Earnings Call: Q1 2019

May 7, 2019

Ladies and gentlemen, welcome to the Erlikon Q1 2019 Results Conference Call and Live Webcast. I am Ira, 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 followed by a Q and A session. The conference call may be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Andreas Frost Belder, Head of Investor Relations at Clearlicon. Please go ahead, sir. Thank you very much, and good afternoon, ladies and gentlemen, and welcome to Oerlikon's conference call on the results for the Q1 of 2019. Your hosts today are our CEO, Roland Fischer and CFO, Jurg Fedje and myself, Andreas Rathsweiler. As a reminder, all related documents on the Q1 results, including the presentation, are available for download on our website. Today, we will follow the well known agenda. Roland Fischer will start with an overview and an update on the segment's performance, followed by Jorg Fedje, who will comment on the group's financial performance and the confirmed full year guidance. After the presentation, as already announced, we will host a Q and A session to answer your questions. And it's now my pleasure to hand over to Roland. Yes. Thanks, Andreas. Good afternoon to everybody on the line, and thank you for joining our first quarter 2019 earnings call. For the Q1 of 2019, Oerlikon achieved sales growth despite the challenging market environment. The group sales went up by 3.3%, both reported inorganic to CHF 624,000,000. Group order intake amounted to CHF 680,000,000 And important to note, order intake in the same quarter of the previous year was a record quarter, which is the reason for the year on year decline of 10.2%. And beside of that, it should be noted that the order intake level in the Q1 of 2019 marked the 2nd highest amount we have achieved in 4 years. And I think this is the relevant reference of our ability to deliver a high level of sales in the upcoming quarters. The Service Solutions segment maintained a high level of both orders and sales in the Q1. The MainMag Fiber segment continued to capture a significant share of business across its application range where we see high levels of demand prevailing. In the Q1, we delivered an EBITDA margin of 15% for the group. The margin represents a healthy level for an industrial company that is investing significantly in growth while facing challenging markets. The margin is lower than our own target, that's true, but can be explained as follows. Firstly, the industry sector in general and the automotive industry in particular had a slow start in the year, which impacted the service business in service solutions. And this resulted in a product mix, which is which is a higher proportion of revenues generated by the materials and equipment businesses. And just to give you a flavor, the material business showed a growth in the mid teens. And secondly, as announced as part of our full year results presentation, we continue to forge ahead with significant investments to secure future growth. We are fully committed to these investments and consequently prepared to bear the related operating expenses. On a positive note, the Manmade Fiber segment improved its profitability with an EBITDA margin of 14.2% for the Q1 of 2019. And in addition to the aforementioned investments in our growth, which is a key element of our strategy, we have taken further strategic actions. We executed another string of Pulse acquisition during Q1 in Germany to strengthen Service Solutions' position in thermal spray services. The segment also further broadened its technology portfolio by launching the new Balimet portfolio, a portfolio of 7 different coatings for the application in the medical area. And based on our steady performance, we are affirming our guidance for the full year of 2019. And I think Jurg later on will provide further details on that topic. And let's now turn to the Service Solutions segment's performance for the Q1 2019. The Service Solutions segment delivered another quarter of consistent performance and sustained its high top line level in both orders and sales. The top line performance is especially noteworthy considering the increasingly challenging market environment. The segment realized good sales growth driven by aviation and tooling. The effects from the small sized acquisitions and raw materials were charged was CHF 600,000 lower year over year, Including currency effects, this results in organic sales growth of 3.2% compared to 2.8% on a reported basis. And in this quarter, we saw a strong increase in the material business, I indicated already, and we are continuing to see success in the uptake of our Sumibor and ServiceOne technologies. Our automotive business has been impacted by the lower production levels with global car production declining. This, of course, has affected areas of our business that are volume driven, such as synchronizer rings or coating of piston pins. But our structural growth that is inherent in our business remains valid. The mitigation effect partially compensated for the lower car production volumes by a magnitude of some 200 basis points versus a global volume decline of around 6%. And this leads me to the Q1 twenty nineteen numbers. Orders increased by 0.3% year over year to 3.80 5,000,000 and sales increased by 2.8% compared to the Q1 of last year and stood at CHF371,000,000 EBITDA for the segment stood at CHF61 1,000,000 for the quarter, that is 16.3 percent of sales. The operating profitability is lower in this quarter compared Q1 2018, and this is partly anticipated as a result of the higher operating expenses related to investments in additives in the EPT competence center and new centers performing tools. Profitability was also impacted by the product mix, mainly the higher proportion of revenues generated from materials and equipment businesses in this quarter. And from an end market point of view, we observed stable activity in the tooling industry. The automotive business, as already mentioned, is facing decrease in production volume, particularly in China and in the rest of Asia. We also echo what is being reported about the industrial sector in terms of uncertainty in the global economy, slower trade growth and investment activities. The aerospace market, on the other hand, is seeing growth. Power generation remains a challenging market. And from a regional point of view, we saw strong growth in North America and good development in Europe, while Asia is trading at low levels. Overall, we saw a slower start in the 1st 2 months of the year. Despite that, we are reporting good top line growth in the Service Solutions segment, which continue to be the main revenue and income generator for the group. Investments in additive manufacturing and in other growth generating solutions are impacting the operating profitability of the segment right now. But we are convinced that this investment in structural growth will pay off as they will enable us to enter new markets, win new customers, strengthen our presence and technology portfolio and successfully leverage digital opportunities. And having this said, let's now move on to manmade fibers. The manmade fiber segment delivered a strong performance in the Q1. Order intake was down year over year due to the record orders we delivered in Q1 last year, but it's trading at a very strong level. Historically, the first quarter order intake was the 2nd highest quarterly order intake since the Q4 of 2011 when we established the Nanmad Fiber segment. The segment achieved strong growth in sales for Filament Equipment and Polymerization Business, which was supported by a substantial increase in sales of nonwoven systems. The sales growth was mainly led by business in Indonesia, in particular, in China. And this leads me to the Q1 twenty nineteen numbers, which show excellent results. Orders stood at CHF296 1,000,000 and were sustained across all product lines. Sales increased by 4.5% compared to the Q1 last year and stood at 254,000,000 dollars The segment further improved its operating profitability. The EBITDA increased by 26% year over year to CHF34 1,000,000 and the EBITDA margin stood at 13.2%, the highest level since the downturn, thanks to higher sales and disciplined cost management. Furthermore, to strengthen its position in the nonwoven market, the Main Black Fiber segment has launched its early call nonwoven brand. It was introduced at the IDI exhibition in Florida, U. S. A, where the segment signed its first contract under the new brand with a well known European specialist company for the manufacturing of nonwovens infiltration. And now a few words on market developments. In the Chinese filament equipment market, we see continued healthy demand from key players. There is increasing customer demand for automation solutions, and the MainMag Fiber segment is constantly strengthening its market position in this field. The texturing equipment market remains positive as a result of increased filament activities, and we continue to see stable demand on high levels for our texturing machines. Our carpet yarn technology is in the main markets in the U. S. And Turkey has, as expected, calmed down. The strong increase in sales for the nonwoven business and the promising project pipeline in this field underlying our initial success in establishing a strong foothold in this market. We also saw an increase in demand for stable fibers and a promising project pipeline for continuous polymerization solutions. And as communicated before, the magnitude of orders for the MainMag Fiber segment has resulted in a pipeline with delivery lead times reaching well into 2021. And right now, we are starting new purchase negotiations for delivery even in 2021. Thus, in the upcoming quarters, we expect the healthy demand in this market to continue with healthy order intake in the coming quarters. And after this review of the segment's performance, let me now hand over to Jorg for additional comments on the group's financials. Jorg, please, it's yours. Thank you, Roland, and good afternoon to everybody. Let me start the group's financial review with a closer look at the Q1 group numbers. Group order intake, what you have seen, CHF680 1,000,000 in the Q1, that's a reduction of about 10% year over year on a reported basis on 9.2% after adjusting for currency developments. Again, this is a result of the exceptionally high order intake in the Q1 of last year, where we reported record orders in manmade fiber. Let me reemphasize again that this strong level of group order intake is the 2nd highest in 4 years. Sales came in at CHF 624,000,000 that's up 3.3% year over year, reported and up 4.3% at constant exchange rates. The book to bill for the group was exceeding 1.09 for the quarter. And EBITDA reached CHF 93,000,000, a slight reduction of 2% and was impacted, as mentioned earlier, by rollout by product mix and higher operating expenses related to investment for future growth. The EBITDA margin stood at 15% and came in slightly lower year over year, but was slightly higher compared to the previous quarter. EBIT was CHF 44,000,000, which corresponds to a margin profile of about 7.1%. The development of exchange rates in Q1 'nineteen compared to the same period of last year was slightly detrimental to Ehrlich and stop line. This is mainly related to translation effects, as you know, we report in the Swiss francs. The depreciation of the euro against the Swiss francs was only partially compensated by a stronger U. S. Dollar against the Swiss francs. Assuming stable currencies, orders would have been at CHF687 1,000,000, a difference of approximately 1 percentage points compared to the Q1 of 2019 reported figure. Sales would have been at about CHF 630 1,000,000, equally about 1% compared higher compared to the reported figure. The currency development has, as usual, what we have seen in the past, no impact on EBITDA, and the impact on the margin overall remains minor. When looking at the group sales, the cap of manmade fibers becomes visible as its share of group sales in the Q1 2019 remains almost stable at about 41% compared to the same period of last year. When looking at profitability, the upturn in profitability from MF Fibers is visible as well. The segment accounted for 36% of total EBITDA in Q1, while Surface Solutions delivered about 65% of the group operating profitability. And from a regional point of sales increased in Asia Pacific to 45%, North America to 16%, while remaining stable in the European environment at about 35%, sales in the rest of the world decreased to a level of about 4%. The share of our service and spare parts business, which was addressed before, remained stable at 40% of group sales in Q1 compared to the same period of last year. The group's Q1 performance resulted in a rolling 12 months return on capital of 9.5%. The decline in ROCE is mainly the result of the first time recognition of leasing assets under IFRS 16 and the increased asset base that was contributed by the addition of some MMA assets. Ehrlichon's return profile continues to run at a high level and reflects our ongoing commitment to create value while executing our strategy. Ladies and gentlemen, let me conclude with the 2019 outlook before we start the Q and A session. In a difficult market environment, we delivered a steady performance in the Q1. We recognize that there is a slowdown in global economic growth and ongoing uncertainties in the stabilization and performance improvement we saw towards the end of the Q1 puts us in a position to confirm our guidance for the full year 2019. We continue to expect group order intake and sales to both exceed CHF 2,700,000,000 and the group EBITDA margin after operating expenses from increased investment is targeted to exceed 16%. Ladies and gentlemen, summarizing, Oerlikon has proven that we can navigate through challenging weather conditions. We succeeded to maintain a high level of orders and sales. We also achieved a healthy profit margin against the challenging market backdrop and in light of the significant investment we are making for the future growth of the company. And we are excellently positioned to take advantage of improvements in our markets, initial signs of which have been noted towards the end of the Q1. Hence, we are confirming, as I said before, our guidance for the full year 2019. This closes our comments on the Q1 2019 results. We thank you for joining us on the call, and we are obviously happy to open the lines for questions now. Operator, please go ahead. We will now begin the question and answer session. The first question is from Alexander Tiall from Deutsche Bank. Please go ahead, sir. Good afternoon, gentlemen. Thanks for taking my question. You mentioned that the Surface Solution margin was negative affected by investment. Could you elaborate a little bit more on the investment? I mean, should we consider the investment to be equally split into H2? And what was the drag on the margin? And furthermore, some color on this sun board technology would be nice in terms of total addressable market as it is quite new for me. And lastly, the amendment fiber margin for Q1 stands at 13.2%. Should we expect some shift in the margin or to be deconstance or was it like kind of front end loaded? Thank you. A lot of questions. I try to do my best. I think starting with the last one, Manlight Fiber. We always said that we are targeting an 'eighteen profitability level, and we are moving towards this level coming out of the truck. And for 2019, actually, I think we indicated 100 basis points on top of last year's results of 11, 11.7. That means we are well on track here, moving in the right direction. And it's a cyclical business in terms of not only of the market sometimes, but also in terms of project business, the quarterly results might differ slightly from quarter to quarter. When we talk about service solution investments into future growth, We do have different technologies. We are right now pushing and penetrating and bringing into the market. A famous one is the EPD technology, what is an embedded thin film coating for automotive application, but also for sanitary applications. And here, we are building up a competent center in South, Germany. And just to give you a flavor, the first units, the first equipment is in commercial operation. The second one is right now installed in China and more to come. Another topic and very interesting topic is the CBD competence center. We are going to build also in South Germany in an existing site we have in Black Forest area. This is going back to a string of 1st acquisition we did in 2018 where we acquired a chemical vapor deposition technology, which we didn't have in our portfolio. And this technology does offer certain advances over the existing PVD technology, and it's running and developing quite promising. This brought us to the decision to build a competence center here. Zaidaflax digitalization is always topic in all areas. Just to give you a flavor, we are preparing e commerce for materials supply and sales of materials and other stuff, right? And this, for sure, is not coming free of charge. It comes with a price tag. And that was contributing to the EBITDA margin of the Service Solutions segment, but not alone, yes? There was also another effect, which we called the market driven by the automotive, maybe by the automotive downturn. And we do have a certain amount of volume of business, which is proportionally related to the produced car volume. I mentioned it, the piston pins or the friction system solutions. And this was partially offsetted and compensated by the structural growth component, which we all the time explain what does it mean. And I think that's actually yes, the answer for the question, did I miss something? I think the drag on the margin, I mean, is it like equally split into H2? Or we will see it, I mean, the price adjustment No, the comments which Ronald just made on those projects are obviously ongoing into H2 as well, right? So again, if you try to decompose basically the impact on the margin profile, which we reported, you should expect that this is about half the way that's impacted the Q1. On one side, driven, as was mentioned before as well, by weaker volume, mainly driven by the auto sector. But then in combination to some of the projects, which Solon mentioned, and others which are ongoing. So you should expect that to continue at least from a project point that you that some of that cost being carried over into the second half as well. The second quarter and the quarter is coming forward. Understood. Thank you. Welcome. This is the operator. The next question is from Alessandro Foletti from Octavian. Please go ahead. Yes, good afternoon. Thank you for taking my question. I have two questions, one as well on the guidance. Can you please give an indication in which areas you see improvements now coming up in the Q3 quarter maybe and in H2 in particular? Because others maybe specifically in the margin having the first quarter in surface below your indicated full year guidance, it must mean the next quarter will be above. So where do you see and which areas do you see improvement? What kind of concrete indications you have for better trading afterwards? That would be my first question, and I'll come back to the second one afterwards if you agree. Okay. I think the question is fair. And Leander, it's the following one. Q1 is, as you have seen, at 16.2% or 3% for the Service Solutions segment. But we also had to see that yes, extra phenomena that the first especially the 1st 2 months, January, February, have been quite weak, while March was much better. And this gives us a certain confidence that we will see better results here. Alessandro, we hear you typing, which should go on mute, please. Sorry? I won't type. I cannot move on mute like this. Just go ahead. Thanks. Yes. Okay. That means this was the effect within the Q1. And then we also expect a certain recovery into Q2 of 2019 also coming out of the automobile industry. And this together with what we know in our different markets, tooling, makes us confident that we are able to confirm our guidance. All right. Thank you. My second question is more technical. I saw the corporate cost, I mean, if I make the sum of the EBITDA of the 2 divisions and the group, so the corporate line had a €2,000,000 negative. Now this seems to me a little bit lower than what I should have expected because if I'm not mistaken, you have to carry about $15,000,000 of corporate cost after the disposal of drive systems. So I wonder if there is something positive in this Q1 result or if this €2,000,000 is the new level? Alessandro, the that is correct, by the way. The standard cost, the way we were talking about, is probably not as high as $15,000,000 now that we have fully deconsolidated that number. Again, keep in mind, when we guide or guide, actually, we don't do guide, but when we give indication on corporate impact, this obviously includes more than just the standard cost. But all the activity which we're doing here on the headquarter side as well. And needless to say, being cognizant about what's happening from an overall market point of view, we take the liberty of managing that as well. In other words, project related costs, which can be deferred or moved from 1 to the other quarter without having an effect actually of supporting the underlying business going forward. So please look at it in that context, right? And that's basically what I can say to that from that point of view, Alessandro. You cannot give an indication on how high would be that line for the full year then? Well, again, that's what we said, but I would expect that probably to be at this current run rate. I mean, it is a fact that we have some of the unabsorbed stranded costs from DRIVE. But again, on the other hand, there is discussion ongoing on how to deal with that, also related, obviously, to the portfolio mix. So let's put that number around as I said, based on the volatility and the impact of the project, let's put that number around 10 plus 1,000,000 for the year. That's the best in terms of visibility which we have today. Okay. Thank you. Welcome. The next question is from Graham Phillips from Jefferies. Please go ahead, sir. Yes. Good afternoon. A couple of questions. First of all, one for Jurgen, accounting one really. If I look at the Surface Solutions, the EBITDA to EBIT bridge, the increase in depreciation and impairment from last year went from 20% to 28%. What's that increase due to? And what is the expected run rate for 2019? And I'll come back to my next question after. Well, a big comment is obviously driven by the IFRS change standard, And that's the main one which you have in there basically. And then, obviously, the investments which have been ongoing in the business over time, which ultimately result in a higher amortization and impacting the operating levels. Okay. So there was no impairments, one off impairments in the quarter? There was no one no one off impairment on the business. Yes, that's correct, yes. Okay. So I expect that run rate to continue. My next question was around the end market description you gave in the slide pack on the server solution performances. If I do the math on automotive, it looks like sales grew about 10% or 11%, and I'm mindful of your comments that the market was down. Clearly, what contributed in there was the acquisitions. Can you talk a little bit about is that the main feature of the difference there for that growth to show up? Or are there other things, I don't know, surcharges or some mix shift or something going on there? Sorry, I think the surcharge effect was quite minor. I think I mentioned it's 600,000 euros and no, no. Nothing special. Nothing special, yes. Okay. So it's grown 10% or 11% when you're saying autumn production was down in the order of, I think, 6% or 7%, I think you said, and you were down 4%. So I'm just trying to understand that difference between sort of plus 10% in the reported numbers. Graeme, it's Andreas speaking. I assume that maybe your Q1 base in terms of automotive might be because it's the plus 10% looks a little bit strange to me because I think we had minus 4% on the automotive business. That's our view, right. So maybe we take it offline and then look at the number base. Okay. And just again following up on the comment that was made earlier about how you're going to get the margins up in the remaining quarters this year for automotive sorry, for Surface Solutions. What's the production levels are you expecting in the automotive industry for the remainder of the year in order to get that margin up to the 19% to 21% corridor? The margins for the Service Solutions business is the ANGIER margin, right? And automotive, we expect to come back in the second half, the third and fourth quarter to a certain extent. We see already and I told you, in March, we saw a clear trend, upwards trend for Service Solutions as a segment. We see some good indications in April as well. China, we expect to come back and not further to deteriorate here. And besides the automotive business, you have to be aware that Service Solutions consists not only of automotive, right? We do have fixed business. Aviation is doing quite well. Our Metco business is doing quite well. Material and altogether makes us confident to achieve the guidance. Okay. And in terms of the recent acquisitions in that division, Surface Solutions, what are they contributing in terms of margin to the division? The latest acquisition that Tera Labs is in line with what we have. It's not period thing, but also it's not a skyrocketing business, which push us further, right? And the others that are made during early 2018, have they been it's true? It's the same, similar. I think we have we did some acquisition technology acquisitions, then pure business acquisitions. And I told you, I'll give you an indication. The CBD acquisition was a smaller one. Obviously, it turns out to be a great deal, a great business. And but again, it's an equipment business carrying for normal margin profile of equipment business, right? Okay. And just finally on Manmade Fiber, was there a change in the service contribution to that division, given the sort of the nice uptick in margins or can you remind us what's the proportion of service in manmade fiber again? It's 10%, 12%, something like that. It's on another minor volume, but it's a nice, great business, but it's a low double digit percentage. Okay. Thanks very much. Yes. The next question is from Andy Schneider from ZEP Capital. Please go ahead, sir. Hi, gentlemen. I have also some follow-up questions on the surface margin development. You said that March was much better than January in February. Was it already in the corridor in March, I. E, above 19% or not? I have to sorry, but we don't want to disclose monthly results here. All I can say is it was moving it's not only moving in the right direction, but being substantially higher. And you also have to keep in mind the nature of January, February. We had in Europe our New Year process of taking off productive days. And we had in Asia and China the Chinese New Year effect. And from that perspective, it was expected to be better. But yes, I think more I don't want to say actually. And should we expect it to be back in the guidance range already for the Q2 from today's perspective? I do not give a guidance for the Q2. All I can say is we are moving in the right direction. It's improving. And on a yearly basis, 2019, we assume that we will make it. We will be within the guidance, yes. And how should we think about these investments? Not only not talking about AM, which is separate, but all these extra investments in Surface Technology. Are they just to keep the revenue growth from, right, at 4% to 6% in the future? Or will they lead to higher growth in the future? Or will they lead to higher margins in the future? Or are they just to keep the business as it is today, so I. E, we will have to live with lower margins from now on because you've jumped at higher investments? I think you have to decouple the effects. I think it's the new investments in new technologies. And now maybe I'll take a second. If you talk about this EPD technology, which obviously does exist and which obviously starts to be successful. I told you several machines are in sold and are in commercial operation already. And moving on top that this technology will develop in a quite positive way because European Union, for instance, just a sidemark, is limiting the old technologies based on chrome 6 materials by 20 20 5 or something like that. That means all the automotive OEMs and all of the other industries have embarked on a journey to substitute the old technology, the old protein technology. And here, EPD is not only 1, maybe the one technology which is going to substitute that. And from that perspective, we are quite optimistic to develop here a business over the course of the next 5 years in the order of magnitude triple digit volume. Assuming it's an equipment business carrying the normal margin profile of equipment business, but there is also an opportunity to go into a coating business, going into service business, right? And this has to be seen. This has to be developed. And again, we just started with it 2 years ago actually. And the comfort center is even not that in commercial operation. From that perspective, it's very difficult to give you a more precise information. It should be good enough to give you a sense that it's more than just a power plant site. This is reality, yes? It's under construction right now. I was just more thinking about isn't that just how the business is? New technologies pop up every year. You have invest in new technologies all the time. And hence, the margin will never be at the high end, so 21%, so always rather at the low end. Is that more the reality we've talked about? Or is it just a phase and in a few years' time, we will have again higher margins at the higher end of the guidance? I expect to be back at the normal margin level. If you talk about Cisalimet Technology 7, new coatings for medical of margins what we know since years. The next question is from Michael Firth from Vontobel. Please go ahead. Yes, hi. Two questions which are really sort of follow-up questions. The first one is, you show in a slide that the service business overall is at 40% of revenues, unchanged from last year. And if I understand you correctly, your service contribution was lower in Surface Solutions. So I assume that it increased in manmade fiber. And I know there was a question earlier on that, but my question here is really which regions drive this increased service business in manmade fiber? And is China eventually adopting more service business also in manmade fiber? That would be the first question. And the second, I'm coming back on the automotive industry. Said that you are getting indications for or you're seeing indications for improved business in automotive already now. And my question is, what indications exactly are you getting from customers? Is that coming from China, from Europe? What are they telling you? Are they expecting really higher volumes already in the near term? Or is it just expectations into the second half? Thank you. The first question, service Manmade Fiber. I just learned that the service share increased from 10% to 12%. And the nature of the beast of the service business means we do the service where we previously have installed our equipment. That means to a certain extent or big extent, it's in China for sure, but it's also in the U. S. Where we have, for instance, carpetland equipment in commercial operation. I think it's a move, yes, from 10% to 12%, but this is math actually, right? Now coming to the second question of service solution and the automotive business, yes? You know that in the automotive business, we do have frame contracts, right? And the customers are placing their orders within this frame contract. And here, we do have a simple indication that the customers are asking for more parts and pieces. This is one element. Of course, we are just cutting and talking to our customers. And here, we do see and anticipate, for instance, in China that this tax reduction step which was introduced is creating an effect. And again, I'm not talking about full recovery of the 15% or 16% reduction in production volume, yes? No. But I'm talking about a certain recovery to a certain level. And this is what the automotive market in general expects. Everybody talks to everybody. But again, we also see it in terms of number of pieces and parts being asked and ordered from our customers. And that makes gives us the confidence. The next question is from Armin Rakeshberger from ZKB. Please go ahead. Yes. Hello, gentlemen. First, you mentioned April was strong. So how was March then? The other way around. I mean, March was strong. How was April? Was it as strong as March or even improved? That's the only question? Yes, no, no. There is some more. There is more to come. No, you're right. So March was much stronger than January, February. April was fine as well, let's say it that way. And you understand that we do not have yet the final figures for April due to time reasons, and we have to focus on our on the event of today, right? But it looks reasonable. Okay. Then order intake, I have a question or a domestic question for manmade fiber. You already announced 2 big contracts. You have won in January 2018 of EUR 540,000,000. So my question is, how much was booked now in Q1 2019 of these two big orders. €60,000,000 to be short interest. €60,000,000? €60,000,000, yes. Okay. Then next question, your EBITDA margin was impacted by the change of IFRS 16 at Surface Solution, especially I wonder I mean you already guided that will have a positive impact of 1 percentage point on the margin. So could you confirm for Q1 that, that was about the impact at Surface Solutions and or Manmade Fibers? Yes. We can confirm that. I mean, there hasn't been any other understanding or interpretation. So your assumption is correct, yes. Okay. So like on a like for like basis, the EBITDA margin at Surface Solutions would have been even 1 percentage point weaker? Following that logic, that is correct, yes. Okay. Then well, I'm a little bit surprised or first, the other question here. Additive Manufacturing, you were guiding that all your investments in for Additive Manufacturing will have a negative influence on the EBITDA margin for Surface Solutions of around 2 percentage points. My question is, I got the impression that in Q1, you invested a lot in Additive Manufacturing. Was it above 2%, just Additive Manufacturing alone? I do not know what created the impression on your side because the major investments in Additive actually are done. This is in Charlotte, the production side, which does exist and which is in commercial operation and in Plymouth, where we have our material side. It's also in commercial operation. The infrastructure is done. And what we are doing now is building up the equipment and machinery stuff in line with revenue and top line development. And from that perspective, now the CapEx investment is just now coming what is really required to fulfill the revenue. But the OpEx part, for sure, does exist in terms of all these R and D projects and product development projects with customers, that's the case. But the big investment, the bigger stuff is even done now or somewhere else. Okay. Yes, then about Surface Solutions, your guidance for the EBITDA margin, you still stick to the 2019 to 2021 EBITDA margin guidance, which plus you mentioned that the impact on your investments for Additive Manufacturing and the other new technologies will still be high in second half year. So it looks to me very challenging to reach even 19% EBITDA margin for Surface Solutions. I think nobody said that it's easy to be achieved for sure or not. But we also have to be realistic. The corridor is maintained, but yes, we might end up at the lower end of this corridor, yes. That's the best part of it. You already guided for the lower end before Q1. Yes. I think you said it, yes. And now it seems to me almost unrealistic in the light of your high investments going on. If it would be unrealistic, we would not do it, right? No, it's and yes, it might be not easy, but yes, we stick to it. Okay. Then my last question, if I may. Additive Manufacturing is mainly material business or a big part of it is material business. And we are faced now with the deteriorating EBITDA margin at Surface Solutions due to an increase of material business due to thermal spray activities. Will we have the same facing the same problem while now materials deliveries will increase in Additive Manufacturing? No. I think what if your base assumption is not correct? Additive today is only to a certain extent, let's say, onethree roughly, material business and twothree is service business. That means we are producing parts and pieces, right? And from that perspective, it would be wrong to draw this conclusion as you did. Okay. That was The next question is from Wazir Rizvi from RBC Capital Markets. Please go ahead. Hi, good afternoon. Just a couple left for me. Firstly, I was interested to see your tooling business is growing, particularly given what you were saying about the automotive markets. I'd be interested to hear what's driving that growth for you, whether it's other end markets or market share gains. And then secondly, this one on manmade fibers. I was just wondering whether you're picking up any change in attitude towards large projects. I mean manmade fibers are generally large capital projects and trade wars and things like that. I wouldn't imagine it's particularly helpful for sentiment. So I'd be interested to hear what your customers are saying and what you're hearing. Maybe starting with the second part of your question, no. We do not see any impact, and we do not see any change in behavior. I think indicated it in my speech that we are negotiating, again, bigger contracts in China, Filament, leading into 2022. And the underlying demand and the underlying megatrends in China asking for more sustainable technology in terms of resource consumption still exists and is maintained. And from that perspective, no, we don't see any impact here. The first question was concerning tooling and the service solution area. Yes, you're right. Automotive is a strong and important pillar of this business, but there are others. It's electronics, semiconductor business is doing quite well right now. So food processing staff and general industry. And maybe not to forget, we are implementing our strategy. That means we are increasing our share of thin film technology in aero and aviation industry. And this is contributing aviation is doing quite well. And this is contributing and compensating the downturn in automotive production, and this brings us to the results we have shown. Very helpful. Thank you. There are no more questions at this time. Okay. So thank you very much for joining the call. We're happy to assist you if any additional questions may occur. And other than that, we'll later speak to you at the half year results in August. Thank you very much again for participating, and have a good afternoon. Bye bye. Bye. 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