Earnings Call: Q4 2019

Mar 3, 2020

Ladies and gentlemen, warm welcome to Oerlikon's Full Year 2019 results presentation and analyst conference today. My name is Andreas Schwarzwalla. I'm the Head of Investor Relations and Corporate Communications for the Oerlikon Group. It's my pleasure to welcome you all here either in Zurich or via our webcast on a global basis. Earlier today, as you have probably seen, we announced our full year results and published our annual report. All the documents related to the announcement, annual report, press release and presentation are available on our website for download at earlycon.com. A quick look on today's agenda. As usual, our CEO, Roland Fischer, will provide you with an high level view and a brief introduction of the key figures for the group and will provide you more details on the segment performance for 2019. Following that, our new CFO and a warm welcome to Phil as it is his first set of results for the Oerlikon Group to provide you an insight into the financial performance as well as the outlook going forward. To remind you, today's presentation will be broadcasted and taped. So after these brief introductions of the 2 gentlemen, we will have a Q and A session. And following that, we will have the replay available on the website later today. Having said that, I think that's all for housekeeping. It's my pleasure now to hand over to our CEO, Roland Fischer. Thank you. Thanks, Andreas, and a warm welcome from my side as well. 2019 was a year of many facets and not to say a very colorful year actually. We, as EarlyCon, we continued to execute our strategic goals, including the successful divestment of DRIVE Systems. And in hindsight, I think it was a smart move. We achieved a decent price at exactly our investments organically, and we are bold on acquisitions in Service Solutions, strengthening our leadership position. And furthermore, we launched a share buyback program by the end of last year. 2019 was a year in which we as a company performed resiliently in a very challenging market environment. Across both end markets and geographies, the economic environment has been increasingly turbulent in 2019, especially in the second half of twenty nineteen. But nevertheless, our business has performed well, showing resilience, weathering the challenges. In light of these headwinds, we delivered a robust performance. Our group sales at CHF 2,600,000,000 are at around the same level as in the previous year 2018. And just as a reminder, and you know it, 2018 was a record year for us, right? And I have to say thanks to the entire Oerlikon team for that great, great achievement. The EBITDA contracted by 50 basis points to 15 point 1%, adjusting for onetime effects, mainly restructuring. I will come to that. And in the second half of last year, Q3, we saw the first impacts of the challenging market environment on our business in an increasing number of end markets. And today, I can confirm that immediately installed and established initiatives showed first results, leading to a Q4, which is, as indicated, we told you that better than the previous Q3. And we have been able to show an operational improvement here. Important to understand that the contraction in margin profile is not only reflecting market conditions, but also our positioning for the future with investments in innovation, technology and our service network. We are not content to just batten down the hedges. We are positioning the company for the future growth and for an improved and enhanced profitability. And so we can emerge stronger when the markets are coming back and they will come back. We reacted to market conditions like the weakening automotive market in China with workforce adjustments and rightsizing of business lines and business areas, including our Additive Manufacturing business, taking into account slower pace of adoption and industrialization in many industries. Not to mention what we did on top, and this is the normal way of doing business, doing a tight cost control, and we had also hiring freeze for the entire group since autumn last year. Undoubtedly, these are painful but required and necessary steps. And nevertheless, towards the end of last year, we even decided to go 1 step ahead. We commenced a comprehensive 2 year productivity program to enhance business effectiveness and efficiency to consolidate and optimize our structures and to maximize synergies between our different business units in Service Solution. And this is complement to our growth initiatives we do anyhow in our business. Organically, in 2019, the group invested CHF 127,000,000 into R and D, that's about 4.9 percent of our revenue. That's quite a lot. That's well above average. And by doing so, we filed slightly more than 100 new patents. The organic growth initiatives, which we did in 2019, included several elements. In Service Solutions, we launched a certain number, a big number of new solutions, new products, Balimet, special coating for medical and surgical tools, Balik Auros and new coating for extreme wear assistance applications, especially important, especially for the aerospace market. Bali Carbos, high performance for Coating for High Performance Vehicles and last but not least, the famous Sumibor Coating for combustion engines. Combustion engines still do exist and are still built, not to the extent we would like to see it. But for the time being and over the course of the next, I don't know, 10, 15, 20 years for sure, we will have this type of technology. Beyond that, we established competence centers for CVD, chemical vapor deposition and alternative technology to PVD. For the EPD application, we established a center in South Germany. And last but not least, for oil and gas in the Houston area in the U. S. But also on the manmade fiber area, we introduced 4 innovative industrial designs at ITMA earlier last year in Barcelona. It's the biggest and most relevant, most important fair for the Manmade Fiber Business with some new technologies for carpet yarn production. And here, I think it's also important and interesting to understand, here we are including and applying even artificial intelligence. That means we do have components in our machines today, which learn out of operational performance, and they are adjusting the processes. This is something what never happened before. It didn't exist. And here we are front runner in our industry. In beside of this innovation elements and topics, we did 3 smaller acquisitions, not the big ones. Here, we completed not completed, but sorted out and filled some technology gaps we had in our portfolio. We talk about TeraLab, a thermal spray coating company in Germany, a Swiss based company for thermal spray equipment, AMT. And last but not least, TCOAT, this is a diamond like coating for special application, mainly in the aerospace industry, where it's about machining on composite and fiber composite parts and pieces. And these 3 strategic acquisitions build on total amount of 10 acquisitions we did over the course of the last 4 or 5 years. But it's also important to understand that Enercon remains disciplined and in our commitment to enhance our growth inorganically. And we are retaining the financial capabilities to do transformational deals that are highly strategic and create substantial value for our shareholders and will also create benefits to our customers. And we are convinced that in the current environment, with volatile economic frameworks and still high valuations, a prudent and cautious approach is the order of today. With other words, we are not in a kind of emergency mode. We know exactly what we would like to have. We know exactly where our potential targets are. It's about availability. And at the end, it's also about evaluation. I still have to say there are cases just a few weeks ago, we had one more in the world of digital applications where multiples beyond 13, three-0 have been paid. And this is far beyond any business case. I'm still lacking the idea how a business case can be based on such a price. But that's just as a side remark. Following our resilient financial performance in 'nineteen, the divestment of Drive Systems and the extraordinary dividend in 2019 and the share buyback, we are still able to preserve the financial capability to do transformational deals and allow our shareholders to participate in our success. As such, we propose a stable ordinary dividend of zk35 per share and again, the second time, an extraordinary dividend of NOK65 per share. And it has to be clear that the total amount of 1 dividend of 1 share sorry, the total dividend of CHF 1 per share is, of course, subject to the approval by the AGM, which is going to take place earlier in April 7th April in Lucerne. And before I'm handing over to Phil to go into the financial details, I would like to give a short update about our 2 business segments, Service Solution and Manmade Fiber. Service Solution is a world leading supplier, unique and broad in terms of product portfolio, service technologies, materials, products and finally, solutions is what we are offering together with our customers. EarlyCon develops customized solutions for multiple industries. You know them all, auto aviation, just to mention a few. And customers can choose between or taking standardized products, but also heavily customized solutions in many directions. The additive manufacturing market is a logical step for us as early corn from the service into the structure, leveraging our competencies in material, in engineering, in service and in post treatment. From an end market point of view, we saw a decline in performance across most of our end markets, including automotive tooling, general industry and power generation. Although, aerospace delivered a strong year, a strong performance in 2019, the industry is facing some structural challenges following the grounding of the Boeing 737 MAX. This is a matter of fact. It's more on the U. S. Side. And there is a logical how to say it? Yes, there is a logic behind. When an aircraft is not going to be delivered, nobody needs an aero engine, right? It's opposite on the European side. Airbus is doing extremely well. The engines for the Airbus, it's partially it's a LEAP engine, but it's also partially the GTF. The VL turbofan is doing well. But overall, we do see some declines, especially on the U. S. Side here. The Additive Manufacturing business developed also less dynamically than expected in 2019, I have to admit. And the underutilized capacity impacted our top line and EBITDA margin on the Service Solution business. As mentioned before, structural adjustments in the business were implemented to address market realities. It takes a little bit longer. And this Boeing topic, for sure, is not supporting the additive story because the questions of qualification, certification and passing all the formal procedures, didn't yes, is a challenge and is of higher importance in our days than it has been before. And that is what we are sensing. But we remain convinced that the additive manufacturing will play a key role in the next generation of industrial applications. From a regional point of view, North America, and again, I'm talking about Service Solution, North America performed well, while European markets were flat. Asia Pacific softened in 2019 with a substantial impact from the slowdown in the Chinese economy and impact from geopolitical and trade tensions. What does it mean in terms of financials? Order and sales stood at almost CHF 1.5 1,000,000,000 means 5.4% behind for order intake and a prior year's level when it comes to sales, excluding currency impacts. If we consider the figures on reported basis, order intake minus 6.7 percent and sales minus 1.5%. Sales growth was seen in North America, Europe flat and Asia in particular. China was down markedly. The top line numbers include additions from our bolt on acquisitions and positive raw materials surcharge effect in the Medco Materials business of roughly CHF24 1,000,000 in total. Taking all effects into account, service solution sales contracted by 1.2%. And this is something what has to be seen in line with the market environment. We do have about a 25% automotive exposure. And we saw the impact, of course. We saw the impact of the slowdown in Automation, but we have been able to compensate it by other verticals, by other industries, mainly, and to be more precise, the thick film business was not booming, but compensating that. Unfortunately, the thick film business, mainly in material, doesn't carry the profitability of the thin film service business. And that is why we see the margins as they are. Service Solutions was impacted by a reduced profitability resulting from a regional mix and the product mix, I just mentioned it, but also from exceptional items. In light of the CHF 13,13,000,000 exceptional items, mainly restructuring, the adjusted EBITDA margin was 16.6%. On a positive note and without claiming victory heading into 2020, we saw the 4th quarter or in the 4th quarter, the expected strong operating performance of the Service Solutions business with an adjusted EBITA margin of 17.9% and when excluding the exceptionals, mainly restructuring expenses. But we have to be clear that this is based on the Q1 and the developments of the markets in January February will be not the run rate. And ladies and gentlemen, just to summarize, the Service Solutions business is or continued to be the main revenue and profit generator for the group and delivered robust results in 2019. The performance delivered is in challenging market environments and markets show real resilience. And having this said, let's move now to the Mainland Fiber business. With our Mainland Fiber business, we hold a unique technology expertise and strong market positions in the processing of polymer materials. The segment is the world market leader for solutions and systems used to manufacture manmade fibers. We are the only company, which has the know how to offer a complete manmade fiber spinning system from a single source, from melt to yarn, fibers and nonwovens. Our equipment enables our customers to benefit from low operating costs and a reduced energy consumption. The manmade fiber business as the segment performed strongly again in 2019 with a book to bill ratio again above 1. The order intake exceeded CHF 1,100,000,000 and the segment reported a high level of order intake, above CHF 200,000,000 in the 9th quarter in a row. Also, sales remained at a high level in 2019 at CHF1.1 billion, which is up 4% on a consistent exchange rate base. The growth was attributable mainly to the Filament Equipment Business, China, and related texturing activities in China, which compensated for the decline in the Carpet Yarn and Stable Fiber Business, what is more U. S. Than Turkey. From a regional perspective, I just mentioned it, China, great Europe, okay U. S. And India and Turkey, slightly lower. In terms of profitability, the segment delivered and exceeded our own expectations. We showed an expansion margin expansion of 130 basis points, achieving 13.0% despite the fact that the segment carried a certain number of projects with lower margins coming out of support cycle in 2016, 2017. And looking to the margin developments, we see a continued strong project pipeline for Filament Equipment in China, where our key customers take position to secure the leadership. In Special Filament, we saw lower demand levels, which is mainly driven by the carbon yarn BCF market in Turkey and the U. S. I mentioned it already. On the positive note, we are observing growing interest in our recycling solutions. And finally, the plant engineering part. We see a certain variety of project opportunities with high interest, especially in the nonwoven business. We made progress in the positioning of our continuous polycarbonization solutions. And for Stable Fibers, we continue to see challenging market environments. That means, all in all, the sustained high level of projects in the Main Med Fiber is leading to an order pipeline, with delivery lead times reaching into 20 22 beyond. The Mammoth Fibre business is well positioned as partner of choice in the entire synthetic fiber equipment industry. We are confident to execute our project pipeline and gain new projects in 2020 despite the challenges from the outbreak of the coronavirus in China. And although it's too early to assess potential impacts from the coronavirus, it is important to remind you that our business structure is a very specific one. Our Man Made Fiber business is a large scale project business with long lead project and delivery times. To be more specific, when we talk about big projects in fulfillment, First of all, our customers are 4, 5, 6 big stock listed companies beyond the €100,000,000,000 revenue. It starts with the supply of crude oil. Then you have the first element, you have to crack the oil, then you have to produce polyester. And then at the 3rd element, our part, our equipment is coming to place where we produce the yarn, right? And this tells you, you know China. It's not a carbon country anymore. You need you have to file your plans. You have to apply for permissions, and then you start working. That means a project like that takes easily 3, 4 years. And yes, we saw some delays. Earlier this year, Chinese New Year was extended by 1, 2 weeks. But right now, as we speak here, manmade fiber is back. We are our factories in manmade fiber are fully operational. We are missing about 25 people, which are still, how to say it in a proper English, not arrested. But they are not allowed to travel. They are still sticking with their families in critical areas, right? But it means the business is back to normal. Our supply chain works. And most important or the biggest challenge we do face today is logistical dimension, to deliver, to transport our equipment, what we produce from our sites to the harvest for shipping. So that means there will be an impact in Q1 because 3, 4 weeks being not operational, we will see. But we work now over time and we will recover. And the plan is that by end of Q2, I think we will be back on track. And even more important is another fact. That right now, we are negotiating contracts with customers, existing customers for new projects, big ones, triple 3 digit 1,000,000 projects, would be great, yes. And delivery days, the first half twenty twenty two and the second half twenty twenty three, And so doing already down payments. And that should give you the confidence or gives me, at least me, the confidence that the manmade fiber business is not at risk. We are doing great. And the markets, especially China, is recovering here. Having said, ladies and gentlemen, this concludes actually my part on the business review. I will now hand over to Philippe Miller for the financials. Philippe, it's yours. Thank you. Thank you, Roland. Good afternoon, ladies and gentlemen, from my side as well, and welcome to the presentation. While I have met many of you previously in person, this is obviously, as Andreas pointed out, my first investor conference for Oerlikon. I'm excited and thrilled to be here, and I'm looking forward to working with all of you over the coming years. With that, let me start with group financial review. I'll start with the P and L. Group sales were CHF 2,600,000,000, up almost 2% versus the prior year at constant FX rates and slightly lower on a reported basis. Maintaining similar levels of revenues compared to the very strong year of 2018 in these challenging global economic environment is a solid achievement for our company and is a reflection of our diversified portfolio. Orders were CHF2.6 billion for full year 2019, 5% lower than prior year. The Surface Solutions segment, as we talked about, was the main driver for the decline. We saw lower demand driven by an overall slowdown of industrial activity across several of the industries and markets served. The Man Made Fiber segment had a very strong orders here. We continued the strong trend, and the 4th quarter marked the 9th quarter in a row where we booked significantly above CHF 200,000,000 in orders. At a group level, we achieved a book to bill ratio of 1. Group EBITDA margin before exceptional items was at 15.1%, slightly below what we expected for the total year. In the Q4, we saw a number of the improvements we had anticipated. However, some market slowed down even further towards the end of the year. Reported EBITDA margin of 14.1% includes exceptional items of about CHF 25,000,000 predominantly for restructuring. And let me give you some more details on these charges. As Roland said earlier, we took a detailed look at our structural cost position, both at a group level and in our Surface Solutions business. It's clear to us that we need to become more cost efficient and we need to scale our operations more effectively. Accordingly, we initiated the productivity program Roland mentioned and took a first step in the Q4 2019. The charge is predominantly for severance costs across certain corporate functions as well as businesses in surface solutions that are facing a more adverse market environment than anticipated. We're not done with this productivity program, and I will give you more details in a couple of slides. Moving on to FX. The development of exchange rates in 2019 was disadvantageous for Oerlikon. This is mainly related to translation effects into our reporting currency, Swiss francs. In 2019, the depreciation of a number of currencies, including the euro and the Chinese yuan drove the impact on our financials. At constant FX rates, orders would have been at CHF2.65 billion, which is 2.2 percent higher than our 2019 reported figures and sales would have been at CHF2.65 billion as well, also 2 point 2 percent higher than reported. The transaction and translation effects on EBITDA were not material with a currency adjusted EBITDA of CHF 371,000,000 compared to CHF 366,000,000 reported. Next, I will walk you from our reported EBIT results to net income. Net financial result was minus CHF 15,000,000. This is mainly related to lower interest income and the recognition of interest expense for IFRS 16 lease liabilities. The tax result was minus CHF39 1,000,000 and our effective tax rate was 26%. For 2020 the years after, we expect the rate the tax rate to converge further towards our intended medium term target of 25%. Result from continuing operations was CHF 110,000,000 compared to CHF 173,000,000 in 20 18, a decline of 36%. Result from compared to positive CHF 73,000,000 in 2018. The negative result is really driven by the deconsolidation of our drive systems business after its sale earlier in the year. It mostly reflects accumulated foreign exchange differences, which at the time of deconsolidation are recognized in the P and L. As you know, these adjustments do not have any cash impact on our company or our financial statements. In total, the net results for the group was minus CHF 66,000,000 compared to positive CHF 245,000,000 in 2018. Next, on the balance sheet. Our balance sheet remains very strong with a net cash position of CHF 333,000,000 at the end of the year. Our cash position at the end of 2019 was CHF658 1,000,000. Total equity was just under CHF 1,800,000,000 representing an equity ratio of 49%. Overall, our financial position remains very strong and we continue to have significant flexibility to execute our growth strategy. Next on our investments. CapEx in 2019 was CHF179 1,000,000, 14% below prior year's level. Almost 80% of CapEx was allocated to the Surface Solutions segment due to the expansion of our global coating center network as well as investments into growth initiatives. CapEx in surface solutions represented approximately 9% of segment sales. In Manmade Fibers, CapEx exceeded the depreciation level and amounted to 3% segment sales. Excluding amortization of acquired intangible assets and depreciation related to IFRS 16, depreciation was at CHF126 1,000,000, up 4% compared to 2018. With the CapEx to depreciation ratio for the group of 1.42, excluding the amortization of acquired intangible assets and depreciation related to IFRS 16, we exceeded our midterm corridor of 1,000,000,000 to 1,200,000,000. We are coming out of a couple of years of significant investments into growth initiatives and existing infrastructure in our company. We're expecting to return closer to our target corridor in 2020 and the years after as we focus on capital efficiency and increasing returns on the capital we employ. I will give you more details on the outlook slide. Next on the cash flow statement. Cash flow from operating activities before changes in net current assets was CHF322 1,000,000. Change in net current assets was minus €70,000,000 mainly attributable to the decrease of customer progress in advanced payments in our Manmade Fiber segment. Cash flow from investing activities was positive CHF 416,000,000 mainly reflecting the proceeds from the disposal of the dry systems segment as well as investments in CapEx and the bolt on acquisitions that we talked about. Cash flow from financing activities was negative CHF 760,000,000 mainly attributable to the dividend, which we paid the repayment of the CHF 300,000,000 domestic bond as well as the initiation of our share buyback program. Accordingly, the balance of cash and cash equivalents decreased by CHF 201,000,000 to CHF658,000,000 at the end of the year. Next, I will take you through our return on capital employed metrics. Our rolling 12 month return on capital employed was 7%. The decrease was driven by the lower NOPAT from our weaker operating results in surface solutions and an increased asset base. The asset base increase was mainly due to the recognition of right of use assets under IFRS 16. I will get into more details later, but as we're setting up the company for the future, improving our capital returns will be a key metric for us. Our leadership team is keenly focused on improving this metric over the medium term. Next on our dividend proposal. As you know, returning capital to our shareholders remains a strategic priority for Oerlikon. Accordingly, our Board of Directors will propose a total dividend of CHF 1 per share consisting of 2 elements. First, an ordinary dividend of CHF 35 per share, reflecting the strong underlying performance of our company. This represents a payout ratio of 88% of the underlying earnings per share of NOK 40. 2nd, an extraordinary dividend of NOK 65 per share, reflecting our strong financial position and our commitment to providing attractive returns to shareholders. The dividend will be recommended for approval to the Annual General Meeting of Shareholders, which is taking place on April 7. Now this closes the financial review, and I'll move on to the outlook section. First, I'll give you more of an outlook on 2020 and then I'll give you some more details on how we're preparing the company for the future in the medium term. For 2020, we're expecting some of the end markets we operate in to stabilize. However, we expect little or no real recovery of these markets, and we expect a high degree of uncertainty to remain. Overall market sentiment will likely remain affected by geopolitical uncertainties and trade policy tensions between some of our key regions and markets. On a group level, we expect both order intake and sales to be between CHF 2,500,000,000 and CHF 2,600,000,000 for the full year 2020. We forecast lower CapEx of around CHF 150,000,000 which reflects our strategy to grow with more capital efficiency on the platforms, which we've built. We expect to deliver an EBITDA margin in the range of 15% to 15.5% before exceptional items. Please note that we did not include any potential impact from the coronavirus in our outlook. While we monitor the situation very closely and have numerous actions in place to protect our employees and their families, it is too early to tell the financial impact. We will give you an update on that as soon as we've quantified it. In 2020, as we continue to execute our productivity program, we intend to spend another CHF 25,000,000 to CHF 35,000,000 over the next 12 to 18 months on restructuring costs. Accordingly, on a reported basis, we expect a 14% to 14.5 percent EBITDA margin for the group in 2020. As a result of the decisive actions we've laid out, we expect significant improvements in our operating profitability. And in the medium term, we're targeting group EBITDA margins between 16% 18%. Moving on to the segment outlook. In light of the challenging market environment, we expect surface solutions sales to be roughly flat compared to 2019. The segment's operating profitability is expected to slightly improve from the 16.6% adjusted EBITDA margin in 2019. And in 2020, we do expect to continue to see some headwinds in our markets and the impact of the restructuring actions we're taking to materialize in the second half of the year. In manmade fibers, we expect order intake and sales to exceed CHF 1,000,000,000 again for the full year 2020, which is due to the mainly due to the ongoing strong project pipeline in our Filaments business. This will be partially offset by lower activity in the BCF and Staple Fibers business. The segment's EBITDA margin for the year 2020 is expected to be around prior year's levels of 13%. With that, let me spend a few minutes on how we're preparing the company for the future. We remain very confident about the medium- to long term growth potential of our company. We've built a strong foundation, both financially and from a technology standpoint. However, the degree of uncertainty in some areas of our economic environment requires us to be more nimble and at the end of the day, a leaner company. We have also invested in certain areas where growth has been slower than expected, and we need to rightsize those investments. This is the backdrop for why we initiated our early con productivity program in Q4 last year and we'll continue that for the next 12 to 18 months. Before describe the actions, it is very important to note that our capital allocation strategy in this remains unchanged. Firstly, we will continue to return capital to shareholders. In the past 5 years, including this year's proposal, we have returned over CHF 1,100,000,000 to our shareholders via dividends and we look to continue our shareholder friendly approach, considering our strong cash generation ability and our strong balance sheet. Secondly, despite returning substantial amounts to our shareholders, we retained the ability to execute on M and A, both bolt on acquisitions and transformational M and A, and we remain focused on valuation in those transactions. And then finally, we remain our focus and our investments into organic growth. As Roland mentioned, we invest significantly over 4% of sales into R and D and we look forward to continuing to doing that. So these three pillars of our capital allocation strategy are unchanged. Now we're focused on positioning our company for the future. The productivity program we have initiated aims to expand our market reach, improve capital efficiency and boost profitability in the medium term. As I mentioned, we expect to spend another CHF 25,000,000 to CHF 35,000,000 on this program in the next 12 to 18 months and expect significant improvements in our operating profitability. We're focused on a couple of key areas. Firstly, we are consolidating and optimizing our organizational structure. We're focused on synergies and support functions in our fulfillment organizations and how we become more efficient in areas such as logistics and indirect sourcing. We're also targeting very specific changes in our approach to certain customers and key markets in order to maximize the cross selling opportunities between the different business units. In addition, we are simplifying and standardizing many of our operational processes. We are in the middle of an SAP implementation in our Surface Solutions business and these simplifications of business processes will enable us to become more efficient and faster. And lastly, our program also foresees the rightsizing of investments like the additive business and others to reflect market conditions and our continued focus on operational excellence in these businesses. With these actions, we are keenly focused on improving our structural cost base and driving profitable growth. We are targeting group EBITDA margins between 16% 18% in the medium term, and we're expecting the majority of these improvements to come from the Surface Solutions business. This will not be an overnight fix, but we're convinced that we have a strong business and a strong foundation and an excellent team of employees who will help us execute this plan. Before opening the Q and A session, let me summarize the key points for the presentation today. First, 2019 was a challenging year with challenging end markets specifically for our surface solutions business. And manmade fibers continued to generate orders and sales above CHF 1,000,000,000 and improved profitability of 13% EBITDA. Secondly, we are proposing an attractive dividend of CHF 1 per share to our shareholders. Our capital allocation strategy remains unchanged. Looking ahead into 2020, we see some of the market challenges continuing and forecast sales between CHF 2,500,000,000 CHF 2,600,000,000 and we expect an EBITDA margin before exceptional items between 15% and 15.5%. And finally, our operational excellence and productivity programs will position us to deliver improved profitability and capital returns in the medium term. In closing, I would like to personally thank our employees for their ongoing dedication and efforts, our customers for the trust they place in us and obviously, you, our shareholders and analysts, for your continued support of Oerlikon. With that, I will hand it back to Andreas. Thank you, Phil. Thank you, Roland. Ladies and gentlemen, this opens our Q and A session. And I would like to remind you that this conference is webcasted. So when you raise a question, please wait for the microphone so that everybody joining via webcast is able to hear your question as well. So the first question there from Michael. Yes. Michael van Toppel. A question regarding your 16% to 18% target. In the past, Surface Solutions did 20% to 22% pre Additive Manufacturing. And in Man Made, you said you could reach eventually mid teens. So 16% to 18% doesn't seem too challenging. Is that sort of a first step of where you want to get? Or is that sort of the end game? If you could be a bit more colorful on that one, please. How to say it? The 16% to 80% is on a group level, right? And you're aware about the revenue split between manmade and OSS. And in our world is means if you convert that if you break it down into manmade and OSS, we talk about the target range of whatever, 'nineteen, 'twenty, 'twenty one. That is the range where we want to be back, where we have been in previous years, but not carrying the same load as we or previously, we didn't carry the same load because today, we do have a broader mix. Our metco business is growing. This is aerospace. And again, the service business is somehow equivalent, but all the rest equipment and material is not showing the same profitability from that perspective. There is an intrinsic disadvantage of the future mix. But nevertheless, that is the range of where we want to be again. That's what I would say. I mean, I think the majority of the improvements we're expecting from the Surface Solutions business, maybe Manmade Fiber is marginally better as well. And then I think we're getting back into that range that you're describing, but Roland is saying the mix is probably a little bit different from what it was 3 years ago. And just adding to that, you talked about focus on return on capital employed. Are there any targets that you can share or will share in the future? I think we have everything we're doing here is really geared towards both of the components of the returns metrics, both from a profitability standpoint and really from a capital efficiency standpoint. And I think the way we're approaching the especially footprint discussions and how we're positioning the company and scale of operations going forward will help us improve that metric. And I think you're going to see that, I don't know. Good afternoon. Alessandro Folletti, Octavian. A couple of questions. Maybe on the dividend. I appreciate what you have just said, Mr. Fischer, and also you, Mr. Mueller, regarding the flexibility. But when I look at your share buyback program, which announced at the end of Q3, you started very, I would say, quite dynamically. And now in the days where the stock is down at CHF8 should be the moment in my eyes to be very aggressive in buying, you sort of have stopped. And instead of that, you pay a dividend that basically gives back all the net cash you have right now in the balance sheet. Can you explain me what's the logic there? Because honestly, I don't understand it so well. So the answer is a twofold one. Yes, you're right. The share buyback was launched exactly when in mid November. And we had a good start, and then we slowed down a little bit. Yes, unfortunately, you are right. Our share price right now is not where I see it and where it should be from my perspective. But the topic of the dividend is a different one. We do know where our potential targets are, what we would like to buy, what we would like to acquire. We know the companies. We know the targets. We know roughly the price. We would be willing or would be able to pay for it in order to make a decent business case out of it, right? And from that perspective, the message is we know what we need. And everything beyond what we need also in especially in light of maybe upcoming negative interest. We said, look, let's we don't need it. We don't want to sit on it. Let's give it back to the shareholders. And that was actually the rationale behind. Okay. And you will continue the share buyback or Yes. I mean, I think the program is still underway. And one of the things I wanted to clarify and maybe also especially for our international shareholders, we do not really have the ability to sort of accelerate or decelerate buyback volumes on a daily basis on where the share buyback is. So we're sort of restricted by blackout periods and those kind of things. So essentially, what you've seen over the past 2 months, unfortunately, was something that we couldn't really react to. I think that's important to understand, but we continue to think that it's the right action and that we can do a little bit of both. I think just back to your question, I think the expected cash outflow from the dividend as proposed will be around CHF330 1,000,000. That's our net cash balance. So even after paying that, we would be without any leverage on the balance sheet. So we think we have option really the option to do both and obviously have an underlying company that has an ability to strong generate strong free cash flow. Okay. Can I ask a couple of 2 small questions then? On the customer advances that you mentioned, It seemed to me that they went down sort of faster than with respect to the order intake that you had made. Is there anything to read into that? Can you explain that? There really isn't. No, you're right. I think the situation we have right now is that we talk about new orders coming into a delivery window of 2022, right? And the nature of the beast is a simple one. For a contract where the equipment is going to be delivered next year, the down payments are higher. And in for a project going to be delivered in 3 years' time, it's traditionally lower. And that is actually the reason why the down payment flow is slower than the previous years with respect to a still high number of order intake. Okay. My last question on the surface solution business. Is there any tangible effect on your sales due to raw material price movements? Due to what, sorry? Raw material price movements. Typically, on the metco side, when the steel goes down and so on, That sounds I think it's very minus, I think, in the low single digit CHF1000000 level when you correct for material surcharges. There we go. Next question, Christian. Christian, Christian, I have two questions. On the one side, on your guidance for stable growth or stable sales in the Surface Solutions business unit. It looks a bit challenging. I mean, you have orders intake of -10% in the Q4. You have a very difficult Q1 ahead of you, and you have negative FX impact of 2%, 3%, 4%, whatever. So how do you want to achieve these sales to be stable? So I think it's a fair point and a fair question. We never said that it will be a home run, right? And you're right. What we assume is a certain recovery on the market side in the Q4. And you are also right, Q1 was traditionally weak due to the sheer seasonal pattern. February was also not knowing details yet, but all indications are will be not an extremely strong month. Where I also have to say that China just plays a 10% role in our Service Solutions business. But nevertheless, 2 sites in China are closed, coding sites. And from that perspective, you are right, there is headwind. We do see some ramp up cases for certain applications. One is an immaterial Medco Business, where we showed a decent growth beyond the market growth here. This is going to continue. On the one hand side, that's positive. On the equipment side, we are a little bit more cautious. We saw a great year 2019, 2020, in terms of investments, will be weaker. It's a mixed salad. You're right. But this is what we see and what we believe. And there is one disclaimer, and I think you made it, that this corona topic, as long as it is a Chinese topic, it's under control from for us, for our portfolio, for our applications. But when it becomes a global or European phenomena, it might look different. And we just said during lunch a discussion, look, people which are buying noodles and rice and whatever kind of food, right, they are not thinking too much about buying a car most probably, right? And from that perspective and this is a disclaimer we made. This is and we didn't we tried it, but we stopped thinking too much about it because we will not get our arms around, right? Cannot. And that's why we said based on what we know, that is our guidance. And if something happens in terms of this virus topic? Okay. I think there's a second disclaimer you put in. You also said that, that's including acquisition. What's your assumption there? I mean, you have to have some assumptions if you say stable sales, including acquisitions. For acquisitions we have, it's a small amount. That's usually the kind of tuck in bolt on acquisitions that we make. It's not a very fair amount. 50 to 100 Off sales, no, that's significantly less than that. Okay. Okay. Second question I would have is on the manmade fiber, the margin development in the Q4, which was quite below last year and as well below Q3. You mentioned there that it's coming from a project from the prior down cycle period. Does this also eat into 2020? And to what extent? Yes. I think those I don't call it lousy projects, but projects which are carrying a lower profitability are still coming to execution in the coming quarters. We have more than 50% done, more to come. And the margin in Q4 didn't came out of the blue. I think we gave you a guidance, and we knew somehow we saw it coming. And we told you on I think we got that on EUR 5.8 billion or something like that. Now we are at EUR 13,000,000 slightly better. That means this is not a surprise. This is in the normal course of executing the projects which are carrying different profitabilities. So it would be a fair assumption to consider maybe a 12% margin for H1 and a 14% for H2 in order to get you 13%? It will really depend a little bit on the project milestone timing, which is really what you see. So a lot of those projects have to really analyze is the impact from the situation in China. That will have an impact. And outside of that, it is not necessarily first half, second half dynamic for us. Thank you. And we've got a question here from Armin. Armin Resberger from ZKB. Yes, regarding disclaimers, what are your assumptions regarding FX exchange rates for the stable sales and order intake for the U. S. Dollar and euro maybe and renminbi? I would say we've sort of reflected a currency situation, an FX situation similar to what you had in January. And we've entered a lot of our sort of hedging positions to the extent that we hedge certain positions as of then. And that's sort of where we go forward. So in other words, the latest things that have happened here specifically impacted by the global crisis are not budgeted by us. I think what I would also highlight though again is and you saw that in 2019 is that there might be an impact on sales and on orders. But typically, because of the way we fulfill contracts and the way our operations work, the impact on profitability on bottom line is fairly limited because we incur both the sales and the cost in that currency. So that's kind of what I would tell you. And then obviously, what happened sort of over the last 2 to 3 weeks, specifically with the strengthening of the Swiss francs, we did not reflect that way, but you know. Okay. Then additional question. Sales, 3 d printing, how much sales were you able to realize in 2019? We said we're still sort of in the range between CHF 30,000,000 and CHF 40 1,000,000. So a little bit and I think Roland said that a little bit behind what we had anticipated at the beginning of the year. And then more than 2 years ago, you reported 2 big contracts orders in manmade fibers, around CHF 530,000,000. You were still booking from these orders. So how much did you book in Q4? How much still is left of these two orders? We have booked around 50% of the overall I don't know off the top of my head that what we booked in the Q4, but I think to date a little bit over 50% and then the rest is still to come. And to come in 2020? Book as order end. Book as order end, yes. Not revenue. Reitru Breuwiela from ENPA. A question on equipment within Surface Technology. Could you remind us how big that business is and what it does to your margin if there's a mix in a change mix? We have 2 business units producing equipment, right? It's a thin film and it's a thick film equipment. And here, we talk about in total, between EUR 200,000,000 and EUR 300,000,000 revenue. This is heavily depending on the economical cycles. You have periods which we had in 2018, 2019 where big customers like Brett and Britney ordering several certain number of machines, yes? And this is done once and then they use it for the next, I don't know, 8 years, 10 years. That means it's a little bit up and down. And the second element is we do, especially in the thin film area, primarily serve our internal coating centers, right? Here, we have a clear philosophy. 1st priority is doing the service and selling the spare parts to those which have 1. But we think twice to whom we sell a thin film coating equipment because the volume which is going to be produced on that equipment is not our service business, right? And that's why on the Medco thick film area, it's a little bit different. Here, we are coming traditionally that was a Solsa philosophy, equipment and materials. And here we are heavily pushing the service part due to the sheer and simple reason that the profitability is much higher. But we talk again, we talk about Service and Aerospace, and this is it takes time to penetrate. 1st of all, you have to take the opportunity to enter a new aero engine program, and then you have to fulfill the qualification process. But we are doing it. We are quite successful on that. And maybe to give you insight into the split, as you know, the Surface Solutions business has 60% related to services and the other 40% roughly to equipment and materials, of which half of that is equipment and half is materials. With that, Fabian? Yes. Thank you. Fabian Hecke, UBS. First, a question again on the man made fibrous margin. Still a bit surprising guiding for flat margin at 13%. You have no longer highlighted your 15% or mid teen kind of midterm guidance. So my first question, is this still in place? Secondly, on Man Made, I mean, in H1 2019, you had more than 15% EBITDA margin, but then it came down, heavily down, but will still not apparently not recover in 2020. And you mentioned low priced orders. But if I remember correctly, the trough in the manmade fiber business was in 2016. So it's now 4 years later, seems much, much longer than the normal throughput times. So what are we missing here? And how was it possible that you had such strong margins in H1 'nineteen? I think it's primarily a mixed topic. We didn't have in those quarters low margin projects to be executed. And then I think in early in 2019, I think the PCF, the carpet yarn business, what also has a stronger carries a stronger profitability beside of the service part, what is about 10% of the whole stuff, was contributing more. And yes, you're absolutely right. But again, this advantage of that business is it's somehow how to say it, foreseeable, yes? But what's going to come assuming that the entire project planning stays on track, and we know not very precisely, but actually quite good what is going to be delivered and what are the margins. And that's why that puts us into a position to give a guidance knowing that in Q1 and Q2, we are overshooting, but we will at 13%. I think and note in the next four quarters, this low margin profile projects will continue to a certain extent. And we will be that's why that's the reason why we say we are flat. And we are weak in the BCF business. And the mid teens? Mid teens remains the structural margin profile that the business, considering a normal level of BCF and the Filament Margin to improve is the structural set of margin profile that the business should be able to achieve. Okay. And then again, a quick follow-up in Manmade on the customer advances, which was down more than EUR 130,000,000. Whole free cash flow was down because of this in Man Made triggered by Man Made, which actually very cash generative normally. So can we expect a reversal or some structural trends as most business comes from China, I mean, financing terms, customer prepayment? Is there anything that has changed and is not going to just reverse because otherwise we could expect a very strong free cash flow next year? No. I expect to the manual fiber cash situation remain on that level. Again, if we talk assuming we are closing the project delivery days in 2023, there will be no 15%, 20%, 25% down payment. It will be a single digit percentage. That means that volume creates a lower amount of upfront cash, but it comes later, right? But I think it's important, Fabienne, that the underlying in terms and conditions with the customers and sort of how we contract and when we book orders and the fact that we have them securitized and so on and so forth, nothing has really changed. So there is a business and a commercial dynamic behind that, but there is not sort of a structural dynamic of customers approaching us in a different way. Okay. Thank you. Then I got a last one on your restructuring plan. You started in Q4. Can you give here some more details there exactly going to save costs and take out costs? Is it on SG and A? Is it more on procurement? Is it in the production sites? You highlighted a bit also in the headquarters. Is there anything in terms of numbers you can share with us to have a bit of feeling about cost savings or also the split in which areas? I expected the question. And of course, there are numbers which I'm having in mind. But let me try to describe it in a different way. We are not in a as a company, not in a kind of emergency mode. We are not fighting to survive. We are still doing not extremely great in this market environment, but we are doing fine. And it was actually triggered by the structural change, what is coming upon us out of the automotive industry last year. We said, look, things are going to change. The automotive industry never will be back where it has been before, not knowing and not thinking too much about their topics. But he said, look, we have to do our homework. And we defined a package where we say we have to be more cost efficient, we have to take cost out, we have to adjust our structures. And just as one example, 1 year ago or yes, 2 years ago, we have been 3 point whatever, 6 percent,000,000,000 company. There was almost €1,000,000,000 drive system business, right? And you said after the divestment, we don't touch the headquarter, we don't touch the central function for the time being until we know what's going to happen. And that's why we said, look, let's start from the beginning. We do adjustments on the headquarter side. We do improvements on the central functions, HR, finance, IT. Here, we had a mixed picture. We had centralized organizations and we had very local organizations. This is going to be sorted out. We made adjustments on the automotive business unit. And then there is a big block where we say, look, we have to optimize. We have to do better in our Service Solutions business in two directions: cost, but also getting access to new market fields where we are not yet present today. And there are good examples. We managed the penetration of the aerospace industry with our thin film applications. I mentioned aerospace takes a long time, took us 3 years. Now we have it. And if we don't do a bit wrong, we are in for the next 3 decades. So that's fine. And here, we have to do more. That's why what we have in mind. We do we are looking for synergies between the business. Equipment was mentioned. Here, we are doing similar topics, different machines doing a different physical process. But at the end, we talk about cabinet, we talk about control units, we talk about processes, tools, how our engineers are designing an equipment. Here, we do alignment. And there is a certain double digit €1,000,000 effect in a mid- to long term run. When we talk about footprint, for instance, today, and we know where we are coming from, we do have in the thin film area 108 sites, our traditional business model being close to a customer. That's still valid. That's still great. But in certain areas of this planet, in Central Europe, for instance, where logistical opportunities are completely different as of today compared it with 10 years ago, right? When you order and place an order at midnight with Amazon, the day after you have your product most probably, right? So here we are moving more towards, how to say it, virtual coating centers. We are doing it already to a certain extent. That means when a customer is sending a package of tools to be coated, it doesn't mean necessarily in future that everything is coated at the coating center where he sends it to, right? Using digital tools, we are optimizing our load. We are optimizing our batch planning for different coating machines, stuff like that. That means here, we expect a double digit lower double digit effect in the midterm range time range. Then we talk about efficiency, about low logistical processes. We talk about almost everything. We talk about the front end, a special organization or special process to deal to and to better deal and handle big customer rather than the traditional long tail, which we have in the material business and in the thin film coating business, yes? We have just to give you a feeling, 30,000 customers in the balsas area. We have a huge community of a huge customer base, and we have to find a better way to deal them properly. And in parallel, we have to find a better way to deal and better cope and better serve the big ones. This is a complete not a complete new setup. It's about a question doing things which we didn't do before without losing anything what we did before. I would agree with that, Fabienne. I think the that is really the context in which we're working, and I think that's very critical. And then I would just maybe add to that, the Q4, obviously, you have to think about it as a number of initiatives, really focused on HQ, support functions and some of the businesses that aren't where the environment is really a little bit tougher. We're talking about a net reduction of headcount there, a couple of 100. But I think very important there is also that we're while we're doing that, we are also shifting some headcount and shifting some employees. And that's really part of the core strategy that Roland is describing where we're this might not be a net reduction, but we're going to be pulling support functions together in areas where they're costing us less. And then I would just say the right way to maybe think about what we've given you as a restructuring expense, the way we think about it is maybe a 1 to 2 year payback on that because it's a little bit of mix between just structural sort of more headcount type actions that have a little bit of shorter payback and some other things. So 1 to 2 years is maybe the right way to go about it. And there is a technical dimension. Things are changing. Everything gets more digitalized. And although in our processes, serving the customers, that means it's a comprehensive package. We mentioned I think we did mention the digital hub we opened in Munich last year. This is not a hobby of anybody. We do see the clear need to use our size and the strength and the leadership position of our company to develop new business models, new type of doing business based on state of the art latest versions of digital opportunities. I think I mentioned this morning, in the main made fiber area, not only service solution, We are selling BCF machine for producing yarn for carpet applications, which carries artificial intelligence modules, yes? The machine is controlling what has been fiber tension. And whenever something is different, we are using the signals for which we installed to optimize the process. This today, we have started delivering elements, machines for manmade fiber applications, again, carrying artificial intelligence. This is where we are. And this is what we have to do more, right? And that's why it's not, again, not a typical restructuring or survival program. No, this is a repositioning program where we make conscious decision to do things differently and maybe also to get rid of old stuff to a certain extent where it applies. But being really also in future in the leading position. There should be nobody aside of us being ahead of us, right? That is the ambition at least. Arvind Reshberger again from ZKB. You mentioned your coating network of about 108 plus films for thin film. And you also mentioned that 2 are closed down in China. In China, in Wuhan. Only 2. 1 in Wuhan. Okay. And the other one of out of the 13 in China, 11 are operating and 2 are impacted from that region. And Italy, Northland Italy, where are the plants there? Also in the red area? No, we are not in the red areas. We are operational in Italy. There is now knocking on wood, that is as we speak, right? But no. For coating centers. And you don't have any production plants in Northern Italy after selling drive systems? We do have coating centers, 4 coating centers, but they are all operational. And the situation about production plants in China except the coating centers? I think manmade fiber, we talk about the big one in Suzhou. It's back at stage. We are close to 100%. We are missing the mentioned 25 people, which are not allowed to travel. They are still sticking with their families in their hometowns. That's it. And again, we are operational. We are full speed ahead. Our supply chain is also on a normal level. They are even doing extra shifts to recover. The only restriction we see right now is transportation. It's a logistical topic on to bring our goods to the ships, right, for the time being. And so from that perspective, we will see, again, in Q1, a certain slowdown revenue wise because the 4 weeks, 3 weeks, 3.5 weeks, we have been closed. We didn't create any revenue, right? But this is going to be recovered over the course of the second quarter. That is what we see right now. China. Well, I mean, I see 2 problems. 1st, well, you are there. Your bond is operational, okay. But from hearsay, from other companies, they are operational, but there are no orders there. I mean, salespeople can travel. They can't visit their clients. I mean, you can't sell a plant, a manmade fiber plant via the telephone or via the Internet. You have to visit your clients. Our clients are not sitting in red zones. Again, as of today, yes, you are right. We do have some smaller clients, which we cannot visit. That's it would be stupid just because you're allowed to move in, but then you are not allowed to step out again, right? So from that perspective, it doesn't make sense. But also the commissioning part, we have I don't know how many projects in erection and commissioning phase. We had to stop there as well, right? We brought back our people and our local people, but now we are back at site. I think that's very important. Honestly, I mean, that's why we're driving the distinction. When you think about our business, it's obviously a long term project business. So in other words, we're not negotiating contracts today for revenue generation next month. What we're manufacturing and producing right now relates to orders that we got a year or 2 years or 3 years ago. So in other words, we will probably see a little bit of slowdown on the commercial side in terms of new order intake and finalizing that and all this kind of stuff, the whole system is a little bit slower, but those orders are for delivery in 3 years from now or in 2 years from now. So that's sort of why we're driving the distinction, the project business and our manufacturing cycle are basically back up and running. And I think the other thing that I would say is that our customers are also continuing production by and large. And even if they currently right at this moment don't have the opportunity to ship their product, They are storing it at their facilities because they know that when the logistics ways are opening back up, they're going to have an opportunity to sell that. So that's sort of why we're driving the situation. I think the project business is quite a bit different there from what you're describing. I see that point, yes. And the other problem I see, you lost maybe 15 to 20 production days because of the crisis. And even though you work through all the weekends now with your people, it's quite difficult to catch up during the next quarter. I mean, it will shift the problem into the second half year for sure. I mean, especially in China, where people tend to work also on Saturdays. Look, that's part of why we said it's just too early to quantify it. We don't want to speculate about it right now. I think we have a decent assessment of sort of what we're seeing and I think you understand the dynamics of the project business and then we really have to go through the detailed project timelines and see it doesn't impact just the first quarter also the Q2? Or we'll give you that update. Okay. Then a completely different question, if I may. Regarding you had some additional costs, additional to the restructuring costs. And if I'm right, it was for a bigger acquisition. You might have done some due diligence. And now you are deploying quite some cash for your investors. And so I see can you put a number on which acquisition you were following, how big, which country? Was it for surface solutions? Well, as you know, we are not disclosing an M and A pipeline. So as you rightly I mean, it's over. You No. But well, you're stuck to certain M and A NDA restrictions. So I think we're not disclosing here anything on terms of what we did on M and A. And the other element, as you rightly said, there were certain the €25,000,000 of exceptionals include the €19,000,000 of restructuring and €6,000,000 are related to other nonrecurring items, which include some of the costs from M and A, but also include other projects where we talked about digitalization, the ramp up and things like that. So this is a relate not purely related to M and A, But I think what we have said is that we looked at a couple we talked about this previously. We have looked at a couple of potential acquisitions pretty closely. And then it goes back to what Roland was saying. I think we continue to have a keen focus on just value creation opportunity and that's somewhat limited with where valuations are at the moment. Alessandro. Again, just a quick follow-up on the restructuring as well. You mentioned rightsizing, and I think it was related to AM. Can you give more information on that, please? Rightsizing was related to AM, but we do it in other areas as well, functions and as a headquarter. What we did in AM, I think you are more interested in. We adjusted the headcount and the capabilities to a level. What is more in line with the revenue we are grading and the expected growth, which is still substantial in terms of percentage, but Philippe gave the total figure, right? We are in the range of 30 something. And if you do 10 more, this is really a strong growth rate. But at the end, it doesn't change the needle for the segment or even for the group level. And what we did is really to how to say it, to establish and go through a really a tough and a conscious decision, yes, talking about taking all the R and D projects and really do an assessment, what is the probability that these projects are going to come? What is the probability of converting it into a real revenue stream? What is the way to go? What are really the core technologies which we need in terms of capabilities? Is it more on the production side, process side or more on the material side? We did some arrangements and some adjustments here, right? So and but we don't talk about I don't know. I don't want to mention the figure, but a certain small amount of jobs have been canceled here in Germany, in Vale as well as in Huntersville. Maybe in the past, you used to tell us what was the dilution on the segment margin. Initially, it was 200 percent sorry, 200 basis points, the dilution from that segment from that business on the Surface Solutions segment. Then it became 300 percent in the more tough environments. Can you give an indication of what's the direction here again maybe? It's getting better. That's exactly the purpose. Yes, I assume that, but I think that's sort of the point. Going to 200, going to total 200. That's sort of the point. I think we're it's sort of embedded in the guidance that we've given. I think we've said a couple of times, clearly, we think that the 300 basis points dilution has to be the floor. The cost action that Roland is describing is part of that improvement. There's a very significant component just in terms of executing more consistently and better fulfillment operations. I think we will give you that number. I think we haven't included it into the guidance right now because there's just a high degree of uncertainty attached to it, but we'll give you that number again. And clearly, we're focused on making sure it's less dilutive in the future. At some point, it will be 0 or a positive. Exactly. Let's say 0, maybe. We always said, let's walk before we run. So we'll get it to breakeven first and then but that's exactly the intention. And it's also it's not only about headcount reduction, just to give you a flavor. We do have a site in Troy for producing of additive materials, right, which is also to a certain extent underutilized. What we are doing right now is quite simple. We are using the site for ordinary non additive materials as well, which is coming out of Troy, right? In Loomis and exactly. And these are logical steps, how we are not trying, but how we are getting our arms around. Good. Maybe a final question. Two final questions. If I may, a very long term question on Additive Manufacturing. I understand that so far, additive manufacturing has infected only prototyping and small series production. Is it possible to have coverage of capital allocated to Additive Manufacturing if it never goes into large volume production? I think the topic of quantity is a difficult one. When it comes really to mass production, as we see it in the casting business, right? We at least, I don't see additive in order of magnitude coming close to casting products, right? Here, we talk about when we talk about Aerospace by nature, we talk about 100 of pieces of parts, maybe few 1,000, right? That is for a mass production, nothing. So and here we are already. We do have components in the 100. That means that does exist for engine, for error engine applications, for power generation, gas turbines applications. Pardon? Space. Space, yes. But space, again, is one order of magnitude lower. We talk about 10, 15 satellites. This is a single piece production, right? So that means having that said, it's the quantity is just one dimension. The other more important one is the topic of design features, which do exist when you think about more bionic designs, what you cannot produce by using a different technology, right? And here, it's a balance between volume and price. You get just to give you a flavor. There is one famous not famous, but an important product in the U. S. For military aircraft costs €70,000 €80,000 per piece, right? So it's difficult to compare it with mass production. And the requirements that customers do impose is a completely different one. Mass production capabilities or processes even would scare them to a certain extent. Again, an Adam question on your guidance in Surface Solutions. I'm trying to get to your guidance of only slightly improving margins, even assuming that the cost cutting program only kicks in into H with a run rate of savings of €30,000,000 as you mentioned before, 2 year payback, that means €30,000,000 to €30,000,000 in savings. So assuming €10,000,000 only this year, that would mean already 60, 65 basis points of margin improvement. And then AN negative impact should only get better. And then on the opposite side, we have the mix effect, which was pretty bad this year already. How bad can it get there? Or why is your guidance rather conservative? I think you're doing exactly the sort of the math that we try to lay out there. We do anticipate in some of the end markets to just continue to have challenging economic sort of dimensions in terms of pricing, in terms of maybe the automotive industry, some of those areas. And so we're just anticipating some continued headwinds on that, that we'll be able to more than offset with what we're doing here. But I think that's just sort of our running assumption is that some of the dynamics will continue to be we're not going to be able to generate price or even the opposite and we're going to have sort of ordinary inflation, labor inflation working against us. And so we're more than offsetting those headwinds. But the biggest negative mix impact this year was the tooling business in Asia in Surface Solutions as far as I understand. And this can't go down another 30% this year as it was in 2019. So where exactly less dilution from AEM? Yes. And I mean, it's not offsetting all of that. But I think it's there's a little bit of mix and there's materials is going to continue to grow well and that's a little bit lower margin. But then specifically, I think it's the sort of the commercial dynamics that we'll have with some customers. Okay. Then, ladies and gentlemen, thank you very much for participating, also for those on the webcast for joining our full year results. We'll see us again on May 5 when we present our Q1 results and host a conference call then. And in the meantime, wishing you good afternoon, and thank you very much for participating.