Ladies and gentlemen, welcome to the Gurit Half Year Results 2023 Conference Webcast. I'm Alice, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be immediately followed by a Q&A session, where questions can be posed by the ongoing conference call. As an analyst or journalist, you can receive the necessary dial-in details by registering at investor@gurit.com. Registered participants may then ask questions by pressing star and one on their telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Mitja Schulz, CEO of Gurit Group. Please go ahead, sir.
Thank you very much, and good morning. I welcome you to the presentation of our first half 2023 results. I'm here in Gurit's corporate office in Zurich, together with my colleague, Philippe Wirth, our CFO. You have seen that we announced a change in the Board of Directors this morning, so I'm happy to have both Rudolf Hadorn and Philippe Royer here with us in the room as well, providing additional background and be ready to answer questions during the Q&A session. Let's start and have a look at today's agenda first. I will start the presentation by providing you a business update, highlighting the key activities and achievements of the first half of this year, and comment on the most recent events.
Philippe Wirth will provide details on the financials before I will spend a bit more time explaining our view on the markets and our full half outlook. Following the presentation, we have scheduled the Q&A session. Let's start with a review of the first half of this year, and I think I can say that this was overall a successful first half for Gurit. Our legacy businesses, so excluding the Structural Profiles business, were performing much better than last year. Our Western wind customers started to order blade molds again, driving sales and profitability of our Manufacturing Solutions business. Our new PET extrusion sites in India and Mexico increased their operational performance after a period of ramping up. The marine and industrial business saw continued strong demands, in particular for our recycled PET foams, as well as our high-performing Corecell products.
The multitude of cost out and profitability improvement measures, which we initiated last year, started showing the expected results. Strategically, we are progressing with the implementation of our long-term strategy, executing in different work streams according to our plans. I will highlight a few examples later, but let's have a deeper look at the first half of 2023 first. Overall, Gurit achieved a revenue of about CHF 245 million in the first half of the year. We increased our adjusted operating profit margin to 5.6%, coming from 2% in 2022. Excluding the newly acquired Structural Profiles business, the adjusted operating profit came in slightly above 10%, which again underlines the good performance of those businesses. Still, the Structural Profiles business yielded a significant loss in the first half of this year.
I will comment later on our plans and activities to turn this business around. Another positive element I want to highlight is our cash and liquidity situation. We improved our free cash flow performance quite significantly versus last year, driven by higher profit and a stringently applied net working capital management. That helped us to significantly reduce net debt and deleverage our balance sheet. Philipp will comment in detail about the financial performance in his part of the presentation. A few more first half highlights related to our activities in the wind business. I mentioned already, we see Western wind customers order blade molds again after one and a half years with almost a standstill in new projects. This has two different elements. One, it helps our Manufacturing Solutions business to drive sales and profitability.
The other, that this is a positive signal and an early indicator that western wind customers start investing again in new blade generations and incremental capacity after a period of stagnation. We see the trend of PET as dominating core material in wind blades to continue, and are happy with the fact that we are able to increase our PET market share, leveraging our new PET extrusion sites in Mexico and India. Focusing on India, our new site in Chennai is now fully up to speed. We are running PET and kitting on maximum capacity and successfully manufactured the first mold for one of our Indian customers fully locally. We keep our strong position as core material supplier in China and our partner of choice to support Chinese customers on their expansion projects outside of China.
At the beginning of the year, we concluded the restructuring of our European kitting footprint by fully relocating the Danish kitting operation to Spain and Turkey. The Structural Profiles business is still loss-making and was impacted by operational issues in Denmark and the delayed ramp-up of our lead customer in India. This led to a substantial negative profit impact in the first half of the year. We are convinced that the strategic rationale of the acquisition remains intact. A different approach is needed to turn the business towards profitability. We concluded with the minority shareholder that Gurit will take over full control of the business with immediate effect. Consequently, we reached an agreement to acquire the remaining 40% of the company. The joint venture will be dissolved and the company fully integrated into Gurit.
With the full integration of the Structural Profiles business, we will be able to accelerate the turnaround of the business. Further cost optimizations in all operational areas are needed. We will fully utilize the synergies of the Gurit Group by bundling procurement activities and leveraging the Gurit footprint and customer access. In China, for example, we see first positive results in the business development of high-performing root connection parts for local blade manufacturers. We teamed up with Owens Corning to develop and sell high modulus glass pultruded profiles to wind customers, offering a cost-competitive alternative to carbon fiber and utilizing the strong R&D capabilities of the Structural Profiles team.
Further extensions of Gurit's product portfolio for wind blades can be expected, since we are in advanced engineering discussions with customers about modular and more integrated product solutions, where we will build on the full set of competencies our combined teams can offer. I highlighted it at the beginning, we are very happy with the development of our marine and industrial business. The marine business saw another year-on-year growth, driven by continued strong market environment for production and pleasure boats, as well as sailing yachts. Our teams did an excellent job in executing strongly, and were able to mitigate inflation impacts through solid price management. Due to our strong regional presence and our diverse product portfolio, we booked new business with new customers in Europe and North America.
In the industrial markets, we see growing demand for recycled PET as an alternative, fully sustainable material for applications, especially in the construction and transportation segment. Concluding, the marine and industrial business continues to deliver, Gurit will strengthening our market position and global reach. I emphasized in my introduction that we are on track with the execution of our strategy. Highlighting our ESG performance, we progressed well with the implementation of our sustainability strategy. We are operating multiple ESG-related work streams, it's encouraging to see that the dedicated work of our teams has been recognized with continuously improving rating results. We received a silver rating from EcoVadis. We have just been awarded with an A rating by MSCI, most recently, our Inrate governance rating improved by another 7%.
In addition to that, we are actively participating in industry-wide initiatives, focusing on recyclability and increased bio content of new products and solutions. With this, I conclude the business update and hand over to Philippe Wirth for the half year financials.
Thank you, Mitja. Let me start with the P&L, and here with a quick summary on sales. Sales in materials include 47.5 million from Structural Profiles in the first half of 2023, and CHF 27.4 million in the same period in 2022. Excluding these sales, materials grew 6.1% at constant exchange rate. The growth is mainly coming from wind materials in Europe and Americas, and from solid results in marine and other industrial markets. Structural Profiles ended below expectation in the first half of 2023, due to delayed orders in India. Kitting grew 10.4%. Like in materials, this growth came from Europe and Americas. Manufacturing Solutions increased 5.1% compared to the first half of last year, with a mix shift to more molds for our Western customers.
In total, this led to an increase in sales of our continued operations of 17.6%, If we exclude Structural Profiles and Aero in both years, Gurit grew 8.6% in the first half of 2023 at constant exchange rates. When we look further down to P&L, operating results benefit from the Western wind market, with increased demand for our core material and a pickup of orders for molds. Gross profit margin is three point nine percentage points, or CHF 10.9 million above prior year. Increase is mainly coming from an improved product mix in tooling, with more Western sales, which accounts for an increase of CHF 7.9 million. Lower material and freight costs, including sales price changes, adds CHF 4.6 million profit compared to last year.
This means, and we talked about this in the past, how important this is for Gurit. Our profit is increasing because Western blade manufacturers have bought molds again, and with a lot of effort in our sourcing strategy, this trend of increasing material and freight costs, combined with a lag, a time lag, until we can adjust sales prices, has now started to reverse. These positive impacts, however, are partially offset by a reduction of Structural Profiles profitability. EBITDA for the first amounts to CHF 20.3 million , including restructuring expense of CHF 0.6 million , mainly related to Structural Profiles. This compares to CHF 28.1 million last year, which included a gain of CHF 18.3 million from our sale of the Aerospace business. Excluding this gain on sale, EBITDA improved more than CHF 10 million.
Adjusted operating profit excludes the gain on Aero in 2022, restructuring and impairment charges. It amounts to CHF 13.6 million in the first half of this year, compared to CHF 4.6 million last year in the same period. The next slide summarizes the key drivers for this increase again. Last year, we had an adjusted operating profit of CHF 4.6 million . Compared to prior year, we gained CHF 7.9 million due to a favorable product mix, mainly of our Manufacturing Solutions business. In addition, we benefited CHF 4.6 million from lower material prices. Big emphasis has been put on our sourcing strategy over the last year. Savings from restructuring, mainly our footprint adjustment in Kitting Europe, plus other smaller items, added CHF 3 million to the adjusted operating profit.
On the negative side, we incurred a decreased profit of CHF 6.5 million due to the acquisition of Structural Profiles last year. The actions that we are taking there have been discussed by Mitja. Now let's move to cash flow. For those of you that follow us regularly, may remember how in the last two earning calls, I was talking about the challenges we had with net working capital, caused by longer payment terms in the wind business and the inefficiencies in our inventory levels due to long lead times, much more volatile demand, and the ramp-up of the production in India. To counter these trends, we have put several initiatives and measures in place with the target to bring the net working capital back to approximately 22% of sales.
As you can see on the left chart, this work is bearing fruit, and we were able to reduce net working capital below the targeted level on average over the last 12 months. Capital expenditures amounted to CHF 5.5 million in the first half. CHF 4.4 million, or approximately 80% of it, is related to capacity increases, mostly to our footprint expansion in India. The full year 2023, we expect CapEx between CHF 10 million-CHF 15 million. Free cash flow, which equals to net cash flow from operation of the capital expenditures, amounted to CHF 6.5 million. Compared to the previous year, we benefited from higher EBITDA, excluding the gain on Aero and improved working capital. To conclude on the financials, a couple comments on the June balance sheet.
Net debt decreased by CHF 6 million to CHF 78 million since December, and CHF 26.2 million since last year, June. The equity ratio is 33.8%, and this is a slightly better number than in December 2022. We experienced a CHF 7.4 million currency loss on equity, which more than offsets the earnings. The gross debt to EBITDA ratio remains stable at 2.8 times, with underlying two opposing effects. On the positive side, we were able to reduce gross debt by CHF 21.1 million since December 2022. On the other side, the gain of the sale of the Aerospace business from last year is not anymore included in EBITDA. We expect this number to further reduce by the end of the year.
The acquisition of the remaining 40% of Fiberline will only have a small impact on debt, as the majority of the cash flow or the cash outflow, goes out over an extended earn-out period. Our return on net assets is positive again, coming from our significantly improved legacy business. Financial summary. Strong first half in the legacy business with margins back to normal levels. Free cash flow generation helps to deleverage by lowering the debt. Unfortunately, the structural profile business did not develop as initially expected. This muddies a little bit, the overall picture, but as, as you have heard from Mitja, we are addressing this issue. With this, I hand back to Mitja.
Thank you, Philippe. I will share our view on the wind market outlook in reference to the latest market outlook data we use from Brinckmann here. Short-term uncertainties in the wind industry will remain, with customers announcing negative impacts related to quality issues. As you know, we are not talking about our customers in public, but I want to highlight that Gurit is not directly involved in those quality issues recently announced by two of our customers. Naturally, we will be impacted indirectly when customers delay projects or postpone new product introductions. Anticipate further late stock depletion, since customers still sit on sizable inventories, which is impacting short-term demand....The recently announced offshore project cancellations in U.K. and the U.S. are a worrying signal that there is a need for more flexible auction designs and pricing schemes to enable the long-term feasibility of wind projects.
Looking at the regions, beginning with Europe and North America, 2023 and 2024 are expected to be on similar activity levels before positive impacts resulting from the Inflation Reduction Act in the US and offshore growth will lead to higher installation numbers from 2025 onwards. New blade models for larger wind turbines will drive mold demand, but also regional proximity needs, since geopolitical consideration is becoming more important. In China, we have seen a solid market so far this year, but anticipate lower installation numbers for the full year on a level of 50GW-60 GW, instead of the 70+ GW shown on the chart. Market remains highly competitive, with plenty of underutilized capacity. Gurit sees growth potentials with Chinese customers winning projects outside of China.
One of our customers has been awarded the largest order pipeline for onshore turbines in India and the Middle East. Gurit strategically supplies and services those projects from our sites in China and India. Considering relatively low order intakes in the last 12 months, a stable ASP development of our western customers, we expect that our customers will focus on recovery and earnings improvement in the next 12-18 months. Midterm growth projections are above 6% per year. The industry will need to scale and set up the investments needed to produce the expected gigawatt levels of new wind turbines. Let me conclude today's presentation. We had a successful first half of the year, 2023. H1 sales was within the expected range, highlighted by a positive product mix in wind, with more western mold projects and a strong marine industrial business.
This, and the cost-out measures launched, improved our profitability and cash flow performance. We acquired the remaining 40% shares in Fiberline Composites to accelerate the turnaround of the business. Strategy execution remains on track with a steadily improved ESG performance. For the full year outlook, we narrow our net sales guidance to CHF 460 million-CHF 490 million, we increase our operating profit margin outlook to 3%-6%. Before we now start with the Q&A, we would like to provide a bit more background on the organizational changes in the Gurit board of directors, which we communicated this morning. For that, I hand over to Rudolf Hadorn and Philippe Royer.
Thank you very much, Mitja, welcome everybody, also from my and Philippe Royer's side. We are here, both of us, today, to explain and announce the organizational change in the board of directors. I personally served Gurit for 16 years, almost now. The disappointing results of the past 2 years required resolute, and as we can see, successful action as of 2022. The wind market lights up since the beginning of 2023 again. That's good. The financial results come back strongly now in 2023 for the core business, and the newly acquired Fiberline business needs full focus and control to deliver the results we all need. In order to fully integrate and now dynamically develop this business, we completed the buyout of the residual 40% of the Fiberline shares, actually yesterday.
Also, as Philippe Wirth elaborated, our indebtedness on a gross, gross and net basis is markedly reduced, and overall, we can say that Gurit is again on safer grounds. Now, personally, as all of you know, or some of you know, I have various business, private, private businesses I pursue, and they need my full attention and passion going forward. This is why I've decided to step down now, at this moment, as a Chairman of Gurit, and Philippe Royer, a member of the Board of Gurit since 2019, and the former CEO, will succeed me in this role up to the next annual general meeting. I thank you for your understanding, and I will ask Philippe to introduce.
Thanks, Rudolf. Good morning, everybody. Well, first, many thanks to Rudolf Hadorn for his leadership in the last 16 years. I'm also grateful he accepted in the last couple of months to postpone a bit his personal projects in order to finalize the acquisition of the 40% remaining shares of Fiberline, together with Mitja Schulz. For me, Gurit is not new, as I dedicated a significant part of my time in the last four years as a board member to understand the company and its markets. In the last 10, 12 years before that, I was CEO of comparable companies. I mean, industrial B2B companies, comparable in size, sometimes comparable in production progress, processes. For example, I know extrusion quite well, even if I was extruding more aluminum than PET.
comparable for some markets, in terms of customer structures with some heavy players, and certainly comparable in terms of geography. I've been running or acquiring locations in Europe, obviously, but also in North America, including Mexico, many plants in China, Southeast Asia, and also in India, and even in Tamil Nadu, close to Chennai, where, we, as Gurit, have, successfully started a large multiple business operation. Well, what is maybe new to me is that I was not used to such a unique, huge market potential opportunity, together with having some players in the supply chain making heavy losses, but I think I'm not the only one to be surprised by that. I'm optimistic for Gurit, cautiously optimistic for wind business.
You have seen in the first half results, and you have heard from Mitja Schulz earlier today, that we have some positive signs. I'm also optimistic for marine and industrial business, as the team has done a super job in the last couple of years to identify market opportunities, and they are many. With this, I think I hand over back to you, Mitja.
Thank you, Rudolf. Thank you, Philippe. This ends our presentation. Thank you very much for joining us today. With this, I'm now handing over to the operator for the Q&A session.
We will now begin the question and answer session. Pre-registered participants can now ask questions by pressing star and one on the touch tone telephone. Questioners are requested to use only handsets and turn off the volume from the webcast. If you wish to remove yourself from the question queue, you may press star and two. Our first question comes from the line of Laura Bucher with Octavian. Please go ahead.
Hi, good morning. Thank you for taking my question. First of all, congratulations on the good results. A couple of questions from my side. First, how fast can we expect to see the demand for molds translate into sales of wind component materials? Second, can you walk us through the operational issues and the new different approach regarding the Fiberline acquisition, and how quickly do you expect these issues to be solved? Final question, some OEMs are indicating more movement, especially now in H2, in the US, after the announcement of the IRA credits. You said volume should come in 2025. Can you give us an idea of what kind of conversations, if any, you're having on that topic?
Sure. Laura, let me start with the third question related to the IRA impact. We are obviously in discussion with all our major customers who are active in the US or North America. We see some of them, and they announced those that as well, being more bullish and also investing in incremental blade manufacturing lines. You've probably seen some of those in the announcements yourself. These are all customers of us, and with our established footprint in Mexico, we will be able to participate from that. When you look at the timing, this was your question, we see that they now gradually launch investments in extending production facilities or bringing idle production facilities back to life.
This will take a little bit of time. We have the first new mold orders there as well. We anticipate that really, in, in terms of blade numbers/then turbine numbers, we will rather see sizable impacts of that in the earliest, in the second half of next year. This is also why, why I'm, I'm saying, and I think this is a consensus with others as well, that that really measurable impact we'll rather see in the 2025 than much earlier before. That also answers a little bit your first question. You asked: How long does it take to translate a mold order into a material order? First of all, that depends a little bit on the customer.
It depends a little bit on where the mold actually lands, because there's then certainly some transportation time if you bring a mold across the ocean. Usually, usually, we would say some time between six and 12 months, it rather takes, and probably more 12 months, until we really see that the customer is then installing the mold, making the first blade, and then being ready to scale production. Your last or second question, in this case, was related to the Fiberline turnaround, and what are we doing differently, and what's the, what's the timing behind?
First of all, I mentioned that in my presentation, I think there are further opportunities we can use by fully leveraging the capabilities the joint company has in fields of procurement, in the fields of sales, in the fields of joint product development. That's, that's one. There are some impacts which we will see already next year. There are some other impacts which will probably take a little bit longer time until business developed turns into profit and sales streams. Operationally, as I also indicated, as you have also seen in the financial presentation, we did sizable restructuring of the Danish operation.
We are in discussion with the team to discuss measures how to further optimize the operational performance, the product performance, the quality performance, increase output of those products. A multitude of measures is being lined up here, and we are confident that we will see gradually improvements, probably starting later this year already, but certainly helping us to improve performance already next year. So this is the timing we have basically behind these activities.
Just a very quick, follow-up question here. Regarding Fiberline, I think in the last conference call, it was mentioned that there was some delay with the technical, or was it acceptance of, of, you know, like, so, so technical penetration?
Yes.
Can you give us any update on that?
Yeah. Absolutely. Absolutely, and obviously I, I, I, forgot to mention that. One of the major reasons why we are not materializing the sales in, in, in India yet was as you just said, and as I also explained, that one of our lead customers delayed a project. We have now started in supplying. We are basically now, as we speak, in the ramp-up phase of these of this particular customer project. Will take us probably the, the, the, the next three, four months until fully conclude on that ramp-up, and then supply those products being ramped up, starting end of this year, and then obviously the next year out of our Indian facility to this particular lead customer.
Okay. Thank you very much for your, for the time.
Thank you, Laura.
The next question comes from the line of Tommaso Berti with Credit Suisse. Please go ahead.
Yes, good morning. Thanks, everybody, for the presentation. Firstly, on profitability, I mean, EBIT margin has improved quite significantly, but net profit, it seems, is suffering from higher interest and taxes. Could you comment maybe on that also in terms of what we can expect here for the full year? Then on Fiberline, a quick follow-up to Laura's questions. Could you maybe indicate by when you expect Fiberline to be breakeven? Then thirdly, on the market outlook, you mentioned inventory levels continue to be relatively elevated. By when do you kind of see these, these inventory levels to be fully drawn down? That would be helpful. Thanks.
Sure. Philippe, you start probably with the, with the question.
I will go all the way through up to Fiberline, right? The first one, the net profitability, yes, is tempered a little bit by higher interest rates compared to prior year. You all know that the interest rates are increasing. We also see currency losses on the financial results. The Swiss franc is strengthening against all the currencies, particularly areas like China or also Turkey, are devaluating quite significantly on their currencies, and that's a major reason there. You also notice a continuing high tax rate of more than 40% for the first half year. This is due to loss-making businesses, where we do not capitalize the deferred tax assets arising from the loss carry-forwards.
We do that when we don't see in the midterm, the benefits coming back from from higher taxable income. On the net working capital or on the inventory question, our inventory levels, they are much better, right? Our inventory turns are improving, so the increased levels would come from higher sales and not from lower turns. However, on the particular, on the Structural Profiles business, and when you hear the story that orders are delayed in India, of course, there is now some inventory sitting around which we will be able to dispose by the end of this year once these orders come in. Also there, we expect then some benefits on the inventory level.
Okay, Philippe, thank you. Tommaso, let me.
Sorry.
Let me come back.
Just to follow up, if I may.
Yeah.
On the inventory level. I actually, I actually meant more, the inventory levels of your customers, so in terms of blades.
Oh, okay.
Yes. No, that, that, understood.
Okay
... let me just, let me just lead you through that, or our, our perspective of that. I mentioned it also at the beginning of this year, right? We had some customers. It's a little customer specific, and some of our customers are really eating through sizable inventories. I mentioned at the beginning of the year that we see with some of those customers, even year-on-year reductions in blade manufacturing demand due to that. This is materializing as we speak, and also reflected partially in our numbers. I would personally anticipate that for those particular customers, we will see that impact in the full next year as well. 'Cause we are really talking sizable inventory numbers here, and when you listen to some of those customers' presentations, you could also hear that.
Related to your question about Fiberline and breakeven timing, two comments here. One is, there are things which we are controlling ourselves. I said that. We have a multitude of cost out measures, planned, initiated and in the pipeline. We are confident that we are executing those, and we were confident that those will lead and help us to reach breakeven-ish territories next year. There is one uncertainty, and I also want to mention that, and I mentioned that before. There is a market uncertainty, as I said. And obviously, performance has also something to do with top line, and we know that some customers are still not fully clear about the total amount of blades to be produced next year. So this uncertainty is still a little bit out there.
I guess we will get much better visibility until the end of this year and early next year. When we will talk about 2024 and guidance 2024, I think we will also have a much better view on timing for breakeven at the Fiberline, of the Fiberline business.
Understood. Thanks a lot.
As a reminder, if you wish to register for a question, please press star and 1 on your telephone. Star followed by 1. The next question comes from the line of Daniel Koenig with Mirabaud Securities. Please go ahead.
Yes, good morning. I have two questions. First, on the consultant on 2024, is that, in your view, a conservative estimate? I was just wondering if the mold business is picking up in the West, isn't that a sign that maybe 2024 is gonna be better than in 2023? What is your assessment of this Brinckmann consultant outlook for 2024? Is that a conservative or a realistic outlook? Then I was wondering on your guidance, on your EBIT margin guidance of 3%-6%, you're now currently at the upper end of that range. Besides currency effects, what are negative factors which would bring it down? Or can you elaborate on your forecast?
Because it looks, if the business is picking up, and you're already at the upper end, it's, maybe a conservative forecast. Thanks. That's it.
Good. Daniel, thank you for your question. Yeah, let's start probably with the second question first. Might, might be, might be a conservative view. We've also seen quite a bit in this industry over the last 24 months, I would almost argue. When you, when you look, and this is also why I mentioned in particular, that we see near-term uncertainties in the business. What is, what is impacting and what, what, what, what, what can happen, is, of course, that certain projects, which we talk about with customers, slip further to the right, from a timing perspective.
I mean, customers have announced, and you, and you, and you read that, about specific delays of projects, that is impacting and could further impact the business, and consequently, probably two, three mold projects, for example, moving to the right or other things, which would then have a negative, second half year impact. I think that's, that's clearly one element which is driving probably a cautious view of us on the second half of the year. To your first question, related, how realistic is the outlook of Brinkmann? You know, that's almost a philosophical question.
I would argue, when you compare outlooks from Brinkman or Woodmac over the last years and, and how good they have been at the end of the day, from today's perspective, I think anticipating overall that the Western wind markets will be more or less on similar levels next year, I think is a solid, is a solid estimation. There are some upsides, potentially, if things, in particular in North America, will go a little bit faster. There are probably even some downsizes, if another customer suddenly comes up and, and tells the market about unprojected issues. From today's perspective, we think that's a, that's a solid outlook, as good as you can make outlooks in the wind industry.
Okay. Sorry for the philosophical question. Thanks.
No, it's all good.
There are no more questions at this time. I'll hand back to Mr. Mitja Schulz for any closing remarks.
Okay. Thank you very much. Again, I want to thank all of you for your time today and for your questions. That concludes our presentation. I wish you all fantastic remaining week, and talk to you soon. Thank you very much.
Ladies and gentlemen, the conference is now over. Thank you very much for your participation. You may now disconnect your lines.