Earnings Call: H2 2020

Feb 9, 2021

Ladies and gentlemen, welcome to the presentation of Debt Villers Annual Results 2020 Conference Call and Live Webcast. I am Alice, 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. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Dirk Landbrecht, CEO and Mr. Walter Schertz, CFO. Please go ahead, gentlemen. Yes. Welcome to today's call. My name is Dirk Lamrecht and here with me is We regret that we cannot meet in person for our annual risk size conference this year. I do sincerely hope that these things will change in the course of this year and that we will be able to meet in person again soon. I will directly move on our today's agenda. After our explanations, Walter and myself will be happy As announced 1 year ago, we reorganized our company to strengthen our market Focus on our core competencies. The new organization has been implemented successfully and has already proven itself during the COVID-nineteen pandemic. The increased focus on the respective markets had Detweiler to respond in an agile way and And quickly to changing markets developments and customer needs. During my part of the presentation, I will focus on the In business as shown on this slide, our CFO, Weiter Schulz, will talk about the transition from the former to the current Der Weiler Group. In the pandemic year 2020, we proved that our focus on system with critical elastomeric components For attractive global markets brings added value. Currency adjusted to continuing operations generated an organic revenue growth of 1.2%. Walter will provide you more details. The Healthcare business, Food and Beverage and our online distributor recycle Business enjoyed a strong demand throughout the year. The other units had to accept a significant revenue decline during several months. By taking action early, we were able to adapt cost structures quickly. At the same time, the Healthcare business and the online distributor rifle improves their profitability. As a result, Detweiler was able to increase its operating result by 10.9% to CHF148 million. The EBIT margin improved to 14.6%. The net result from continuing operations rose by 20.7 percent to EUR 118,900,000. Now I would like to comment on the performance of our business area. We will start with Healthcare Solutions. This business area offers high quality system critical components for containers and delivery systems for injectable drugs and diagnostic For the Pharmaceutical and Medical Markets. The Healthcare Solutions business area increased its sales to €403,400,000 this has been adjusted for the strong Swiss francs impact. This equates to an organic growth of 11 4.1 percent to €79,200,000 This resides in a significantly higher EBIT margin of 19.6 Included in these figures are expenses for managing the impact of the pandemic, Startup costs for new production capacities, higher depreciation and negative currency effects. To meet the strong demand for high quality products, we implemented several measures to increase our production capacities. That is through further automation at 20 fourseven work regime and the installation of additional equipment. The expansion of our facility in India where we will double our capacity is continuing. However, unfortunately the pandemic has delayed the construction work. The new building is now scheduled to be operational in the Q2 I will now switch to the business area, Industrial Solutions. This business area offers customized system critical components for demanding applications in the mobility, Food and Beverage, Oil and Gas and General Industry Markets. In the business area, Industrial Solutions, we Civil Engineering Business in May 2020. Therefore, we present you the figures of the continuing operations of this business area Without civil engineering and the reporting in the prior years. Due to the substantial negative impact of the pandemic, revenue fell to €427,500,000 This corresponds to an currency adjusted decline of 11.4%. Thanks for the quick adjustment of the cost structure and the encouraging performance of the Food and Beverage business, The EBIT margin improved slightly to 11.8%. The operating results amounted to For €50,400,000 Top of the end of the reporting year, Detwala Telnet's strategic partnership with Nespresso. The new multiyear contract will run until 2,030. It envisaged a continuous volume and revenue growth. Since the Q3 was also supplied to another customer, To serve the forecast demand, we will invest in the expansion of our production capacities at our Swiss plant in shut off. Besides the two business areas that are part of our Krog business, So online distributor rifle completes the Detweiler Group for the time being. Based on the competent technical support, high Availability and short delivery times, Ryfel supplies more than 100,000 electronic products to more than 1,000,000,000 1,000,000 sorry, EUR 1,000,000 Business, Government and Private Customers. Rycet was able to increase its market share in the reporting years, thanks to its attractive price performance proposition. The online distributor achieved a currency adjusted growth of 12.7 percent in a challenging market environment. Reichheld also increased its revenue to €188,800,000 The low cost base helped to increase the operating risk side by 16.2% To €17,200,000 the EBIT margin improved to 9.1%. Ryerson benefited from the trend towards online shopping that was boosted by the pandemic. There was a Particularly strong demand for electronic devices and accessories for use in home office or home schooling setting. With this, I conclude my review and hand over to our CFO, Walter Scheff. Thank you, Dirk. Hello, everyone, and very pleased to have you here. My name is Walter Schertz, I'm presenting the annual financial results 2020 for Dettlider Group. I'm thankful for your interest in Dettlider. As Dirk explained, that dialogue focuses on the system critical endostomere components. This has been implemented in 2020. The reorganization, therefore, amongst other items, included the sale of the distributors Distalec, Genedis and the Civil Engineering Business. This affects the reported results as already communicated a year ago and in a half year results. So this will not be a surprise to you. That's why the group's continuing operations improved, but reported figures for financial year 2020 are influenced by divestments. The reported EBIT is minus €315,900,000 and reported net result stands at the minus euros 346,300,000. This actually includes a loss of €464,500,000 from the sale of these subsidiaries. It It is important to note though that this loss does not affect Dacquisition's current liquidity and the overall equity position, which I will explain later on. When we start here with the sales bridge, you can see that DAT WIL was able to generate organic revenue growth In this difficult year, but we also see a negative impact of the strength in Swiss francs Swiss francs. Coming from prior years, euros 1,360,800,000, this is actually the left side column, our turnover for the whole group reached 1,000,000,000 €69,200,000 this year, which is the right, the bar on the left. Excluding the divested businesses, Distalec, Natus and Civil Engineering, the 2019 continuing operations turnover Was €1,050,500,000 which is the 3rd pillar on this slide. Healthcare Solutions organically grew by plus 11.8 percent or 45,100,000 Bayerischeld organically grew even grew by plus 12.7 percent or CHF 22,100,000. Industrial Solutions on the other side organically lost minus 11.4 percent or €57,500,000 on the top line. Dirk has given you the reasons for this development. All those effects led to an organic increase of +1.2 percent in sales, Of which the strong Swiss francs took some 4.8%. The Swiss francs further strengthened Relative to all currencies that Wiley is exposed to. This brings me to the profit and loss statement. The consolidated income statement is a functional income statement as in the previous years. It shows continuing operations and discontinued operations, actually the divestments. This allows you to better assess our operational performance. The continued operations is the basis for the future development. I would like to make 3 remarks to this consolidated income statement. First, the gross profit margins slightly reduced to 24%. The Swiss francs led to a decrease of around 4%, while raw material prices Help to support the gross profit margin. The turnover decrease in Industrial Solutions also affected this ratio. 2nd, general and administration expense was reduced due to the reorganization and previous year's divestments effect. In addition, some of our IT costs are recharged externally, actually to third parties now, thus resulting in higher other operating income for this 3rd, the lower income tax expense of around €20,000,000 contribute to the weighted average tax rate Of 21.8 percent, the income tax expense dropped again in 2020. One of the reasons It's the reassessment and capitalization of tax loss carry forwards, which could be saved operationally. You see the major impact in the detailed reconciliation in the annual report. I will talk about the finance result in a separate Moving on to the EBIT bridge, you will have noticed again that the reported EBIT is impacted by divestments. To continue operations EBIT 2019, again the 3rd pillar was CHF 133,500,000. As you can see, Healthcare Solutions and our online distributor, the Ryhild further strengthened their profitability in 2020. Healthcare Solutions organically grew their EBIT by 30.6% and Raichu by 20.9%. This actually shows you the operational leverage in these businesses. Industrial Solutions organically declined by minus 12.2%. The EBIT 2020 from continuing operations reached €148,000,000 This is the basis for the debt filing group going forward. Here you see the various EBIT margins. Debt Wireless EBIT margin shows the resilient performance in a challenging environment. Continuing operations alone delivered an EBIT margin of 40.6 percent or 148,000,000. In Healthcare Solutions, the EBIT margin reached 90.6 percent or €79,200,000 This actually includes the Middletown results. As you can see in our alternative performance measure documents on the debt Lido website, this is considered as part of the normal business going forward As operations in the U. S. Are running. Industrial Solutions adjusted EBIT margin excludes the divestment of Civil Engineering, so it results to 11.8 percent or CHF 50,400,000. This is quite a reasonable result given the massive top line Last but not least, Rijo increased their EBIT to 9.1% For SEK 17,200,000 compared to previous year. As Dirk mentioned, we are continuing to optimize the firm's value. A short word on the finance result. It shows that we paid less interest on bank loans and other finance charges. On the other side, as in the half year, it includes the development of the unhedged currencies such as Indian rupees, Brazilian reais Or Czech krone. During the corona year, these currencies actually depreciated quite strongly against the Swiss francs. The finance result is basically €2,000,000 higher due to the strengthening of Swiss francs. With that, I move on to the balance sheet. And you see that the balance sheet overall has shortened by minus 4.7%. However, please be reminded that this today, Canadian balances already have been impaired in 2019. This means that the development you see here on the asset side at least is less pronounced as you might have expected. Trade accounts receivables increased due to the strong development in the Q4. On the liability side, That's why I further shortened the current liability positions, mainly by repaying interest bearing debt. By streamlining the liability side, This further reduced net debt and gearing. While liabilities reduced over proportionate, the XT ratio actually is above Our strong balance sheet and liquidity allows us to pursue further strategic opportunities and investments Even beyond these corona times, especially in Healthcare Solutions and Food and Beverage, as Dirk We'll explain in our future plans and the outlook. You note that the equity ratio increased 66.4 percent from previous years, 58.1%. The increase of the net cash surplus, which is the last line, Net cash surplus is actually cash less short term bank debt. The increase to EUR 169,500,000 It's due to the fact that the net debt further reduced to €35,700,000 On the left side, free cash flow could further be increased And stands at €115,700,000 in 2020. The improved cash flow from operations Unless investing activities improve free cash flow, which I will show you in the cash flow statement on the following slide. Net cash flow from operating activities further increased to a level of 185,300,000. The team put really good emphasis on the accounts receivable position and their aging in this special year 2020, As you can read in Footnote 11 of the Annual Report. This positive and increased operating cash Inflow was used for investments on one side and repayment of debts on the other side. Net cash used in investing activities reduced €69,600,000 mainly helped by less CapEx than in 2019 and disposal of subsidiaries. Net cash used in financing activities though increased to minus CHF 132,700,000 mainly due to repayment Overall, the liquidity situation at Detleiter Group remains solid. Important to mention is the fact that the majority of the investing cash flows are investments into the future That is Healthcare Solutions and Food and Beverage. Capital allocations happen in growth areas. The return On capital employed or ROCE for DAT Weiler Group only slightly decreased to 22.1%. As you can note From the individual graphs, the ROCE development at Detweiler Group is influenced by recent growth investments in Healthcare Solutions, But also the absolute profitability drop in Industrial Solutions. The ROCE varies between these business areas. Healthcare Solutions ROCE of 23.7% is driven by increased absolute EBIT and relatively spoken More increased capital employed. Industrial Solutions ROCE stands at 70.1%, which will increase again with growing turnover and EBIT. Raichfeld's ROCE is driven by higher EBIT and only slight increase in capital employed, mainly related to inventory. The capital expenditure in 2020 is slightly above the long term average Due to attractive business growth opportunities, it is still the mid term goal to reach more or less the level of the depreciation or around 8% of net sales. However, due to investment opportunities based on additional orders and demand in Healthcare Solutions and Food and Beverage in the coming years, We were and are ready to invest further. That's why we allocate this capital into growing markets where we see potential. Last but not least, let me talk about the dividend proposal. The reported net result is negative as you have seen. However, due to the strong balance sheet and the solid continuing operations net result, the Board of Directors proposes to the AGM an increased dividend CHF 3.20 per share. The payout ratio stands at 45.8% Of the adjusted net result, this is slightly above the normal payout ratio as in previous years. With this, I would like to hand over to Dirk to talk about Dettlider's outlook for 2021 and beyond. Yes, Walter, thank you very much for these financial insights. Now I will continue with the outlook. Yes. First of all, let me start with our mission. We are materialize ideas for a safer, smarter and more sustainable world. We live in a world of constant change. The demand for powerful and complex technological products is rising. In many cases, For our customers to essentially implement ideas and innovations from the idea to industrialization. We develop and manufacture our components in a global network of more than 20 plants. We produce more than 90,000,000 components every It is crucial for our customers' success that they have access to our material specialists and engineers In the main economic regions, the components we focus on have a critical impact on the safety We engage in advanced systems with demanding and complex requirements That can only be fulfilled by a handful of global suppliers. These high-tech components make a decisive contribution to the success of our customers' products, but at the same time, they account for only a small portion of the other against and multi material components for selectromobility of the future. The base of global megatrends is providing opportunities in existing and new markets. These are demographic and lifestyle changes, an increase in safety and regulations, more efficient use of resources And the digitalization of all areas of life. By applying our core competencies For these global megatrends, we create growth opportunities in existing and future markets. We are able to support customers from the design study and the prototype phase up to the global serial production. Our pharma business is specialized in primary packaging for injectable drugs. The estimated market growth over the next 5 years will increase due to an additional demand for vaccines and therapies to fight The COVID-nineteen virus. As one of the leading players in this market and based on our core competencies, we are able to provide Best in class quality. Our first line production standard offers customers the possibility to reduce Particle contamination by up to 50%. Our strategic priorities are focused on aggressively growing in the U. S. And in the attractive biotech market, increasing the number of new drug development projects, We are involved in and pursuing opportunities to expand our footprint in China and Latin America. Among other applications, our system critical components such as stoppers and plungers I used to provide the COVID-nineteen vaccines. We are proud to be able to support the leading pharmaceutical companies in the fight Against the pandemic, during the intensive phase of the COVID-nineteen pandemic in the Q2 of 2020, we proved that we can make an important contribution to our pharma's customer business contingency. This is thanks to our presence with standardized plans on 3 continents. Our Mobility business unit is specialized in triple components for the automotive industry. We are well positioned to help our customers transition towards new mobility. Our strong market position is based on the broad technology and advanced production standards. Both aspects are crucial to manufacture components for electrified and emission reducing systems. We continue to invest in the development of new customer projects. We acquired further new projects for electrified vehicles. Electroactive Polymers or Smart Rubber open up new interesting applications in the fields of digitalization in vehicles and driver Customers achieve higher quality and shorter time to market Due to on our co engineering approach, for housings for electrified vehicles, customers benefit from our leading expertise In simulation and in multi material components. We will continue to focus Our strategic priorities in order to drive the success of our organization by driving profitable growth, With our focus on increasing agility and accelerating digitalization, we have been preparing ourselves for unforeseen events in the VUCA world. During the corona pandemic, we are benefiting from this groundwork. The progress achieved has shown us That we can react faster and better to unexpected impacts. In the fall of 2020, we added the advancement of With our unique shareholder structure and more than 100 years of corporate history, sustainability is part of our values. Since 2009 already, we are a member of the UN Global Compact, published a sustainability report According to the guidelines of the Global Reporting Initiative, GRI, and a CDP disclosure, Motivated by the good ratings, for example, from MSCI or Ecovaris, we want to take this ability to the next level. By 2,030, we want to achieve carbon neutrality for our own activities at all our sites. To define the milestones, we will use the science based targets concept. Already today, we purchased 35% of our global electricity consumption from renewable energy sources. This amounts to an annual reduction of CO2 emissions by some 15,000 tons. Also, we were able to reduce our relative resource consumption in 3 consecutive years. A good example is our Swiss plant in Schadtorf, where we already produced carbon neutral since 2013, we purchased electricity from hydropower sources and the process Heating energy is supplied by a nearby wood fired heating plant. This brings me to the specific outlook for 20 21. NetWeiler expects a significant double digit revenue growth in the Healthcare business in 2021 And a strong development above market average in the following years. Strong demand for high quality coated components From our first line production will have a positive impact on the product mix and the average margin. In the business area, industrial side groups will lead to a high single digit revenue growth in 2021. After a strong 2020, the online 2 Supertur rifle is likely to achieve low middle single digit growth in 2021. For the Group, we expect the increase in revenue to be considerably over CHF1.1 CHF 1,000,000,000 and an EBIT margin of around 15%. All of these forecasts that there will be no additional unforeseen negative impacts caused by the pandemic and the current outlook the current lockdown, sorry, We'll not proceed in the Q2 of 2021. To conclude my presentation, let me summarize the 5 elements We focus on system critical elastomer components. We superior customer value based on our recognized core competencies. We have leading positions in markets driven by megatrends. We are dedicated to talent development and sustainable growth, and we have a track record of strong performance and financial I'm convinced that we set things on track in 2020 for sustained growth and long term success in 2021 And beyond. Based on our clear focus and strategy, we will continue to lead the way with technology And unlock our potential for future growth. Thank you very much for your attention. We are now happy The first question comes from the line of Mr. Michael Firth with Sontobel. Please go ahead, sir. Yes. Thank you. Good morning, gentlemen. Two questions from my side. On your margin, in the first half for you, 2020, you showed a 21.7% Margin for Healthcare on an adjusted basis. Now my question is what was that margin in the second half? Somehow it looks a bit Weak considering the 19.6% margin that you show for the business in for the full year. So I struggle to understand What the dynamic is there. And that brings me to a question on your guidance For the margin as well, your 15% group margin guidance, also here, it seems a bit conservative to me considering that Your highest margin business is obviously also growing fastest in 2021. And so I would have expected a little bit more upside on the margin there. That's the margin question. And then I have a follow-up On the Healthcare business after that. Yes. Mitra, thank you very much for your questions. First of all, with regard to the Healthcare margin development of the In 2020, in the second half year, of course, we have seen an improving margin and which is cited in Higher margins in the Q4 finally. Due to the fact, as you may remember, that we had not a strong half year In 2020, but the second half year was much stronger. So what I can say today is that based on the orders what we have in hand that we will see some further Positive to an over margin in 2021, which is as well driven By the first line concept what we have, that means that our products, what we are bringing to the market is Going in this direction more and more and this first line products having a higher margin overall. Okay. So is it correct to assume that your margin should move above 20% in Healthcare in 2021? Yes, that is I think that is a fair statement, yes. Okay. And then the second question would be also regarding your Healthcare business. Were you able to gain any new customers in healthcare as a result of the COVID-nineteen Situation and the demand for stops and plunges for vaccines and other medics. And are those market share gains maybe helping you also for the first time business? Yes. I think that is that was always our Target, as I said some minutes before that we of course, we are striving more and more in this Biologic Markets and of course, COVID is helping us in this respect here. We have every year new But the most important point is that we would like to increase our market share with the leading pharmaceutical companies Over the years. And the first line concept will help us here, and that is what we can see And a strong strong orders in hand what we have already today. Okay. Thank you very much. Yes. You're welcome. The next question from the telephone comes Richard Frey with Zech KB. Please go ahead. Good morning, gentlemen. Thanks for taking my question. First of all, also Healthcare. Looking at the Medical segment, Which was declining, I guess, most of it was due to FX, I guess. Still, There was not huge growth left organically. And as I have In mind, you once put the attribute of an attractive growth potential into that segment. So may you shed some more light on what is going on in this still small segment? And secondly, regarding mobility, when it comes to the transition from combustion to E Mobility, may you help me a bit on understanding what your potential there is? So Is the business more or less the same size or are there bigger growth potentials ahead When it comes to that transition. Thank you. Yes. Richard, thank you very much for your questions. First of all, with regard to the performance Of Medical Solutions, you are right. That is mainly by the FX exchange rates as well in 2020. We expect that we will see some further increase in 2021. But as you know, This product is what we are heading here in this segment is or that business unit is mainly Delivered into the hospitals and of course due to the COVID crisis, a lot of hospitals have to reduce, let me say, their Treatment of the patients. So that means overall there was not a high demand as what we have experienced in the last years But we expect that during the course of 2021, that will recover in this direction and that we see A slightly increase of growth here as well. With regard to mobility, I think As we said, the electrification of the cars is still at the beginning. What I can tell you that the content, the value per car, What we have today, we see that as well in the future for full electric vehicles for some Hybrid versions, we see a higher content in the future. But overall, the growth will depend on the Number of cars which we will sold to the market. That is, let me say, that is where we are in, and we believe that we can grow With the market. Yes. Thank you. That helps. Thanks. Yes. You're welcome. The next question comes from the line of Serge Rautzer with Credit Suisse. Please go ahead. Yes. Good morning, gentlemen. Congrats for the results. I have a Question on the Healthcare. Basically, I'm a little bit puzzled because last year in the slide presentation, you mentioned An adjusted EBIT margin for Healthcare of 20.9%. Now you disclosed 16.8% for 2019. The same is true for Industrial Solutions. Last year you mentioned SEK 13.3 billion and now it's SEK 11.9 billion. Can you help me to understand this? This will be the first Yes. Hi, Serge. This is Walter. It's basically coming from the adjustments. Also before maybe Michael's question on why did it actually decrease to 19.6%, it's not a decrease. Keep in mind that until half year twenty twenty, we adjusted for the Middletown loss. At half year, it was 8,100,000. In the 19.6% that we see right now in the margin, actually that loss is included. It's obviously still a loss, But nevertheless, we still believe that in the Q4 2021, that operations at U. S. Facility will actually be at the breakeven point. So that means going forward, it will get better and better and obviously, it will also help the margin improvement. Same actually for the civil engineering part. Their continuing operations actually exclude the oh, sorry, Industrial Solutions part, sorry. There actually the Civil Engineering divestment is adjusted. You see that in that document, alternative performance measures, where Okay. I will have to dig again, but this would mean that civil engineering has been very Profitable and I believe that this was not true or I thought this was not true. No. Civil engineering was certainly below The market or to that value group's EBITDA. Yes, clearly, it's not crystal clear yet, but I will call Then the next question would be on the CapEx in the Healthcare. You mentioned that you increased production facilities. Can you tell us how much CapEx do you spend there or how much incremental sales potential you will build up there? Yes. Please understand, Sesh, that we would like not disclose such figures. But as I said, We will be in the position to grow over the next couple of years in the double digit range. Organically, on one hand, that means independent of COVID. And with COVID, we are currently seeing some additional tailwind. And what we have prepared with our facilities around the world, we will be able to cover that with an over proportional Growth in the first line sector. Okay. And can you give us an update on S and P About the new customer, about the sales development and also of the margin level where we are currently. Which are you talking about health care on? No, food and beverage, sorry, F and P, food and beverage. Okay, sorry. Sorry. No problem. 1st of all, we are not disclosing any special customer figures here. But overall, and maybe this question is coming up, I think we will see as well in this sector A good growth in the next couple of years based on this existing contract what we have, this new contract until 2030 With our biggest customer, Nespresso. And on the other hand, this new customer has already started in the Q4. But we are constantly increasing our capacity in the next couple of months, so that we'll have Constantly an increase of sales there as well and the margin is in the average of that what we have with Our existing customers. So that is what we are striving for. Okay. And the orders in hand for this area of food and beverage It's very good. And so we see that as well as strong growth over the next years. Okay. Then the questions I always get from my investors, What's about Reichheld? So, excuse me, divestment plans this year, next year, target multiple, can you tell us something here? That is not foreseen to sell rifles this year. As I said, every year, we will review that together with the Board. And as we're always discussing how to proceed for the next year, so far we see that we can add additional value with Raiford To the group, as it means to all our stakeholders. And when somebody approaching us And asking for this company, then of course, we will go into discussions, but we have not started a process of selling rifles. Well, margins are expected to decline due to the rollout in Germany and Switzerland and in Austria. Is this correct? No. Okay. I think the margin development with Rykut will be around this level. It's always a question Will we push them more for growth and with a slightly lower margin or we are focused on margin? That is always how we have to deal with it. Okay, perfect. Many thanks. You're welcome, sir. The next question comes from the line of Rolf Rehnert with Helvea. Please go ahead. Yes. Good morning, gentlemen. Thanks for your opportunity for the questions and the presentation. Looking at the strength of your balance sheet and the confident outlook for this year, How far do you think you want to go with increasing the dividend? I think as you have seen, we have The payout ratio at currently about 45.8%. And of course, when everything is going right, our target is always to increase the dividend, But to stick to our end payout ratio around of 40% to 45%. So If everything is going right, I could imagine that we next year will have as well again an opportunity to increase the dividend. But this will be always around 45% payout ratio, yes. Okay. Thank you. And In that context, how do you see then the ideal balance sheet structure? Because you're running into a net cash Hi, Rolf. Well, first of all, to maybe add to Derek's statement, The payout ratio should be kept stable, so to speak. So when we continue to develop well, which is a plan, obviously, The payout ratio, nevertheless, will stay stable. On the balance sheet structure, we obviously Or investigating further investigating into further options. On one side, we will invest In future growth in areas where we actually see that benefit, where we bring value to our markets, Healthcare Solutions is one example, Food and beverage on the other side. And then not yet touched, but actually acquisitions are not off the table. Actually, there is a dedicated team in that live looking at potential acquisition targets. And as we just Discussed in half year in various roadshows is also that We want to really focus in particular areas, growth areas, where acquisitions are still Okay. Thank you. And then final question on the competitive field To the market leader in healthcare and opportunities in COVID, can you explain a bit more of what you see there from clients and what their Decisions are, what is important for them will be interesting. Thank you. Yes. Thank you very much, Well, I think what we can see currently, as I have explained in our presentation, is that more and more customers are recognizing That our processes, especially what we have in Healthcare, are bringing a real benefit to them. That means We are looking to the cleanliness what we have with our production environment and our products, Which is clearly in favor of in the future of our customers. So what we are recognizing in the last 1, 2 years More and more customers are approaching us, especially for new drug developments, which is important for us, And we have there significantly increased our share already in 2019, 2020. So As I mentioned before, that was in the previous years before that close to 0. Now we are seeing a significantly increase That makes me very confident, and that's the reason why I'm saying that we will be able To grow on an organic way as well with the Healthcare sector in the double digit range over the next couple of years independent of COVID. The next question comes from the line of Sebastian Vogel with UBS. Please go ahead. Good morning. Can you hear me? Yes. Good morning. Good morning. First one would be a quick follow-up to the questions earlier asked about The Healthcare margin in the second half of twenty twenty. You mentioned that you are not specifying dedicatedly the ramp up Cost fall for the U. S. Facility. Nonetheless, if I would like to have a number there in mind, what would be the sort of number that I would need to pencil in for the second half or for the That would be my first question. The second one would deal with the auto business. Can you shed a little bit more light how the 4th What has developed over there for you in terms of demand and how the Q1 in 2021 has sort of started and what you And the last one is on the guidance. You mentioned there that you see or that you expect significant double digit growth And considerable growth as well for the group. Can you also explain a little bit more what you understand on the significant and considerable? Yes. So first of all, we decided not anymore to disclose any costs dedicated to our DreamShield plans, for example, like what we have in the health For Delaware, but of course, you can imagine that because what we had, which we announced in the first half of 2020 was slightly increased as well in the second half of twenty twenty. So that we even we were able to Most of the costs here. And as I said, we had, of course, some additional costs for fighting against COVID internally, Which was partly leading to extra efforts to run the facilities during this crisis. So I think, but I said that we will that we have increased the margins over quarter by quarter. So now we can see More than 15 months in a row that we are able to increase the margins of the Healthcare sector. And if I'm looking to the orders in hand, I Expect that we can follow this successful path as well in 2021. If it comes to the automotive sector, we have much better turnover Mobility sector in the Q4 2020, as what we thought during the half year Conference last year, that was clearly better. Currently, we see something similar, Still stable in the Q1 in 2021, but I have to say that this market is Still very volatile and it's quite difficult to predict what will happen in the next couple of months Or by end of the year. Over, we've made what we are getting from our customers overall if we are looking to the forecast of What I believe that cars which will produce in 2021, there should be a significant increase of that Maybe more on the second half of the year 'twenty one, but due to the fact that we are Having seen a lot of volatility in this market, we are in our forecast quite Conservative for the year 2020 2021, sorry. And let us have a look in 6 months with the half year, Maybe we can have a better outlook and then we can talk about again the full year outlook for the Deaf Weiler Group. Do I miss something? We lost connection with Mr. Vogel. If it's fine, I'll proceed with the next question, which comes from the line of Daniel Koenig from Mervo. Please go ahead, sir. Yes. Good morning. I had also a couple of questions. First, I was wondering if you could say something on carbon neutrality. You're going for scope 12. I was wondering similar to Glencore what you can say in terms of scope 3? That's my first question. And then I was wondering if you could give me some indications of what you Back in terms of raw materials, they have gone down a little bit in 2020. But the underlying raw material has gone down much, much more. What can we expect in 'twenty one? Yes. And then finally, I just had a little question on CapEx in Healthcare. It went down €10,000,000 What can we expect in 2021 for Healthcare Solutions for CapEx? Thanks. That's it. So, Walter, I will be happy to answer that for 2021 for CapEx Healthcare. I will start With regard to the scope 1 and 2, as we announced last year, I think it's our target To go clearly in this direction and that we said in carbon neutrality for the year 2020, So we have defined an internal group which is working on this topic So that we can give you a better indication what does it mean year by year. And of course, there's always Discussions about Scope 3, but we decided first of all that we are starting with Scope 12. And Over the time, we will as well going back as well internally with further targets For Scope 3, but first of all, we said we are focusing on Scope 1 and 2, which is already a challenge, as you can imagine, To make it happen by the year in 2,030, that is the actual situation. If we have a look to the material increase, material costs, we have in our minds that we believe that There will be some material increase, cost increase in the year 2021. Yes, that is considered in our forecast. How much that will be is quite difficult to say. That depends on the market recovery, Especially in the automotive sector, today, we are calculating Slightly increased in the 4th in the 1st 6 months and maybe a little bit higher in the second half Year of 2021, which maybe lead us to a slightly below the 1st digit range Over the full year, we have so that we will come back to the level what we had in 2019, around something around that. Yes. Walter, with the CapEx? Sure. Healthcare, our CapEx in Healthcare Solutions, you know Mr. Kurnig that we also talked about The expansion in India, as you see on one of the slides that the Work in progress or construction in progress is €65,000,000 and a large portion of that is obviously So with that, I expect actually that the CapEx went down by €10,000,000 I expect that it will Slightly only slightly increase in 2021 given those elements that I just mentioned. Okay. Thanks a lot. Yes. You're welcome. So we still received some questions here via So I think do we have to expect extra cost weighting on the operating Due to the expansion of capacity in U. S. And India, I think overall that should be in line with the year 2020, I think there should be not a huge difference. Then the next question is, do you predict sales growth of about 9% or more for 2021. What makes you optimistic despite ongoing uncertainties due to the pandemic? As I said, what we today have in hand there was orders in hand, especially in the sector of healthcare and Food and beverage, that makes me optimistic that we will achieve this target. And can we go beyond this €1,100,000,000 Yes. If let me say the mobility market is proceeding As we have seen in the Q4, yes, it should be then possible, but let us see and wait what will happen in the next couple of months I think the next question is was by Westwood of Ryfel. Some interested parties last summer. Can we expect an announcement already in half year 1 or rather in half year 2? Already answered that. No, there is not foreseen to sell rifles in the first in this year, sorry. Maybe somebody is jumping in and give us a great offer, then of course, we will consider. The next question would be or would you possible keep right within the debt by line group as we See, as we said, that is not foreseen in the long term. But as long as we can see a clear additional benefits to all of Then the next question is coming from Peter Sandeep. How much we have the one off cost in Healthcare in the second In the second half year, if we assume €5,000,000 then the adjusted EBIT margin for Healthcare And the second half year would be close to 24%. Is that a fair assessment? As I said, we will not disclose the quarterly results, But correct is that what we have what I have said before that we are seeing a constantly increase Of our margin in the Healthcare sector and based on the orders in hand and with Increasing share of Firstline Products, I believe that will further improve in the year 2021. And then the next question is coming from Dominique Salgas. And as I said, How much is that going to invest in shutoff? And with which aim will you also hire additional people? First of all, yes, we will hire additional people in Shafter and that is due To the high orders in hand, what we have, especially for the food and beverage business with the new And the existing ones, which will lead to a significant growth in 2021 following years. So the amount what we will invest in shutoff is around €20,000,000 in 2021, but mainly in And then the further question is coming from the Wirti Trust from Nikampro. Could you please provide us an update on the following topics, Pricing power, yes, pricing power, I think, due to the fact that we have, let me say, just handful of competitors around the world and we have really a specialist in our fields. I think we have a good market position here to defend our prices. Next question from him is M and A situation as you have increased the M and A team last year. Of course, Due to this quite difficult situation with COVID in the year 2020, it's not so easy To go in contact with companies, especially with due diligence and so on, That is quite difficult, but however, we have still a long list of companies in our portfolio And we are approaching them and we are discussing with several companies, but it's nothing what I can announce here. Today, then you will save almost €40,000,000 in the marketing and selling costs, what's your budget level for 'twenty For 'twenty one, I think if I'm looking to the overall cost, what we would like to spend, of Of course, in some areas, we will spend more money, especially in the healthcare sector For R and D costs and partly as well in the mobility sector that we have And good opportunity to benefit from the trend in the different markets as far as the same as asphalt for food and beverage. So There is a need to bring further financial people on board, which will help us To have a sustainable growth over the next year. I think the other things what we have seen here is good. You already answered that. Then the next question is coming as well. Can you further provide an update regarding our digital Transformation especially for your ERP implementation and maybe Walter is leading this department and maybe you can Just some inputs here as well, Michael? Sure. Well, on the digital transformation, what I can say is basically that Detleiler was one of the 1st manufacturing companies in Switzerland fully going into the cloud. We are in the cloud Completely one of the first manufacturing companies on one side. And on the other side, we are rolling out The S4 system, so to speak, so that actually already happened in major Plans in the debt Wyler world and the rollout will continue as planned. So there, The question was also, are we behind peers? I do not think that we are behind peers. In contrary, I believe we are moving on Quite well. Yes. Thank you very much, Weiser. Then another question from Tutor from Zai. Is there an intention for share buybacks? No, there is no intention for that. That is not for free. Yes, that is the list what we have received here. So if there are no further questions, it seems so. Then I would like to close the meeting and I would like to thank you again For joining us today and for your interest in the Detweiler Group again. And I would like to take the opportunity as well to thanks all employees Stettweiler for the great job in 2020. I think we have we did some significant steps forward For future of the Stettweiler Group as we have described and I'm confident That we can bring further value to all our stakeholders. And now, I wish you a good week, and thank you very much for joining us here. Goodbye. Thank you. Goodbye. Ladies and gentlemen, the conference is now over. 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