Ladies and gentlemen, welcome to the Q3 2018 results conference call and live webcast. I am Alice, the conference 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&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Andreas Schwarzwälder, Head of Investor Relations at Oerlikon. Please go ahead, sir.
Thank you very much. Good afternoon, ladies and gentlemen. Welcome to Oerlikon's conference call on the results for the third quarter and nine months of 2018. Your hosts today are, as usual, our CEO, Dr. Roland Fischer, CFO, Jürg Fedier, and myself, Andreas Schwarzwälder, Head of Investor Relations. As a reminder, all related documents on the Q3 nine-month 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 Jürg Fedier, 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&A session to answer your questions. Today's conference is being recorded. 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. The 2017 numbers have been updated accordingly as the Drive Systems segment after the signing of the transaction is reported as discontinued operations. Having said that, it is now my pleasure to hand over to Roland.
Thanks a lot, Andreas. Good afternoon to everybody on the line. Thank you for joining our third quarter 2018 earnings call now. For the third quarter of 2018, Oerlikon again achieved a strong top-line growth. The group order intake increased year-over-year by 22.2% to CHF 655 million, while sales went up by 28.9% to CHF 687 million. This strong result was driven by both segments. The Surface Solutions segment maintained double-digit growth in both orders and sales in the third quarter. The Manmade Fibers segment continued to capture a significant share of business across its application range, where we see the high levels of demand prevailing. In the third quarter, 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 Surface Solutions business and the high operating costs related to investments in this quarter. Both of our segments achieved strong double-digit EBITDA margins in line with guidance, with Surface Solutions delivering an 18.3% EBITDA margin, which is in the guided corridor, and Manmade Fibers 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. The closing is still expected to take place in late 2018 or the first quarter of 2019. We have continued to execute a string-of-pearls acquisitions and investments to strengthen Surface Solutions' leadership position. In the third quarter, the segment expanded its service treatment portfolio with the acquisition of Eicker in Germany.
With this acquisition, we added innovative technologies and expertise in plasma nitriding, which is a heat treatment technology to increase reliability and wear resistance of metal parts. On top of that, we opened a second production center in Veľká Ida, 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 Surface Solutions and attractive adjacent markets. 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. Now let's turn to the Surface Solutions segment performance in the third quarter 2018.
The Surface 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 third quarter and positive raw materials surcharge effect added in total roughly CHF 22 million 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.
Oerlikon scored a first win for its ePD coating system in China with the initial sale of INUBIA to the Shanghai Dafangwuyu Automobile Technology Company. The ramp-up of the additive manufacturing business continued according to plan. From October 10 to 11, Oerlikon successfully hosted the second Munich Technology Conference on Additive Manufacturing. 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 CHF 395 million, sales increased by 11% compared to the third quarter last year and stood at CHF 373 million. EBITDA for the segment stood at CHF 69 million for the quarter. That is 18.3% of sales.
The operating profitability is lower in this quarter compared to Q3 2017, to be clear, is as anticipated and within the guided corridor of 18%-20%. The profitability had 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 observe continued solid demand in the tooling market, showing normal seasonality pattern in the third quarter. 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 Surface Solutions segment, which continue 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 one, will secure future growth of the segment. Before we move on now to Manmade Fibers, we would like to shed some light onto Oerlikon'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. Oerlikon has been and will continue to grow above pure automotive volume businesses.
That means we expect the automotive business of Surface 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 Surface Solutions DNA, that is innovation, market penetration, regional expansion, last but not least, acquisitions. Now allow me to 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 which will replace harmful chemicals such as Chromium-6. We have also launched S³, a segmented synchronizer system, which is our recent innovation for synchronizer rings. We see potential for our brake disc innovation, a rust and dust-free brake disc. Last but not least, SUMEBore 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. 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. These new and innovative products allow us to increase market penetration. With the ePD technology, we can replace the electroplating market for decorative and functional coatings. Our brake disc innovation can replace uncoated brake discs. High-performance synchronizers can find their way into commercial vehicles, transmissions, and gearboxes. Coating for tools become more and more important to support production efficiency and parts performance. 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. Regional expansion is supporting our growth path in the automotive industry.
We have just expanded our footprint in Europe with the new sites and joint ventures, and also in Asia with several new coating centers in Japan, China, Indonesia, and India. 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 Eicker, a German heat treatment supplier for the automotive industry. Earlier in the year, we bought DIARC Technology, a Finnish surface engineering company specialized on surface treatments for automotive and precision components. All 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 automotive market.
Our growth pattern in the automotive end market will continue to support the segment's midterm growth expectation of 4%-6% CAGR. Now let's move on to Manmade Fibers. The Manmade Fibers segment achieved another significant 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 Barmag Huitong Engineering, also secured notable wins in the polymer processing market. All in all, this is a demonstration of the 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 CHF 260 million, and sales increased by 59% compared to the third quarter last year and stood at CHF 314 million. EBITDA increased by 64% year-over-year to CHF 36 million, 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 an one-time impact from the divestment of the tape and monofilament technologies. At the annual world's largest textile machinery show, ITMA in Asia, Oerlikon 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 has created good customer interest at ITMA.
We continue to see favorable market dynamics in the third quarter of the year. The filament equipment market in China maintained healthy 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 accept 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 third quarter. In addition, it has recently announced its partnership with Shaoyang Textile Machinery in China to jointly advance the offering and sales in the competitive hygiene market.
The magnitude of orders for the Manmade Fibers segment in recent months has resulted in a pipeline with delivery lead times reaching into 2021. For the upcoming quarters, we expect the healthy demand in this market to continue, with healthy order intake in the coming quarters. After this review of the segment's performance, let me hand over to Jürg for additional comments on the group's financials. Jürg, please. It's yours.
Thank you, Roland, and good afternoon to everybody. Let me start the group short financial review with a closer look at the third quarter group figures. Again, please be reminded that all 2018 figures show continuing operations and 2017 figures have been restatement for the divestment of Drive Systems and for the new revenue recognition standard under IFRS 15. The aforementioned positive development of all segments, not surprisingly, consolidate to a strong group performance. They add up to an order intake of CHF 655 million in the third quarter, an increase of 22.2% year-over-year on the reported basis, or 21.7% if adjusted for currency developments. Sales came in at CHF 687 million. 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 one 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 first nine months of the year, the ratio continues to exceed one. EBITDA reached CHF 103 million, an improvement of almost 16% when comparing to the third quarter of last year. The EBITDA margins 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 million, which translates into an EBIT margin of 9%. The ongoing recovery in the Manmade Fibers becomes visible when looking at the group's business split as the segment increased its share compared to the same period of last year.
The Manmade Fibers segment increased to 46% of the group sales in the third quarter of 2018. Surface Solutions accounted for 54%. When looking at profitability, the upturn in Manmade Fibers becomes visible as well. The segment accounted, in the meantime, for 35% 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 at 16%, while declining in Europe to about 31%. Sales in the rest of the world decreased to around five percentage points. In line with the before mentioned recovery in Manmade Fibers, the share of our service and spare parts 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 US dollar against the Swiss franc. Assuming stable currencies, order would have been at CHF 652 million, a difference of 0.5% compared to the third quarter 2018 on the reported figure. Sales would have been at CHF 682 million, 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 CHF 105 million as compared to the CHF 103 million reported.
Looking at the ROCE, Oerlikon's return profile shows a positive development. The group's third quarter performance resulted in a rolling 12 months return on capital of 11.7%, 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&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 2.6 billion and sales to increase to around CHF 2.6 billion. The EBITDA margin after operating expenses from increased investment, particularly in additive manufacturing and discontinued effects from Drive Systems, is targeted to exceed 15.5%. In addition, we do not see any changes regarding the impact from the Drive Systems divestment that is expected to close late this year, as mentioned before, or in the early first part of next year. 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, achieve 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 Oerlikon Board of Directors to broaden the board through the nomination of a new independent board member. The board will be extended to consist of seven board members, increasing the total number of non-affiliated board members to four. 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 third quarter and first nine 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. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets when asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Grant Phillips from Jefferies. Please go ahead.
Yes, good afternoon. Thanks for taking 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 a percent in the quarter. You've underperformed what some of the tooling companies have shown in reported growth for the third quarter. That's the first bit of that. 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. Thirdly then, again, in Surface Solutions, you talk a lot about ePD, and the first wins that you've 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'm not quite sure how we should be thinking about the margin impact there. Thank you.
Okay. Let's start with the latter part of your questions. ePD. ePD is a new technology, it is used for automotive applications, but also for decorative elements and sanitary stuff. 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 years. Yeah. 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 this electroplating market, we talk about billions. 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 one in commercial operation at our customer site, and a second one we just sold. We start with equipment sale.
We do partially parts coating in our Chinese site in Shanghai as well. We have to be clear, we are in a very early stage, and this is something what kicks in over the course of the next five years. The additives market is not as a surprise coming, and here today, we talk about CHF 500 million, stuff like that, in that range, including powder and services. It is 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 build up our infrastructure, which is not yet completed, but right now we are commissioning equipment in Plymouth on our material side with our new atomizers.
We are confident that this is an attractive market and technology, and we plan to take a certain share out of that. 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 is the seasonal pattern. We had the holiday season, which especially here in Europe, kicks in. From that perspective, I would just say we are fully on track.
Mm-hmm. I think you quote the long-term growth for that area in the past have been around 3%, I can rectify that, I guess, when I think about sort of industrial production trends and so on. It's been very volatile this year, the growth for tooling. Is it a indirect exposure, I don't know, to some of the weak parts of automotive, perhaps, showing up in this? Again, sorry, just to finalize then, thinking about all these things we just mentioned, the mix, ePD, additive manufacturing, what can we think about the margins for next year in Surface Solutions? Because, clearly there's still a lot of investment and maybe some dilution from ePD, that could sort of still retard perhaps growth next year in margins.
No, we are highly confident that we stay within the guided margin for the Surface Solutions segment, it's between 18%-20%, heavily depending on product mix and on regional market development. This is normally the frame which we contain since, I don't know how many quarters. A lot. 18%-20%.
Yeah.
The tooling-
Excluding-
No, including additive.
Including additive, yeah. All the investments. Yeah.
The volatility of tooling, we got to live with that a bit, you think?
Again, we have a seasonal pattern here as well, a regional pattern and a seasonal pattern. 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.
Yeah.
The next question comes from the line of Michael Flath with MainFirst. Please go ahead.
Yes, good afternoon. Follow-up here on Surface Solutions. I think you mentioned 4%-6% expected growth going forward. My question is if that is including additive manufacturing, and what your assumptions are for additive manufacturing. Then I have a follow-up.
Yes, the 4%-6% is what we expect here in Surface Solutions, and this is all in.
Okay. Thank you. Any particular assumptions for additive manufacturing? I think in the past you presented sort of a roadmap over five years, with some sales targets around, I think, 100 million or so. Is that still valid? Is that still the way we should look at it?
We still have a roadmap, of course, in line with what I just mentioned to Grant before, it takes a little bit longer in terms of timing due to understandable and good reasons, the overarching schedule and program we have in mind is still valid, yes.
Okay. Thank you. Just two more. One is, you talk about increasingly challenging market environment overall, specifically, can you give some examples? What has changed in the last few months? What has specifically become more challenging for you? My final question would be, if you can just repeat the investment. You talk about investments in automotive. What are those investments? I am not sure you mentioned it. Thank you.
Let's start with the later 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. It is 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, actually we are just introducing it to the market, having that said, means we are investing in an ePD center in Germany, just as an example. We do also investing, I think I mentioned Veľká Ida, what is a new production site for transportation and automotive applications, these markets are still growing, we believe in the growth of that.
I think I missed one. The challenging markets.
That's a challenging market overall, right? 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? Besides that, we have the terrorist topics and the political environment, which for sure
Is not creating additional confidence and yeah, that's it.
Thank you.
The next question comes from the line of Wasi Rizvi, RBC. Please go ahead.
Well, hi. Good afternoon. Thanks for taking my questions. I've got two, if I could. 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? 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? 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&A activities. What we said is, and you saw the directory record, in 2017 and 2018, what we acquired. We talked here about, we call it string of pearls, smaller and acquisitions where we acquire technologies, where we acquire capabilities which were missing. Sometimes we talk about white spots in the markets, and for sure, we still have mid-size and big acquisitions in mind, but please do understand, it doesn't make sense to comment. The first part of your question, I'm sorry, I'm not sure whether I really get it. You asked for automation?
No, automotive. 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.
Okay. 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 the normal way of doing business. Up close.
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. For other customers, it is 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 two, small housekeeping questions, then a follow-up on M&A. You mentioned the M&A effect of raw materials surcharge effect for this quarter. Can you maybe split those two effects in numbers? First question. Second question, how big is the one-off in Manmade? If you can remind me that you took this quarter. Then the third one on M&A again, I want to address the same question on the pipeline. You don't want to comment too much on that one, but if I look at CHF 1 billion cash that you will have 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 possibilities or?
Yeah.
You generate cash every year.
Luckily, you should be happy about that. No, Alessandro, I think you're starting with the M&A. As I said, you know, we communicated clearly what we did. We do not comment on our activities and our intentions we have in mind. You should be assured that we are fully aware about our cash position and our opportunities. It's also clear we do things in a very disciplined and reasonable way. More I cannot say on that. The second question, I think you asked about one-offs in Manmade Fibers.
If I may.
Yeah, okay.
If I may jump in, if you don't mind.
No.
It was about CHF one and a half million, which were recorded as a one-off, and that's related to the closure-
Okay.
Divestiture of the facility in Germany, actually.
The effect of M&A and raw material surcharge, can you split that one out? Plus CHF 22 million, the two cumulative.
Well, let's see. You probably talk about magnitude CHF 13 million, CHF 14 million, in a combined manner on surcharge effect and M&A impact, on a top-line basis, right?
Well, you wrote CHF 22 million effect to the top line. This was the sum of M&A and material surcharge? I just would like to know how much is M&A or how much is surcharge.
Sorry, of course. Yeah. It's CHF 9 million attributable to surcharge effect.
Okay.
The raw material effect.
M&A.
By M&A.
All right. Thank you.
You're welcome.
As a reminder, if you wish to register for question, please press star and one on your telephone. The next question comes from the line of Fabian Haecki, 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 in terms of divisional sales? Then the second quarter on Manmade Fibers is, when I look, after five quarters of second and EBITDA margin somewhere in the 11+% range, can we expect a breakthrough in the margin support by better pricing finally, mix and labor choice is a certain plateau where further scope is limited. Then a third question on Manmade Fibers. At the beginning of the year, you announced a large order of CHF 540 million, 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 first nine months, nothing has been booked. How shall we read this? Is there a risk of 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 later part of your question. I think you are right. CHF 510 or 14 million of this contract, which we signed, is not yet booked. There is a smaller part, most probably going to be booked in Q4. This is in line with our normal governance of booking rules. It's about contract, it's about down payment, it's about finance security and some other criteria. Also, the delivery schedule, and again, it's into 2020. From that perspective, the 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 still a competitive environment, especially on the filament side in China. At the end, the margin in total for the Manmade Fibers segment also depends on the product mix.
Filament is the biggest one, but we do have service business with higher margins and BCF business with, again, different margins. From that perspective, yes, we are improving, and you will see that, but not to the extent where we have been five years ago. Last but not least, I think it was a question of Manmade Fibers, BCF. Turkey was 13 to 15-
13 to 15.
-million in. Exactly. That is what we have in Turkey discussion.
No. Overall.
Overall?
Overall. BCF.
Including U.S.
Including U.S. Okay.
Sorry, CHF 13 million?
CHF 30-CHF 50. CHF 30 million-CHF 50 million is the range.
Okay.
Yeah.
Okay. Thank you.
Gentlemen, there are no more questions at this time.
Thank you very much. That 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.
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