Earnings Call: Q2 2018

Aug 7, 2018

Ladies and gentlemen, good morning or good afternoon. Welcome to the EarlyCon Q2 2018 Results Conference Call and Live Webcast. I am Moira, 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. After the presentation, there will be a Q and A session. The conference will now be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Andreas Schwarzfelder, Head of Investor Relations at Erlikon. Please go ahead, sir. Thank you very much, and good afternoon, ladies and gentlemen, and welcome to Erlikon's conference call on the results for the Q2 and the 1st 6 months of 2018. The hosts today are, as usual, our CEO, Rodan Fischer and Jurg Fedje, the group CFO and myself, Andreas Rasvel, Head of Investor Relations. As a reminder, all related documents on the Q2 and half year results, including the following presentation and the interim report, are available for download on our website. Today, we will follow the well known agenda. We'll officially provide with an overview and an update on the segment's performance, followed by Jurgen Fedje, who will comment on the group's financial performance and the increased full year guidance. After that presentation, we will host the Q and A session to answer your questions. Today's conference, as mentioned, is being recorded, and a replay will be available in our website later today. Before I hand over to our CEO, let me add a general comment. After the announced divestment of the Drive Systems segment, which we disclosed on July 30, the segment is reported as discontinued operations. Consequently, all 2018 numbers are based on continued operations, and the 2017 numbers have been restated accordingly. Having said that, let me now hand over to Laurent. Thanks a lot, Andreas, and good afternoon to everybody on the line, and thank you for joining our Q2 2018 earnings call now. For the Q2, Oerlikon achieved a strong top line growth, as you see. The core border intake increased year over year by 26.8 percent to CHF 6 77,000,000, while sales went up by 36.6 percent even to CHF665 1,000,000. And this excellent result is driven by both segments. The Service Solutions segment carried its growth momentum forward into the Q2, increasing both orders and sales. And the Manmade Fiber segment once again significantly boosted orders and sales in the Q2. Profitability is further improving. In the Q2, we have been able to improve the group's EBITDA margin to over 70%. This is an excellent and outstanding result. And however, we have to we need to put this into perspective in order to manage expectations going forward. This excellent result is a result, on the one hand, from a positive product mix in Service Solutions. And on the other hand, it includes onetime discontinued effects from the divestment of the drive business segment. Operationally, both of our segments achieved strong double digit EBITDA margins and therefore, contributed both segments to the excellent results. We also continued to deliver on our strategic priorities. As you are well aware, we announced end of July that we have signed an agreement with Dana to divest our drive systems segment. And the closing is expected to take place in late 2018 or the Q1 2019, subject to customary approvals and the usual closing conditions. This transaction marks a strategic milestone for us as we now can fully concentrate on growing the service solutions and advanced materials businesses while working and strengthening our mainframe fiber segment. In addition to that, we have continued to execute string of pearls acquisitions, such as an example, the Zanto Technology based in Charleston, USA, and investments to strengthen service solutions leadership position, and you will see us continuing on that strategic path. On the group's strong performance in the second quarter, based on this strong performance, we are in a position to raise our guidance for the entire year of 2018. Crew border intake is expected to exceed CHF 2,600,000,000, which reflects more than 15% growth year over year and sales to grow to around CHF 2,600,000,000, which is an increase of more than 20%. The group's EBITDA margin is expected to exceed 15.5% at year end. And here, we have to get used to the new figures after taking the drive system aside. Now let's now turn to the Service Solutions segment performance in the Q2 2018. The Service Solutions segment further advanced its business and delivered another quarter of strong results. Consistent sales growth was achieved in almost all end markets, such as tooling and automotive and across all regions. In the automotive market, Erycon's sumibore coating product, which improves engine performance by reducing emissions, scored a major win with a global leading market player in Europe. Also in aviation, a higher level of demand was noted, while the upward trend in general industries continued into the 2nd quarter. The small size acquisition in the Q1 and a positive raw material surcharge effect added in total roughly CHF16 1,000,000 to the reported top line. The ramp up of the additive manufacturing business and construction of new facilities continued according to plan. In the Q2, we have acquired the sensor technology from Qi Additives. The company offers manufacturing and engineering services for surgical implants and instrument systems specializing in the orthopedic and spin markets. In addition, we have further expanded our partnership network and are collaborating now with RUK and Lufthansa Technik to develop AEM components for aerospace and with a German company, IABG, a leading European provider of services such as technological testing, analysis and consulting to accelerate the qualification and certification of additive components and establishing new standards for additive. And after accounting for operating expenses from increased investments in the AGS manufacturing business and technology acquisitions And benefiting from a positive product mix, the segment managed to obtain an EBITDA margin for Q1 2018 at over 20%, representing an improvement in operating profitability as compared to previous quarters. From an end market point of view, we observed strong momentum in general industries worldwide. The cooling market shows continued good demand in all regions, which is supported by strategic initiatives and the adoption of new coating solutions. The automotive business remains robust in Europe, the U. S. And Asia, and we do see ongoing moderate growth also in the aerospace market. Our generation remains a challenging market environment. In particular, large gas turbines are down. From a regional point of view, Europe and North America are showing strong growth, and we do see good development in 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, delivering strong results in the Q2 for the year. And now let's move on to manmade fibers. The Mainmade Fibers segment continued its successful recovery and significantly boosted orders and sales in the Q2. The Filament Equipment market, led primarily by China, was the main contributor to the excellent top line improvement and was strongly supported by related texturing activities. We achieved new customer wins for carpet yarn, the so called BCS, pipe continuous filament and polymer processing equipment and systems. Segment sales doubled in China and tripled in India and North America as compared to the same period in the previous year. This leads me to the Q2 2018 numbers, which show an excellent result. The orders increased by 45% year over year to CHF 282,000,000 and sales increased by 82% compared to the Q2 last year and stood at CHF 271,000,000 EBITDA increased by more than 100% year over year to CHF 32,000,000 The segment sustained double digit operating profitability with an EBITDA margin at 11.8%, while continuing to ramp up production capacities to manage a significant increase in orders and sales. The EBIT for Q2 2018 stood at CHF26 1,000,000 as EBITDA margin was at 9.5%. We continue to see market dynamics improving in the Q2 of the year, the filament equipment market in China. So again, strong demand as Tier 1 customers are in the process of consolidation, aiming for capacity, technology and efficiency leadership. As a result of the increased filament activities, the texturing equipment market was also positive. These are good demand from EDF copper yarn solutions from the U. S. And Turkey, with some signs of normalization and project opportunities in stable fibers and non renewables. All in all, this has resulted in a strong pipeline, which with lead times growing already into the year of 2021. The strongest us speak for the performance of the segment and its management. It demonstrates its ability to successfully manage the fast and accelerated recovery that we currently see. And now, last but not least, let's move on to drive systems. We are providing today only a short market update on Drive Systems segment. As already mentioned by Andreas, we have announced the divestment of the segment and drive systems is reported in discontinuing operations. Nevertheless, the development in the first half year was very strong. Draught Systems maintained its growth momentum and achieved 20% growth in its top line. The segment continued to see benefits from its repositioning efforts as it made further headways in securing new business with existing and new customers in its end markets and across all regions. The segment noticed continued global improvement in the agriculture market and also construction remained strong, in particular in the U. S. And Asia. We saw and registered a strong uptick in the transportation sector, especially in China and in India. In automotive, drive systems has been ongoing positive has seen ongoing positive market settlement and especially the significant increase in sales volume of the so called new engine vehicles in China for the notable development. In the energy and mining sectors, the higher oil and coal prices appear to be triggering an increase in capital expenditures for both equipment replacement and capacity expansions. All in all, the segment saw a healthy growth in demand worldwide. The strong top line combined with improving production efficiencies and cost discipline leads to a higher EBITDA margin of 12% in the 1st 6 months of 2018. We are convinced that the drive system business will further develop under the new ownership of Dana as a business and market focus as well as technologies of both companies are a good complementary fit. And after this review of the segment's performances, let me hand over to Jorg for additional comments on the group's financial year. The stage is Jorg, please. Thank you, Roland, and good afternoon to all of you. Let me start the group's financial review with a closer look at the Q2 group figures. Again, please note that all 2018 figures show continuing operations and 2017 figures have been restated for the divestment of drive system and for IFRS 15. The before mentioned positive development of all segments, not surprisingly, consolidate to a strong growth performance. They add up to an order intake of CHF677 1,000,000 in the 2nd quarter, an increase of almost 27% year over year on a reported basis or 20.8 percent if adjusted for currency developments. Sales came in at CHF665 1,000,000, up 36.6% year over year on a reported basis. Driver of the top line development was growth in both segments, as mentioned earlier by Roland. The book to bill for the group exceeded 1 for the 9th consecutive quarter, and EBITDA reached CHF113 1,000,000. That's an improvement of 63.8 percent when comparing this to the Q2 of last year. The EBITDA margin stood at 17.1%. That's an increase of 2.9 percentage points versus Q2 last year. But as mentioned before, the increase is due to a positive product mix and a onetime discontinued effect from the divestment of the drive Systems segment, excluding the discontinued effects of $9,000,000 which relates to the incurred cost and preparing for the sale. The Q2 EBITDA margin for the group's continuing business would have been at about 15.6%. EBIT was CHF 72,000,000, which translates into an EBIT margin of 10.8%. The redevelopment of the exchange rates in Q2 compared to the same period last year was beneficial to the group. This is mainly related to the translation effect that we report in Swiss francs. The appreciation of the euro and to a lesser extent, the Chinese yuan against the Swiss francs was slightly compensated by the devaluation of the U. S. Dollar against the Swiss francs. Assuming stable currencies, orders would have been at CHF645 1,000,000. That's a difference of 5 percentage points compared to the 2nd 2018 reported figure. Sales would have been at CHF 634,000,000, also lower by almost 5% compared to the reported figure. The transaction and translation effect on EBITDA was about 5.6% positive and fall in the same magnitude as orders and sales, hence with limited impact on the margin. The strong recovery in 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 Surface Solutions segment accounted in the Q2 2018 for about 59% of the group sales. Manmade Fibers increased to about 41%. And when looking at the profitability, the upturn in manmade fiber becomes visible as well. The segment accounted for 28% of total EBITDA in the Q2, while Surface Solutions delivered 71% of total group's profitability. From a regional point of view, our proportion of sales increased in Asia Pacific region to about 47% and North America to 17%, while declining in Europe to about 32%, sales in the rest of the world decreased to about 4%. In line with the before mentioned recovery, Manmade Private Share of Our Services and spare prop business decreased correspondingly to 39% of total group sales in the Q2 2018 is in comparison to 47% in the same period of last year. This concludes our comments on Q2 results. Let me now continue with the first half of 2018 to guide you through the group financial statements. The group figures show a strong performance in the first half of the year. Orders and sales up 35% 38%, respectively, standing at CHF 1.4000000000 and almost CHF 1,300,000,000. The margin for the first half year improved to 16.4% for the group, including the before mentioned discontinued effect. Looking below the line on EBIT at the P and L, the net financial result was minus CHF 1,000,000, which is mainly related to higher interest income and foreign exchange gains. The tax result was minus CHF 36,000,000. The effective tax rate on earnings before tax confirms the trend from Q1, which is now 28%, and it's mainly attributable to higher earnings with a favorable country mix supported by successful tax planning instruments. For 2018, we do expect the tax rate to be slightly below 30%. However, going forward, we expect to converge towards 25%, which is driven by the positive effect from the divestment of Drive and System following closing of the transaction. The result from continuing operation was CHF 91,000,000 compared to CHF 31,000,000 for the first half twenty seventeen, which is almost 3 times as high. And result from discontinued operations representing the drive system segment was CHF 20,000,000 compared to CHF 16,000,000 result of CHF 111,000,000 compared to CHF 47,000,000 for the first half of twenty seventeen is again an increase of more than 100% and confirms the strong performance of the group in the first half of this year. Our balance sheet continues to remain strong and healthy as well as unlevered with a net cash position of CHF 363,000,000. Our cash position at the end of June this year was at CHF 778,000,000 Total equity amounted to almost CHF 2,000,000,000 representing a ratio of about 44%. Overall, our financial position remains strong together with the expected cash proceeds from the DRiV System divestment and the existing credit facility we have in place. This provides us enough room for us to maneuver and to further execute upon our strategy. CapEx was at CHF79 1,000,000 in the first half of this year. That's 30% above prior year level. Almost 85% of CapEx was allocated to the Surface Solutions segment due to the expansion of the global coating center network. On one hand, capacity expansion in existing centers as well as our investment in additive manufacturing. CapEx in service solutions represented roughly 9% of sales. In Manmade Fiber CapEx amounted to about 2% of total segment sales. Excluding amortization of inclined intangible assets in the amount of CHF 20,000,000, depreciation was at CHF 60,000,000, up 70% compared to the same period in 2017. And with the CapEx to depreciation ratio for the group of about 1.31, excluding the amortization of acquired intangible assets for the first half, we are still above our targeted midterm corridor of 1 to 1.2 percentage points. Coming to the cash flow statement. Cash flow from operating activities before changes in net current assets was CHF 244 1,000,000. Change in net current assets was minus CHF 50,000,000, mainly attributable to the increase of contract liabilities or better known as customer advances in the amount of CHF 109,000,000. Cash flow from investing activities amounted to minus CHF 90,000,000 mainly reflecting capital expenditures and cash flow from financing activities amounted to minus CHF 135,000,000 mainly attributable to the dividend payments earlier this year. This is also in a decrease in cash and cash equivalents of CHF 30 3,000,000 to CHF 838,000,000 at the end of 2018. And another very positive development, if I look at Perosi, Oerlikon's return profile shows a positive development to group's 1st quarter performance, resulting in a rolling 12 month return on capital employed of 10.7%, reflecting the higher operating profit over a reduced asset base now exceeding our implied cost of capital. This reflects our commitment to create value while executing on our strategy. Ladies and gentlemen, let me conclude with the 2018 outlook before we start the Q and A session. Despite the fact that certain risks in the global political and macroeconomic environment remain, we expect the positive momentum in our end markets to prevail. Based on the strong set of results in the first half of twenty eighteen, we are confident that we will be able to sustain growth and therefore raising our outlook for the year. Our guidance has been updated to reflect the announced divestment of Drive Systems. We are now providing guidance on the basis of continuing operations, which means that we have restated both the full year 2017 and the previous guidance. For the full year of 2018, we expect group order intake to exceed CHF 2,600,000,000 and sales to increase to around that level of CHF 2,600,000,000. The group EBITDA margin after operating expenses from increased investments, particularly in additive and the discontinued effects from drive system, we target the margin to exceed 15.5%. Let me quickly summarize the underlying assumption. We expect surface solution sales to grow up to 10% in 2018, while remaining within its attractive margin corridor of 20% to 22% EBITDA margin with an unchanged dilution assumption of around 200 basis points from the investment expenses in Additive Manufacturing. In manmade fibers, we expect order intake to increase further to exceed EUR 1,100,000,000. Due to the successful capacity ramp up, sales can slightly exceed the CHF 1,100,000,000 and the margin is expected to exceed the 11.5%. Allow me to elaborate on certain impacts from the drive system divestment that is expected to close late this year or in the Q1 of next year. Besides the further improvement of our cash position of around 600,000,000 dollars we expect the tax rate for the group to be slightly below 30% at year end and going forward to converge what I said before towards 25%. Further, and similar to what we have seen in previous divestments such as vacuum, accounting principles require a recycling of the cumulative exchange differences, the CTA, through the P and L. We currently assess this effect from the CTA in the magnitude of minus CHF 285,000,000 at closing. Let me remind you that this will be a non cash effect in the result from discontinued operations. With the strong Q2 performance, our increased expectation for the full year and the clear execution of our strategic roadmap, we provide the framework to sustain our growth and further improve profitability going forward. Ladies and gentlemen, this closes our comments on the Q2 and the 1st 6 months of 2018. We thank you for participating, and we are 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 Garam Phillips from Jefferies. Please go ahead. Yes. Thank you, gentlemen, for taking my call. First of all, three questions. Just on first question is on Surface Solutions growth. Can you talk a little bit about the end markets that are going to provide this 10% growth expectation for this year? Is that an organic growth number? Or is that with the acquisitions? The second question was around additive manufacturing. How big is that market now in terms of sales for you? And what's that growing on it? And the third question was really on the margin. I know you've got the corridor 18% to 20%. When do we get through the CapEx and the investment phase? Is it in 2019 that, that margin corridor could actually be lifted? Thank you. Okay. I will take I will try to answer your question. First of all, the Service Solutions growth, which is, I think, 10%, is including all in. That means organic mainly. And we do have some smaller acquisitions, we call it string of pearls, and which are contributing to a minor extent as well. That means the big chunk is coming out of the organic growth part, and this is related actually not to a single vertical like automotive or aerospace. It's across the entire landscape. It has a certain regional pattern. China is still doing well. But overall, it's across the landscape. Additive, what was the question for Additive, the second? How big is Additive Manufacturing in terms of sales now and perhaps expand a little bit on the D and D aerospace? And as usual, we do not disclose the volumes and the figures for the business units. But I think we gave you an indication for last year where we have been. And it's we are growing here on a percentage perspective, impressive with impressive figures. But overall, I think the Additive business is a small part of our OSS volume, and it's in a lower double digit range of millions. And last but not least, I think the CapEx question, also an interesting question. We do have most of this a peak year in 2018 with our CapEx spending. And just to give you CapEx and financials is one element, but talk about what we are doing gives maybe a better impression. We just recently opened our plant in Japan, La Voya, where we are having a combined shop now for automotive and filtering applications serving a big Japanese car OEM. And maybe another example is India, where we are where we have opened a site, a service shop serving GE power generation. And last but not least, of course, our active engagement, which has commissioned an atomizer in Plymouth just a few weeks ago. That means these are elements where we are spending our money. This is spent into the footprint, which is going to serve our growth in the coming years. But again, most probably 'eighteen will be a PTF. If that means we can go down by really 'nineteen. Okay. So in terms of if we think about 2019, and I appreciate that still you'll probably provide guidance on that early next year. But can we think that there might be some operational gearing coming in from this business once we pass the sort of CapEx and R and D peak? Yes. Of course, 1st of all, I think the margins where we are right now is very attractive. And please keep in mind that the volatility within this margin range is not only primarily driven by our CapEx spending, but heavily depends on our product mix and on our regional mix. Just to I think I explained it in an earlier call, the same product being sold in the country A is not generating the same profitability when you compare it with a sale in another country. That means there is and this is not an excuse, there is a strong pattern behind regional and product pattern, which creates a certain volatility. It's not only CapEx. That would be the wrong conclusion. Yes. And I appreciate, obviously, a mixture of CapEx sorry, of service and equipment and components and materials. But in terms of the balance of the business, when we think about the balance of the business for the remainder of this year and into next year, is there anything in that in terms of, I don't know, more service or more materials as opposed to less equipment, which may change the mix and, therefore, the margin? No. The share actually, most probably is going to be maintained because we are not purely focusing on service or material. We are trying to boost all business lines. That means the Material and Equipment business is growing to a similar extent as the entire segment. And from that perspective, the shares should stay somehow stable. The next question is from Michael Firth from Vontobel. Please go ahead. Yes. Hi, gentlemen. Two questions. One is actually following up on what you just said regarding Additive Manufacturing. Do you have a plan for when this business is expected to become breakeven in terms of EBITDA contribution? And the second question is regarding manmade fiber. You have increased your guidance here as well with sales now slightly exceeding €1,100,000,000 If I remember correctly, you said in the past that you wanted to avoid volumes really exceeding €1,000,000,000 in terms of the capacity that you want to make available in order not to overshoot? So what are the capacity needs that you have in manmade fiber, if any? And how do you manage that sort of cycle? Let's start with the main disaffected question, manmade fiber. I think it's self explanatory that we are using all given and available opportunities to manage this business. That means that we are using our supply chain. We are increasing people, staff, mainly on a temp basis in order to get our arms around. And we also clearly said and stated that we are not going to expand our technical capacity, what is still the case. We use our sites, which we have. We do not invest beyond some normal replacement rate into this size. And the sheer fact that projects which we are discussing with customers right now are leading already into 2020 2021 gives you a clear indication that the capacities are limited. And this is our way to manage it because it's a cyclical business and we use what we have. The first question was breakeven additives. This is a simple or more difficult question. It depends how you see it. The breakeven, we are asking for the breakeven point. This point heavily depends when we limit or stop our growth rate, right? Right now, we have an existing business that is doing well, but it's fine. But we are growing in a very strong way. And the nature of the beast means we are investing. And as long as the additive market is behaving in the way as it does right now. And we do have a plan to take a certain share out of that market. We are growing and we are spending the money. And we have not yet reached breakeven, of course, yes? But I cannot tell you when this exactly will be. Maybe just one last follow-up on manmade fiber. You mentioned in the past that you still had some lower margin orders your order book. When can we expect actually the margin to step up further? I mean, you increased your guidance slightly, but we're still far away from sort of previous peak margins. Any comment on that? Michael, I think you see already the effect of stronger projects coming in with what it indicates, 11.5 or something like that for Mainnet Fiber, what is already a strong increase versus previous year. This effect takes place already, but I also want to be crystal clear. We are not yet and most probably, we will not see the levels of project margins which we saw 4, 5 years ago, where we have been in the range of 18 or even higher. This is not the case right now, and we don't see it. That means we are improving. And we will further improve in the coming year of 'nineteen to a certain extent that we do have a plan. At least I have it in mind or Europe and myself, we have it in mind. I don't know whether we published it. And Andreas is shaking his head. That means I'm not going to tell you. But we will improve. Thank you very much. Yes. Thanks. The next question is from Wasi Rizvi from RBC. Please go ahead. Hi, thanks for taking my question. I have a few actually. Starting with Surface Solutions, you talked originally prominent about Tsumebor. So I was just quite interested in what the big win was and is it something a significant has taken? What is a specialist product into mass markets and whether that could add something to your organic growth rate next year in terms of what its contribution could be? And then moving on to Manmade Fibers, I'd be interested in your thoughts as to how you think what your customers are thinking around laying down what are quite large capital projects at a time when the kind of global trade has a bit more uncertainty around there. So I mean, how do you see them behaving in the back end of this year if this level of uncertainty continues? So first question, I was talking about a bigger win in the automotive market segment. I talked about a big car European car OEM, where we managed to in or to how to say it, to convince the customer to go and to install our solidboard technology for their cylinders in their car engines. And as we talk about a very big one, we talk about 1,000,000 of engines per year. But here, we will see a ramp up in terms of equipment and in terms of powder, which is required. And for sure, this project will contribute to our growth path in the coming years. And the second question, mainly fiber. You are right. But rates open to great trade questions between U. S. And China maybe might create an impact right now. We do not yet see it. This market is still hot. It's a consolidation question in China between the 4, 5, 6 big players. And so far, we do not have any indication concerning effects from potential trade war elements. Yes, that's correct. Absolutely correct. I think it's more driven what he alluded to, so this strong consolidation, which is taking place. And needless to say, the pipeline based on the discussion which we had before due to limited capacity from both players here in the market takes it out to 2020, 2021, right? Yes. And sorry, could I just follow-up on the first one? Are you able to quantify what the impact of this big win would be European auto OEM could have on surface solution sales? Are you able to give us an indication of the size? Of course not. Okay. Sorry. And just sorry, just one more thinking about your balance sheet. I mean, you said the shape of your group has changed again now. So your 2 divisions slightly different profile to what you were previously. Does that change how you think about what the optimal leverage is for the Oerlikon Group? What do you think it should be on an ongoing basis? I mean, once we get beyond the fact that our portfolio changes going on, what's the optimal leverage for the group now? Well, we haven't actually changed that position yet, and I don't think we're going to change that going forward. So we remain in a position and everything which we look at going forward in terms of redeploying the cash, which is a need. We said that before. And the situation which we have right now with DriveSat, more the potential income of an additional €600,000,000 on cash will obviously not change that. But our view on the gearing remains the same. We still believe that we should bring this company on the balance sheet probably in the vicinity of 1.5x to 2x net debt EBITDA. And that per se indicates and dictates then the capacity which we have based on the current balance sheet and the cash to redeploy into further activities and transformational moves going forward. So now the position has not changed. Great. Thank you. You're welcome. The next question is from Alessandro Foletti from Octavian. Please go ahead. Yes. Good afternoon, everybody. I have a couple of questions. Maybe on the disposals of charge systems. You mentioned the CTA recycling to the P and L. Is there maybe a book gain to expect? When I look your asset sales and liabilities sales, is there a book gain that may come in that compensates maybe part of that loss? That's question number 1. Then on the cash in, you mentioned the €600,000,000 plus or minus cash in. Does this imply that you are not reducing the pensions? Because you mentioned in all your press releases that the EV of this transaction is €600,000,000 So I was wondering if you can explain a little bit how the composition of this €600,000,000 is? That will be my second question. And then I have another question on the man made as well. You've been mentioning the normalization in Turkey. When I hear the word normalization, last time we spoke about that, let's say, I have a few red alarms flashing. Can you maybe quantify a little bit what you mean with this normalization in Turkey? Thank you. So I need to launch to answer on. Yes, okay. I'll start with the financial part of it. The CTA, I mean, if I understand you correctly, is there something out there of an extraordinary book gain apart from what we're going to generate on the underlying net profit, not to the extent that can see it over the next 2 to 3 months or until year end. So in other words, the CTA will have an impact on the net reported result to that magnitude. On the cash side, actually, if you go back at the high level, Alessandro, and look at the bridge from equity value to EV, you'll have about a EUR 500,000,000 equity value. You'll have a net debt position middle of the year of about EUR 51,000,000 a pension of about €49,000,000 a minor adjustment, which you have a minority interest, which brings you to approximately the €600,000,000 Around when I talk or we talk about around EUR 600,000,000 is driven by the cash flow, which is obviously going to be refunded at the end of the transaction. And that's currently running in the magnitude of EUR $30,000,000 to $20,000,000 on top of the $6,000,000 to $20,000,000 but obviously will be a reflection of the ongoing underlying business going forward, right? So there's no positive changes in debt position or in pension positions the way you said, the delta will come from the cash pool itself at the time of closing because it's a lost box transaction, right? We probably should have probably have names in that. But just to remind you that this is a lost box transaction going back to the 1st January 2018. I hope that helps, Alessandro. And at least the tricky question to Roland. Yes. Alessandro, maybe I have to apologize if I caused a red lens by using the word, the phrase normalization. It should not be the case. It's we have a strong manmade fiber business. The carpet yarn, DCF business is a smaller part compared to the Filament. And we saw a strong business over the last 6, 12 months in Turkey, which is which was outstanding to a certain extent. And we believe that this now is going back to normal. But this is not changing the needle on our main fiber. At the end, the opposite is the case. And I gave this strong indication. When you talk about contracts today about 2021. That means 2019 is 1st and not talking about 2018. Yes? And 'twenty also is almost completely filled. That should give you a kind of confidence that Manmade will have a stable, fully loaded period over the next at least 1.5, 2 years. All right. Maybe just a comment on this issue. I fully understand and appreciate that you are fully booked for 2019, of course, or maybe also for 20%. But as you know, a lot of oftentimes, your share price sort of reacts over to the order intake figure and not just to the sales and bottom line. With this growth in order, at some point, we will reach a level where growth is not possible anymore. And there is where I know we would have to figure out how we talk about it the next time. And maybe the fact that you have 2 years gives you as well as some opportunities maybe to think about that business differently. I'll leave it there. Yes. Okay. I take it from there. But no, fine. I get your point. Thank you. It looks like that we have answered all the questions. That closes then our Q2 results call, and we look forward to having the discussion with you going forward and speak to you next time on latest on October 30 when we publish the Q3 numbers. Thank you very much for participating, and have a good afternoon. Ladies and gentlemen, the conference is now over. Thank you for choosing Carver's call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.