Earnings Call: H1 2021

Aug 11, 2021

Ladies and gentlemen, welcome to the presentation of Debt Builder Interim Report 2021 Conference Call and Live Webcast. I am Paolo, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. Webcast viewers may submit their questions or comments in writing via the related field. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Dirk Lambrecht, CEO and Mr. Walter Scheff, CFO. Please go ahead, gentlemen. Yes, thank you. Hello, everybody, and welcome to our today's call. Here with me on the call is our CSO Advisor, Per. As usual, we will provide you an overview and an outlook on our After this, we will be happy to answer any questions you may have. I will Start with the business review on group level. Compared to the pandemic horizon prior year period, we achieved a dynamic revenue growth of 20.8 percent to CHF519 1,000,000 in the first half of twenty twenty one. For a change, the currency effect was close to 0. As you can imagine, the pandemic was still an issue, namely strict Hi, Jan and conduct rules and a lot of employees working from home, but our markets and our plans were significantly less effective than in the prior year period. Thanks to the strong recovery in demand and our leading positions, We were able to achieve a double digit sales growth in almost all the markets we serve. Thanks to the high capacity utilization and cost discipline, we could increase our EBIT by more than 50% to CHF98,900,000. As a result, The EBIT margin improved by more than 3 percentage points to 16.8%. The net result increased by more than 70% to $74,500,000 This corresponds to a net result of 4.38 per barrel share. All these figures and comparisons are for continuing operation in both periods excluding the divestment in the first half of twenty twenty. Due to the negative effects of the pandemic in the prior year period in comparison with the first half of twenty nineteen provides additional information. Based on continuing operations, our revenue and net result already are above pre pandemic levels by 8% and 7.4 Percent, respectively. Our strategic realignment proved successful throughout the pandemic and beyond. The two business areas Healthcare and Industrial Solutions focus on markets and customers, while the group functions Technology and Innovation in Finance and Shared Service provide valuable and competent support. In the first half of twenty twenty one, both businesses areas generated a combined EBIT margin of 18.3%. With this figure, the profitability of the core business is already almost on a par with that of the former Sealing Solutions division, highlighting the promising potential for the future. Next, I would like to comment on the performance of our business areas. I will start with Healthcare Solutions. This business area offers high quality system critical components for containers and delivery systems for injectable drugs and diagnostics for the pharmaceutical and medical markets. As part of this business, we support the leading and the provision of COVID-nineteen vaccines. Together with our employees, we are proud that we can make such an important contribution To overcome the pandemic, in the healthcare business, we experienced a very strong demand from the business and from the COVID vaccine manufacturers. We were able to increase revenue by 18.7% to CHF238,700,000. Our new plant in Middletown supports us in absorbing the high demand. The higher margin pharma business generated a growth rate of more than 22%. Thanks to the high capacity utilization, EBIT rose by 60% to 56,900,000. The EBIT margin improved by a third of 23.8%. This was supported by a positive change in the product mix, namely a greater proportion of high margin coated components that are manufactured according to first line standards. Through our newly launched NeoFlex components and our participation in COVID-nineteen vaccine projects, We could attract new customers and expand our customer base. This creates a foundation for a long term revenue growth. To avoid future capacity bottlenecks and to maintain delivery capabilities, we are investing in production capacity expansion in the course of this year. The opening of the new second plant in India is planned in the Q2 of the next year. I will now Switch to the business area Industrial Solutions. This business area offers customized system critical components for demanding application in the Mobility, Food and Beverage and General Industry Markets. By streamlining its organization, we have further optimize the Industrial Solutions business area structure. Among other changes, the Oil and Gas business unit is now part of the General Industry Business Unit. I will continue to lead this business area directly. While doing so, I can rely on 3 very seasoned and committed managers who had and drive the 3 business normalized market conditions and a significant demand recovery in the first half of twenty twenty one. Accordingly, revenue rose to CHF 249,300,000 Adjusted for currency effects, This equates to a 23.5% growth compared to the prior year period in which the business was hit hard by the pandemic. The mobility revenue even grew by 29%. This is encouraging, but based on the continuing business, we are still 4.7% below The pre pandemic level of 2019, the Mobility business unit is still some 10% below the 2019 level. Thanks to the improved capacity utilization and the consistent cost management, we were able to increase the EBIT by some 50% to €39,900,000 This is still 22% below the pre pandemic level And leaves room for further improvement to previous levels. This EBIT margin grew from 10.5% to 12.8%. In the Mobility business unit, we are currently establishing a global production base for complex Multi component parts by transferring the liquid silicon production technology to our global production network. Multi component parts are particularly used in electric vehicles. In the Food and Beverage business unit, the new 10 year contract with Nespresso and the supply of additional customers resulted in a revenue growth of some 20%. As announced, the changed product mix has a negative impact on the margin, but will improve the absolute EBIT over the coming years. To cope with the high order backlog in the food and beverage business unit, We plan to invest in new production facilities and automation at the Swiss site in the course of 2021. Besides our core business, the online distributor Ryfel completes the Detweiler Group. Based on the competent technical support, high availability and short delivery times, Ryker supplies more than 100,000 electronic products to more than 1,000,000 business, government and private customers. Thanks to its attractive price performance proposition, Rifelt could continue to increase its market share and accelerated organic revenue growth to 14% in the first half of twenty twenty one. For the first time ever in its 50 year company history, Reichheld generated more than CHF100 1,000,000 in revenue within a 6 month Period. In the first half of twenty twenty one, the growth in the business to business segment gained momentum, while the growth in the business to consumer segment slowed down a bit as we have expected. Thanks to the very high capacity utilization and operating leverage effects, the EBIT rose by more than a third to 10,100,000 and the EBIT margin improved to 9.6% despite the already strong base from the prior year period. To cope with the high growth in demand, we will invest €10,000,000 as announced in a new distribution center. This will double Raichl's logistical capacities. With this, I conclude my review and hand over to our CFO, Walter Schell. Walter, the floor is yours. Thank you very much, dear. Hello to everybody. Great to have you all on the call and thanks a lot for your interest in that Wheeler. My name is Walter and I'm happy to provide you more financial details on DASB Wheeler's half year results 2021. Let us start as usual with the sales bridge. To have a proper prior year period base to compare with, We have to deduct the remaining revenue of Disturac, NEDIS and Civil Engineering from the reported revenue 2020. Today's business generated CHF488,600,000 in revenue in the first half of twenty twenty. This is the 3rd part from the left here. Further to the right, you can see that all three businesses supported our substantial organic revenue growth with double digit organic growth rates. Healthcare Solutions grew by 18.6 percent to a revenue of €200 €38,700,000 which is the figure in the bracket as you can see, Industrial Solutions by 23.2% to €249,300,000 and Reikjens by 14% to above €100,000,000 €105 This adds up to a 20.3 percent organic revenue growth for DAT WILER as a whole. For a change, the Swiss franc was slightly weaker in the first year first half year twenty twenty one compared to almost all currencies relevant to Dettweiler. It is 0.5% this year and actually it is positive for a change. Overall, the reported growth in the continuum business totaled 20.8% and revenue reached CHF590,000,000. I will now move on to the EBIT bridge. As you remember, the EBIT of the prior year period was impacted by our divestments. The EBIT of the continuing operations was €64,500,000 in the first half of twenty twenty, the 3rd pillar from the left again. Further to the right, you can see the contribution to the EBIT increase of the 3 businesses in the first half of twenty 21. Healthcare Solutions and Industrial Solutions both increased its EBIT or their EBIT by more than 50% to a level of €56,900,000 or €31,900,000 respectively. Again, the figures in the bracket. Reichelb improved EBIT by another third in addition to an already very strong prior year period. In absolute terms, the Healthcare business was the largest contributor to our overall €34,400,000 EBIT growth. It contributed almost 60% of the total group's EBIT which was €98,900,000 As the same with revenue, the currency impact on EBIT was negligible in the first half of twenty twenty one and it is positive for a change. The reported EBIT increase The reported EBIT increase amounted to 53.3 percent, thanks to strong revenue, good capacity utilization, but also good cost discipline. How does this compare to the past? This slide shows you our robust track record in operating profitability, thanks to our leading market positions and our close customer relationships. You see that the debt side of reorganization in 2021 actually pays off and is appreciated by the markets reserve. For the group, our continuing operations are actually back at the pre pandemic EBIT margin levels of 2019. Healthcare Solutions delivered a strong EBIT margin rebound in 2021. It is considerably above the reported pre pandemic EBIT margin level of 2019. The reported EBIT margin in the first half of twenty twenty was affected by one off costs to overcome the pandemic impact and actually start up costs or ramp up costs of the new U. S. Plant in Middletown. EBIT margin for Industrial Solutions also recovered compared to the previous year. It is still behind the levels 2019, but the ambition is clearly to reach previous levels again. Reichheld succeeded in continuously improving its EBIT margin over the last years, thanks to strong demand and high capacity utilization. On this slide, you see the consolidated income statement. Don't worry, I will not go into all the details, but I want to make a comment below EBIT regarding the net finance result and the income tax expenses. Dabfwheel's financial result in the prior year period was characterized by a large corona related foreign exchange fluctuation and therefore a strong negative Currency impact. In 2021, the currencies relevant to that figure almost all of them recovered against the Swiss francs are more or less in normal fluctuation mode. The income tax expenses increased to €23,200,000 The low value from the previous year's period is due to one off effects from the divestments, but also the corona impact. That means significantly declined operations in low tax countries mainly in Industrial Solutions. The current tax rate is closer to the medium term reality of some 22% to 25%. When we have a look at the balance sheet, you see that it expanded due to a strong growth, Good business performance and related debt result of €74,500,000 As a result of our customer driven investment activity and here I make a reference to the recent media releases about investments and I'll talk about them in a second, the cash balance actually decreased. As a result of the strong growth in turnover, as you can see here, net working capital also slightly While our current liabilities actually expanded nicely, mainly the accounts payables, Accounts receivables also increased. Our equity ratio increased compared to half year 2020, but slightly decreased against year end 20 The 65.2 percent equity ratio and strong financial flexibility support our pursuit of future opportunities and investments even beyond pandemic times, especially in Healthcare Solutions and Food and Beverage. Here, I give you or we give you an overview of the average capital employed and on the return on capital employed over the past 5 years. The strong EBIT increase of more than 50% is the main driver of the improvement on the return on capital employed. To appreciate the decrease of capital employed, you need to understand the calculation model. The capital employed is at average of 3 values End of June 2020, end of December 2020, and end of June 2021. You certainly remember that the value at the end of June 20 2020 was significantly impacted by corona and therefore lower than usual. This was due to lower receivables and inventories and as I said in the midst of the corona crisis. As announced earlier this year, we are investing in production capacity expansion of the Healthcare and Food and Beverage businesses. This is driven by encouraging order intake and customer demand. In total, we have invested in the half year first half of twenty twenty one €54,800,000 Compared to net revenue, our capital expenditure reached 9.3%. This is actually higher than in the 2 previous years and clearly driven by customers and market needs, which gives us a lot of confidence for the future development. Driven by strong demand, we allocate our capital into growing markets where we see attractive growth and profit potential for the future. Let me quickly provide you some information on the consolidated cash flow statement without going into the details. Our stressed Sorry, our strong cash generation from operations of €78,600,000 allows investments and further repayment of debt. Free cash flow stood at plus €25,300,000 in the first half twenty twenty one. This is below the figure for the same period last year. But as you can see here on the 3rd line, the amount for net cash used in investing activities is also some €35,000,000 higher than in the previous year, because of investments, but we also have the cash inflow from the divestments in 2020. On this slide, you see the multi year overview of the important projects in which DAT Leader invests. As announced, we want to take advantage of the attractive market opportunities. We expect to invest some €20,000,000 to €130,000,000 for the full year 2021. In the coming year, from today's perspective, we expect our investment activity to reduce Some €90,000,000 to €100,000,000 or around 7% of net sales. And this 7% obviously depends and differs between the various businesses. As you can see, the majority of the main investments projects support our 2 high growth high margin businesses, Healthcare Solutions and Food and Beverage. Additionally, we will invest some €10,000,000 in the Expansion of the logistics capacities of our online distributor, Dreichardt and some €6,000,000 in a new competence center for surface technology at the Swiss Talking about investment figures is one thing. Visiting our highly automated production facilities and see what value those investments create is another thing. Therefore, we are very happy to invite you to our Capital Market Day on 30th September 2021. We will be honored to welcome you as our guests in the beautiful Canton of Houri. In addition to presentations on current topics, we would like you to show we would like to show you in particular our plant in Schadtorf here in Switzerland. You will have the opportunity to see our investments in the production facilities of the Food and Beverage business. It will allow you to get an idea of the production processes complexity as well. A detailed invitation with registration link will follow by tomorrow. With that, I would like to hand over to Dirk. Yes, Wouter, thank you very much. A lot of Interesting figures and it's coming up in the right direction. So I will now continue with the outlook. But allow me first of all to remind you of our strategic priorities. As we have drive profitable growth, to accelerate the digitalization and to increase agility and enhance sustainability. By focusing on these priorities, we will drive our organization and provide the framework for our current, our future success. The way we have managed the impact of the pandemic so far shows that we are working on the right topics. Our people and our organization were and are agile and digital enough to operate and to do business in a very fast changing environment. Looking at the future, we want to further enhance So the sustainability of our organization and employees. As mentioned on previous occasions, an interdisciplinary project team has been working on developing our sustainability and It includes 12 focus topics that prove our commitment to reduce our environmental footprint and deliver more value for our stakeholders in the future. The focus topics are structured according to environmental, social and governance priorities and are intended to close gaps and build on existing strengths. One of our main environmental initiatives is for our own activities worldwide to be climate neutral by 2,030 by following the science based target approach. Through our social activities, we want to proactively improve the relationship with our customers, employees and the communities in which we are active. In the area of governance, We focus on continuous developing the development of transparency, compliance and ethics. Each topic bundles activities relating to current and future projects. There are clear responsibilities with measurable objectives for effective monitoring. All the activities are coordinated by the new Head of Sustainability Function who reports directly to me. The official launch of our renewed sustainability strategy will happen together with the next edition of our sustainability report at the end of this month. We are looking forward to providing more details during our Capital Market Day for the 30th December. For the specific outlook for the full year 2021, we are optimistic despite the remaining uncertainties due to the pandemic. For the Healthcare business, we expect the significant double digit revenue growth close to 20 to continue in the second half of the year. The same counts for the positive product mix development to high value products, which will lead in the mid- and long term to further margin improvements. Due to the high order backlogs, We also expect the growth rate in the food and beverage business unit to remain high in double digit range. In contrast, the short term trend in the mobility business unit depends substantially on how the general shortage of electronic components will affect the number of vehicles produced worldwide. We expect that this bottlenecks will be solved in the coming quarters. Also, Raquel's further development is subject to how the shortage Electronic components will influence the availability of electronic products. More uncertainty is the result of increasingly difficult Procurement situation of certain raw materials and logistics. Despite these Challenges and the seasonally weaker second half, we are raising our full year guidance to above CHF1.15 billion To conclude my presentation, let me summarize the 5 elements of Our investment proposition. We focus on system physical elastomer components. We offer superior customer value base on our recognized core competencies. We have leading positions in markets driven by mega trends. We are dedicated to talent development and sustainable growth and we have a track record of Strong performance and financial stability. In the first half of twenty twenty one, thanks to a high demand and dynamic Profitable growth, our core business showed our promising potential for the future. I'm convinced that our strategic realignment with a focus on system critical elastomer components for attractive global markets will pay off in the long term as well. Now, I would like to thank you for your attention. And Walter and myself are now happy to answer your questions. You will hear a tone to confirm that you have answered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to use only handsets and eventually turn off the volume of the webcast. Webcast viewers may submit their questions or comments in writing via the reality field. The next question comes from Charlie Ferenbach from AWP. Please go ahead. Good morning, gentlemen. Hi, good morning. Could you give us some more light about the future of So Eichl, are there any discussions with possible buyers ongoing, maybe 2 to 3 words of that? And second question So it's concerning the margin. You had this 18.3% in the core business and you see further improvement Potential for improvement. So where's the roof for the core margin EBIT margin? Is this is over 20 Present possible? Thank you. Yes. Charlie, thank you very much for your great questions. First of all, to Reichheld. As we already said several times, Reichheld is performing very well as you have seen in our reports here for the first half year and then the previous years. So there is not a high pressure. As I said several times before, If a company is compending and is looking for a rifle, we are always prepared to act accordingly. So from that perspective, there is no pressure from us. There is no formal process from our side currently to sell Ryfel. And we will review that every year as mentioned before. And for the second point, as I said, within my outlook, if we are looking on the 18.3% margin, Which is for the core business, yes, there is further potential for the future and that always depends a little bit about, let me say, the product mix. But overall, I'm quite confident that we will be able in the coming years to have, Let me say in the standalone approach in this direction to optimize it year by year. Okay. Thank you. But maybe for Ryhut, it's not belonging to the core business anymore. This is unchanged? Correct. That is unchanged. That is the reason why we called about the core business with Healthcare and The next question comes from the line of Richard Fry from TKB. Please go ahead. Good morning, gentlemen. Good morning. I have two questions regarding Healthcare. The first one is about first line. You have mentioned that you have achieved a positive development regarding mix, Meaning that you have a higher share of first line components in it. May you give us a rough indication So that we can imagine a bit better how big that change is or how big The share of first line in the mix looks like. And secondly, also regarding Healthcare, May you give us an indication how organic growth without the COVID boost would have looked like just to have also an idea without COVID how business would have being developed? Thank you. Yes. Richard, thank you very much for your questions. And I think that is interesting for other ones as well. Yes. With regarding to the first line approach, as you know that we are currently ramping up new Facilities in the U. S. As well in India with first line. So our First line is designed for high value products, which is still on the let me say on the level of around 15%. So from that perspective, is there good room for improvement over the coming years that our NICS will be more in favor of us, so that we are moving into the high value product range over the next coming years when we have other facilities fully ramped up. With regard So the topic of the margin, I think there is, of course, As well some room for improvement, but it's mainly linked to the product mix here. When we are looking to the portion of the COVID, I think it's around 50% currently what we experienced so far and we have quite a good visibility for the next 2 years that we see a similar mix at minimum for the next 1 to 2 years. Okay. Just a clarification, this 15% you've mentioned regarding first line, this is in accordance To sales in Healthcare? Yes, correct. Yes, of course. Okay. Thanks. The next question comes from the line of Sergey Roetzer from Credit Suisse. Please go ahead. Yes. Good morning, gentlemen. I have plenty of questions, but I'll try to ask only a few of these, Sven. So the first one is You have been guiding CapEx of between €19,000,000 and €100,000,000 for next year. And Walter mentioned that it will be 7% of sales. So This tells me that sales for next year for 2022 will be between 1.285 and 1.428, so midpoint is 1 350, do you feel comfortable with these numbers that we will have sales next year already between 1.3 and 1.4 plus? Yes. I think that's Walter, you would like to answer that? Yes, of course. Well, Serge, as in the past, that's an indication, right? That's The goal after and you have seen that in the slides after we have had some recent investments, The midterm goal is actually to go back to a kind of normal level of 7% of net Having said that and I repeat it again, if there is customer demand, if there is actually demand in the market, We are further support that growth, that demand and might invest as well. It really depends on our customers and we will we are certainly there to support them. Okay. To become more precise, when we are on Slide 20, where you have all these investments and these new capacities or plants, We have all the phase outs going into 2022. So can you go plant by plant and tell me what is incremental revenue. When is the revenue recognition of these several initiatives? Honestly, we are not going plant by I don't think that you have expected that here. No, I tried it. Okay. No, I think it's As we said, we are investing based on the market demand and the market demand especially in some areas is Quite very high. And especially in the health care sector, as you know, if we are starting to invest in health care, which we'll know As well in next year, especially in India that will lead to further sales in the next year. And I said several times That will give us an opportunity to grow in this sector on the double digit range independent of what happens with COVID and COVID will be always additional tailwind to go beyond this figure. I think that is what we can say. And Food and Beverage, I think it's I think we have this long term agreement. We have, let me say, great customers on board, which are Placing more and more orders for us that we have to increase the capacity and that installation of the new That will take some time here. But overall, we'll see then in the coming years That we should benefit from this investment what we will do in 2020 2021, sorry, 2022. So that is what we can say today. Uncertainties we still have in the mobility sector. If we are looking here For the short term, the ship shortage crisis, as you know, is not really over. That is lingering disruption is now likely to reduce the scale of the global light vehicle production in the second half of twenty twenty one. We expect That a lot of activities will be then moved into the year 2022, so that we will see some further increase of sales Okay. This is very detailed. Many thanks. But with that, can I come back to the guidance on Healthcare and Food and Beverage? I believe you said that you said double digit sales growth for Healthcare or close to 20%. And with the sales mix, then the margin will further improve already in the second half? Or is it more mid term, long term? That will be more in the mid and long term, yes. So let me as I said, the installation of the new first line Facilities which are ramping up currently that will take some time. We are getting more customers on board with our clear target to drive more in the direction of high value products as we said for Nexanto with our NeoFlex Product live. That will need some time, but that will come over the coming years. But you can keep the margin you achieved in the first This month of this year. Now the margin for the second half of this year due to this seasonal effects, what we have as you know in July, August And December will be slightly coming down and that is why the reason why we have, let me say, in the outlook For the second half of the year, a slightly lower margin. Okay. Got it. And probably the last one, The growth in food and beverage, you mentioned double digit or high, but you have been growing 20% in the first half. Of course, the base is lower compared to the second half. But then is this more now the EUR 70,000,000 plus a sustainable level? Or can you grow much further on this EUR 70,000,000 plus? Based on the orders what we have in hand, it seems to be a very stable outlook. So that means that it should be on the same level. So no further growth sequentially? Yes. Okay. Got it. Thank you so much. The next question comes from the line of Michael Feud from Vontobel. Please go ahead. Yes, thank you. Good morning, gentlemen. Two questions from my side. Just a follow-up on the previously asked question relating to the vaccine, COVID-nineteen vaccine related business. I didn't get the answer really that 50%. Was that did I understand correctly that 50% of the growth in health Care sales came from the vaccine related business. Just can you just clarify that please? Yes. Please do not mix up. I think what I said is that First line today is around 15% of our total turnover in the health care. And on the other hand, we have approximately the total growth what we have In the first half year, it's around 50% of that is related to COVID. Okay, perfect. So I got that right. Thank you. And the second question would be regarding the mobility business. You saw Strong growth there, also some sequential growth, and you mentioned all the uncertainties in the second half of the year. Can you maybe give us a little bit more detail what you are currently seeing in terms of the behavior from customers in the mobility business. And is it fair to assume that you expect revenues to be Slightly below the first half level in the second half. Yes, for sure. I think thank you very much for this question because that is very clear that obviously We had this big impact in the first half year of last year and mainly in the second quarter. So if you're looking to the global de extinction production So a short snapshot there. Let's just one example this year over year growth in the Q2 was around 55% or 54%. So of course, that is related to the lot of shutdowns what we have seen last year. So We have as well seen last year there was a recovery already starting in the Q3 and Q4. And that of course if we are compared then the 2nd half of this year was the last year that the growth will not on the same level as you can imagine. But overall, we Expect according what LMC is saying as well that the growth for the global light vehicle assembly will be around Yes. Let me say 13% to 14%. And we believe if that will happen that we could, Let me say in line with that maybe slightly above that. And yes, I think that is what we can say today. Thank you. Thanks. Very helpful. Yes. You're welcome. The next question comes Sebastian, can you hear us? Mr. Fegeld, we cannot hear you. Are you perhaps on mute? Maybe we should proceed and then Sebastian maybe The next question comes from the line of Daniel Koenig from Mirabaud Securities. Please go ahead. Yes. Good morning. I had 2 very easy questions. First, I was wondering what one can expect from raw materials. I saw the gross margin is Slightly up on the slightly up in 2021 H1, what can one expect For H2. And then my standard question is what's the latest on Middletown? Is it Still breakeven in the Q4 'twenty one? And yes, what is the latest So, Middletown. Thanks a lot. Daniel, let me take the first question about the raw material situation. Well, the figures you have in front of you, we don't have any negative effects so far. Actually the team is putting a lot of effort to keep the supply chain running. However, as just Dirk mentioned before, the procurement situation, the logistics capacities, the components, There's a lot of certainty at the moment and that can even become tighter in the Q3 right now, So in the second half. We believe a recovery is possible in from Q4 onwards. When you talk about the raw material prices, until now we did not see substantial increases in raw material prices at least in our books. However, in the second half there will be increases and we will Actually have the opportunity to hand them over to the market with a certain gap. With that Dirk, maybe you want to ask or answer about Middletown? Yes, of course. I think I'm happy to say that we are doing Good progress in Middletown. So according to our strategy and that is not only in Middletown, we have as well good progress And our other sites with regard to productivity and to leverage, let me say, our installed capacity here. We will not disclose I do not like to disclose any detailed figures with regard to middle term, but what I can tell you It's according to that what we have planned on the strategic approach for the future. So I'm so far Happy with that and we will see some further opportunities with that for the future especially for the U. S. Market. Okay. Thanks a lot. Yes. You're welcome, Daniel. The next question comes from the line of Rolf Reinders from Helvea. Please go ahead. Yes. Good morning, gentlemen. Congrats for these results. That's all very encouraging. Two questions, if I may. All other companies are reporting about inflation. You also mentioned that which you mentioned that mostly you can pass it on. Would you be able to Elaborate a bit on the magnitude and the differences maybe per segment, what you experience from clients. And you maybe clarify a little bit with that what you mean? You mean is that On the raw material price per segment or Yes, indeed. Sorry for that. This raw material price increases It's a big topic with all the companies that report now. But of course, not everyone is able to pass that on. I would be curious to learn what the magnitude is You of these price raw material price increases and how the different responses are per segment? Well, let me thanks a lot, Rod, for your question. Let me shed some light into that. For the Healthcare Business, I mean, we have aluminum parts. We also have the aluminaire parts and there we have the increase. However, Due to kind of measures that we have taken, we'll be in a position to actually at least for 2021 not have any major topics there. We actually secured prices at a very good level. When you talk about Industrial Solutions, Let me distinguish between the Food and Beverage and Other Businesses. In the Food and Beverage part, the wager element is aluminum and there we also have the chance to pass it on to customers. On the mobility side and general industry side, actually the relevant changes that might Happen in the second half or later, we normally have kind of a time lag of between 3 to 6, 7 months. Okay. Thank you. And then you had a strong balance sheet, of course. I think it's about net debt free now, but I didn't see that immediately. Maybe you can comment on that and maybe on your Capital allocation priorities going forward, maybe in combination update on possible acquisitions that could come closer? Yes. Thank you very much, Rolf, for your question here. And of course, as you know that we're always looking in the M and A sector. But as I said, We will be very disciplined when we are looking in this field that whatever we acquire should be fully linked to our core competencies, to our cultural fit and of course to our market approach. So we have yes, we are in discussion with, of course, as always with companies. And but it's too early to say that we can announce something in the next month. However, we are working on that, but from time to time, we need some time. But on the other hand, with regard to our strong organic growth, I think not only for 2021, but as for the next year, I think our the pressure is not so high for us to I'll go into an adventure. Yes, let me say so we are focusing on organic growth and looking forward that we are fulfilling the market demands for the next years, especially in the already defined business areas, which we have in our portfolio. Okay. Thank you. That's encouraging to hear and understood. And Could that very strict focus what you have on M and A then result in Different payout ratio, given the strong balance sheet, Reichardt still On day to be divested, etcetera, etcetera? I think that is what we will discuss and always together in end of the year or the beginning of the next year. So it's too early to say What will be happen next year, of course, we will try to optimize our dividends To give a stable dividend to our investors here and as you know we have a payout ratio In the range of 40% to 45%. That is what we currently approaching here, yes. Okay, yes, great. And maybe final question. Other companies also report next to what you report on return on capital employed or return on invested capital. Do you plan to communicate on that parameter in the future too? Hey, Errol, hi, it's me. Well, it's actually the same answer as in the past, right? We Due to Swiss cap sales to the right that we have, we actually in all the acquisitions, we offset the goodwill. In a normal PPA, you would actually you would go in much more details. And I think when we look back at our goodwill, What kind of elements are in there? That's not an exercise that would be very beneficial. So yes, internally we measure that. Intern externally, I think it would not help a lot. Okay. Thank you very much. So we have still some questions from the webcast. One question is, We'll be there an increase in the sales of elastomericomponents post COVID as well. As I said before, yes, there will be an increase and we see especially and that I think that is related to pharma here the question. Especially in the pharma sector, we have a good outlook for the next coming years and that is of course in need because we are Quite a high amount in the sector. So there is a strong pressure to us to perform here the right way. Another question is coming with regard to the seasonality second half of this year versus the first half That the lower margins in the second half year in the Healthcare and Industrial Solutions sector as I said that is mainly linked by the seasonality. And that is the main reason that we are below in the The last one, why we invest €10,000,000 in the new warehouse for Ryfel when Ryfel is for sale? So as long as Ryker will be in our portfolio, we will handle them as a business which is going forward To optimize, let me say as well the motivation of all our people there. So and whenever the time is coming, of course, that Investment will be considered in a potential, let me say, surprise. Yes, that's all. I would like To thank all of you for your attention, for your great questions in the name of Walter as well. And we are looking forward to see maybe a lot of you with our Capital Market Day, which we will have on the September Well, please, I'm sure that we can give you them a further insight about the rest for the rest of the year and for the future. And I think we have a lot of interesting things about new product lines, innovative products and that is what we would like to show you. I'm looking forward to See you there. And now I wish you a great rest of the Friday and sorry, sorry, sorry, sorry, Wednesday. I'm looking forward to see you both soon. Thank you very much and goodbye. Hi. Thank you very much. Have a good day. Ladies and gentlemen, the conference is now over. 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