Earnings Call: H2 2020

Sep 3, 2020

Good afternoon, ladies and gentlemen. Welcome to today's presentation on our results of financial year 2019 2020. I will start with the presentation with some overall comments on our results and business activities for the full financial year, followed by our CFO, Bernd Brinker, who will talk about the financials in more detail. Afterwards, we'll be available for your questions. Our financial year 2019 2020 was a year of 2 very different halves and this is reflected in our business performance and results. The first half year was largely in line with expectations. However, the outbreak and spread of COVID-nineteen led to an unprecedented slump in business activities from February 2020 to the end of our financial year. Before we come to the results, let me give you an overview on how we at dormakaba handle this crisis. We have 3 priorities in our crisis management: 1st, the health and safety of our employees second, focus on supply chain and hence business continuity. For some time now, all our factories are up and running again. And 3rd, maintaining our financial stability by applying the cash is king principle in our financial management. Bernd will go into more details here later on, but we were able, for example, to strongly improve our operating cash flow and to decrease our net debt as compared to December 31, 2019. Our key figures for the full year in brief. We generated sales of CHF2.5 39,000,000,000. Organic sales decreased by 6.9%. EBITDA reached CHF325 1,000,000, which amounts to an EBITDA margin of 12.8%. Net profit was at CHF164.1 million. Based on these results, the Board of Directors proposed, while all segments added to the decline in operating results, their performance varied. Segment performance in the second half of twenty nineteen-twenty was marked by the severity of the COVID-nineteen pandemic in individual countries. I would like to start with the segment Access Solutions Americas, so North and South America, which was heavily impacted by the pandemic. The business recorded organic growth in the first half of financial year. However, in the second half, organic sales and profitability were significantly down compared to previous year. For the full year, organic sales were down 8.1%. Revenue contracted for all countries and product clusters as sales development was harmed by project execution constraints, resulting from lockdowns in individual locations. While there was no blanket lockdown for the U. S. And construction site activities resumed to normal levels by the end of the financial year, U. S. Interstate travel restrictions continue to limit service and installation activities. In the Q4, which means April to June, we had to initiate a cost saving and restructuring program to address the ongoing pandemic related substantial volume contraction and to maintain operational and financial efficiency. Measures include headcount reduction, mainly in manufacturing in Asia and the Americas. In AS Americas, the program included a reduction of around 150 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es, most of which are already being effective. As of July 1, the segment is led by our new COO, Alex Houston. His priorities include driving sales excellence, further operational consolidation and performance improvement, which also includes the finalization of the measures initiated at our Mezker business. These measures were slowed down due to the pandemic as rebuilding customer confidence was hampered by the restrictions. Our next segment is Access Solutions, APAC Asia Pacific, which was first impacted by the pandemic. Organic sales for the full year were 8.5% below previous year as the second half of twenty nineteen-twenty twenty was severely impacted by the pandemic. The biggest negative impact for the business was in the region South Asia. 4 quarter sales of our Indian market organization came close to a standstill being down by roughly 90% compared to previous year's level. Nevertheless, there were also some encouraging signs in this segment. Despite the strong negative impact on sales, the segment was able to keep the EBITDA margin at a best in class level with 13.6%. Further, the Chinese commercial business, which is a major driver for our performance in that market, held up well. And the Pacific region and particularly Australia were less affected and even showed organic sales growth for the full year. As part of the group wide program mentioned before, AESA Pac initiated measures to adjust capacities and costs, which included a reduction of around 500 FT feet feet feet feet feet feet feet feet feet feet feet Es, mainly in manufacturing, most of which are already being effective. Looking ahead, barring newer waves of COVID-nineteen outbreaks, the segment expects an improvement in the first half of financial year twenty twenty one versus the second half of financial year twenty nineteen-twenty twenty. On the segment, AXIS Solutions, DACHER, Germany, Austria and Switzerland, which was the least affected by the pandemic. The business experienced organic sales growth for the 1st 9 months of the financial year. However, for the full year, the segment reported an organic sales decline of 3.5%. Business development in the DACH markets was solid with Switzerland our 3rd biggest market even achieving organic growth for the full year. The overall decline in revenues, however, is driven by lower worldwide demand for door hardware products, one of the 3 global product clusters attributed to this segment. This led to lower intercompany sales and to significant lower capacities in the relevant production sites for this product cluster, including the segments sites in Asia and hence also had a significant impact on profitability. In financial year 2018 2019, so back 2018 2019, the segment initiated a performance based program that included profitability measures at its NEPTAL site. As a result, the segment was able to partially compensate the negative impact on the performance by COVID-nineteen in the period under review. Nevertheless, to adjust cost structures, AS DACH initiated measures as part of the group wide program in the Q4. They include headcount reduction of around 100 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es, mainly manufacturing to address lower volumes and price pressures in the market. Now some details on Access Solutions EMEA, Europe, Middle East and Africa, where the impact of the pandemic was in between the other segments. While AS EMEA experienced organic growth in the 1st 9 months of the financial year, organic sales for the full year went down 5.7%. All markets were to some degree negatively impacted by the COVID-nineteen pandemic during the last 4 months of the financial year. Moreover, even stable business activities such as services were negatively impacted due to restricted access to customer premises during the lockdowns. As part of the group wide program in the 4th quarter, AS EMEA had to initiate an adjustment of its market organizations with an overall headcount reduction of around 150 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Feet Es. As of January 1, 2020, the segment is led by our new COO, Steve Bouyguesk. Steve and his team have successfully addressed our structural issues in the region Skambalte, for example, with the divestment of our Norwegian project installation business announced in early July. The transaction includes around 80 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet Feet and was closed on On to the last segment, Key and Wall Solutions, which was the hardest hit by the pandemic. The 2 business units of the segment performed very differently. The business unit key systems was heavily impacted by the pandemic. April May 2020, in particular, were impacted by a sales decline of more than 60% as all its major production sites around the world were unexpectedly and temporarily closed. Regional lockdowns in most of its major business markets led to a significant decline in demand and sales were also impacted by an unprecedented slump in the global automotive industry. In contrast, the business unit movable walls achieved good organic growth and increased its profitability despite the challenging environment. These very good results were driven by a strong performance of its North American Modernfold and Skyfold businesses as well as by a positive contribution from automation measures of the German production site in Ahold. To adjust for significantly lower volumes of key and wall solutions, the segment had to initiate a headcount reduction of around 3.50 FTE in the Q4, mainly in manufacturing of the key systems business unit. Most of the reduction was implemented by end of June. To close the overview on the segment results, I would like to give you a short outlook on business development. We have seen some sequential improvements for all segments in June July and expect this to continue for the coming months. Therefore, we expect on a group level that the first half of financial year twenty twenty one will outperform the second half of the last financial years, so the second half of twenty nineteen-twenty twenty. This is always under the assumption that COVID-nineteen or geopolitical tensions such as trade conflicts will not create an additional significant deterioration of the business environment. Changes in the Executive Committee. I already mentioned that in the year on the review, there were changes in the leadership of 2 segments, in AS EMEA as of January 1, 2020 and in AS Americas as of July 1, 2020. In addition, we decided to discontinue the Chief Manufacturing Officer role starting July 1 as CMO, Jorg Lichtenberg, decided to leave the company at the end of the financial year. Overall, the executive committee is now reduced from 11 to 8 members at the beginning of the merger. This concludes my short overview on our results. I would now like to add a few words on our investments. Our sound financial and business profile has enabled us to consistently execute our strategic initiatives even during the current crisis. This includes continued investment activity in innovation, digital transformation and in sustainability. This is of key importance to ensure our competitiveness and long term profitable growth for the post COVID-nineteen period. Let me give you some examples. In the past financial year, we again invested around CHF112 1,000,000 or 4.4 percent of net sales in projects and activities around innovation and digital transformation. 4.4% of net sales is a high number in our industry. On this slide, you see a selection of products we launched this year, overall segments and product clusters. Let me just highlight 1. Our new generation sensor barrier Argus, which was enhanced with biometric features to enable touchless access and people flow. Many of our investments are focused on meeting the changing customer requirements, especially also with regards to digital customer experience. For example, we introduced a digital subscription and billing platform, which is used for the first time for our OraCode vacation rental product range. With our offering, we are also well positioned to address the demand emerging from the pandemic, be that with regards to technology as in the area of seamless and touchless access solutions or for a specific vertical such as healthcare. For example, in just a couple of months, we developed and launched an automatic door system that uses 3 d and thermal imaging to control the flow of people in stores. Sustainability has considerably gained importance as one of our key strategic objectives over the past years. Despite the challenges and disruptions brought by the pandemic, we have remained steadfast in our sustainability activities and have again made good progress on achieving our communicated targets. For example, we achieved a great saving on our carbon emissions and significantly improved the share of products with environmental product declarations in total sales. We also strengthened our sustainability governance within the organization. Accountabilities are now also attributed on a level of the Board with the Chairman being mandated to monitor and evaluate the implementation of the sustainability strategy. Our efforts and progress in sustainability continue to be acknowledged by independent experts in the field. For example, in December 2019, we have been awarded a gold medal for sustainability by EcoVadis, placing us in the top 5% of our assigned sector. With that, I would like to hand over to our CFO, Bernd Brinker, for more details on our financial results. Bernd, the floor is yours. Thank you, Riet. Warm welcome to all of you from my side as well. I would like to start with a brief overview. Our results for the 20 nineteen-twenty twenty financial year have been heavily influenced by the coronavirus pandemic. After achieving organic growth of 0.8% for the first half, there was an organic fall in sales of 6.9% for the financial year as a whole. Currency translation caused another 3.7% drop in the sales figure, while acquisitions made a net positive contribution of 0.7%. In total, therefore, our sales declined by 9.9%. We achieved an EBITDA of CHF 325,000,000 given an EBITDA margin of 12 point 8%, which is 3.10 basis points lower than in the previous year. This includes various one off costs caused by the negative operational effects of the pandemic, and I will come back to these in more detail later. After taking account of a nearly unchanged net financial result and an improved income tax result, net profit came to CHF 164,100,000. Based on the resulting net profit after minority interests of CHF 84,600,000, our Board of Directors is proposing a dividend of CHF10.50 per share. And now to the details. First, let's start with sales. There was an organic drop in sales for the 20 nineteen-twenty financial year of CHF 193,200,000, mainly because of COVID-nineteen. The pandemic impacted our global business, initially in China from February 2020 and then from mid March in parts of Europe and South America and then in North America from end of March. All of our businesses and segments were therefore already feeling the negative consequences of the pandemic in March 2020. The effects were worst in April May, but fortunately, in June 2020, there was already a market improvement in sales, even if they were still below the year back figures. At the same time, the strengthening of the Swiss franc also had an impact. Negative contribution from currency translation was CHF 104,300,000 compared with the previous year. In the Q4 of financial year 20 nineteen-twenty, organic growth was around 25% lower than in the same quarter of the previous year, after having been just 3% lower in the 3rd quarter. Our Key and Walls Solutions segment reported the largest organic fall in sales. The very good results of the Moval Walls business unit were not enough to offset the decline recorded by Key Systems. Our production sites for key systems are all located in regions where the pandemic hit hard and where extensive restrictions were imposed. Our end markets in key systems also suffered greatly. AS DACH has survived the pandemic best so far. Although our global door hardware production in Asia was significantly impacted by the fall in volumes, Regional markets in Switzerland and in Germany proved highly resilient. And last but not least, our acquisitions and divestments made a positive net contribution to sales growth of CHF 19,000,000. Next slide is on EBITDA. The decline in sales left a significant mark on EBITDA. After posting EBITDA of CHF 214,100,000 for the first half of financial year 'nineteen-twenty 20, EBITDA for the second half sank to CHF 110,900,000 mainly because of lower sales volume. As a result, the full year EBITDA margin fell to 12.8%. The pandemic's impact on our profitability is particularly evident in the changes in our EBITDA margin throughout the financial year. In the first half of the financial year, so from July to December 2019, it was still up at 15.5%. In the Q3, so from January to March 2020, it was around 150 basis points lower than the equivalent period prior year quarter. And in the Q4, so from April to June 2020, the EBITDA margin was more than 10 percentage points down on the prior year quarter. So for the second half of the twenty nineteen-twenty twenty financial year, which means January to June 2020, we still managed to post an EBITDA margin of 9.6% despite COVID-nineteen, though this was obviously much lower than the year back 15.8%. The EBITDA figure includes extraordinary and nonrecurring expenses. These totaled almost CHF 19,000,000 for financial year 'nineteen-twenty, bringing the EBITDA margin down by around 70 basis points. They include around CHF 12,000,000 for COVID-nineteen related restructuring measures and a further CHF 7,000,000 that we already reported for the first half. After correcting for these exceptional costs, an adjusted EBITDA margin for the 'nineteen, 'twenty financial year would have been at 13.5 percent EBITDA margin. EBITDA was also impacted by the strong Swiss francs, which caused a negative currency translation effect of CHF 16,000,000. And finally, also here, acquisitions and divestments made a net positive contribution to EBITDA of 9.3%. Let's dig into our Cash is King initiative. We reacted quickly in the emerging crisis. Already in March 2020, we moved to adjust our corporate strategy, installed a comprehensive global crisis management and established the principle cash is king. The main objective of these changes was to maintain our entrepreneurial flexibility and preserve financial stability at all times. Instead of focusing primarily on organic sales growth and EBITDA margin, we prioritized cash flow, I. E, the permanent and sufficient availability of financial resources and the inflow of funds from our operational businesses. We are in a position to monitor this financial status globally and on a daily basis. As a consequence of these measures, we introduced a global hiring freeze, we reduced overtime and holiday entitlement balances, we cut the use of temporary workers, and we introduced short time work in some countries. The business plans and requirements of our customers and markets have changed dramatically, at least for the time being, so we are also reassessing all investments and projects that had previously been relighted. In addition, we have reprioritized our M and A activities. Though we continue to develop selected attractive projects, which we know from experience needs several years of preparation and work to build a trusting relationship with the present owners. So we continue to work on the M and A pipeline while we reprioritized our M and A activities, the execution. What have been these measures what have these measures helped us to achieve so far? We can report particularly success with our trade receivables, which have gone down by more than CHF 100,000,000 compared with the previous year, thanks to a very focused work by our whole organization. The cash received has been used to pay down financial debt and increase cash. This has allowed us to reduce our net debt by almost CHF170,000,000 compared with the figure on our interim balance sheet as of December 31, 2019. Let's talk a little bit more in detail on our cost savings and restructuring program. We were also quick to initiate a group wide cost savings and restructuring program to mitigate the crisis and the attendant decline in demand. The underlying aim is to adjust our cost structures to our capacities. One of the characteristics of this unprecedented crisis is the negative effect it has on both supply and demand. Another is the series of restrictions and lockdowns imposed by governments and local authorities, which have led to much reduced economic activity around the globe. By contrast with earlier crisis, this one has also had a serious effect on businesses that were previously seen as very crisis resistant, such as services. Here too, the aim of the measures we have taken is to maintain our entrepreneurial flexibility and financial stability at all times. These measures inevitably entail job cuts. A total of up to 1300 staff will be affected, the vast majority of them production employees in Asia and America. We already made around 900 of these cuts by the end of the 20 nineteen-twenty twenty financial year, so as of 30th June. We expect these measures to generate a positive financial contribution that should already be visible in the 2020, 2021 financial year. The associated one time costs come to overall CHF 26,000,000, of which CHF 12,000,000 will fall in the financial year 'nineteen, 'twenty. So they are already part of our P and L, which we are presenting today. So let's turn to the income statement. The first thing to note about the change is the change in the gross margin driven by the negative volume effect. This more than offset the positive contributions from integration gains, operational improvements and lower raw material costs. The lower expenditure on SG and A was driven by basic successful cost management and the realization of cost synergies, but also in the 4th quarter from capacity adjustments in response to lower demand. As Reit Cardinal has already said, we are sticking to the implementation of our long term strategy despite the crisis. This strategy is based on issues that are priorities for us: innovation, digitization and sustainability. In the profit and loss statement, this is reflected particularly clearly in spending on R and D. In financial year, 2019 2020, we once again invested about CHF 112,000,000 here. Including capitalized projects and given the lower sales figures, this comes to 4.4% of sales overall. The net financial result is largely stable, mainly because the higher level of debt on average could be offset by lower interest charges. Under income tax, we were once again able to achieve a lower income tax rate compared with the previous year. This is thanks to a one time positive effect in the USA, where we were able to carry back tax losses to higher tax previous years. As a result, our income tax rate was only 22.3% compared to the normalized level of around 28% at the time of the dormakaba merger in year 2015. Overall, net profit fell to €164,100,000 reflecting in particular the decline in operating profit. Now let's have a look into our cash flow statement. Our switch to the cash is king principle led to significantly improved operating cash flow. This can be seen in the rise in the absolute figure for operating cash flow from CHF 280,700,000 to CHF 328,100,000 as well as in the significant increase in the operating cash flow margin from 10% in the previous year to now 12.9%. The key drivers here were the substantial improvement in net working capital and especially in trade receivables. We also reduced capital expenditures compared with the previous year, though the actions taken on many long term investment projects require time and will only have a delayed effect. We therefore expect another fall in CapEx in the current financial year. So in the year 2020, 2021, we expect another fall in CapEx. Free cash flow before M and A rose by 35 percent from 179,700,000 to CHF 242,900,000. How does this translate into net debt development? Despite 4 to 5 months of the considerable negative influence of COVID-nineteen and despite the acquisition of Alvarado at the start of 20 nineteen-twenty twenty financial year, our net debt as at June 30, 2020, was more or less stable at CHF 667,700,000, which is only CHF16,300,000 higher than at the end of the last financial year. It is worth noting the positive trend since December 31, 2019, I. E, the end of our first half, where when net debt was still up at €836,100,000 This means that we were able to reduce our net debt by €168,400,000 in the second half of the financial year. Dormakaba thus continues to have a solid financial profile. This is reflected in the leverage ratio of net debt to EBITDA of 2.1 times for the period under revenue. Owing to the crisis, measures introduced to ensure permanent solvency and liquidity have become much more important. We continue to have what we regard as sufficient financial room for maneuver. We have as yet unused committed credit lines granted by international and regional banks totaling more than CHF 500,000,000. Let's move to the dividend proposal. As in previous years, we want our shareholders to participate appropriately in our financial results for the 'nineteen, 'twenty financial year. We agreed and communicated a dividend policy when we merged to form dormakaba in year 2015, which commits us to a payout ratio of at least 50% of net profit after minority interests. As you can see from the chart, tracking our payout ratio, we have consistently implemented this policy for the last 5 years. It ensures that the same principles are always applied whether we are in a boom phase, a phase of steady growth or a period of crisis. The Board of Directors is therefore asking the Annual General Meeting of this October 2021, so 20th October 2021 2022, sorry, again, of 20th October 2020 to approve a dividend of CHF 10.50 per share. This is equivalent to a payout ratio of 52.1%. The proposed reduction in dividend compared with the previous year where we paid CHF 16 per share, correspondence exactly to the fall in net profit after minorities. Due to a recent change in the law, the dividend distribution will be different to the previous years. Previously, we paid the whole dividend from reserves from capital contributions. This form of distribution is now limited to a maximum of 50% of the whole. Therefore, half of this year's proposed dividend distribution will therefore come from reserves from capital contributions and the other half from retained earnings. The portion paid from reserves from capital contributions is tax privileged for private individuals in Switzerland. To finish my part of the presentation, I'd like to talk about the outlook for the 2020, 2021 financial year. After very weak business performance in the months of April May 2020, the results for June July and even August 2020 show a significant improvement. Based on this improvement, we currently expect to see a recovery in our business activities. However, we have to note that this recovery will not be global. In India and Australia, for example, which are important to our business, we are currently seeing negative influences and heavy restrictions as a result of COVID-nineteen. On the other hand, there are positive signs of economic recovery in some other countries that are important to us, including the USA, Germany and Switzerland. The dominant issue for our business in 2020, 2021 financial year is therefore COVID-nineteen. Reliable predictions about this are not possible at this time. In addition, we have to factor in geopolitical risks such as existing trade conflicts. All in all, visibility about the future course of business is very limited. Under the assumption that COVID-nineteen or geopolitical tensions will not create additional significant deterioration of the business environment, we expect to see sequential improvement. In particular, we currently believe that our organic sales growth and EBITDA margin for the Q1 of our 2020, 2021 financial year should be better than in the Q4 of the last financial year, so of 'nineteen, 'twenty. And we expect that our organic sales growth and EBITDA margin for the first half of twenty twenty, 'twenty one should be better than in the second half of the twenty nineteen-twenty twenty financial year. Due to the current low visibility and attendant economic uncertainties, we are not issuing any concrete guidance for the 2020, 2021 financial year or for the period thereafter. And now I'll hand back to our Chairman and CEO, Gerd Kalenhau. Thank you very much, Bernd. Before we conclude our presentation, there is still one major event to address my succession. On July 9, our Board of Directors appointed Sabrina Soussaint as my successor as Chief Executive Officer. She combines strong leadership and interpersonal skills, profound industrial knowledge and a successful track record of growing businesses profitably. Along with my colleagues of the Board, I'm convinced that with her global business experience, her know how in the field of technology and her drive for innovation as well as her authentic personality, she is an excellent fit for dormakaba and has everything it takes to successfully advance our businesses. With a view to enduring a smooth transition, Sabrina will join dormakaba on January 1, 2021 as a member of the Executive Committee and assume the CEO function on April 1, 2021. With this in line with our previous communications, my dual mandate as Chairman and CEO will end. Until then, the leadership team and I will focus on navigating dormakaba through these challenging times as a stable, healthy company. We are confident that dormakaba has a sound foundation necessary to continue mastering this ongoing crisis while enhancing future competitiveness and long term profitable growth for the post COVID-nineteen period. Thank you very much for your attention. Now Bernd and I are ready to take your questions. And with that, let me hand over to our operator, Alice. We will now begin the question and answer In order to allow as many participants as possible to ask questions, we kindly remind you to limit yourself to one question and one follow-up. The first question comes from the line of Martin Flueckiger with Kepler Cheuvreux. Please go ahead. Hey, good afternoon, gentlemen. Thanks very much for taking my question. I'll start off with the management changes. You've announced quite a few, I think 3 major changes over the last few months. Just going back to Sabrina Susson, I'm kind of curious, so what was the decisive criterion that favored the appointment of Ms. Soussaint as new CEO? And also speaking of the new COOs within your organization for AS EMEA and AS Americas, what are the key capabilities of Steve Buick and Alex Houston that made them eligible for their new positions? Thanks. Okay. Let me start. So you're right. We have communicated 3 appointments, Steve Buick, Alex Houston and Sabrina Soussaint. Let me start with your first question about the required job profile of that job, the way we have defined it. Sabrina is an excellent fit to that profile. Based on our profile, we required international leadership experience, technology and or industry experience, leadership and personality, which was clearly defined what we mean with that proven track record, profitable organic growth and willingness to relocate to Switzerland. In addition, DNA for market oriented innovation with digital competence, M and A and PMI experience and a reasonable career path ahead. These were the clearly defined criteria. And as I already said, Sabrina was a great fit to that one, and that led us to the decision to appoint Harrier as the CEO. Alex Houston, so our COOAS Americas, has the following priorities: 1st, sales excellence second, further improvement of operational excellence and last but not least, to finally fix the NESCO issue, which is driven by customer satisfaction. At the end of the day, we need to see profitable growth in the most important country we have in our portfolio. And last but not least, Steve Wieck, who was internally appointed, so he knew dormakaba very well. And also here, it's about profitable growth. It's about profitable sales, sales excellence, beside the fixing of the issue we have in Skambal, particularly in Norway. And you have seen the first important step, so we could close that divestment August 31, 2020. Next question please. The next question comes from the line of Bernd Pomrehn with Zendobel. Please go ahead. Yes, hello gentlemen. Seamless and touchless access solutions should represent quite an opportunity for the industry given our continued fight against the pandemic. Are you able to quantify the sales potential stemming from this opportunity? So what should this add to your top line? And how long will it take until we see a significant revenues really coming from this opportunity? Thank you. Ready? So we don't disclose numbers on that, but I can give you at least examples. We launched, as I said, solutions in very short time, so within 2 months. That included facial recognition and temperature screening, sensor in the remote opening systems, and that was always in connection with automatic doors, people flow management solutions. So there is a clear need even for existing products. So just to make a normal door an automatic door, we have a very good and reliable solution called ED100 or ED200. These are the 2 products we have, and we have seen there clearly increased needs and demand, in particular in China. Next question, please. The next question comes from the line of Andreas Muller with ZKB. Please go ahead. Yes. Hello, gentlemen. Thank you for taking my question. I've got a question on the short term increase, the sequential the next months, can you indicate July August how much that was down relative to last year? That's the first question. Okay. Thank you, Andreas, for the question. So what we again, I would like to and May were the worst months, and I have and May were the worst months, and I've indicated that we had a negative impact by almost 25% in the Q4 compared to prior year period. What we've seen then in June was already a significant increase. And there in June as well as in July, we were basically on the let's say, the end of single digits, slightly double digit negative growth compared to prior year period. First indications for the month of August indicate that this is still the case, although it's early days. Okay. And then on the restructuring, what's going to be the run rate or basically how will that impact the cost base for the next years, all these measures you've got in mind? Okay. With regard to the restructuring, we talk about the COVID related restructuring, which we initiated and launched in April started in April. So we talk about the layoff of up to 1300 employees, where we have already achieved 900 at the end of June 2020. We expect in total restructuring cost of EUR 26,000,000 from those EUR 26,000,000 we have already absorbed in the financial year 'nineteen, 'twenty in the P and L EUR 12,000,000. So we expect another EUR 14,000,000 in the current financial year. With regards to the payback, let's say, in general, our expectation is that we will basically achieve double the amount, so close to €50,000,000 savings as a result of those initiatives. And we expect this that the run rate will be achieved at the end of the current financial year. Some elements will even lead into the year after, so in the 2021, 2022 year. But let's say, as a general statement, run rate should be achieved at the end of the current financial year, and we expect something in the magnitude of €50,000,000 However, what is also important is that this those restructuring measures have been designed based on our current assumptions for the business environment. And we believe if the current business environment will continue that this is the right setup. However, if there are signs of improvement, if and when, then we will go back and we will rehire people, especially again in the production area in order to be able to meet demand. So this might lead to a change in the profile of the costs as well as in the profile of the benefits. But if this continues to be the case as we expect it to be, then the framework is as I just designed it. Okay. Thanks. That's clear. The next question comes from the line of Tobias Fahrenholz with MainFirst. Please go ahead. Yes. Hello, gentlemen. Hi. Could you speak a bit on currency and the currently quite weak U. S. Dollar? You have a certain transaction mismatch, I think around 4% or so. What is the negative margin you're seeing due to this in the current year? And do you still have some opportunities to reduce this gap either this year or in the midterm? Okay, Tobias, we have an appendix in our presentation. This is Slide number 30 3, where you can see our currency exposure. On the left hand side, the sales per currency region and on the right hand side, the cost per currency region. As you rightfully pointed out, there is a certain mismatch. However, I would consider this I would set this as only a minor mismatch. But what we have is there is an over, let's say, proportional element of sales into the U. S. Environment, which from today's perspective is not the most favorable situation. So there is also a slightly negative impact not only from currency translation, as I already described earlier, but also from currency transaction. What is also important, and I would like to use the opportunity of this question to again go back to our financing. We have I've shared with you our financial profile, our financing structure, our net debt. And as you may recall from earlier discussions, the majority of our gross financial debt is available to finance our U. S. Dollar assets. So therefore, we still continue to finance our U. S. Activity. So therefore, the U. S. Dollar interest rate is most important when, let's say, trying to assess and trying to design the expected financing costs. So therefore, also the U. S. Dollar is also important for the financing. The next question comes from the line of Reimer Rosenau from Helvetica Bank. Please go ahead, sir. Yes. Thank you. At the half year results, you said that you are reviewing your midterm financial targets in view of the current environment, which was pre COVID. Now you say that you do not provide any additional financial and business guidance anymore for the financial year 2021 and beyond. Does this mean that the midterm financial targets are now dropped definitely, I mean, particularly the 18% EBITDA margin target? So here's my answer. First of all, I think it's a logical step that we can't provide a full year guidance at this time given the COVID. And I continue to say that COVID is not a sprint, but a marathon. So it doesn't make sense for industrial companies from my perspective to guide on a full year given that COVID. Now on top of that, as you might know, our new CEO will have to work on a strategy in a project because our current strategy is called Dormakava 21. So we established that strategy in 2015, and this will end with the business year 2021, 2022. Therefore, something that Sabrina will initialize with the EC is, of course, strategy process to assess strategy and potentially to adapt strategy. And that includes, of course, also to define new medium term targets. So that given that COVID kind of impact, it doesn't make sense to come now with new medium term targets. So let us maneuver through the COVID, which will last for the forthcoming months for sure. And to keep the company stable and healthy. And when Sjavrina is going to start in January, she will initialize that strategy process and part of it will also be definition of the medium term targets. Okay, understood. Then the second question, if I may. How is the status of the integration of 2 legacy IT and ERP systems of old Carpa and old dorma? Is that completed or partly? So if you could just could update us on that. Okay. Remo, so I will take this question. So I think we have discussed the our strategy in terms of IT already the years before, and I would like to frame it as following. Our integration concept, our rollout concept for IT is not something which happens overnight. It's a thing which is an evolution over time. So we differentiate between application rollout and infrastructure. In terms of IT infrastructure, we are basically there. This is already something which we have achieved, I would say, a year earlier, and this was a clear driver and support for the very difficult business environment since the start of COVID-nineteen. So thanks also to our IT infrastructure, we are able to manage our business in accordance with the underlying needs. With regard to IT applications, we talk about the rollout of ERP elements. We have started in the year 2016, and we will continue with the ERP rollouts for the years to come. So this is something we are now working. We have just finalized our work in Australia with the ERP roll out. We are now in the process to finalize this in France, and we will now go to Switzerland, and this will take some long period of time. And once we are ready, then we'll move on to other countries, and we are also working in the U. S. Environment on certain rollouts. So this is much more a project which will take some years. But again, it's not a revolution, it's an evolution over time, and it's nothing which will happen overnight. And so therefore, also the risk is rather limited because it's a step by step approach. Okay. And are there what would you estimate are the costs attached to these projects per year? Is this is I would like to give you an indication in terms of our IT costs because it's very difficult to give you a clear guidance on the specific rollout costs because on the one side, we design templates, then we have the specific rollouts, then we have the implementation time, then we have the hypercare time. So there are plenty of additional efforts being done. In general, our current IT costs are roughly, let's say, close to 4%, a little bit less than 4% of sales. Now with a much lower sales volume, it's getting up higher in terms of relative share, but in general, a little bit less than 4%. A benchmark in our industry is something in the magnitude of 2.5%, maybe in the digital environment now a little bit higher. But the difference between those 2.5% and I would say 3.8%, this is something which you can allocate to our IT integration and ERP rollouts. Okay. That would be roughly €30,000,000 to €40,000,000 The 4% is €100,000,000 Okay. That's great. Thank you. Next question. We have a follow-up question from Mr. Fluger with Kepler. Please go ahead. Yes, thanks for taking my follow-up. Just coming back to the hollow metal door business, the former Mesker openings business, which you acquired, what was it like, 4 years ago or so. My understanding is that this business is continues to be affected both in terms of top line and profitability. I was just wondering whether you could share with us what your updated targets are for this business and what you expect for the former Maersk activities going forward in 2021? Thanks. Ready? Okay. Just let me explain what happened with our Meske door business. As you are aware of, we the fiscal year previous to the last fiscal year, we failed with a local SAP rollout. And that, of course, had a significant impact on top line and bottom line, as you said. But not only on that, also on customer trust, confidence. And while we have in the last fiscal year solved the technical issues, so the processes and systems, we had in mind also in the last fiscal year to regain trust of the customers. But with the COVID restructuring, we could not physically meet our customers and to bring those doors to the customers and to convince them that we are back in business from that perspective. And that is still the current issue. So that's why I said that COVID-nineteen has slowed down our efforts to regain customer trust. And that is, as I said, one of three priorities of the renewed team in the United States or at AS Americas to solve that issue. And look, I trust the team that they are able to do so in the course of the new fiscal year to step by step regain the trust of our customers. Thanks. Can you just remind us when the actual SAP rollout failed? When the actual problem arose at the time? Was it 2 years ago? When was that? So that as I said, that was the year before last fiscal year, therefore, 'eighteen, 'nineteen. That was then when we failed to have this war, was at the end of that fiscal year and or the second half of that fiscal year 2018 2019, we failed with that rollout. Okay, great. Thanks. Gentlemen, there are no more questions at this time. Sorry, we have a last minute registration, which is a follow-up from Mr. Foeckiger again. Yes, thanks. I thought I'd take the opportunity if no one else is asking questions. Talking about AS Access Solutions stock in Q4, I. E, in calendar Q2 of this year, you've initiated specific measures to adjust capacities and costs that this restructuring program that we've been talking about or touching upon just few minutes ago. I was just wondering, apart from the downsizing or rightsizing, as you call it, in terms of employees. I was wondering what exactly are the measures that you're taking? And in the press release or in the annual report, I can't remember now, so Macauber is also talking about price pressure in AS stock. And I was wondering whether you could elaborate a little bit on that, whether this is purely COVID-nineteen related or whether there are other reasons for that as well? Listen, so with regard to FTE reduction, when it comes to Germany, we initialized in 'eighteen, 'nineteen a cut of about 100 jobs, as you know, and that had already in 'nineteen, '20 a positive impact. So that was related to mainly Enerpretal. What we now announced is another 100 people also in production, but not related to Ener Petal. That's related to other factories in Germany. And when it comes to price pressure, it is a particular in those products or product clusters that are volume businesses that have some COVID pressure. As an example in key systems, that's a volume business, but also in door closers. While in others, more sophisticated product clusters, we have, despite of COVID, still the opportunity to even slightly increase prices. So it's really dependent from product cluster to product clusters and the corresponding differentiator. Okay. So overall, the price pressure mentioned in the press release or annual report is not that substantial. It's more, let's say, selected or in just a few areas, a few clusters? In a few clusters, mainly volume driven clusters, yes. Question? Okay. And may I just take the opportunity to ask another question? Yes, with regards to that EUR 12,000,000 and the other EUR 14,000,000 restructuring costs, I was just wondering, is that all cash? Or is there also a noncash, I. E, an impairment component in that? And if you could also allocate the restructuring costs to the various segments, that will be quite helpful. Thanks. Okay. Martin, So first of all, there are no impairments as part of those EUR 26,000,000 costs. The EUR 12,000,000 which are in the P and L, include an amount of roughly EUR 8,000,000 provisions. So this hasn't been spent yet. So the spending is still to come in the current financial year. So but again, no impairments. And sorry, the element was? If you the EUR 12,000,000, how are these allocated to the various sectors? Okay. So exactly. Thanks. So with regard to the allocation to segments, what we do here in order not to distort our financial results, we allocate all those costs on group level only. So you will not see an allocation to individual segments. We internally call those items affecting comparability. So therefore, those costs, this So that would be in the corporate line then from a segment perspective, yes? Exactly. Okay. Thanks. Okay. Further questions? The next question comes from Marc Tosa with BV AG. Please go ahead. Yes. Hello, gentlemen. I would have a very simple question. Applying the same logic that you basically mentioned for the non disclosure of further strategic midterm targets, does it really make sense to basically change 2 divisional heads just ahead of the change in CEO? Or does is that an indication that the CEO, the new coming CEO will now have the basically potential to radically change the course of the company or the strategy? Okay. So what we did, Marc, was clearly we said we need to ensure that we have the right people at the right place. And that is, of course, a permanent job also over the board, by the way, when it comes to the executive committee. So the board was clearly of the opinion that we will need to strengthen the Executive Committee, and we did that on time. That has nothing to do with the freedom of our next CEO. The next CEO will manage this company. And the next CEO, as I said, will not only be responsible for profitable growth, but also to define a new strategy and corresponding operating model. So there's plenty to do, and Sabrina will do that with a very strong EC. I clearly say that the Board is of the opinion that we have a very strong EC in place. So that is also needed as a support to Sabrina to achieve the future to be defined goals. Okay. Allow me maybe the second question. Is there any reason from today's perspective, and you mentioned that COVID is more of a marathon than a sprint, that the old targets of an EBITDA margin of 18% should not be reachable anymore. Independent of the newly or newly to be defined strategy. Has the market changed in such a way that these targets could become obsolete? All righty. The answer is the market has not changed from that perspective. And if you are going to ask the senior management of dormakaba, so the top 75 managers, they are of the opinion that 18% EBITDA should be achievable. And therefore, no KPIs have been adjusted or adapted? That's what I can say, right? And now I will certainly not start now to define a new medium term target. Let the team do the job, and they will do that in 2021. And in the meantime, we will also ensure that this company remains a healthy and fit company from that perspective because that's going to be the base for further improvements. Today's last question is a follow-up coming from Mr. Pomrehn with Vontobel. Please go ahead. Yes, again. The organic sales decline of 14% in the second half of the year was more than severe, was more severe than we expected. And you mentioned that supply chain issues had a negative impact, which we may be a little bit underestimated. Are you able to quantify these supply chain issues which you faced? And did this have any impact on your sourcing strategy going forward? Thank you. Okay. Let us talk about supply chain and our issues in the beginning of the COVID pandemic, we had several factories locked down by local governments. Give you two examples. The major one at AS Access Solutions was our factory in Malaysia. What we do there is we supply aluminum die casting components for door closers. So this factory is crucial for our door closer business globally. And that has been closed by the Malaysian government for quite a number of weeks. So that was a challenge. That was a challenge. We took different measures in order to keep going, but that was a constraint for certain numbers of weeks. As I said, all factories that includes not only access solutions, but also key and wall solutions, they are up and running today. The perfect storm was with Key Systems. Key Systems, as Bernd said, has factories in China, India, Italy, United States, Peru and Colombia. We had a time where 5 of those 6 factories were closed by local governments. And of course, such an event has a substantial impact on our business. Again, up and running again and supply nowadays is no longer an issue. That was the last question. Mr. Cardona, Mr. Brinkert, back to you for any closing remarks. Thank you very much. And again, thank you very much for your attention. Finally, I would like to show to you or project to you our IR agenda just to make sure that we are also available when it comes to investors' conferences. And with that, again, I would like to thank you for your interest and your attention. Stay healthy and all the best. Goodbye.