Good morning. I am the Arkadin operator for this conference. Welcome to the Geberit conference call. Please note that for the duration of the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star zero on your telephone. This call must not be recorded for publication or broadcast. At this time, I would like to turn the conference over to Mr. Christian Buhl, CEO, accompanied by Mr. Roland Iff, CFO, and Mr. Roman Sidler, Head of Corporate Communications and Investor Relations. Please go ahead, sirs.
Thank you for the introduction. Good morning, ladies and gentlemen, and welcome to the conference call. The objective of this communication is to inform you directly and promptly about the current situation and the impact of the COVID-19 crisis on our business. We will cover the following three topics in this call. First, a sales update for Q2, followed by a review of the first half-year sales figures. Second, a sales update on the impact of the COVID-19 crisis on Geberit, and thirdly, our priorities going forward. Let me start with our net sales figures for Q2. The second quarter was substantially impacted by the COVID-19 crisis and the negative currency development. In CHF, net sales declined by 16% to 671 million CHF. Thereof, the negative currency development led to a sales decline of minus 5%. In local currency, net sales declined by minus 11%.
The severity of the COVID-19 impact on demand varied substantially by geography, depending on the degree of the local lockdown. In markets where construction sites were temporarily closed, sales declined substantially, or in some cases, even collapsed in the second quarter. These countries include Italy, France, Spain, the U.K., India, and South Africa. The remaining countries were also impacted by lower construction activities imposed by the COVID-19 restrictions, which led to a sales decline in Q2, however, much less pronounced. As a result, net sales in local currencies declined in all four regions in Q2. In Europe, by -10%, in America by -11%, in Far East and Pacific by -16%, and in Middle East Africa by -37%. Let me now continue with a review of our net sales figures for the first half of the year.
In CHF, net sales decreased by -9.8% due to the substantially weaker foreign currencies and the COVID-19 crisis impacting the business since mid of March. The negative currency development, mainly driven by the substantially weaker EUR, led to a net sales decrease of -5.3%. In local currency, net sales declined by -4.5%. In Europe, net sales decreased in local currency by -3.3% in the first half of the year. In countries without a severe COVID-19 lockdown of construction sites, we recorded a sales growth or at least sales on previous year level in H1, mainly due to a strong first quarter. In Germany, net sales grew by 2.9%, in the Nordic region by 2.2%, in Eastern Europe by 1.4%, and in Switzerland, Austria, and Benelux, net sales reached previous year level.
In the remaining European countries, with the severe COVID-19 lockdown of construction activities, net sales declined substantially in the first half of the year. The U.K. by -34%, in Italy by -25%, on the Iberian Peninsula by -21%, and in France by -19%. Turning now to the markets outside Europe. In North America, net sales decreased by -5% in the first half of the year. In Far East and Pacific, net sales decreased by -18%, driven by the lockdown in China in the first quarter and the sales collapse in India in the second quarter. In the Middle East Africa region, sales decreased by -26%, driven by a sales collapse in South Africa and substantial decline in Israel and the Gulf. Let me now comment on the sales development per product area, again in local currencies.
All three product areas were impacted by the COVID-19 crisis. Installation and Flushing Systems decreased by -4.8%, Bathroom Systems by -4.6%, and Piping Systems by -3.8% in the first half of the year. Let me now comment on the current status of our business in the context of the COVID-19 crisis. I start with the demand side. After a strong decline in demand starting mid of March, due to the impact of the COVID-19 restrictions on construction activities, the situation started to continuously improve since mid of May, in line with the relief of the lockdowns in the various countries. Building construction sites are now largely open again in all countries, and overall demand on group level has almost reached previous year's level. However, there are three important remarks to be made to the current demand situation. First, demand is still very volatile.
We have indications that demand in June was positively impacted by inventory orders for wholesalers. Thirdly, selected individual countries still suffer from COVID-19 imposed restrictions, and demand is still substantially below previous year, namely in the U.K., in Spain, in the Gulf, in India, and South Africa. Especially weaker economies show a substantially slower recovery back to normal demand. Let me now comment on our supply chain. Overall, the supply chain was intact with only a few temporary production closures forced by local authorities. Since mid of May, all plants and logistic centers are up and running again. The availability of our products was secured during the entire lockdown period, except for temporary production interruption of our shower toilet in Milan. The order backlog from this production interruption has been almost eliminated in Q2. Let me now comment on our priorities going forward.
Independent of the risk of a second wave, we stick to the priorities defined in March. First, no change of our strategic agenda or operational priorities. Second, we continue to think long-term and invest also during the crisis into our strategic and operational initiatives. Third, we do not restructure our group. On contrary, as a strong and financially very healthy player, we continue this crisis as an opportunity to emerge stronger. Fourth, we adapt our operational activities to the current market reality. For example, by keeping a high degree of flexibility in our plants and logistics centers to cope with the high fluctuations and volatility of demand. For example, by further leveraging the digital innovations made during the lockdown, internally with our digitalized way of working, but also externally in the interaction and support of our customers with digital products.
We still refrain in the current situation from providing an outlook for the building construction market due to the continued uncertainties and risks around COVID-19. The biggest risk, of course, would be a second wave of lockdowns, negatively impacting the activities on building construction sites, renovation works or showrooms, as seen in the second quarter. Let me close my introduction with a short summary. Net sales declined in the second quarter in almost all countries, driven by the COVID-19 lockdown. Since mid-May, the situation gradually improved, and demand reached almost previous year's level. However, the situation around the COVID-19 pandemic remains to be highly fragile, which makes the short or mid-term outlook impossible or not meaningful. Thank you for your attention. We are now ready to answer your questions.
Dear ladies and gentlemen, we will now begin our question and answer session. If you have a question for our speakers, please dial one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find your question answered before it's your turn to speak, you can dial two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question received is from Fabian Häcki of UBS Asset Management. Your line is now open, sir. Please go ahead.
Yes, good morning, everyone, and thank you for taking my questions. You're saying since mid-May, the situation improved and demand reached almost pre-crisis level. I remember in Q1 call, you were saying in April you had a low double-digit decline, roughly between 10% and 15%. This means you had a short and harsh slump in April, followed by a significant recovery in May. Can you also give some colors on the inventory levels? You said at end of March you had relatively high inventory levels that should be reduced in April. Now you're saying, in June it was increased again, probably of a further expectation of a normalization. Can you explain how over Q2, over the months, the revenues, how this developed and also some comments on the inventories? Thank you.
I try to guide you again on the time sequence, starting mid of March until end of June. Mid of March, the crisis started with a substantial collapse or decline of demand. Per end of March, inventory levels of wholesalers were on a rather high level. In April, demand and sales declined by a lower double-digit percentage between 10% and 15.0%, or the lower double digits, most probably also driven by a reduction of inventory levels of wholesalers. As of mid-May, we have seen a constant or continued improvement of demand and also sales up to end of June. As I said before, we are now almost on previous year's level. We have also indications that at least in June, we have seen some inventory orders and inventories are rather at a high level due to the uncertainties at the moment with the wholesalers.
Okay, thank you. Then maybe also comment on the lockdown countries. I was a bit more pessimistic on countries like Italy and Spain. In Q2 it seems you still were able to sell 50% of your previous year's level. How did you even be able to sell into Italy during Q2? Can you explain a bit here the situation, how it was in Italy?
All in all, these shutdown countries, Italy, France, U.K., Spain, but also India and South Africa, don't forget, all these shutdown countries were down by about 40% in the second quarter. They haven't been completely closed. Of course, they were still going on some renovation work, for example. Also these countries, that's one reason, and also these countries started to recover, to open again, beginning May, mid-May. Also May and June are much better than April for these shutdown countries.
Okay. I also saw as a last question that you Bathroom Systems, you warned us with the closure of the showrooms that this would be particularly impacted and how it would actually perform the best from all your product categories. Have you also seen a certain shift to online channels or was this just all driven by the reopenings?
No, that is just too early. The closure of the showrooms in Europe for around two months between mid-March until mid-May, has not yet an impact on our sales figures for end of June. It's just too short because you have a certain delay. Imagine you are choosing your bathroom in the showroom. There's a certain delay until it comes to sale, to installers, wholesalers, and finally at Geberit. It's just a question of time.
Okay, very clear. Thank you very much.
The next question received is from Martin Flueckiger of Kepler Cheuvreux . Your line is now open, sir. Please go ahead.
Good morning, gentlemen. Thanks for taking my questions. Just firstly, I was wondering whether you could provide a little bit more granularity with respect to your key market, Germany, what you saw there in Q1 and Q2. If I remember correctly, you didn't provide the Q1 sales numbers at the time, so I was just wondering to get a little bit more granularity on the dynamics in that market for you. That's my first question.
In Germany, we have had a very strong first quarter, and in the second quarter, we have seen an impact from the COVID-19 restrictions, but much less severe compared to the other countries, of course. Also in the second quarter, sales in Germany were slightly down.
Okay, thanks. Just on the, sticking with Germany, just on the order backlogs at installers, the last number I saw was nine-point-something weeks, if I remember correctly. Has there been an update, and if yes, could you quote that update and did you actually see, or do you expect a favorable impact from the lower order backlogs as installers have now more free time to deal with your products?
The order backlog of installers in spring came down substantially to actually 9.6 weeks. That's around 25% less than in spring 2019. One of the main reasons for this decline was cancellations of projects, smaller or bigger projects. That gives you also an indication that for the second half of the year, especially the fourth quarter, we are somewhat more pessimistic because we have seen that projects which were planned are delayed, postponed, or maybe also canceled. You see that in the figures of the order backlog of installers in Germany.
Okay, thanks. My final question would be on your performance in the shower toilets business. If I remember correctly, in Q1, your shower toilet model Tuma was impacted. I think the situation now with Mera and overall how your shower toilets business performed in Q2 versus Q1. Thanks.
It was only one model which was affected from a temporary production interruption. That was Mera. Tuma was not affected. It was only the model Mera in the first quarter, and we have been able to almost eliminate the backlog from this production interruption in the second quarter. We had a relative weaker Q1 for shower toilets, but a very strong Q2 because we were catching up from the production interruption in Q1.
Okay. I guess that double-digit growth rate you targeted there didn't materialize because of the external circumstances. Could you provide us with an indication of how well you did in shower toilets?
We did very well in the first half of the year with shower toilet, and we have been growing double digits in the first half of the year.
Okay, thanks.
The next question we received is from Charlie Ferenbach of AWP. Your line is now open, sir. Please go ahead.
Good morning, gentlemen, and thank you for taking the questions. I'm not sure if I got your comment right, how you adapted your production. Did you reduce the capacity of workforce because of the lower sales? My second question is, as you said, the trend between April and June was, beginning with May, was a trend up again. Is the assumption correct then that the Q3 the sales development should be better than Q2? Thank you.
To the first question about our production plants. We did not restructure our production plants. Of course, what we did during this crisis and the lockdown, we tried to be as flexible as possible in the plant, which means with temporary workers or also by an increased flexibility of permanent staff, for example, holiday planning, but also flexibilization of work time. We tried to cope as good as possible with the lower demand in the plants in the second quarter without any fundamental restructuring.
Okay.
Regarding sales Q3, as I said before, it's very challenging at the moment to give any outlook, also short-term, because demand is still very volatile. We refrain from our outlook for Q3. What we have seen at the moment is, if you look at the project pipeline, that we see that running projects are still running, and they are maybe a little bit delayed, but they are going to be completed. We expect also in the third quarter. We see in the funnel also that new projects are postponed or sometimes also canceled, and that might have an impact more midterm or maybe towards the end of the year.
Thank you very much.
Before we take the next question, just a reminder, if you would like to ask a question, please press 01 on your telephone keypad. The next question we received is from Martin Hüsler, Zürcher Kantonalbank. Your line is now open, sir. Please go ahead.
Yes, good morning. I have two questions. First of all, about the U.K., which seems to be strongest hit by lockdown and in terms of sales decrease. Was it only lockdown or do you think it's also underlying demand that was weaker or is it not possible actually to tell the difference between the two? I also saw that last year, the first half, actually, U.K. was pretty strong. That's the first question. The second one is more a channel one market observations. If you detect any change in competitive behaviors, do you see that you get stronger because you have a strong balance sheet? What do you see in terms of payment terms? Do you see the customers pay later? Do you have any problems with cash ins? Just maybe a very high-level observation from you. Thank you.
To the first question, in the U.K., is it a lockdown or fundamental demand? Very difficult to say, predominantly, obviously, it must be the lockdown because people on construction sites are not allowed, have not been allowed to work. That is the predominant driver for, I would say, the decrease in the first half of the year. Of course, going forward now, it will be a very important question, not only in the U.K., how will demand develop? How will the economy develop, and how will consumer confidence develop? That is too early, at least for us, to have a view on that. Your second very broad question about competitive landscape and payment terms to customers. I give you a high-level answer. Of course, we try to emerge stronger from this crisis, which means we want to be stronger than competitors.
We do that in various dimensions. We do that short-term, for example, that we use, if possible, some availability issues of competitors, and also mid and long-term by not restructuring, by continuing our investment into our R&D pipeline, by continuing to invest in our plants. The second part of your broad question was around customers. Have we seen any impact in terms of customer payments? We have not seen any impact so far. No bankruptcies, but also no losses from bad debts to customers. Little bit of pretty minor prolongations of payment terms, but not material on the group level.
Okay, thanks a lot.
The next question we received is from Christian Arnold of MainFirst. Your line is now open, sir. Please go ahead.
Yes. Good morning, gentlemen. Thank you for taking my question. Like Fabian, I was also surprised this morning by the outperformance of the Bathroom Systems in the second quarter. I'm thinking of the closed showrooms, and I think we got two explanations for that. On the one side, the catch up in Q2 on the Mera, and on the other side, on the build up of the inventory levels at the wholesalers. Mr. Buhl, you also made a comment that this negative impact of the closed showrooms will be felt with a delay of two months. If I understood that correctly. That means that most likely in the third quarter, we will see underperformance of this product segment. Could you confirm that view?
I confirm your fundamental thinking. I will not confirm this exact figure of two months. It's depending, of course, on the project length, but typically maybe three to six months until we see an impact from showroom closures on our sales.
Three to six months.
Yeah, not two.
Okay.
It's also not an exact science.
Yeah. Sure.
Completely.
The second question on Far East Pacific. Here you were mentioning the collapsing demand in India second quarter. It was compensating the positive impact in China, I believe in the second quarter. Could you give us your view on India for the future? Does it stay like it is now? Do you expect also recovery to normal levels?
Let me first comment a bit on the dynamics of India in the second quarter. In April, our sales were basically down to zero in India because everything was closed. Since then it's gradually improving, but still as of now, the demand is substantially below previous year. We believe that in general, weaker economies like India, but also South Africa, will take more time to recover to a normal level, back to previous year's level than other economies like, for example, France or Italy. In general, we are more pessimistic also especially for India, but also for South Africa.
Okay. A third question on pricing. Could you actually increase the prices in the magnitude you planned, like this 1% point I think you have guided us in the last call?
Yes. We did implement the price increases as planned around 1% as of April.
Yes. Beginning of April. Okay. The last question on margins. I know you don't want to talk about margin at this point in time. Nevertheless, we had a positive impact of some 100 basis points on EBITDA margin, I think in this Q1. Can you confirm that you won't have this kind of extraordinary impact again in Q2?
Yes, that is true. That was a one-time effect in the first quarter. We do not expect that in Q2. There are three main levers for our margin in the second quarter. First of all, of course, lower raw material prices. We have seen lower raw material prices in April and May. Year to date, raw material prices are down -3% from May 2020. That's lever number one. Secondly, of course, the operating leverage will impact our margin in the second quarter because volume is down around 10%. As an indication, in normal times for the operating leverage, we have about 50% fixed cost, 50% variable cost. That will impact us. Thirdly, it's the possibility to mitigate this margin impact from lower demand. First of all, by the flexibility in operation I mentioned before, flexibility in the plants, temporary workers, but also permanent staff.
Secondly, cost containment measures we took mainly in the SG&A area, hiring freeze, but also where possible and meaningful, lower marketing costs, traveling costs, of course, that should support then the margin. These are the three main levers, lower raw material prices in the second quarter, negative effect from operating leverage, but mitigating measures from flexibility in the operations and cost containment measures in SG&A.
Thank you very much.
The next question we receive is from Remo Rosenau of Helvetische Bank. Your line is now open. Please go ahead.
Yes, thank you. Good morning. You mentioned two times the postponements, and/or cancellations of new projects in Germany. Could you give any more details about the impacted subsectors? Is that mainly commercial construction where you're not that much involved, or is it also concerning the housing sector that much?
First remark, I was not only referring to Germany. I think the delay or postponement of new projects will happen across geographies, not only in Germany. Secondly, yes, there is a different picture if you go one level more in detail. Mainly non-residential projects are affected, typically hotel projects, but also retail projects. The residential sector seems to be less affected at the moment when it comes to project delays or postponements.
Okay. It's still true, of course, that your exposure is much larger in the residential sector than in the other ones overall, right?
Larger, more than 50%. That's correct. Yes.
Okay, great. Thank you.
You're welcome.
The next question we'll receive is from Avish Singh of Credit Suisse. Your line is now open. Please go ahead.
Oh, hi, good morning. Thank you for taking the question. I'm asking on behalf of Andre Sydow. I've got three. Firstly, can you please provide an indication of how much the order pipeline was down at the end of Q2 year-on-year versus the start of the year?
I not 100% understood your question acoustically, but I think you asked about the order pipeline for end of June.
Yes. How much the order pipeline looks like now, at the end of June versus the start of the year?
As I said in my introduction, currently the demand is almost on previous year's level for end of June.
Yeah, on the order pipeline. Okay. Maybe for Q2 overall, if there's any indication.
I can't understand your question, sorry.
Okay. We can move on to the next. Just on factory loading. In Europe, in Q2, was it broadly even across the sites and hence shall we assume normal operational gearing on Q2 decline? Or were the factory starts at some more substantial under absorption?
I'm very sorry, but it's very difficult to understand you acoustically.
Oh, sorry about that. Is it any better now?
Not really, no.
Okay. I will go back to the line and come back. I will maybe back in the session later. Sorry about that.
Ladies and gentlemen, again, as a reminder, if you would like to ask a question, please press zero one on your telephone keypad. We receive the follow-up of Martin Flueckiger of Kepler Cheuvreux . Your line is now open. Please go ahead.
Yeah. Hi again. Thanks for taking my follow-up. Just to clarify on your statement regarding raw material prices, I wasn't sure whether you had said year-to-date up until June or up until May, the raw material price decline of 3%. If I remember correctly, in Q1, they were down 2.4%. I was wondering what the current run rate would be for Q3, and if you could provide the number for Q2, that would be lovely.
You're right. For Q1, it was -2.4% the first three months, and now per May, so the first five months of the year, we are down -3.3%. As of June, we have seen a stabilization of raw materials and slight increase for the month of June.
That's sequential, right? That's not year-on-year.
That is, yeah. That is sequential, correct. June taken sequentially.
It's still down year-on-year, of course.
Yes, of course. Yes.
Thanks.
The next question we receive is from Manish Dhingra of Kotak. Your line is now open. Please go ahead.
Yes. You said about the operating leverage, 50%. There are some fixed costs, some variable. Also, you said there will be cost containment as well as reduction in G&A costs. Can you just give a figure, what will be the net operating leverage after you count your efforts?
I think if I understood your question correctly, if I can quantify the cost containment measures and the cost structure in the second quarter?
Yes.
No, I can't quantify. Of course, we do our best to be as flexible as possible and we do our best to face these costs, which are not absolutely necessary in this environment. Since it's not a simple restructuring exercise, I can't quantify these cost containment measures or the additional flexibility which we have reached through in the plants and logistic centers. Maybe, if you compare that development now in the second quarter also with our last crisis in 2009, where you have seen that we developed quite well in terms of margin. We achieved a record margin in 2009, despite a top line decline. Keep in mind that in 2009, we had a complete different situation around raw material prices. As I said before, this year, raw material prices are down currently 3.3% for end of May. In 2009, raw material prices were down 11%.
A large driver for the strong margin in the last crisis were the lower raw material prices, which is not comparable to this year's raw material price development. In other words, if you look at our margin bridge, which we always provide, the net price effect, what is the effect on the margins from lower raw material prices and sales prices. In the crisis 2009, the positive effect on the margin only due to the raw material prices and the mix sales prices was almost four percentage points. We will not see that this year.
Okay. Yeah. Thank you.
We receive the follow-up of Fabian Häcki . Your line is now open again. Please go ahead.
Yes. Thank you for taking another question of mine. Just a very short one. Governments in Europe and elsewhere, they try to support the economy hit by COVID-19 through green or sustainable initiatives in infrastructure, but also in construction markets. Do you see yourself as a potential benefit from such Green Deal programs or policy support at all?
No, we do not see a material impact because these programs you're referring to are managed around the topic of energy. Our product is obviously mainly about water, and we are less exposed to energy topics. Therefore, we do not expect a material impact of these programs you just mentioned.
Okay. Thank you.
The next one we receive is from Eva Shang of Credit Suisse. Your line is now open. Please go ahead.
Thank you for taking the question. A quick one. If possible, can you provide an indication of the sales impact from the June distributor restocking and also from the shower toilet newer catch-up in the second quarter?
I think I answered this question before. We have had a strong second quarter for shower toilets, driven by the elimination of the order backlog for end of Q1 for a specific model where we had a production interruption. Secondly, the inventory levels of wholesalers most probably are at a high level for end of June.
Yes. Is there maybe any indications in quantification of those impacts?
No.
Okay, cool. Thank you.
As a final reminder, if you would like to ask a question, please press zero one on your telephone keypad. The next question received is from Daniela Vinkemeier of MainFirst. Your line is now open. Please go ahead.
Yeah. Thank you. Just a question. You said that big projects have been postponed. Construction expenditures are very important for many countries. Do you see there will be a kind of trickling down spiral in the economy if there are big projects are postponed?
I think it's a bit too early to have a clear view how much these project delays and postponements will impact then the building construction overall. It's too early to give you also a quantitative answer to this question. The only thing, what we see is that the typically larger, typically more non-residential projects, as mentioned before, are sometimes delayed or postponed.
Is your question answered, Mr. Vinkemeier?
Yes. Thank you.
Okay, we go on to the next one. It's from Christian Arnold of MainFirst. Your line is now open. Please go ahead.
Yeah, just a follow-up question. You mentioned that you don't see a material positive impact on Green Deal initiatives, et cetera. Is there a potential negative impact? I'm thinking of that some installers are generalists, meaning that they are taking care about bathroom installations as well as heating installations, and that some of the capacities could actually move towards heating installation.
Yes, I think this analysis or conclusion is correct, because our installers, especially in the mature market, they're always in competition, in parentheses, because they can decide or they have to decide, do they Bathroom Systems renovations or, for example, heating as well. You are right, everything which is connected to energy, of course, shifts sometimes capacities more to heating from the same installer, which you also need to install our products. Your analysis is correct.
Where would you expect the potential impact? Would it be more the mature markets like Germany or?
Yes. Obviously, yes, because there where you have the highly skilled installers, you have obviously growth on everything which they install. It is mainly mature markets.
Thank you.
You're welcome.
Now we receive the follow-up of Martin Flueckiger of Kepler Cheuvreux . Your line is now open. Please go ahead.
Yeah, thanks for taking the follow-up. You got me curious about your last answer on the EU Green Deal. Isn't the situation a little bit more, let's say, complex in the sense that if you have renovation projects that are being pushed as a result of these sustainability initiatives like the EU Green Deal, that renovations are likely going to be more broad-based because you don't want to have construction sites within short time frames within your house or within your non-resi building. As a result, couldn't people also think, "Well, if I'm going to do the heat boiler now, I might as well do my bathroom facilities as well in order to prevent to have a construction site two years from now." Isn't the whole situation a little bit more difficult to assess rather than saying it's all going to be negative?
No, I also share your view, and I also agree on your view, but that is not a contradiction to what we discussed just before. Take any dollar and its capacity. By the way, your view saying that it could also have a positive impact, because once you renovate your heating, for example, of course, it's a good opportunity to also do piping. I agree on that as well. At the end, it boils down that the capacity which has to install all these various product categories makes the installer is 100%. We have to decide, or customers decide, how much of this capacity is he allocating to which product category. That stays the same. That was my answer before. There we rather see a shift, or it could be rather a shift from green initiatives towards more heating versus bathroom or sanitary equipment.
That's not a contradiction.
Sure. I see your point. On the other hand, if you look at building permits across Europe, except for Germany, you would also think that overall installers across Europe are going to be seeing less utilization over the coming few months and therefore, there might be even some increasing spare capacity from that end, or is that something you're not expecting at all?
Also true. I don't know, but it could be. Again, it all depends on the capacity of people, the number of hands, and what these hands are doing. That is the key question. I agree also on your view. We do not expect a massive negative shift from this green initiative. I just said before, we rather see a challenge because it's a competition between sanitary products and heating products, for example, or energy-related products when it comes to installations. Rather a negative impact than a positive, but nothing dramatic, also not on the negative side.
If installer backlogs are now at reduced levels, you said minus 25% year-on-year in the spring survey for Germany, then that competition across the HVAC and sanitary industries should diminish, shouldn't it?
Hmm. Why?
From the point of view of the installer. If he has less order backlog, then he might have some spare time, so he can do both. He can do the HVAC installation and your stuff, no?
That would be true if the order backlog is at zero or minus, but we have not spare time. We still have an order backlog, but it's not as big as before. We still have order backlog of 9-10 weeks.
Okay, thanks.
We receive no further questions. I hand back to the speakers.
Thank you for your participation and over the question. We wish you all a great day. Thank you. Bye.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.