, ordering points and etcetera. So we still Have plenty to do. But again, also then it depends on the sales development going forward because again, It's more expensive to lose a customer to lose a delivery than in order to all of them to gain some low inventory. But we are working on it and so far we have done a very, very good job, but particularly wheels have done a very good job. Ceiling, we have Slightly, they have little to do in order to change the parameters. But we will still see they're also moving into lower seasons, So I'd say in Q3, Q4, so you would see a further drop in inventory. Yes. And then the last one for me. I maybe misheard you, but Did you say, Peter, that you expect slightly better quarter the next quarter versus last year? Or did you mean versus this quarter? And also you mentioned something about North America. So sorry, Anja. If I said that, I was wrong, because it's slightly better development Year on year, in Q3 compared to year on year in Q2. All right. I understand. And then you also mentioned something about North America Getting slightly worse than last quarter. Can you If we should kind of grade it, then we Thank you. Our next question comes from Malte Schulz, Commerzbank. The floor is now open to you. Hi, good afternoon. Three questions also from my side. First of all, with Only one sixth of your added restructuring and business under development. Don't you've seen there more opportunities to make now a deeper restructuring? Or is Also kind of the final big go or shall we expect that in the next year or 2 years we will see another very big one here to Yes, to make it more profitable for the future. Second question would be given that aerospace is probably down for them at least say next 5 years, do you expect there are also significant write downs to come? And maybe also final comment would be my last question on the oil and gas market on the offshore side. How much recovery is still left? And probably also when you look at your orders for Q4 or even further down, they would probably be diminished with a very low oil price. What do you think? Finally, on the business development, we had last year already, we did some major restructurings already last year. We are I mean, the fine tuning here in this quarter, if I may call it the fine tuning, might be not That's good to call it that. But I mean, what we did here was some restructuring related to specific markets within oil and gas where we see The changes coming up due to the, let's say, these low oil prices, that was more fine tuning. We don't see any major Restructuring going forward in that area, we are already moving from earlier Announced restructuring. So that's going to be continued improvement from a structural point of view, but not really any extra efforts that we see today. And write downs in aerospace, I cannot see that happening either, but that is something we started shared factories and we're doing that. And we don't honestly, we don't really have a lot of A lot of intangibles or anything connected to that area. So we don't have a we don't see that being a major I don't see any kind of risk in that related to aerospace. Oil and Gas, I mean, We are still I mean, still I see a high activity level. Of course, we are not blind and then we see that overall oil price is down and we see that the overall activity. But Also, they are a little bit linking back to the wheel season. It's been kind of a pent up demand for that, and there's still quite a lot of big projects. And we Having the quarter actually received quite a lot of big orders, and we have not been shrinking the order book in the quarter, but maybe not been building us as much So we expect a much, let's say, more stable development at least in the next few quarters, and then we need to Watch and see what is happening, yes, going into next year. I mean, that is really the time frame that we're looking At the moment, in relation to oil and gas. Okay. No, that's clear. Thanks. Thank you. There's just going to be a brief pause whilst any other questions are registered. Okay. There appears to be no further questions. So I'll hand back to the speakers for any other remarks. Okay. Thanks a lot for the interest. And as usual, of course, Christophe, myself and Ulf is still around. So if you have any follow-up questions, then don't hesitate to get back and I push that first question at least to Christophe. And then we will Support is offering making sure that you get good replies on your questions. And if we don't hear from you shortly, I hope that I will be able to meet all of you here as the autumn kicks in, and we are Again, attending various seminars and doing presentations. So meanwhile, some of you, I think, has already been on a few weeks of vacation. And if not, And then best of wishes and stay safe and take care. Thank you. Thank you. This now concludes our conference call. Thank you for attending. You may now disconnect all your lines.