Earnings Call: Q3 2018

Oct 30, 2018

Ladies and gentlemen, welcome to the Q3 2018 Results Conference Call and Live Webcast. I am Alice, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Andreas Schwarzwelder, Head of Investor Relations at Oerlikon. Please go ahead, sir. Thank you very much, and good afternoon, ladies and gentlemen. Welcome to Oerlikon's conference call on the results for the Q3 9 months of 2018. Your hosts today are, as usual, our CEO, Doctor. Roland Fischer and CFO, Jorg Fedje and myself, Andreas Schwarzwelle, Head of Investor Relations. As a reminder, all related documents on the Q3 9 months results, including the following 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 performance, followed by Jorg Fedje, who will comment on the group's financial performance and the full year guidance. After the presentation, also as usual, we will host a Q and A session to answer your questions. Today's conference is being recorded and the replay will be available on our website later today. Before I hand over, just as a reminder, allow me to repeat that the 2018 numbers are based on continuing operations and the 2017 numbers have been restated accordingly as the Drive Systems segment after the signing of the transaction is reported as discontinued operations. Having said that, it's now my pleasure to hand over to Rola. Yes. Thanks a lot, Andreas. Good afternoon to everybody on the line, and thank you for joining our Q3 2018 earnings calls now. For the Q3 of 2018, euricorn again achieved a strong top line growth, and the group order intake increased year over year by 22.2 percent to CHF 655 1,000,000, while sales went up by 28.9 percent to CHF687 1,000,000. And this strong result was driven by both segments. The Service Solutions segment maintained double digit growth in both orders and sales in the Q3, and the Manmapped Fiber segment continued to capture a significant share of business across its application range, where we see the high levels of demand prevailing. And in the Q3, we have delivered an EBITDA margin of 15% for the group. The margin reflects the higher proportion of revenues generated by equipment and project business in the Service Solutions business and the higher operating costs related to investments in this quarter. Both of our segments achieved strong double digit EBITDA margins, in line with guidance, with Service Solutions delivering an 18.3% EBITDA margin, which is in the guided corridor and Manmade Fiber slightly improving the margin to 11.5%. We also continue to deliver on our strategy. The customary approvals for the announced divestment of the DRIVE Systems segment to Dana is ongoing and is on track. Therefore, the closing is still expected to take place in late 2018 or the Q1 of 2019. In addition, we have continued to execute string of pearls acquisitions and investments to strengthen Service Solutions' leadership position. In the Q3, the segment expanded its service treatment portfolio with the acquisition of Eicher in Germany, which is with this acquisition, we added innovative technologies and expertise in plasma nitriding, which is a key treatment technology to increase reliability and wear resistance of metal parts. On top of that, we opened a second production center in Welkaida, Slovakia, which will provide coating, heat treatment and nitriding services for automotive and important transportation components in order to meet the continuing high demand from these industries. All of these actions fit in the frame of our clear focus to redeploy cash in a disciplined manner in service solutions and attractive adjacent markets. And based on the strong performance over the past three quarters, we are confirming our guidance for the full year of 2018 despite the increasingly challenging market environment. And now let's turn to the Service Solutions segment's performance in the Q3 2018. The Service Solutions segment sustained its top line growth and delivered double digit increases in both year over year orders and sales. We have seen a significant increase in order backlog compared to the same period in 2017, which is due to the higher volume of equipment orders. The segment realized good sales and order growth, notably driven by tooling, automotive, aviation and general industries. In the power generation market, sales came in slightly lower compared to the previous year. The small sized acquisitions in the Q3 and a positive raw materials surcharge effect added in total roughly CHF 22,000,000 to the reported top line. In this quarter, we saw a strong increase in thermal spray materials and in equipment, balanced by slower seasonal growth in coating services for tools and precision components. On the innovation side, we see good momentum on EPD. Ehrlichone scored a first win for its EPD coating system in China with the initial sale of Eunubia to the Shanghai Daofangwu Automobile Company. The ramp up of the additive manufacturing business continued according to plan. From October 10 to 11, Oerlikon successfully hosted the 2nd Munich Technology Conference on Additive. Over 1,000 participants from industry, academia and government came together to discuss the challenges and success stories of additive manufacturing and address ways to speed up the industrialization of additive. This leads me now to the Q3 2018 numbers, which show a good result. Orders increased by almost 14% year over year to 395,000,000 Swiss francs, And sales increased by 11% compared to the Q3 last year and stood at CHF373 1,000,000. EBITDA for the segment stood at CHF 69,000,000 for the quarter, that is 18.3% of sales. The operating profitability is lower in this quarter compared to Q3 2017, but to be clear, is as anticipated and within the guided corridor of 18% to 20%. The profitability has been impacted by the product mix, namely the higher proportion of revenues generated from project and equipment business in this quarter and higher operating expenses related to investments, particularly in building up the additive manufacturing and expanding the automotive businesses. From an end market point of view, we have stopped continued solid demand in the tooling market, showing normal seasonality pattern in the Q3. The automotive business remains positive in Asia, robust in the U. S. And slightly softer in Europe. The aerospace market is seeing continued growth as well as general industry globally. Power generation remains a challenging market environment, especially for large gas turbines. From a regional point of view, we see strong growth in North America and good development in Europe and Asia. Overall, we are pleased with the positive development of the Service Solutions segment, which continued to be the main revenue and income generator for the group. The investments into additive manufacturing and into expansion and innovation like EPD, enhanced thermal spray machine service 1 will secure future growth of the segment. Before we move on now to Manmade Fibers, we would like to shed some light onto Eerlikon's exposure to the automotive industry and provide explanations on this important end market as investors are currently strongly focusing on this industry. The key message first, Erlikon has been and will continue to grow above pure automotive volume businesses. That means we expect the automotive business of service solutions to structurally grow even if assumptions for a slowdown of the general automotive market would materialize. The drivers for this expected future outperformance of our business lie in the core of Service Solutions DNA, and that is innovation, market penetration, regional expansion and last but not least acquisitions. And now allow me go into more detail on the individual drivers, starting with innovation. There are various recent innovations for automotive applications that will translate into revenues and sales growth in the future. Our recent launch of EPD, which is the embedded PVD for design parts, is gaining momentum and is an environmental, friendly and future oriented coating procedure completely reach Conform both in production and disposal. Whenever high end metallic services on plastic parts are requested, EPD is a clean alternative compared to today's electroplating technology and which will replace harmful chemicals such as CHROME6. We have also launched S Cube, a segmented synchronizer system, which is our recent innovation for synchronizer rings. We see potential for our break disc innovation, a rust and dust free break disc. Last but not least, Sumibor is an innovation using our thick layer technology. It is a cylinder bore coating resulting in lower friction as well as reduced consumption and wear. And these are just our recent examples. There are many future innovation and growth drivers that we see in the automotive end market. The production of electromotors creates a growing need for high performance tools, smaller gearboxes for hybrid cars or increasing number of gears to reduce the fuel consumption, just to name a few, are growth drivers for our high performance coatings. And this new and innovative products allow us to increase market penetration. With the EPD technology, we can replace the electroblading market for decorative and functional coatings. Our brake disc innovation can replace uncoated brake discs. High performance synchronizers can find their way into commercial vehicle, transmissions and gearboxes. Coating for tools become more and more important to support production efficiency and parts performance. And following the trend for lightweight, this creates wider applications for our existing products to handle the increased usage of aluminum and high strength steel in a car. Also regional expansion is supporting our growth path in the automotive industry. We have just expanded our footprint in Europe with the new sites and trade ventures and also in Asia with several new coating centers in Japan, China, Indonesia and India. And finally, in line with our string of pearls strategy, we also complete acquisitions in the field of automotive applications for inorganic growth. Just recently, we closed the acquisition of Eicher, a German heat treatment supplier for the automotive industry. And earlier in the year, we bought DIAK Technology, a Finnish service engineering company, specialized on service treatments for automotive and precision components. And all of these examples prove our structural growth element in the automotive end market and confirm my initial statement that there are many opportunities beyond pure automotive volume business. Based on this, we expect to continue to grow above the overall market automotive market. Our growth pattern in the automotive end market will continue to support the segment's mid term growth expectation of 4% to 6% CAGR. And now let's move on to Manmite Fibers. The Manmite Fibers segment achieved another quarterly growth in top line and recorded a historical high in quarterly sales. The segment continued to secure orders and sales in the Filament and Texturing Equipment markets, primarily in China. Following the strong growth in sales for filament equipment, a record level of sales was achieved this quarter for texturing equipment. In addition, sales for carpet yarn grew significantly, primarily in the U. S. The joint venture, Oerlikon Bama Kuitong Engineering, also secured notable wins in the polymer processing market. And all in all, this is a demonstration of a successful ramp up in production capacities. This leads me to the Q3 2018 numbers, which show an excellent result. The orders increased by 38% year over year to CHF260 1,000,000 and sales increased by 59% compared to the Q3 last year and stood at CHF 314,000,000 EBITDA increased by 64% year over year to CHF 36,000,000 and the segment sustained double digit operating profitability with an EBITDA margin at 11.5%. The disproportional margin development in relation to the record sales level reflects certain impacts from previously booked lower margin projects, an unfavorable product mix and a onetime impact from the divestment of the tape and monofilament technologies. At the annual world's largest textile machinery show, ITMA in Asia, Polycom demonstrated its power as one of the innovation leaders for digital production of chemical fibers. The fully networked Factory 4.0 is autonomously controlled, resulting in cost savings, higher flexibility in the production lines and reduced downtimes and wastages and have created good customer interest at Sietmar. We continue to see favorable market dynamics in the Q3 of the year. The filament equipment market in China maintained health demand, and we do see accelerated interest for automation and digitalization concepts from Tier 1 customers. As a result of the increased filament activities, the texturing equipment market was also positive. With regard to BCF, Carpet Yarn Solutions from the U. S. And Turkey, we confirm previously communicated signs of normalization and expect reduced activities going forward. For stable fibers and nonwovens, the segment continues to see project opportunities and realized sales for the filtration market in the Q3. In addition, it has recently announced its partnership with Shaoyang Textile Machinery in China to jointly advance the offering and sales in the competitive 5 gs market. The magnitude of orders for the manmade fiber segment in recent months has resulted in a pipeline with delivery lead times reaching into 2021 again, 2021. For 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 hand over to Jorg for additional comments on the group's financials. Jorg, please, it's Jorg. Thank you, Roland, and good afternoon to everybody. Let me start the group short financial review with a closer look at the Q3 group figures. Again, please be reminded that all 2018 figures show continuing operations and 2017 figures have been restatement for the replacement of drive system and for the new revenue recognition standard under IFRS 15. The before mentioned positive development of all segments not surprisingly consolidate to a strong group performance. They add up to an order intake of CHF 655 1,000,000 in the 3rd quarter, an increase of 22.2% year over year on a reported basis or 21.7% if adjusted for currency development. Sales came in at CHF687 1,000,000. That's an up of 29% year over year reported. Driver of the top line development was growth in both segments, as mentioned by Roland earlier. The book to bill for the group was below 1 for the quarter, which is a result, as you know, from the project business character and related revenue recognition in Manmade Fibers in particular. For the 1st 9 months of the year, the ratio continues to exceed 1. EBITDA reached CHF103 1,000,000 an improvement of almost 16% when comparing to the Q3 of last year. The EBITDA margin stood at 15% and therefore lower than in Q3 last year. As mentioned before, the reduction is a result of product mix and higher operating expenses related to investment, mainly in Additive Manufacturing, EPD and capacity expansions. EBIT was CHF 62,000,000, which translates into an EBIT margin of 9%. The ongoing recovery in the Mainwave Fiber becomes visible when looking at the group's business split as the segment decreased its share compared the same period of last year. The Main Main Fiber segment increased to 46% of the group sales In the Q3 of 2018, service solution accounted for 54%. When looking at profitability, the upturn in MAMF Fabric becomes visible as well. The segment accounted in the meantime for 35 percent of total EBITDA in Q3, while Surface Solutions delivered 67% of the group's profitability. From a regional point of view, our proportion of sales increased in Asia Pacific to 48%, North America 16%, while declining in Europe to about 31%. Sales in the rest of the world decreased to around 5 percentage points. In line with the Bifor's mentioned recovery in Manmade Fiber, the share of our service and spare prop business decreased correspondingly to about 36% of the group sales compared to about 44% in the same period of last year. The development of the exchange rate in Q3 2018 compared to the same period of last year was slightly beneficial for Oerlikon's top line. This is mainly related again to translation effects as we report in the Swiss franc. Depreciation of the euro and to a lesser extent the Chinese yuan against the Swiss franc was slightly compensated by the devaluation of the U. S. Dollar against the Swiss franc. Assuming stable currencies, orders would have been at CHF 652,000,000, a difference of 0.5 percent compared to the Q3 of 2018 on the reported figure. Sales was up being at CHF682,000,000, also lower by only 0.7% compared to the reported figure. The transaction and translation effect on EBITDA were 1.6% negative assuming stable currencies. EBITDA would have stood at about CHF105 1,000,000 as compared to the CHF103 1,000,000 reported. Looking at the ROCE, Oerlikon's return profile shows a positive development. The group's 3rd quarter performance resulted in a rolling 12 month return on capital of 11.7 percent, which is mainly driven by higher profitability in Manmade Fibers. The overall diligent management of capital investment and working capital as well as impact from the divestment of the Drive Systems segment. This continues to reflect our commitment to create value while executing upon the strategy. Ladies and gentlemen, let me conclude with the 2018 outlook before we start the Q and A session. Based on our strong set of results, we are confident that we will be able to sustain growth and therefore confirming our outlook for the year. For the full year of 2018, we continue to expect group order intake to exceed CHF 2,600,000,000 and sales to increase to around CHF 2,600,000,000 The EBITDA margin after operating expenses from increased investment, particularly in additive manufacturing and discontinued effects from drive system is targeted to exceed the 15.5%. In addition, we do not see any changes regarding the impact from the drive system divestment that is expected to close late this year, as mentioned before, or in the early first part of next quarter next quarter of next year also. With the strong Q3 performance, our unchanged expectation for the full year and the clear execution of our strategic roadmap, we provide the framework to sustain our growth and profitability going forward. To summarize, Q3 was another quarter of strong growth for the group. We increased orders and sales by more than 20% year over year, achieved an attractive EBITDA margin and are in a position to confirm our full year guidance. Also, I would like to announce and reconfirm the decision of Ehrlich and Board of Starrett to broaden the Board through the nomination of a new independent Board member. The Board will be extended to consist of 7 board members, increasing the total number of non affiliated board members to 4. The change will be proposed to the shareholders for approval at the 2019 Annual General Meeting of Shareholders. Ladies and gentlemen, this closes our comments on the Q3 and 1st 9 months of 2018. We thank you for participating, and we're happy to open the lines for your questions. Operator, please go ahead. We will now begin the question and answer session. The first question comes from the line of Graham Phillips from Jefferies. Please go ahead. My question. I wanted to focus on Surface Solutions and there's sort of three parts to it here. Really, what is happening with tooling growth? I think that if I calculate correctly, only grew about 1% in the quarter. So you've underperformed what some of the tooling companies have shown in reported growth for the Q3. So that's the first bit of that. And the second bit really is how big is the additive manufacturing market now and your participation in it? Because obviously, you've been investing a lot in growing in that. And thirdly, then again in Surface Solutions, you talk a lot about EPD and the first wins that you had in that, so that's good. What's the size of that market? And what's the impact on margins hopefully as that business starts to take hold? Is this more equipment or service or powder? I mean, I'm not quite sure how we should be thinking about the margin impact there. So thank you. Okay. Let's start with the latter part of your questions. EPD. EPD is a new technology, and it's used for automotive applications, but also for decorative elements and sanitary stuff. And here, it goes in a direction of replacing existing electroplating technologies, which are subject to reach limitations, which will come over the course of the next year, yes? And now it heavily depends on how you size and cut the market. We start with automotive as the most attractive market here, overarching, I think, the e blading market, we talk about 1,000,000,000, yes? But this is not what we, for the time being, have in mind. We do have a solution, a machine, which is able to coat those parts. We have 1 in commercial operation at our customer side and the second one we just sold. And we start with equipment sale. We do partially parts coating in our China Chinese side in Shanghai as well. But we have to be clear that we are in a very early stage. This is something what kicks in over the course of the next 5 years. The LHC's market is not as a surprise coming. And here today, we talk about €500,000,000 stuff like that in that range, including powder and services. It's growing not as fast as we originally anticipated due to qualification and approval and requirements and especially also in the aerospace and aviation market. We are heavily working on that. In parallel, we built up our infrastructure, which is not yet completed. But right now, we are commissioning equipment in blemish on our materials side with our new atomizers. And we are confident that this is an attractive market and technology, and we plan to take a certain share out of that. And last but not least, if I recall it the right way, tooling growth, we do not sense any market slowdowns here. We are on track in our tooling business. Yes, what we see is a certain regional pattern. What we saw also in Q3, it's a seasonal pattern. Yes, we had the holiday season, which especially here in Europe kicks in. And from that perspective, I would just say we are fully on track. I mean, I think you quote the long term growth for that area in the past have been around 3 percent. And I can rectify that, I guess, when I think about sort of industrial production trends and so on. But it's been very volatile this year, the growth for tooling. I mean, is it indirect exposure, I don't know, to some of the weak parts of automotive perhaps showing up in this? And again, sorry, just to finalize and thinking about all these things we just mentioned, the mix, EPD, additive manufacturing, what can we think about the margins for next year in additive sorry, I beg your pardon, in surface solutions because clearly, there's still a lot of investments and maybe some dilution from EPD that could sort of still retard that's growth next year in margins? Well, we are highly confident that we stay within the First Solutions segment, but it's between 18% 20%, heavily depending on product mix and on regional market development. So this is normally the frame which we contain since I don't know how many big corners of our question, yes, 18% to 20%. And then the tooling Excluding No, including additive, yes, all the investments, yes. And the volatility of tooling, which is we got to live with that a bit, do you think? Again, we have a seasonal pattern here as well, a regional pattern and a seasonal pattern. And when we talk about tooling, we're not only talking about drills. We talk about forming tools, for instance, as well. That means the product portfolio is based on different elements, and we see a stable growth here. Okay. Thank you. Yes. The next question comes from the line of Michael Firth with Vontobel. Please go ahead. Yes, good afternoon. A follow-up here on Surface Solutions. I think you mentioned 4% to 6% expected growth going forward. My question is if that is including Additive Manufacturing and what your assumptions are for additive manufacturing? And then I have a follow-up. Yes. So 4% to 6% is what we expect here in Service Solutions, and this is all in. Okay. And any particular assumptions for Additive Manufacturing? Because I think in the past, you presented sort of a road map over 5 years with some sales targets around, I think, EUR 100,000,000 or so. Is that still valid? Is that still the way we should look at it? We still have a road map, of course. And but in line with what I just mentioned to Graham before, it takes a little bit longer in terms of timing due to understandable and good reasons. But the overarching schedule and road map we have in mind is still valid, yes. Okay. And then just 2 more. One is you talk about increasingly challenging market environment overall. But specifically, can you give some examples? What has changed in the last few months? What has specifically become more challenging for you? And then my final question would be if you can just repeat the investment. You talk about investments in automotive. What specifically what does investments I'm not sure you mentioned it. Thank you. Let's start with the latter part of your question, automotive. I think I tried to give a more detailed insight and explanation why we are so optimistic that we will grow in automotive because of these different contributing elements of our growth, yes? It's not the sheer number of registered cars or something like that. We talk about structural growth. We talk about regional topics. And we talk about new technologies like EPD. Again, this type of stuff today is plated with the conventional technologies. The new one is actually, we are just introducing it to the market. And having that said means we are investing in an EPD center in Germany, just as an example. But we do also investing and I think I mentioned Welkaida, what is the new production side for transportation and automotive applications. And these markets are still growing, and we believe in the growth of that, yes? And I think I missed one. The challenging market. That's a challenging market overall, right? Of course, we do what we see is sometimes we see some regional pattern in different countries. We see specific developments in countries where one application is going down, others is coming up, that means the stuff is getting more volatile, right? And beside of that, we have the tariffs topic and the political environment, which for sure is not creating additional confidence. And yes, that's it. Thank you. Your next question comes from the line of Wasi Rizzi, RBC. Please go ahead. Hi, good afternoon. Thanks for taking my questions. I've got 2, if I could. So firstly, on Surface Solutions. It appears that there's a fairly rapidly changing environment, particularly in auto. Can you give us a feel for how real time your management information is for Surface Solutions and what you're currently seeing in that business? And then secondly, I was just interested, it looks like you will be getting some cash quite soon either back end of this year or early next year. How does the acquisition pipeline look? And then if you can kind of split that between smaller bolt ons and then maybe larger things that are out there? As usual, we do not comment too much or not at all on M and A activities. What we said is and you saw the direct record in 2017 and 2018 what we acquired. We talk here about we call it string of growth, smaller and acquisitions where we acquire technologies, where we acquire capabilities, which we're missing. Sometimes we talk about white spots in the market. And for sure, we still have midsized and big acquisitions in mind. But please do understand, it doesn't make sense to comment. And your the first part of your question, I'm sorry, I'm not sure whether I really get it. You asked for automation. No, automotive. So the auto markets, just in Surface Solutions. I'm trying to get a feel for how real time your management information is from the business and then what you're currently seeing in that business? I am autumn. Okay, okay, okay, okay. So I think we are very close to our markets. And of course, we do have frame contracts, what is typical for this industry. And we see and we watch and we observe permanently the rate of volumes, which are asked from our customers. That means this is a normal process and it's a normal way of doing business. Close. And in terms of what you're seeing in that business, any particular change since the quarter end in the volumes you're seeing from your customers or nothing? Again, it depends. In Europe, we see maybe a slight softening for some customers, not the market in general. In for other customers, it's even going up. That means overall, the market is for us based on what we have intact. Okay. Thank you. The next question comes from the line of Alessandro Foletti with Octavian. Please go ahead. Yes, good afternoon. Thank you for taking my questions. I have 2 small, almost housekeeping questions and then a follow-up on M and A. You mentioned the M and A effect of raw material surcharge effect for the Q3. Can you maybe split those two effects in numbers? First question. 2nd question, how big is the one off in man made? If you can remind me that, that you took this month this quarter. And then the third one on M and A, again, I wanted to ask you the same question on the pipeline. Now you don't want to comment too much on that one, but if I look at EUR 1,000,000,000 cash that you will have by the end of next by the end of Q1. Seems kind of difficult to me to consume that cash with this sort of acquisitions that you have been doing so far. What are your thoughts about that? Do you have bigger possibility as a whole plus your churn every year? Yes, exactly. You should be happy about that. No, Alessandro, I think you're starting with the M and A. As I said, you know and we communicated clearly what we did, but we do not comment on our activities and our intentions we have in mind. And you should be assured that we are fully aware about our cash position and our opportunities. But it's also clear, we do things in a very disciplined and reasonable way, yes? And more I cannot say on that. Then the second question, I think you talked asked about one offs in Manmade Fiber. If I may jump in, if you don't mind. It was about CHF 1,500,000 which were recorded as a one off and that's related to the closure and divestiture of the facility in Germany actually. And the effect of M and A and raw material short charge, can you split that on, Arndt? About SEK 82,000,000, the SEK 2,000,000. Well, we have let's say, we you probably talk about magnitude EUR 13,000,000, EUR 14,000,000 in a combined manner on surcharge effect and M and A impact on a top line basis, right? Well, you wrote $22,000,000 effect to the top line. This was the sum of M and A and material surcharge. So I just would like to know how much is the M and A or how much is surcharge? Just Sorry, of course. Yes. It's €9,000,000 attributable to surcharge effect. So the raw material effect and the raised by M and A. All right. Thank you. Welcome. The next question comes from the line of Fabian Hecke, UBS. Please go ahead. Yes. Good afternoon. Question on manmade fibers. You said BCF slowing in Turkey and the U. S. Can you remind us how much this is of in terms of divisional sales? And then the Q2 on Manmade Fibers is when I look, I mean, after 5 quarters of second and EBITDA margin somewhere in the 11 plus percentage range, can we expect kind of a breakthrough in the margin supported by better pricing finally, mix and lever choices kind of a certain plateau where further scope is limited? And then a third question on manmade fibroids. The at the beginning of the year, you announced a large order of €540,000,000 where you initially planned that 50% will be booked as orders in this year and 50% next year. So far as I know, in the 1st 9 months, nothing has been booked. How shall we read this? Is there a risk of like from delays to cancellations? Did you not really get the payments? Or is there any explanation on that? Thank you. Okay. Again, let's start with the latter part of your question. I think you are right. So EUR 5 smaller part most probably going to be booked in the Q4. And this is in line with our normal governance of booking rules, yes? It's about contracts. It's about down payment. It's about finance security and some other criteria. And also, the delivery schedule and again into 2020, yes? And from that perspective, this is in a it's a big majority is coming in the next year 2019. The margin are where they are right now, slightly improved, and we expect the margin further to improve. It's but it's still a competitive environment, especially on the Filament side in China. And at the end, the margin in total for the Manmade Fiber segment also depends on the product mix. So filament is the biggest one, but we do have service business with higher margins and PCF business with, again, different margins. And from that perspective, yes, we are improving, and you will see that, but not to the extent where we have been 5 years ago. Last but not least, I think it was a question of manmade fiber BCF. Turkey, it was €13,000,000,000 to €15,000,000,000 to €15,000,000,000 in exactly. That is what we have in Turkey, we discussed. Overall, including U. S. Including U. S, okay. So EUR 13,000,000, say EUR 30,000,000 to EUR 50,000,000,000 to EUR 50,000,000 is the range. Okay. Okay. Thank you. Gentlemen, there are no more questions at this time. So thank you very much. We obviously answered all your questions. Happy to support in case further questions come up on a bilateral basis. Thank you for participating in the call and speak to you with the announcement of the full year results beginning of March next year. Thank you very much and have a good afternoon. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thanks for participating in the conference. You may now disconnect your lines. Goodbye.