Earnings Call: H1 2020

Aug 18, 2020

Quarterly report

Morning, ladies and gentlemen. I am the entity operator for this conference. Welcome to the Gevirtz Conference Call on the Half Year Results 2020. Please note that for the duration of the presentation, all participants will be in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Bull, CEO, accompanied by Mr. Roland Iff, CFO and Mr. Roland Wietler, Head of Corporate Communications and Investor Relations. Please go ahead. Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to our conference call on our Q2 results. Cambridge delivered very good results during the COVID-nineteen crisis in the Q2. Let me start with the key statements. The EBITDA margin reached in the 2nd quarter previous year's level despite substantial decline in net sales of minus 16%. The resilience of the margin in the 2nd quarter led to an increase of 70 basis points of the EBITDA margin in the first half of the year and reached 31.5%. The EBIT margin reached 26.3%, almost previous year's level. The net income margin decreased slightly by 1 percentage point in the first half of the year to 21.4% due to an increased tax rate and a weaker financial result. Before we discuss the financial results of the first half year, let me briefly summarize our sales results, which we already communicated on July 6. Net sales in Swiss francs decreased in the 1st 6 months by minus 9.8 percent driven by the COVID-nineteen crisis and the negative currency development. In global currencies, net sales decreased by 4.5% in the first half and by -10.7 percent in the second quarter. The negative COVID-nineteen impact on demand varied substantially by geography depending on the degree of the local lockdown. In markets where construction sites were closed, around 20% of our sales exposure, volumes declined substantially or in some cases even collapsed in the Q2. This country includes Italy, France, Spain, the UK, India and South Africa. The remaining countries were also impacted by lower construction activity imposed by COVID-nineteen restrictions, which led to a sales decline in Q2, however, much less pronounced. Let me now comment on the operating and financial results in the first half of the year. EBITDA decreased under proportionally compared to net sales by minus 7.8 percent to CHF452 1,000,000. The EBITDA margin reached 31.5%. Despite a net sales decrease of minus 10%, we were able to increase EBITDA margin at 70 basis points. The main drivers for this margin improvement were fast and targeted cost containment measures, a high and even further increased flexibility in production and logistics to cope with the substantial decline in volume, lower raw material prices and increased sales prices. It is worth to mention that these results were achieved without restructuring, salary cuts or support from the public sector, for example, through short time work. The public support from short time work was minimal since we consciously decided to introduce short time work only very selectively and for a very short period of time in France, UK, Italy, the country which were most hit by the lockdown. The negative currency effect of minus 5.3% on net sales in the first half of the year has only a minor impact on the EBITDA margin due to our strategy and our continued efforts to achieve a natural currency hedging. EBIT decreased in the 1st 6 months by minus 10.5 percent to CHF386 1,000,000 in line with net sales, leading to an EBIT margin of 26.3%, 20 basis points below previous year's level. The slightly weaker development of the EBIT margin versus the EBITDA margin was driven by higher depreciation costs from higher investments in previous years. Net income decreased by 13.9%, slightly disproportionally to EBIT to CHF 350,000,000,000 due to a higher tax rate driven by the new tax regime in Switzerland effective than the year and the weaker financial results in 2020. Earnings per share decreased by minus 13.5% to CHF86.77 positively affected by the share buyback program. In the first half of the year, 262,000 shares have been bought back under the program launched in June 2017 at an average share price of CHF406. In total, 1,026,000 shares have been bought back since 2017 for a total consideration of CHF440,000,000. The share buyback program has been finished in April this year according to plan. Free cash flow decreased in the first half of the year by minus 32 percent to R174 1,000,000. This over proportional decrease was driven by 2 factors. 1st, a negative base effect with an extraordinary strong free cash flow in the previous year when free cash flow increased by 35%. And second, an increase in net working capital due to the strong sales dynamic within Q2, starting with a substantial decline in April and the recovery toward 10th June. In order to leverage the low interest rate environment and the strong debt capacity of our balance sheet, we issued in April a standard Swiss franc bond in the amount of CHF 300 1,000,000 with a maturity of 2.5 years and a coupon of 35 basis points. With this, the rate remains to be very solidly final. For end of June, we hold cash position of CHF 350,000,000 and an unused revolving credit facility of CHF 500,000,000. Let me now comment on our outlook for the remaining year. Let me start by saying that ongoing uncertainties around the COVID-nineteen crisis make an outlook still very difficult and uncertain. Accordingly, our outlook is subject to uncertainties and based on the assumption of no lockdowns or material business restrictions driven by the COVID-nineteen pandemic. Let me start with the current business performance. In July, sales were slightly above previous year level, driven by stock rebuilding effect of wholesalers in countries which were severely hit by the lockdown, for example, in Italy or in France. Under the assumption of no COVID-nineteen imposed lockdown or material business restrictions, we expect in the second half of the year further normalization of the building construction industry. However, delayed or stopped projects, especially in the non residential segment and the temporary closure of customer showrooms in the Q2 might have an increasingly negative impact on demand during the second half of the year. Under these assumptions, we expect currently adjusted net sales in the second half of the year to be slightly below the second half of 2019 and the EBITDA margin for the full year slightly below 2019 level. The weaker outlook for EBITDA margin in the second half of the year compared to the margin increase we achieved in the first half of the year is driven by 3 factors. 1st, generally increasing costs again due to the normalization of the business after the sharp decline in Q2, for example, for marketing or the release of the higher increase. 2nd, raw material prices, which started to increase again in June and tougher comps from lower raw material prices in the second half of twenty nineteen. And thirdly, a higher wage inflation since several tariff increases this year become all the effective as of the second half of the year. Let me close our introduction with a short summary. The last couple of months were marked by a historical business collapse in terms of speed and extent. However, February delivered very good results. First, our supply chain was not materially affected by the COVID-nineteen imposed restrictions and the availability of our product assortment was ensured. The stability of our supply chain was largely driven by our strategy to pursue a high degree of vertical integration manufacturing, decreasing the dependent needs from suppliers and our strategy to source and to manufacture locally, close to our customers in our end markets. Secondly, we were able to maintain our industry leading profitability on previous year level, despite the unprecedented collapse in volume in the Q2, and this without restructuring efforts or support for the public sector. Global raw material prices helped but were not the main driver. The main reasons for the strong profitability were at half a consequent crisis management based on short decision making processes and the lead organization the continued investments in further optimization and process flexibility over the past years And finally, the flexibility and the high commitment of our employees based on good and trustful relationships between employees and management. This unprecedented crisis reveals the fundamental strength and resilience of our strategy, our business model, our stability and our strong company culture, key assets during times of crisis. Thank you for your attention. We are now ready to answer your questions. Ladies and gentlemen, we will now begin our question and answer session. And the first question is from Andre Kogman, Credit Suisse. Your line is now open. Please go ahead. Good morning. Thanks so much for taking my questions. I wanted firstly to follow-up on your raw materials comment with stock prices increasing and obviously the comps that we see from last year. Do you expect Q3 raw materials to be up, down or flat year on year or sequentially? Sequentially, we expect increasing raw material prices now in the 3rd quarter compared to the Q2. But year on year, the level will be still below our previous digit level. Thank you very much. And the second follow-up I had is on your comments on July sales development. Would you say you'd still be up year on year ex the restocking effect, if that's possible to quantify at all? I don't know. I can't answer that because I can't quantify the restocking effect. Okay. Fair enough. And the main question I have really is about emerging stronger on the other end. As you said, this is clearly demonstration of resilience. And we see your R and D flat year on year, your IT personnel is up year on year, as you say in the statement. Could you maybe talk a bit more about what is in the pipeline? What are you working on? What is where that we can expect from Geberd over the next 12 months in this kind of digital assets and new growth introductions? And how you'd expect that to influence the performance? We did not make any compromises on our lead pipeline. Therefore, we are on track with new product introductions, which will come to the market next year. But for obvious reasons, I do not want to go into detail about our innovations next year, but we will have important and significant innovations in all areas where we are active next year. And if I may, anything kind of specific to kind of post COVID? Are you working on introducing new products to address the kind of touchless, frictionless trends that we see emerging? Is that something that we can also look forward to the exchange? Sorry, can you repeat the question? It was difficult to understand. Sorry, I was asking specifically if you have products, new products in the pipeline that respond directly to post COVID trends that we see emerging, which is more touchless operations, more frictionless buildings? Is that something that is also in the pipeline? Not only in the pipeline. We have it actually already in the assortment. We have already today touchless products, for example, to flush and toilet, but also in the area of faucet, electronic faucets, as we have seen a substantial increase in demand already over the last couple of weeks months driven by the COVID-nineteen crisis for the touchless products. And of course, also in the pipeline, we have further products coming in the area of top shelf activations. Got it. Thank you very much. The next question is from Martin Hoechler, Swedish and Kantaribank. Your line is now open. Please go ahead. Yes, good morning. I have a couple of questions. First of all, turning to Slide number 10 on your presentations. I'm surprised by the strong positive effect of other costs, which was plus 0.7%. I think in the Q1, it was a minus of 0.2% or 0.5%. What were the main drivers? You mentioned some on a high level, but maybe a bit more detail. And what should we expect for the second half of the year? There are 2 main drivers for this good development of other costs. Number 1, the fast and constant Internet cost containment measures. For example, in marketing for example, in administration, some of them were easy to achieve because they were not able to travel, for example. And others were conscious decision which we took to adapt our organization very fast to the new market reality. That is the first bucket. And the second bucket is the flexibility, mainly of our personnel in plants and logistics. We achieved a high flexibility driven by temporary purpose, but also a flexibility of permanent staff in the plants, for example, by location planning or using the flexibility from flex time models, which we have in place in the plan, the logistics. In some of the plans, we even increased the flexibility during the crisis in alignment with the employer percentages. Okay. And then maybe adding to that, you were mentioning that in the second half, you envisage wage inflation. I was just wondering whether there is no room to renegotiate with employees because of the economic environment and the pressure wage inflation shouldn't be that high in this state of environment? I'll give you 2 answers. The first answer is no, there is no legal room because that is negotiated by the Tagifo vendor with company representatives, we do not have any influence. And by a certain coincidence, this year made in Germany the tariff increases happening more in the second half of the year than in the first half of the year. My second answer is even if we would have the flexibility, we would not start to recursionate our wages in the second half of the year if we have seen the results this organization and these employees delivered, especially in the Q2. Okay. Well understood. And the very final question, the amortization of immaterial assets was a bit higher than I was expecting in the Q2. Any one offs there? Or is this not a run rate for the next couple of quarters? No, there was a one off for €4,000,000 in that line item linked to a small impairment. Okay. Thank you. And the next question is from Charlie Finberg, AWP. Your line is now open. Please go ahead. Good morning, gentlemen, and thank you. Can you give us an idea of your expectations of the development of the demand in Germany and in Switzerland in the second half? And second question, I have the corona situation, nothing changed on the situation with the lack of capacity of installers in Germany? And last, is still planned a new share buyback program to start it in Q3 or Q4? Or you have other ideas yet? Thank you. Regarding the demand in Switzerland and Germany, we are fundamentally positive for the second half of the year for the financial V2 countries. However, as I said before, also in these countries, we have seen that certain projects have been played or even postponed in the second quarter that might have more negative impact in the course of the second half of the year. The second question is around the bottleneck of its dollars in Germany. The bottleneck came down in April quite substantially, as we already talked about in July. And starting out to the end to increase in July, the order backlog came back again. It's actually at 11.88 weeks, still somewhat below previous year's level, but substantially higher than during the lockdown in April May. Your third question around share buyback program. We have announced that we will launch a 3rd program. It is prepared. It is mandated to a bank, and it's expected that the bank will start the share buyback program in the course of the second year. Thank you, Paul. Thank you. Second half of the year. The second half of the year. So this still means Q3 or Q4? Exactly. Okay. Thanks. The next question is from Bernd Pommeyne, Santander. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. Three questions, if I may. Firstly, can you share a little bit your view on some developing markets where you are active like Middle East, South Africa and India? Obviously, a little bit more difficult usually to track for us. Then secondly, can you quantify the additional IT costs for your digitization initiative in the first half? And then finally, CapEx was just slightly down in the first half year. Is this also your guidance for the full year? Thank you. The development in the emerging current countries is still quite challenging. So in India and in South Africa, it's visible that it's much more difficult that these countries are coming back to a normal level. As I said before, in July, we have seen quite good sales, again, in Italy and also in France, for example, driven by restocking effects. South Africa and India are still struggling much more. The second question, the additional investments for the digitalization efforts this year is €15,000,000 for the entire year, but I can't split it in the first half of the year to take out of here. I do not know the tax figure. And question number 3, it's always a little bit volatile between the quarters. The guidance for the full year is SEK 160,000,000. Okay. Excellent. Thank you so much. And the next question is from Jon Ravall, Reuters. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. A couple of questions, if I may. You said you expect the second half of the year to be slightly below last year's level? Can you give us any kind of quantification on that? And then kind of numbers, how much below being in the last year second half? That's my first question. And then the second one is you asked if you're seeing some kind of recovery in markets. And I was wondering, could you give a bit more color to that? Like where are you seeing a kind of improvement? And how much which will be coming back and how much of the payback? I cannot quantify how much we believe that the sales level in the second half year will be below previous year's level? It's slightly below previous year's level, but I will not quantify or not. And it figures too much uncertainties around the prices. And the second question, also there is difficult to give you a comp view, but I think there's one observation which we have seen over the last 2 months. It might be that it's also the case for the second half of the year. Then in general, weaker economies, obviously with weaker health systems, are recovering much more slowly, more slower than other countries. As I gave you before, the example, Italy, France are coming out relatively fast. On the other hand, India, South Africa still very much struggling, the U. K. Somewhat in the middle. Thank you. And the next question is from Christian Arnold, MainFirst. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. I have a follow-up question on the raw materials. You in your introduction comments, you said that you expect some higher material prices in the second half, which is one reason why EBITDA margin is going down in the second half according to your guidance. You then said that Q3 actually sequentially increasing, but year over year, we still have a positive impact. So that implies that in Q4, you expect quite a harsh increase in material prices year over year. I mean, is that correct? And could you give us here some more flavors in terms of which material prices you expect to increase quite substantially in Q4? In terms of materials, we expect a stronger increase, especially from the industrial metals. Because the spot prices for industrial metals, aluminum, copper, zinc, they are basically all back to the level of beginning of the year. Obviously, we have not seen that yet in our purchase price, there was a certain delay. But also on the plastic side, we have seen increasing prices not as severe as in industrial on the industrial metal side. And for Q4, we do not have a clear view of the Q4 raw material price development, obviously. But don't forget that last year in Q4, raw material prices were already stable again versus Q3. Okay. Thank you. Second question I have is on the personnel costs. Usually, Q3 shows quite favorable pattern when it comes to restaurant costs versus sales. Do we expect a similar pattern, a normal pattern? Or do we expect something completely different given the fact that you had yes, you asked for flexibility of your personnel in Q2? I would expect a pattern which is not too different from what we have seen in the past. But what you said is correct. Some of the flexibility we used in Q2 will probably harm us in Q3. So the positive effect we have from taking vacation might a little bit lower workmanship than in the past, but it's very difficult to assess right now. And the next question is from Alessandro Florentine of TAVREN. Your line is now open. Please go ahead. Yes. Good morning, gentlemen. Thank you for taking my question. I have one again, a follow-up on raw materials. And I'm sorry, I have to go back to an issue. Related to the Q1. I looked up all my notes, and I didn't find the answer. I remember in Q1, you mentioned that there was a one off in the raw materials. And can you remind me what that was? And then particularly, if this one off remained a one off? Or if it continued in Q2, just on the front, a little bit better, that element. Thank you. So you're right. We had a one off effect on the raw material product in the Q1 that was mainly driven by projects within production and logistics, cost harmonization and cost improvement with a positive effect on the robotic product, which was only in Q1, onetime effect, so don't have an effect in the rest of the year. All right. Thank you very much. The next question is from Martin Frykiger, Kepler Cheuvreux. Your line is now open. Please go ahead. Hey, good morning, gentlemen. Thanks for taking my question. Just one actually because all the others have already been touched upon. I was just wondering what your impressions and observations particularly have been over the last couple of weeks with regards to wholesale is order patterns. And with the indication or the guidance of showroom effects being expected for H2, I was just wondering what you've seen on the ground and whether it's more Q3 or more Q4, when you expect those showroom effects to take place and in which countries too? Thank you very much. The most important behavior of wholesalers impacting our business at the moment is obviously restocking effects that we have seen already in June in the countries which were less affected, for example, Germany but also in Switzerland. And now, let's say, we delay in the counties which were materially affected by the lockdown in Italy and France, as I mentioned before, with a good sales development in July. With regards to the impact of the showroom closures, that's quite difficult. We do not have a clear view also, not clear indications from wholesalers how big the impact could be and how fast or when it actually should come. But there's one agreement or that's what we hear from the whole seller is that it is a negative impact and not always be a positive impact. Very difficult to quantify and very difficult to define the timing or refine the timing of this segment. Okay. Thank you. And the next question is from Kat Lou, Morgan Stanley. Your line is now open. Please go ahead, ma'am. Thank you very much and good morning. Could you please give a bit more details on the trade receivables, please? We see a large increase. Is that purely due to timing or COVID sort of lockdown and recovery? Or should I expect it to go back to normal level? Or is that the new one? Thank you. No, that's not the new one. It has to do with the seasonality within the Q2. The recovery we have seen starting mid May until the end of the quarter, you can see that in the EBITDA. It's already in the results, but you don't see it in free cash flow, I. E, it's in the accounts receivables. Great. Thank you. And the next question is from Frieda Eglom, Morgan Stanley. Your line is now open. Please go ahead. Hi, gentlemen. Two follow-up questions from me. On the raw materials, can you give us a little bit of an indication of how important industrial metals versus your plastics raw materials are in terms of the mix? Is the industrial metals 20% of the mix, 30%, maybe some broad guidance there would be helpful. And then just for my understanding, can you explain why showroom closures in Q2 can be an impact to wholesaler volumes in, say, the end of Q3 and into Q4? How does the order processing actually work? I would expect with the showrooms now open again, the wholesalers come back. Is this just a case of having a very long order book at wholesalers, so it takes time for this to filter through? That would be helpful. Thank you. The raw material split is around 40% metal oriented, industrial metal oriented. 75% of our raw materials are plastics, commodity plastics and special plastics. And about 35% is obviously the rest, packaging, electronics, components, wrapper parts, etcetera, furniture. To the showroom question, first, it's important to mention that in many countries where we are operating, the showrooms are operated by wholesalers. That is true for Germany, also for Switzerland. And secondly, there's delays because you as an ex consumer, you choose your product in a showroom. And then it takes some time after your project starts, maybe even the house building starts and then it's later on, the sanitary equipment is acquired and that leads to a timeline to actually ordering and then the wholesalers and delivering from the wholesalers. Okay. That's helpful. Thanks very much. Our next question is from Raimo Waldemarle, Hereditary Bank. Your line is now open. Please go ahead. Yes, thank you. During tough times, the market leaders should actually be able to gain market share probably more quickly than usual. Do you have any indications yet that this is actually happening right now? And also looking at the ceramics business in particular? First, I think it's been too early to talk about the market share gains. It's a couple of months now. But I feel quite comfortable that we are able to gain market share and I think we have some indications because some of our competitors have not been able to keep open their plans. There were some delivery issues, pricing players, but also interactive players that we did not have. And we made use of that. So most probably that would mean that we are doing better at the moment than competitors. Okay. So this might also be marginally positive impact in the second half of the year and next year? I think the closure of plans of competition, I would say no, because these plans are open again. But I think now it comes more into play that we did not restructure, that we did not cut any RD budgets, that we did not reduce our sales force. For example, in Italy, our sales force was never short time work. So I think these more longer term oriented measures during the crisis will now help for the rest of the year, next year to emerge stronger than competitors from this crisis. Exactly. Great. Thank you. Welcome. And we have a follow-up question from Alessandro Folesi of Permian. Your line is now open again. Yes, thank you for taking my follow-up. Maybe going already a little bit in the reaction that Remo was talking about before. But if we forget a little bit about COVID, we have been speaking about that for 6 months now and looking into more normalization and so on. What kind of growth rates would you expect or envisage in the next or maybe intuitively expect in the next month and maybe next year, etcetera? Because of course, we also see building permits not growing so much anymore. But then again, economic activity will pick up. So if you try a mental exercise to sort of normalize business, What kind of organic expectations would you would you then envisage? Thank you. No, there are too many what ifs and too many assumptions to your question. I think it's still too early. Of course, if the economy normalizes, it has an impact to the loss as well. If not, it's too much uncertainty in this question. And obviously, I will not give you a positive figure. I think what we have on our table, we have, of course, different scenarios. We have different macro scenarios. Whatever scenario will happen, we will not change fundamentally our management division operational. Therefore, we do not spend that much time on thinking about the different scenarios because we basically do anyway the same thing. And that is much more important. All right. Then we speak about it in the next quarter. And the next question is from Manish Beryam from Citi Generalevich. Your line is now open. Please go ahead. Hello. Yes, good morning. Congratulations for very good results. So my first question is on raw materials. So how much the raw material price declined in Q2 as well as in the first half? The second question is, I mean, there you say there is a time lag between the raw material price development and the impact on your profit and loss statement. So can you just highlight, I mean, what is the general time like between the raw material price development and the P and L impact? The third is I wanted to know, you said you did €160,000,000 buyback in this quarter. So what was the average buyback price, I mean, for these buybacks? And also wanted to understand because you are going to do 3rd buyback program. So is there is this just an opportunity like you just do like if you have the cash flow and you do the buyback or you take a call on the price, I mean, if the valuation is right to do the buybacks, what is the process behind? And is there the cash flow availability or also, I mean, and consideration that the company achieved and things like that? First question, raw materials in the 1st 6 months were down by 3.5% compared to the first half of the year twenty 19. If you compare the Q3 sorry, the Q2 this year with the Q1, raw materials were down by 5% sequentially. Your second question was can you repeat the second question briefly? So you say there is a lag between the raw material price development in the market and the P and L impact. So how much is the lag? That is very big mix within the raw material price repurchase. And we have soft raw material is relatively short term because we are not hedging. So we have monthly contracts for other materials. It's quarterly, even half year. So that we do not have an exact figure, a weighted average time lag figure I can't provide you. It's something between 1 month, obviously 6 months, selectively even yearly prices. And the third question about the share buyback. The share buyback program, fundamentally, we want to have a mix of dividend payments, and attractive payout policy and also secondly, giving back the money, we have share buybacks to the shareholders. It's not driven by the actual share price. It's always a delegated mandate to the bank, what we define is the volume and the timeframe and no operational decisions. And I have to correct myself, so that minus 5.1% I mentioned before in terms of raw material prices was Q2 2020 versus Q2 2019. So the sequential effect this year Q2 2020 versus Q1 2020 was only minus 2.4%. I'm sorry. Okay. Thank you. The next question is from Fabrizio Castano, B. J. Asset Management. Your line is now open. Please go ahead. Thank you. Good morning. Lots of questions on the short term COVID impact this morning in the call. Maybe more on a long term view, can you comment a bit on the lasting effect of the COVID world from a product perspective where I think virtually all commercial bathroom in Europe would need to be renovated due to distancing tools? What are the feedback from the experts, from the developers and from the architects? And what are you doing on the product side? Thank you. We have already an assortment which fits, let's say, to the new COVID environment. As I said before, some example, touchless products, hygiene products. And obviously, that is not only in COVID-nineteen, an important element in our innovation portfolio and for our development guys. Just to give you an example, also the new bathroom series, which we introduced last year, the Geberit ONE bathroom series, basically not addressing, not only but also hygienic topics. Obviously, shower toilets fundamentally address hygienic topics and between those topic terms of development of shower toilets, new products for shower toilets, of course, therefore, I think we have good opportunities on the long run to benefit from the more demand for hygienic solutions in public bathrooms, but I would also think in our bathrooms driven by the COVID-nineteen crisis. But we did not have to adapt tactically or short term our innovation time plan because that was anyway one of the important areas for innovation even before COVID-nineteen. Okay. So you expect I mean, one can expect a stronger demand on especially from the commercial side. I think you need the space that you need in the bathroom, I mean, all the buildings and shopping malls, they need to restructure their bathroom. We already see that. The growth, for example, we have an X-ray in place for a W and T flashing, which is electronic thing. I don't have the figure exactly in mind, but it's a high double digit growth rate of this product, which is basically only going to commercial bathrooms, public bathrooms. And the next question is from Tobias Schulte, UBS. Your line is now open. Please go ahead, sir. Good morning also from my side. Just a short question. Are there any potential defaults, which are maybe expecting or following, which might have an impact on the business in regard of suppliers, wholesalers, let's say, a whole bunch of end markets and supplier which you are dependent on? We have not seen any default neither on the supply side nor on customer side. And we also do not expect any default in the future. Thanks, Sven. And we have a follow-up question from Andre Kukhnin, Credit Suisse. Your line is now open again. Good morning. Thank you very much for taking the follow-up. I just wanted to come back to the bathroom stores closure impact. Given what you said in Germany about Germany with the backlog extending for plumbers, would it be right to think that this is not an issue for Germany, the closure of bathroom stores? I don't understand the question. So in your outlook, you said that one of the concerning factors is this effect from bathroom stores being closed for a few weeks and hence depleting the backlog. Given that the German plumbers backlog is now rising up again in nearly 3 months, I would like to think that this bathroom store's closure impact is not going to be the case in Germany. Yes, it might be, yes. I don't understand that much of thinking about this question, to be honest. So which are the countries that we should worry about in terms of this impact from bathroom stores being closed for a few weeks? No, there are no specific countries we are worrying. I think the most worrying, as we said, of course, before is, are there any material restrictions coming up again from this COVID-nineteen pandemic? That is worrying up to a certain extent. But looking at different views of developments per country is not really helpful. It doesn't change our strategy, our operational decisions. Therefore, that is not really relevant for us. Got it. Thank you. And if I may, just last one. Is this situation moving on the acquisition opportunities? Are you looking potentially at more companies? No, we also to that extent, we did we do not change our strategy. Our strategy is that we are growing organically. We always look at bolt on acquisition possibilities. We have always a small list. But on a small list or that's the idea is nothing changed due to COVID-nineteen, which would now make an M and A transaction, the small one, more profitable. Got it. Thank you very much for your time. Welcome. And the next question is from Martin Fuschka of Kepler Cheuvreux. Your line is now open again. Yes, thanks for taking my follow-up. Just going back to the raw material price quotes you gave a couple of minutes ago, Mr. Paul. I'm a little bit confused looking at my notes from the last conference call. If I remember correctly, at that time, back in July, you were saying that raw material prices had declined by 2.4% in Q1. And that my understanding then was that this was a year on year development, Q1 'twenty versus Q1 'nineteen. So is that coincidence that you're talking about 2.4 again for Q2? Or is that a misunderstanding? Because at the time, you were also mentioning that raw material prices had been down by 3.3% in the 5 months January through May. So it looked like it was going to like it was a or an acceleration of a decline in Q2. Now the numbers you were mentioning speak of a deceleration. What am I missing here? Thanks. So it's a coincidence these two figures are, by coincidence, the same. So I repeat. In the Q1 of 2020 compared to the Q1 2019 raw material prices were down 2.4%. Then in the Q2, raw material prices were down 5.1% versus Q2 2019. That adds up together to H1 minuteus 3.5% versus H1 2019. And by coincidence in the Q2, promissory prices were also sequentially 2.4% down versus Q1 'seventeen. And there are no further questions at this point. So I hand back to the speakers for closing remarks. Thank you for your participation. We wish you all a great day. Thank you. Bye bye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.