Earnings Call: H2 2020

Mar 3, 2021

Dear ladies and gentlemen, welcome to the conference call of Andratz AG. At our customers' request, this conference will be recorded. A reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. I now hand you over to Wolfgang Leitner, who will lead you to this conference. Please go ahead. Thank you very much. Good morning, everybody. Welcome to our conference call for the full year results of 2020. I hope you and your families have come safely and healthily through last year through the year of COVID. And I guess we all are optimistic to see the development on the vaccination side. So hopefully that global economy can gradually come back to something similar to normal, probably not yet fully normal. Before I start the presentation, which I think has distributed to you, let me give you a quick summary of what how we see the year 2020. Overall, I think we have managed this difficult year reasonably well. Why do we think that? Number one, we and this sounds a little bit odd, I know, but it has been important. We started very early to purchase masks, hundreds of thousands or, I think, millions of masks, which allowed us to distribute them to all our production facilities globally and allowed us during the weeks and months where masks have been have become the bottleneck to really continue to operate our production sites across the globe, including Northern Italy. Obviously, being a supplier to the global tissue industry helped to be categorized as a critical supplier for the national in this case, national economies. What we did then was to agree on certain assumptions with regards to what have we do have what do we have to expect from, let's say, starting in March for the next few quarters. And with these assumptions, we made two decisions. Number one, to obviously take advantage of all the temporary support subsidies, short work weeks, etcetera, in a very decisive way. But at the same time, decide that we have to assume that this will not be enough that we have to basically make these temporary cost reliefs permanent. And the goal has been to make them permanent to a very large extent by the 2020, which you find reflected in our non operating expenses. All that would not have been possible without the commitment of our employees that really were extremely engaged. They were holding out in construction sites under obviously quite difficult circumstances in difficult countries with not world standard health systems. They were willing to continue production, etcetera. So all that together, I think, enabled us to show a reasonable result for 2020 now when we present the annual results. If we move on to the order intake, euros 6,100,000,000.0 compared to €7,300,000,000 in 2019 sounds like quite low order intake. It is low, But please do not forget that 2019, the €7,300,000,000 have been extremely high order intake. So if we would have to allocate this reduction in order intake, I would split it in half. Half is out to the fact that 2019 was exceptionally high and the other half clearly is reflecting the somewhat lower economic activity due to COVID. Most heavily affected, obviously, were the two metals business area or partial business areas. One part was suffering from the slump in the steel industry and the other part was suffering from the slump in the automotive industry. But also Pulp and Paper has been affected with regards to the order intake, but again, compared to a very large very high order intake in 2019. A little bit to our surprise was the extent of reduction in business activity in the service aftermarket, especially in Pulp and Paper. What happened was that the annual or eighteen month maintenance shutdowns have been postponed because customers wanted to avoid that 300, 400 people would enter the mill to perform this shutdown works. And all that resulted also in a certain reduction in order intake in the Service and Aftermarket business. Revenue side, obviously, was supported by the backlog we had by the execution of these large capital orders, thanks to the high order intake in 2019. So basically, with the €6,700,000,000 revenues, we succeeded in keeping it flat heavily supported by this large Pulp and Paper orders under execution. Moving on to the profitability. The thanks to this cost containment cost reductions, our EBITA developed quite favorably, I would say. We it included still quite substantial non operating expenses predominantly for Metals Forming and for Hydro. If we adjust for these one off items profitability of the group would have been 7% EBITDA, slightly above even 2019. So a solid figure in a not so easy year 2020. Obviously, we are aiming for further improvement during the current year. A few comments, liquidity of the position still is quite good. Net working capital developed negatively owing to the progress of this larger POC, Pulp and Paper projects, which resulted in a reduction of POC payables and an increase in work in process progress as well as advanced payments to suppliers. Free cash flow nevertheless developed positively. And taken all that together and our view on what we have to expect in 2021 made us propose a dividend payment of €1 per share for the business year 2020, which is roughly a 50% payout. So we are staying within our 50% to 60% payout guidance. So far my introductory comments, if you allow me then I would move on to the more detailed numbers for 2020. On Slide three, you see the summary again quickly through revenue increased to the record high of €6.7 Now the increase compared to the record year 2019 admittedly was very small. But again, it's a record high revenue year of 6,700,000,000.0 EBITDA above €390,000,000 owing to a large extent to cost containment, cost reductions capacity adjustments costing us 79,000,000 that we think and we are convinced this is well invested. We can afford it. We could afford it. And I think that brings us in good shape and great shape to hopefully benefit from a pickup in the global economy. Obviously, mostly Schuller and Heitwer were the areas where we spent this money restructuring money. Profitability, EBITDA margin is up to 5.8% from 5.1%. Adjusted for these extraordinary items reached 7% after 5.8% in 2019. Group order intake, 6,100,000,000.0, down substantially. But again not as much down compared to a regular business year as it may appear looking at a pure number. Order backlog €6,800,000,000 somewhat lower, but still a very good workload for 2021. On Slide five, now the revenue figures, 6,670,000,000.00 to €6,700,000,000 You see it's carried by Pulp and Paper with plus 16% and the other three business areas are down between minus 13% and minus 8%. I think at the bottom of the pie chart is quite interesting. Service is down from 40 to 36%, capital correspondingly up. This four percentage points decline in service again could be split half half. One half holds to the substantial increase in capital revenues, but obviously they are fed by the backlog and therefore not hit immediately by a slump in the economy as service and repair business is impacted. And the other half of this decline results from a lower service and maintenance revenue lever. On slide six, you see the Service business. If we look at the last four quarters on the upper row, you see that the first quarter was €576,000,000 revenue compared reasonably with the €587,000,000 in Q1 twenty nineteen. Then Q2 and Q3 were quite low, $580,000,000, $590,000,000 compared to $650,000,006 €70,000,000 in the year before. Q4 showed some increased activity, $690,000,000, but still below the $750,000,007 €60,000,000 in Q4 twenty nineteen. So overall, Service on the lower left side, you see revenues from €2,670,000,000 to 2,440,000,000.00 And the share of Service business as I've said before on the right side 40% down to 36%. Slide seven, ratio of Service business by business area, the biggest decline in Pulp and Paper, obvious because there the revenues went up very substantially due to these large projects. Therefore, the relative weight of service went down plus this shutdown business, which definitely has been postponed, delayed, extended due to COVID. Part of that will be caught up, hopefully in the first half of this year. Smaller part probably will be lost that people just say they wait a little bit more and then make the next regular shutdown, taking some risk obviously. Yes, I think the rest is not particularly dramatic with regard to the changes that you see. On Slide eight, you see this EBITA development once after the the extraordinary expenses and before. So the reported EBITDA margin went up from 5.1 to 5.8% in the blue bars at the left side and the adjusted is 6.8% to 7% or €456,000,000 to €471,000,000 Yeah. On the next slide nine, you see that by business areas, again, after extraordinary expenses and before, Pulp and Paper still in very good shape, 9.9% or 9.7% respectively. Metals heavily impacted by restructuring costs in both 2019 and 2020. On an operating level, slightly negative 0.8%, basically coming from Schuler. It's I would say it is an honest sign or an honest description of the profitability. We were not squeezing the income statement to show a positive result. It's I would say, it's I would say, mid level between conservative and aggressive and maybe slightly on the conservative side. Hydro sizable restructuring expenses excluding these the 7% are a little bit below our expectations as you know. They are a little bit higher. But still they are I think good profitability. We need to keep in mind that on the Hydro side, the profitability of Androids compares very favorably to the profitability of our two main competitors in this field, which obviously lips also certain, I would say, complication to improve profitability substantially. Separation shows a very good development, up from 6.6% before NOI to 9.4%, so very good profitability improvement over the last three, four years. This leads us to some modified guidances or goals, margin goals on Page 10. In Pulp and Paper, we increased our 9% to 10% goal to 10% to 11% EBITDA profitability. We maintain our Hydro guidance at 7% to 8.5. We maintain our Metals guidance, our long term goal of six to 7%. It will take it will not be this year and maybe not even next year, but let's see. I'm not going to give any guidance for next year. But clearly, the expectation is that we see here somewhat positive number in 2021. Not dramatic, but sorry. And separation with 9.4% pre NOI already achieved, obviously 7% to 8% is not a meaningful long term goal. So we increased it to 8.9%. Could it be more? Let's see how 2021 goes and yes, it could be more. It would be great to have double digits there. But I think we need to take the stairs one one and not get too excited about this improved performance. On slide 11, you see the order intake minus 16%. As I've said, rough estimate minus eight percent because of high base year and minus eight percent going to COVID. If you look at the business areas, Pulp and Paper is minus 18%, Metals heavily impacted because of steel industry and automotive industry And Hydro minus 1% looks good, but basically it's another year with a quite low order intake. And I'm cautious to say it will improve, but we yes, we think it will improve. But let's have decided to wait until I can show the real numbers rather than giving indications. At the bottom of the page, on the right side, maybe interesting China. China accounts for 16%, up from 11%. As we all you've probably seen many other industries, China has recovered extremely quickly. China is I would say is booming now. We see a lot of activities, project activities, many projects, many expansion projects proceeding. That certainly will be an important factor in the recovery of the global economy in 2021. On Page 12, what we've seen before, basically now for the order intake. So you see it again was a good order intake in Q1 at €1,850,000,000 total slum in Q2, surprisingly good in Q3, but again relatively low in Q4. And the split between capital and service much more stable than on the revenue side that we've seen before. On Slide 13, order backlog, nothing really to report. I think our what is the revenues that are supported by the share of the revenues 2021 that are supported by the backlog as of 2020. It's a typical ratio of the previous years. So we are with regard to our sales expectations for next year, we are, I would say, basically relying on typical developments from the previous years. On Slide 14, you see the EBITDA net income bridge. And for the next few slides, I hand over to Norbert Mettesheim, our CFO, to lead you through this source of change analysis. Norbert, can you take over? Yes. Thank you very much. Welcome to everybody who's in the call. Coming to the group's P and L statements, quickly leading you through the numbers. The $392,000,000 EBITDA, you have already heard from Wolfgang With the €180,000,000 depreciation, we are coming to the EBITA of the €571,000,000 which is €35,000,000 better than last year's. The depreciation includes €11,000,000 let's say, extraordinary topics, which we adjusted also here as it's mostly in Metals business, a little bit in Hydro according to the restructuring topics, which you are aware of already. Then the regular amortization of 72,000,000 Also this number includes a slight extraordinary topic also out of metals in the range of €10,000,000 Here we will see next year 58 regular depreciations and amortizations and hope that we don't need to do any extraordinary in next year after we have now finalized our restructuring topics in these areas. The impairment of goodwill is a small topic in also in metals, same topic as I mentioned before, cleaning up this business as far as we could. Leads then to an EBIT of $315,000,000 which is a €50,000,000 increase compared to last year's. Also financial results improved mostly by cost for foreign exchange hedging. Now €34,000,000 also reached a level which is certainly a sustainable level for the future. EBITDA at 280000004.2%, coming to the levels which we want to see more increase next year certainly with a further increase of the operational numbers to be expected. Tax rate of 27.5% compared to 32.2% last year's. Also based on a program to utilize much better our losses carry forward by forming of tax groups. And we will hope that we can maintain the tax level on a rate between 2627% in the next years. All effects in this year then accumulated to a significant increase of €80,000,000 in our net income to a number of $2.00 €3,000,000 which is a 3% and a number which goes certainly into the direction which we want to see in the long term, 3% plus all the expected operational improvements, which should then lead us to a number which is certainly above the 3%. Next page, cash flow. It's cash flow as we reported in the external reporting. Nothing really exciting, starting with the 203,700,000.0 net income, then adjusting all the noncash elements, leading to a gross cash flow of €675,000,000 Also here, a significant improvement, 60,000,000 compared to last year's. So all good so far. And now comes first, let's say, little bit of a negative message or, let's say, a message which goes into the other direction, which is a development in net working capital. Here, we have, after a significant improvement out of net working capital in the last year, improvement of cash. This year, we it's turning into the other direction. So we have a €79,000,000 increase in working capital, which is mostly driven simply by the timing sequence of these major orders in the capital business. Last year, shortly before year end, we received huge portions of down payments out of this very large capital equipment project. This year, we are more or less in the execution phase with a reduced order intake and reduced down payments on new orders. This leads to the normal development in plant and then big projects business and cost this year a little bit of cash flow by increase of the net working capital. At the end, operating cash flow or cash flow from operating activities was $461,000,000 still a very solid number, very good cash conversion rate as far as I can see. The cash flow then transfers also into our net liquidity, which you see on Page 16. We could manage to improve it nearly by €200,000,000 saying that this includes €80,000,000 foreign exchange rate effects out from the change of exchange rate in the Brazilian reals, the U. S. Dollar and the Indian rupee, which brought our funds which we have in these currencies down and transferred to euro. The whole effect is €80,000,000 So it would be the same exchange rate, 500,000,000 net liquidity, which gives us a very good basis for the next years and keeps us also flexible with regards to any urgent need of money or any opportunities on the acquisition side. Page 17, you also see the summary of all the financial numbers. I don't need to repeat them. Most have been mentioned yet. Maybe if you add the two ones in these red squares, free cash flow, $330,000,000, is certainly something which should be pointed out, further strong development also with regard to the free cash flow. And as Wolfgang Leiden mentioned already before, you see it on Page 18, This gives us, as well as from the profitability side, the equity side and the cash side, the opportunity to increase our dividend this year back to a level of 48% payout ratio, which we saw average in the as average in the past. Euros 1 per share is what we will propose to the General Assembly in this year. That's so far from my side, and I'm turning back to Wolfgang Leidenhard. Well, thank you. Yes, moving on to the business areas on Slide 20, Pulp and Paper. Yes, development has been very good in spite of this, let's say, close to €3,000,000,000 order intake, which still is a very high level and a very attractive level. Profitability is very good. We have seen a fantastic development of the nonwoven business. We are there at the €500,000,000 level and order intake supported by our equipment to produce nonwoven fabrics, including even masks with our newly acquired or some two or three years ago acquired Tier Tech subsidiary in Italy. More than 30 lines have been sold of this mass production line. And now we have also an FFP2 mass production line, which we are selling Biomass pilot business in Japan still going very actively very well. So, yes, I think no concerns to report there. Profitability is good. I must say we are executing these very large orders, which are not only very large and not only have to be executed under COVID conditions in South America, but they also include technical challenges that we are confident we have analyzed. We have done everything to mitigate the risks. We are confident and optimistic we will achieve everything. We have made set up provisions for that. But this certainly will be a challenge for this year to get these large projects started up or 2022 depending on which project and how things develop in the next several months. So that will be the main challenge for Pulp and Paper to successfully start this huge pulp mills up. On Slide 21, Metals continued weak business. Speaking of weak business and of Schuller, relatively low order intake, I think what is worth mentioning is that nearly 25 of Schuler's order intake in 2020 came from either battery driven car production or battery production battery cell production. Schuller is very strong, has developed a very good technology including the tools to produce the cells. So I think Schuler has been very successful to make the step from traditional cars to engine driven cars to battery driven cars. Obviously, is far too low. We are but we are confident that we have reduced the cost base, the breakeven level very substantially. We are still in the process of seeing the effect of that vast majority of these very substantial personnel reductions will be in place by the end of this year with a stronger first half and a smaller second half. So overall Schuler will have reduced the workforce by about 1,200 employees. And we are confident that, that hopefully is a basis for recovery of Schuler to the old levels of profitability within the next two maximum three years including this year. Slide 22, Hydro. As I said, order intake somewhat disappointing, stable but low. Sales are correspondingly below 2019 because as a consequence of this lower order intake of the last several years. EBITA margin adjusted 7% okay, but could be higher as I've said, 8% is 8% less is what we want to achieve. And some restructuring is in place or has been executed to reduce the cost base and prepare the basis for higher profitability on a lower sales level than in the past. On Slide 23, separation, affected by COVID, so order intake is down by 7%. As a consequence, revenue is down by 7%, 8%. But profitability wise, very good development. EBITDA margin 7.7% to 10.5 and EBITDA adjusted 6.6% to 9.4%. Very interesting businesses business segments from plant based meat to wastewater treatment to baby foods to you call it very specialized segments. And we definitely see that as a business area now that it has been turned around, now that it has achieved profitability that we have been looking for to really look into both organic growth, but also one or the other inorganic or M and A based growth. I'm not announcing anything here or indicating that something will be announced in the next few months. But clearly, this business area is in good shape, is profitable. It's in very interesting markets from a profitability standpoint and from a risk profile standpoint. And therefore, we definitely want to expand or try to expand that business. And then to conclude on Slide 25, what to expect from 2021. As I've said, the execution of this backlog of these large contracts still affected by COVID, make sure that we can maintain a very good part of the lower cost base that we have achieved in 2020 in 2021 and going forward. We clearly have seen that you can do a lot without traveling. We have saved more than €50,000,000 in travel costs, both in sales and in order execution. We have developed digital tools to take advantage of these not only these new tools, but also of the of our customers having also become used to digital communication and hopefully not seeing it as a lack of interest on our side if we don't fly somewhere to visit somebody, but invite for MS Teams or other type of digital meeting. Obviously, any turnaround will depend on the turnaround of metals, especially metals forming and to a much lesser extent of hydro. That's only a profitability improvement. And as I've said, digital channels, digital tools definitely will play a more important part of our daily work. With regard to the market, I assume everybody agrees that nothing to expect from the first half of this year. I mean, all the restrictions will prevail. And compared to last year in many countries, many regions we have higher very high infection levels. Hopefully, that will improve as vaccinations are gaining are penetrating the population in these countries. And that hopefully should be seen in the second half of this year. China, as I've said, is already very active and has been last year already. Service, we are optimistic that Service will be back. We do not expect that it will continue low level of last year. We see larger projects both in Pulp and Paper and in Hydro, actually also in the Metals side. I mean, you probably have noticed we have record steel prices. Who would have thought that? That hopefully should lead to certain limited investments on the steels business side. And yes, on metals forming, I've said this electric cars, battery driven cars certainly should continue to offer some attractive business opportunities. And on the last page 26, outlook and guidance. We expect group revenues to be somewhat lower than 2020, not dramatically, but single digit percentage for sure, but somewhat lower. We expect an increase in reported EBITDA compared to 2020, the €392,000,000 And we expect depending obviously on the revenue development, how it really works turns out that the adjusted EBITA in spite of this somewhat lower revenue level should be stable compared to 2020, which would be in the range of €470,000,000 which would basically result in an EBITDA profitability of in the range of 7.5%, if you're depending on which states you pick for that. So clearly, hope for some slightly improved profitability, but we also expect a slightly lower revenue level as of now. Currently, are not planning any substantial restructuring measures. But as I've said several times in previous meetings, if and when we see an opportunity that we can restructure with a good payback, we will do it. And the time is perfect now. We have done many things, which would have been very difficult under different circumstances. And as I said, depending on how the economy develops, depending on how our businesses, our companies develop, if there are opportunities to make some further optimizations, we definitely would do it. But as of now, we would not expect anything substantial. So much my summary of 2020 and I look forward together with Norbert and Michael Buppa to your questions. Thank you. And we will now begin the question and answer session. If you have a question for our speakers, please press 0 and 1, and your telephone keypad now turn to the queue. Once your name has been announced, you can ask a question. If you find your question is answered before the future to speak, you can dial 02 to cancel your question. If you're using speaker equipment today, please press lift the handset before making your selection. One moment please for the first question. The first question we've received is from Sven Bayer, UBS. Your line is now open. Yes, good morning and thanks for taking my questions. The first ones are on the 2021 outlook that you've just provided. And specifically, I mean, you said H1 likely stable and then post COVID-nineteen, you would clearly see some activity there. So I mean, if everything goes as expected on the vaccinations, I would assume that post COVID then refers to the second half? That would be the first question. Yes, in principle, yes. Yeah. Okay. Got you. And then the second one on the 2021 outlook. I mean, just said sales will be down slightly. So if I take your comment with the 7.5% margin, it sounds like down maybe around about 5%. I was just wondering in terms of the flat adjusted EBIT, right? Yes, you have some headwind maybe from lower top line, but on the other hand, you should have savings at Schuller already. You expect the service business to recover, which should be high margin. So is it the flat EBIT more to be also a bit cautious and mindful about maybe some challenges on the pulp execution and lower temporary cost savings compared to last year? Is that the reason behind it? Yes, I think that definitely is. Mean, the challenge with last year we had windfall advantages, which to a very small extent would still be in place in 2021, for example, short work weeks in Germany, but that's more or less the exception. Not much more we can count on. Obviously, we have reduced workforce quite substantially on a permanent basis. But will that be sufficient to fully compensate this disappearing onetime effects like travel, for example. I mean, let's not forget and let's be realistic. We have hundreds of salespeople who just wait for the airport to open to rush to the airport and fly somewhere because that's how they have lived for many years. And to a certain extent, we need that. But to a certain extent, we definitely want to change certain things. And all that, I think, I would not want to bet the farm on things that are under development, I would say. And again, it's I think it's very difficult to really anticipate how the world will be in summer after, let's say, substantial part of vaccinations in the developed world have been executed or done. I mean, are saying as long as the world is not vaccinated, there will be enough complications continuing. So I think it's too early. I mean, when I said what we did in March, I think we made many good assumptions. But the one assumption that was not correct was that we thought Q4 twenty twenty will be very quick, very fast on the way back to normal, which definitely was not the case. It was not I mean, the companies had adjusted to the circumstances, so not all businesses had disappeared by far not. But are we back in normal? And will we back into normal in Q4? Definitely not. And are we back to normal now? Definitely not. So I think we need to continue to be on the cautious side. It's I think it's a balanced guidance, I would say. It's not overly conservative. It's not overly aggressive. It's, I think, as good as we see it today and as we feel comfortable to share it with you. Yes. I mean, that makes sense. And I guess you could still update them later this year. The other two follow ups I had was on the midterm outlook. So appreciate the upgrade here. I was just wondering on the Pulp and Paper side, as we all know, Valmet has a 10% to 12% target. I was just curious, I mean, I think I understand your approach more that you take one step at a time and don't make or provide too big ranges. But how do you think about the possibility reaching up to 12% margin in pulp business in the long term? So should we take your approach really, we make one step up now and then think about that later? Or how should we look at that? First of all, I will pass on your question to my two colleagues on the executive portal responsible for Pulp and Paper. I am asking them the same question. But I think we also have we need to stay realistic. I mean, this is a business even if it's 50% capital and 50% service as it used to be in the when the capital was not that high, yeah, as it was in 2020. For such a business to be sustainably double digit, even if it's only 10% or 11% is already a quite a big achievement. Is it realistic to say we want to sustainably 12%? I don't know. But obviously, if Walnut achieves that, for sure, we will try to achieve that, yeah. Understood. And then the other question I had on the midterm guidance is if I take the midpoint of your margin targets for the divisions, right, and apply them to last year's revenues, I mean, get to a group margin of roundabout 9% and that would be 9.5% at the high end, 8.5% at the low end. But I understand your group margin target is still roughly 8%. So how should I look at that, the assumptions behind that? Would either Michael can answer the question. I have not done this math and the consequences that we are more concentrating on really getting the four business areas to the levels that we have indicated and whatever the result of that is. And obviously, a lot depends on metals. I mean, is the challenge. I'm confident that we are we have sized it to a breakeven level unless there automotive industry again stops buying anything or something like that. But under reasonably normal circumstances, it definitely we should have we should breakeven under the given under this current volume. So with some increase in volume, we should be more profitable. And also we are still working on making it even at this level somewhat more profitable. But to bring it up to 7%, 8% is a challenge and that will definitely take two years. And that has the biggest impact on group profitability obviously. In Editor, may ask that when you give this very, let's say, demanding group division, you have to realize that not all will make it to the top. And when you then do the math and you have a slight reserve in, then you come somewhere to the 8%, which we see for the whole group. Yes. In other words, not all will make it to the top in the same here. Understood. And go ahead, Sven. Yes, sorry for interrupting. Was just wondering, I mean, on Schuller, you talked about the new structure of clients, right? More BEV, more battery. I mean, is there a margin difference to the traditional Schuller business there? Or it doesn't really change the mix for you? It does not really change the mix. It definitely is not worse regarding margin than the standard business. Schuller has good technology and a good position there. Okay. And then the very final one is just on ESG. I think you were intending to launch a more fully fledged ESG strategy in the first half. Is that the intention to do that still? Or has that changed? Yes. I think in Q2, we will launch something. But again, Robert, last answer was so good. Maybe I pass on this question to you also. We are definitely planning to come out with this clear targets in the second half and to include it into our group's reporting strategy. Wolfgang, just as a remark, we should leave in five minutes because then we have the press conference. Okay. Maybe Maybe we can they can wait maybe a few more minutes. But okay, let's see how many questions are. Let's get to the next question. Yes. We have our next question. It is from Andreas Willi of JPMorgan. Please go ahead. Your line is now open. Yes. Good morning, everybody. I will keep it short. You gave a lot of comments around margin progression for the next few years. Would you expect Hydro to already be in the target in 'twenty one? And the second question on acquisitions, you mentioned separation. How do you assess the current market in terms of attractiveness of valuations and targets that are out there to do some add on M and A? With regard to the first question, Hydro 8% already this year, I would not bet on it. I think it's they have mixed backlog think, because the competition has been quite tough last few years for new orders. So hopefully, it's above 7%, but whether the 8% can be reached, I would not would not commit to that. M and A, we have announced a small acquisition in December, I think, La Roche, which is a very good fit for us both for the nonwoven side and for textile recycling, which will be a very good market next few years, we think. Other than that, prices are very high. We have been participating in one auction, and we were coming out low in valuation. So obviously, there's a lot of market a lot of money in the market and many funds need to invest something. So for an industrial investor who has to be rational and has to look after his balance sheet and leverage. It's complicated, difficult. But as always, we are looking at several smaller things. And with Clariums continuing to develop very favorably, I think we get slowly also appetite for some larger projects if and when they would arise. Thank you very much. Next question? The next question is from Sveldsjang Ower of Commerzbank. Your line is now open. Yes, good morning. Thanks for taking my questions. The first one is again on the framework for the fiscal twenty twenty one guidance and also then linking it back to the increased margin target at Pulp and Paper and separation. Can you give us a sense how quickly those improvements would come through? So the question I really have is that Pulp and Paper would expect would be better, a, order backlog and b, sorry, at least book to bill being positive still. And then also with the service coming back rather a margin improvement for separation that might be kind of as good as it gets? And then for Metals, just quickly, I think on the quarter three call, you said you would expect that one to two percentage points higher year on year in 2021 over 2020. Is that still the framework? And yes, let's leave it there. Yes. I think both Pulp and Paper and separation certainly have a chance to not only stay within their new ranges, but get towards the in the direction of the upper end of their ranges also already in 2021. It's not the official guidance, but no reason to say that they don't have any chance to reach that. And the second question, with this one or two percentage points, please, I didn't understand. I think on the quarter three call, you said that for Metals and with the expected savings coming through from the layoffs that you would expect the margin to improve by about 100 to 200 basis points year on year. Is that still the framework that you would feel comfortable with for 'twenty one? Basically, yes. Yes, basically, yes. Yes, yes. Okay. The very last one, if I may, on the hydro business. You said that sort of the competitive dynamics is hindering you in showing better margins. Can you be any more specific around that comment that you made earlier? No, it was not the competitive well, it was not the dynamic, the competitive dynamics. What I wanted to say is if there are three companies and one company has a substantially higher profitability than the other two, there are different explanations. One is that this one company is so much better than the other two, which in the long run usually is not always the case. Or it says that it's you're already on a relatively high level of profitability compared to what the market offers in terms of profitability. And therefore, you should be cautious of asking for too high or communicating too high margin goals. Okay. That makes sense. As far as we know, we are substantially more profitable than our two main competitors. That's just a fact and that has some impact on what we feel comfortable to say what we can achieve. Okay. Couldn't agree more. Thank you. Thank you. The next question is from Daniel Lyon of Erste Group. Your line is now open. Please go ahead. Yes, good morning. Thanks for taking my question as well. I will take just one to save you time for the press conference. Can you give us a little bit more insight on the Metals division, especially automotive, of course, regarding the dynamics you might expect from the now increasing activity on the automotive field? By when would you expect this to be reflected in your order intake? And maybe just related to this, how are you doing currently in the B segment on the press markets? Have you gained ground there already? How is this developing? Thank you. Yes. We're doing very well on the B sector. Our JiaDong acquisition in China is doing very well, has shown good growth, good profitability. And we certainly hope for Schuler to have next 2021 a high order intake in 2020. Now it's too early to be confident that this can be achieved, but we see quite good projects on the battery side, but also in battery powered cars, but also on the battery sales side, but also on the conventional cars there are a few projects that might go ahead. So there is I think there is some reason to hope for some increase in order intake in 2021 for Schuler compared to 2020. But rather this would be a second half year topic, I guess. So first half year Yeah. Or or I would not I would not see any particular could be evenly spread around across the four quarters. Perfect. Thank you very much. Thank you. Thank you. And the last question is from Robert Davies of Morgan Stanley. Your line is now open. Thank you for taking my question. Just would like a little bit more color on the hydro business. I noticed you mentioned that the orders were bottoming out there. Just be curious what's going on in terms of your large hydro projects versus pumped storage and what underpins your confidence of maybe orders improving into 2021 and 2022? Thank you. Yes, there are several projects that have been also announced that larger projects. So I hesitate because I have been too optimistic with regard to timing of these projects over the last at least four quarters, I would say, or five quarters even. So I don't want to become not taken serious by you. But there are clearly several larger projects. Pump storage is active. We have booked one of which would ultimately be I think the largest pump storage plant in India or Alberta Bukka and Nochuna. In China, let's see whether we how we can compete against the local competition. So I think all we can say is that this should be the bottom in order intake that we've seen last year and the year before. And hopefully, we'll see somewhat more in order intake this year. Thank you. Mike, I think we Alen, unless you are I think you conclude then and finish. Okay. Sorry, everyone. Maybe I was talking too much, so we were a little bit short of time. Thank you very much for your questions. And if you have follow-up questions, please don't hesitate to contact one of three. And look forward to seeing you when we report Q1 results. Thanks everybody for joining. Thank you. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.