Earnings Call: H1 2020

Jul 31, 2020

Dear ladies and gentlemen, welcome to the conference call of Answers AG. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Doctor. Wolfgang Leitner, CEO, who will lead you through its conference. Please go ahead, sir. Thank you very much. Good morning, everybody. Welcome to our Q2 conference call in special times and under special circumstances, I assume, for all of you or most of you. Before we go into the presentation, as always, a short general introduction for this second quarter. Overall, I think, ENRIGHT has gone through and also managed this crisis reasonably well. Obviously, we had some challenging conditions globally, starting in China, then moving to Europe and then moving to North America and especially also South America. Nevertheless, we achieved increase in sales, in operating results, in margin and also net income for this quarter. Obviously, this was a result of a very strong commitment and dedication of all our employees worldwide, who not only made sure that all the companies or subsidiaries, but also the construction sites on which we are working have been kept going under very difficult circumstances. At the same time, our staff has also committed to accept different cost reduction actions like short work weeks, reduction of vacation reserves. And for our larger management group, even pay cuts. Obviously, short work weeks also typically came with individual pay cuts. Altogether, enabled us to achieve the result for the second quarter as we have as we can show today. And for that, we owe a big thank you to all our 26,000 employees. As I said, sales profitability and net income are up in Q2 and also for the first half. However, order intake obviously was substantially impacted by the economic circumstances, while Pulp and Paper and separation have achieved a relatively solid order intake. Our Metals segment, meaning metals processing and metals forming Schuler, have been hit very hard by this weakness in their order intake. Hydro basically developed along the lines in the trend over the last years, rather difficult market circumstances continuing. Since we would not dare to bet on a very short term, very strong and sustained market recovery for Schuler, but also to a certain extent for Hydro, we will continue to adjust our cost structures in these segments. Our liquidity position continues to be very good, more than €1,500,000,000 gross cash, net cash positive. Also, our net working capital has increased somewhat due to the execution of these large orders. Cash flow has also been very good. So far, my summary comments. Now if I may take you through the presentation, beginning on Slide three. Again, order intake, 1,200,000,000.0 times four would result in €4,800,000,000 on an annual basis compared to more than €6,000,000,000 in one year, even €7,000,000,000 definitely is substantially below what we would like to see. And again, it was quite good in Pulp and Paper, supported by a boom in equipment to produce nonwoven materials. I will come back to that in more detail. This is related to the masks that obviously currently are booming globally to protect against COVID. We also saw good development in separation. Hydro continuously low order intake continuing low order intake and also low sales. But I still maintain hope for the second year. I will also come back to that. And metals definitely strongly hit both steel industry and automotive industry. Sales are at a good level, 1,700,000,000.0, strong increase in Pulp and Paper, thanks to the execution of these very large orders, which obviously have not only lower margin, but also lower value added because more is purchased from the outside. So therefore, that relatively high sales level does not translate directly into the full extent into profitability, but still very good profitability maintained. EBITDA margins are up. Again on the plus side, on the sunny side, Pulp and Paper and Separation. Metals with the problems, however, improved compared to Q1. And hydro earnings somewhat disappointing for second quarter. Hopefully, we can gradually improve that until year end. And we move on to Slide five. Order intake for the quarter, minus 42%. However, compared to a 2,000,000,000 order intake in Q2 twenty nineteen, which times four would be €8,000,000,000 which is substantially above what we can hope for in a sustainable level. So the minus 42% are exaggerated, but the €1,200,000,000 definitely are very low, as I have already explained. First half year, down 18% from €3,700,000,000 to still reasonably 3 and billion you see the share of the development both for the second quarter and for the half year across the business areas, not a single plus in need of the four business areas. Slide six. Quarterly development. Obviously, break compared to the strong very strong orders Q2 strong quarters Q2 and Q3 twenty nineteen. And on the right side, geographically split, no dramatic change. Maybe worth noting is emerging markets, and the other China with 15% share of order intake shows that China has had its dip in the first quarter and has recovered very quickly, not to the full extent and definitely not on the consumer level, but in our company, we have balanced the shortfall in work in the first two months of the year, definitely after one or two months already, and look forward to another good year in China for our Android company. Slide seven, sales, up 8% for the half year sorry, for the second quarter on the left side, you see an increase in the capital business. You also see a decrease from the service business, which may be somewhat surprising. But clearly, our service business has seen an effect of COVID due to the fact that many of the mills have been shut down or have been running at reduced rates, and that definitely has had an impact on especially the consumables, the variables, and that also will continue for another quarter. So many of the mill shutdowns have been postponed into the second half. The ones planned for the second half may be postponed into the first half of next year. So there will be a certain effect also on the service business, which typically is much more stable than our capital business. On Slide eight, service business in more details, you'll see on the lower left hand side, last four quarters, 2,600,000,000.0, good growth rate over the years. Overall, we are now at 37% of total sales for the aftermarket. And on the next Page nine, you see by business area. So Pulp and Paper has gone down to 41%. This is the consequence of substantial increase in capital sales from these larger orders that we have reported since beginning or middle of last year with the last one being awarded in the beginning of this year for UPM in Uruguay. Now the rest of the business areas, it's quite stable. Obviously, in Metals, Schuler is also definitely impacted on the service business because the automotive producers have shut down their production sites for one to two months, and there was zero service business, obviously. On Slide 10, order backlog slightly declining, but still at €7,400,000,000 a very comfortable level of backlog, which obviously helps us through the crisis. Slide 11. Q2 on the left side, EBITA from €95,000,000 to €104,000,000 plus 10% profitability, 6% to 6.3% and half year, slightly down, 177,000,000 to €174,000,000 and profitability, 5.8% to 5.5%. Metals is improved somewhat in the second quarter, remains to be seen whether that can be maintained. We hope so, but it's obviously currently a very difficult and difficult to gauge environment. Hydro profitability, as said, dropped also somewhat, both because of under absorption, which we are taking care of by reducing the workforce, continuing to reduce, but also some lower margin order separation continues to, with this good development, increasing step by step volume and profitability. Slide 12. You see Pulp and Vapor 9.6% in the second quarter, 9.2% in the first half year, continuing very good profitability. Metals, Q2 improved compared to Q1, but still slightly negative. Hydro, I must say disappointing, point 2%. If this is after nonoperating restructuring costs, if we would add that back in, it would probably add approximately 1.5, 1.6 percentage points to about 4.7%, 4.8% operating profitability on the EBITA level for the second quarter, which is still below what we have become used to, but obviously, substantially better than 3.2% last year. And separation, again, 8%, 8.4%. I would say it's a glimpse of midterm hope. I would not say that this will continue for the next few quarters, but the 6.5% for the first half year are definitely a good profitability and should be sustainable. For the next two or three pages, I will hand over to Norbert Nettensheimer, our CFO, who will take you through the bridges for net income and cash flow. Yes. Thank you very much for giving me the chance to present this. I'll start with EBITA in the bridge, 174,300,000.0. This is a number which you saw already on the previous slide. Going to the left, depreciation is nearly on the same level as last year with €84,300,000 coming to EBITDA of $258,000,000 which is also slightly below last year, same as EBITDAS. Going to the right from EBITDA, bridge to net income, the, let's say, only major deviation to previous year's first half is the IFRS three amortization, where we had in the last year €44,000,000 and in this year, euros 32,200,000.0, which is mostly driven the difference is mostly driven by the reduced depreciation or amortization on the Acthereum order backlog, which was pretty high in last year's first quarter after initial consolidation of Acthereum. So the other elements then are with regard to the numbers, pretty much on the level of last year. Also this first half, here, we had a slight number, a small number for impairment of goodwill. Last year, was a Schuler company, Abeba. This year, we had also in Schuller one operation where we had to take an impairment. This was for the Italian operation, Sarina, which is €4,700,000 leads to an EBIT of €137.4 which is above last year's level due to the lower IFRS amortization in the first half of this year. Also, financial results are a little bit lower or better than last year, lower net loss and better number in total, euros 18,400,000.0. Difference to last year is driven by lower interest expenses due to the reduction of the external financing volume by €350,000,000 compared to the first half year of last year. This is an EBITEBT of 190,000,000 higher than last year's first half year. And with, let's say, a calculated tax rate of 30%, which is a simple tax rate, taking it as an average rate here as a statistical number, leads us then to a net income of €83,300,000 higher than last year's number, 75,800,000.0. So overall, let's say, not very dramatic development, driven simply by the arithmetics out of the depreciation and the interest. Now I come to Page 14, which is the cash flow development of 100,000,000 in the first half year. Start with the EBT of 119,000,000 which you saw on the previous page already. Then you have the normal and regular elements, which are not cash elements in the EBT, not very different compared to last year's interest depreciation. In the provisions, we have a little bit of change compared to last year. Last year, we had a tailwind in the results from release of provisions this year. We have increased provisions of €12,500,000 which adds then to the EBT and bridge to cash flow. Cash flow then out of the P and L is €284,000,000 which is €40,000,000 better than last year's, mostly driven by this provisions element, which I explained before. And then bringing this, as I always say, over the target line to the cash account this year compared to last year is not that favorable as it was last year. Major difference is the change in working capital, which was which is this year negative, 138,300,000,000.0. I will tell you later a few elements on this. Last year, it was 82.1% positive. In detail, I would say, driven out of the regular POC order execution in major capital businesses. Last year, we had the first half year mostly new orders with major down payments, which accounted to a positive development in cash flow. This year, we had in the first quarter only the steel pit and towers as a major big order and had a lot of ongoing execution of orders, which led to a consumption of this down payment and consumption of cash the normal order execution cycle. The other elements are pretty close to last year's numbers so that we, at the end of this year, come to a €99,900,000 positive operational cash flow compared to this €270,000,000 last year. Yes, the reason, as I explained, is this swing of nearly €230,000,000 in working capital. The last element which I want to present to you is resulting from this cash flow development, the development in our net liquidity. Net liquidity is down by €39,000,000 and the same mostly driven by this working capital changes, as I said before. We had also in this number, which is to be mentioned here, exchange rate effect. So it's €64,000,000 reduction of our net of our liquidity simply due to the conversion of our Brazilian real cash positions into euro following the devaluation of the Brazilian real compared to the euro. So this leads at the end to this reduction of net liquidity of €39,000,000,000 as I said before. Generally, our cash position is further on very solid with more than €1,500,000,000 of liquid funds. And with a well financed company having, in addition to the liquidity, open credit lines, which are well available enough to run our business also in the future. So overall, very solid financial position further on. So far from my side, turning back to welcoming Leitham. Thank you very much. I can take you now quickly through the four business areas and then come to the outlook. Slide 17, Pulp and Paper. You see the numbers for the intake compared to the very high order intake in Q2 twenty nineteen is obviously down, but still a reasonable level. Half year also a good level. And margins are still very good, 9.2% for the half year, 9.6% for the second quarter. And as of that, we benefit a lot from the boom in nonwovens, where we have a very leading position in the raw material for this mask, for example. But our Italian company did a very good job in modifying the diaper for hygiene production line into a mask production line, which helped us in the beginning that we were able to produce 700,000 masks for our own usage. And as I said before, we have been able to sell more than 20 production lines. These are not huge numbers, but still sizable for the Italian company. But also if we this nonwoven part of our Pulp and Paper business this year will account for €350,000,000 plus order intake, so that's sizable for Pulp and Paper. It's a nice and profitable business, and we are very happy we have that. So much about Pulp and Paper. Metals, yes, I think it's we have in the second half in the second quarter, the results have slightly improved. We've taken substantial cost reduction measures, both temporary but also permanent ones. For the backlog, obviously, is declining. Sales have been lower than last year in the half year of minus 8%. And EBITDA, especially this is impacted by Schuller, which was positive last year and is negative in this year. And we see some hope that the second quarter with regards to order intake, obviously, we think it should be the bottom, but it really could be the bottom. But let's see, it's early to say, but I think there's some hope that it will improve somewhat, but it will remain difficult. It will remain on a low level, and it will require further cost adjustment, cost reduction over and above what we have planned and initiated and provided for middle of last year. On Slide 19, weak order intake. I repeat what I said in after the first quarter. We are still cautiously optimistic that the second half year twenty twenty should be substantially better in order intake compared to the first half year, but it is a difficult market. Electricity consumption has decreased. Electricity prices have decreased. Wind has come down now to $05 per kilowatt hour cost. So it would not require this high level of subsidies that so far have been the basis for the expansion there. All that certainly makes life for hydro not easier, but on the other hand, they are it's still the biggest renewable source of energy. It's the most stable one, and we certainly are confident that it will continue to be an important element of our portfolio and a profitable one also. But it will require some continuing downsizing to adjust for this lower order intake, which were at the sales level also declining but with a time gap of two, three years at least. So we will need to continue to adjust that. On Slide 20, separation. As I said, continuing good development. Order intake is slightly lower in the first half of this year compared to last year, but that was because we got a large order in the first half of last year. So I think all the numbers are in good shape. And we see good activity in China, for example, in the chemical industry. We see good activity overall in the environmental industry. We sell many waste for the sludge dryers. We have this synergy with boilers based on sludge and on biomass. So it's overall good development, and we continue to be and it has a very good risk profile with its many small orders, basically machines and maybe some dryers, which are a little bit more process oriented. But from a risk profile and the stability profile, a very attractive business area. So much to business areas and then the outlook on Slide 22. We expect a continuing good environment for pulp and paper, also not with its large number of very big greenfield projects. Obviously, it's not without problems. So the pulp prices have declined substantially because of the capacity increase. Don't forget, fiber consumption has been growing for tissue paper, it's been growing for packaging paper for board and obviously has suffered in printing, writing and newsprint, but also contribute this dissolving pulp going into viscose fiber replacing cotton continues to be quite active with some overcapacity not being visible. So that will slow down somewhat. And what I said is you said is nonwoven is continuing high investment activity. And from that standpoint, our acquisition of Tiotec, this company a few years ago in Italy has worked out very well. Service business will be impacted to a certain extent. Maybe something can be recovered in the second half, but it will be lower than last year. Metals, I don't think I need to repeat, continuing difficult environment, maybe the next second half slightly better, but definitely substantially below historic levels. '23, hydro. Again, continuing challenging market environment. Prices electricity prices don't help. Small hydropower, compact hydro is affected by that because they depend on electricity prices, obviously, and they have shorter term decision cycles. And as I have said, we still are confident we should have one or the other good news with regard to order intake in the second half of this year. In separation, satisfactory good development. And to conclude, Page 24, the outlook. We will continue with our restructuring. I think we have done a good job in the second quarter. Now the goal is to convert these very substantial temporary cost reductions into permanent cost reductions, permanent savings going forward. And for that, we have already established and are in the process of establishing, I would say, quite ambitious goals to get us in very good shape for the future for next year, especially and we will make certain provisions in the mid- to upper double digit million euro range probably in Q3, to get a part of that, to finance these reductions. It will be a basket across several business areas, but the majority obviously will be in Schuler, but also in the Metals P business, Processing business and also in the Hydro business, obviously also in general administration. We are not in a crisis, so we can definitely shift additional capacity into our development departments. We I think we have interesting projects going on, So that we should be well positioned for the future regardless when the recovery is in full force. The guidance for this year is we still have to caution it because, obviously, the assumption is that COVID effects are starting to gradually improve. If that would result in a second wave of complete lockdowns. Obviously, that would look different then. But assuming that we see a gradual improvement, we expect a slight decline in sales and stable profitability after all restructuring costs comparable to last year with an EBITA margin of approximately 5%. So much my guidance and the presentation and I look forward to your questions. Telephone keypad now to enter the queue. You. Once your name has been announced, you can ask a question. If you find your questions for answered before the turn to speak, you can dial 02 to cancel your question. And the first question received is from Sven Weier of UBS. The first one is on Pulp and Paper. And on the greenfield pipeline, I guess, officially, with the Metze order coming up, it's then maybe a little bit empty for the time being. But I was wondering what's going on beyond the obvious ones because we've been hearing stories about a new mill in Indonesia. And so maybe you can give us a little bit of a feeling about the activity that is maybe beyond the not so obvious ones in South America? That's the first one. Yes. I mean you are definitely right that we have seen a boom in greenfield or brownfield complete line investments. So substantial capacities have been added. Together with the overall shrinking economy, obviously, it's somewhat poisonous combination. So I guess we definitely do not count substantial greenfield orders this year and probably also next year, I would say, but this is not really analyzed. But this year, I don't think anything will be ordered. But there will be sizable rebuilds. And so together with the activity on the nonwoven side and on the biomass boiler side, Japan is still very active. It's still a good environment. I mean we have seen this big increase in these large greenfield orders. Obviously, this has been lower margin, has been also lower value added because of higher purchases. So we it will be the volume will be lower, but it will still be in good shape. And on the nonwoven side, you said this is going to be a €350,000,000 plus business this year. I mean what's normally the size of the business? The range of €200,000,000 I would say, roughly. Okay. Also, it is are seeing a year with $240,000,002 50,000,000 It can be a year below 200,000,000 also. And would you see that activity then more limited to this year then probably, yes? Or how sustainable would you see it? I think we on top of what this let's say, this impact of the COVID on the mask business and on the raw material business for this mask. I think we have with this with the product we have developed very quickly, we're the first one. I think we have a chance to also expand this business for the regular diapers, where we also have some good ideas. So I think that could also be some continuing growth area. The other question I had was on Nelis, right, which, as we all know, is being looked at by Violet. And I was just wondering about your relation to Nelis because Violet has said basically they don't buy directly from Naylor's. Naylor's directly sells to the pulp and paper companies, they say. I was just wondering if you had any relation to Naylor's on the supply side. And let's assume that we might be buying it, how easy is it to substitute? Substitute? So do you think there's enough other valve suppliers that you can choose from? And yes, maybe some thoughts on that topic. Would not be any problem. I don't want to say this is a commodity and there are 20 different suppliers, but there definitely are many other suppliers and it will not happen. And you know we Valmed, we are using many suppliers, both of Valmed and us, whether these are erection companies companies or whether these are fabricators in Finland or in Estonia or so there are many suppliers that are supplying and have been supplying for many years to both Valmet and us. So we are not in a war or not in a whatever, so would not have any effect. And do you source directly from them or at the moment or okay. The moment, we certainly buy from time to time from them, yes. Okay. And the last question is a slightly more long term structural question on the Hydro Service business. Because when we think about, obviously, now the impact of climate change, the droughts that we see in some areas of the world where probably the hydro plants are running on low water in other regions, like we've seen it in China now, heavy rain, high load. I mean how does this how do you see that working out for your hydro service business in the long term and your global positioning there? Do you see any impact of that? Service business you mean a negative or a positive or anything? Yes. Because I would think if you have areas with a lot of droughts, right, and the hydro basins run low water, don't run very highly, I guess the service intensity goes down, whereas maybe in other areas with heavy rain where the hydro plants are running at full power, you have maybe more service requirements. So I just wonder if you saw obviously, the drought phenomenon is not completely new, if you saw that usually having an impact on your business or not really? We always think about impact on the new business and the competition from wind and others. But I guess the service activity in hydro is also quite important for your earnings in hydro. So that would be a different story then now. I think the volatility of hydro power generation compared to wind power generation is still quite favorable, I would think. And our service business in hydro has been very good last year and continues to be good this year. So I would not see any new opportunities because of this more extreme climate changes, but I would also not see any negative impact. I mean, obviously, a low electricity price is not good for the Service business because the companies that are running hydropower ons, their cash flow is lower, and therefore, they are maybe a little bit more thrifty with regard to discretionary Service Works. But other than that, it's not and we had an increase in electricity, I think, at the beginning of the year, for example. So I think this is business as usual. I would not see any freight. I would also not see any new opportunities. I think the operating maintenance there would see definitely continuing opportunities where we, I think, have developed some nice software products, some remote management products. So as always, individually, there are many opportunities. So the maintenance schedules are relatively independent of the load of the plants? Sorry, the relative? The maintenance schedules or do the operators have kind of firm schedules where they do the maintenance anyhow independent of the load? I think it's maintenance is quite low. I think it's more refurbishment and that is driven by electricity prices both with regards to the cash flow that is available for that and that is the cash flow that you think you can make if you produce more electricity. But I think keep also in mind, when this hydro business area, we have our pump division that is also accounts for approximately 20% of hydro and that is completely different. So for pumps, for example, drought is very good because we are supplying, for example, these huge pumps, which look like a turbine. That's the reason we are in this business, like an auto turbine, pouring into China for their big projects, water from the South to the North. Again, there are always opportunities. And I think compared to the automotive industry in its current stage, has many opportunities. Understood. Thank you, Doctor. Leipner. And the next question we received is from Andre Singer of HSBC. I will also take them one by one. The first one is related to the capacity adjustments in metals and hydro. Maybe you can elaborate what kind of sustainable top line level you're looking at when adjusting your capacities because obviously this has come down from the initial plans in Schuler and probably also in hydro. I mean, obviously, we are working with certain scenarios on the sustained or let's say, the midterm expected volume level. We have, let's say, luxury that we are working on a backlog. So we but we don't want to waste time. So we obviously try to adjust our capacities relatively soon to the order intake, while we need to maintain certain capacities because we have to execute the orders. And depending on I think it's I think it was good to have this temporary reduction opportunities in most countries in the second quarter that gave us time to think about and analyze what is happening. I think the second quarter will be very important to decide whether the recovery will be relatively fast or whether it will be very slow. And our goal is to be and to have the size that we think we need to have for next year in time before or at the beginning of next year. So we our current plan is to really make adjustments that we end up thinking that they are necessary, and this will happen in next, I would say, two months. To the large extent this year, in countries like Germany, it will maybe take a few more months to get through all these formal requirements. But Goldy Store have the size, the capacity globally by the end of the year, which we feel comfortable with going to next year. And then we need to see what is happening. I mean, we keep our eyes open. And if necessary, we make an adjustment every month. Okay. But you're not prepared to give any kind of, let's say, range of potential top line? Think at least in Schuler's case, have provided, mean, I initially, I think you were looking for GBP 1,200,000,000.0, 1,300,000,000.0 at some stage, and this has probably come down to below GBP 1,000,000,000. But you're doing that on a constant basis, if I understand here. I think it's I mean, we still think that $1,200,000 $1,300,000 is a reasonable size for Schuler that should be achievable, but not under any market circumstances. And the capacity for Schuler, certainly we will plan much lower. I mean, the sales level for next year obviously is cushioned by backlog that we take into the beginning of next year, But we need to have an eye on the order intake that we will have until the end of this year. And that is, I would not say, up in the stars, but it's difficult to and doesn't make sense really to decide now. I think we need to we are monitoring the order intake obviously on a weekly basis globally and have, I think, a very good impression of the pulse of the economy globally. I don't think anybody would want to make a bet now for what will be the order intake in the next four or five months. Understood. You. That will have an important impact on our decision to which level we want to size the company. Okay, fair enough. Thank you. Then on the potential order awards in Hydro in the second half, you mentioned, I think you indicated that already in the first quarter. Generally, you, I think, talked about one or the other good news. Is it one big order we should look for? And what kind or is it a couple of smaller or medium sized ones? So what kind of magnitude would you envisage for the second half? I mean to make it clear, I have not said we have an order already, yes? So it is still hope. But obviously, we have reason to have this hope. And it would be in the very low triple digits. Okay. And then my next question relates to pulp, but just a follow-up your comments on Sven's questions as well. With regard to execution of the order backlog, lower margin, obviously, you mentioned also the issues with regard to services and some mills. How should we look into the current profitability in pulp and the speed of execution of backlog also of the larger projects? Because obviously, the margin is very, very high in the second quarter. The question is to which extent is it sustainable and to which extent you can continue to quickly execute the backlog as you obviously did in the second quarter? I think last time I said that I cannot guarantee that we can maintain the very high profitability level. Our share price dropped by 5%. So I'm not saying that again. But I think you should not over you should not put too much emphasis on the quarterly results. I think we are obviously doing our best and optimistic that we can maintain approximately the profitability level in Pulp and Paper, provided nothing dramatic happens on the overall economy. But it would be too much interpretation to say, well, this is in Q2 now. We have added a few percentage points and this is not what will continue forever. I think this is a regular volatility. Okay. But the sort of the quarterly revenue level with regard to executional backlog is very sustainable then for the next quarters. Is that a fair assumption? I don't want to give you a concrete guidance and conclude the noises. But I mean, these large projects are under full execution for the rest of this year, yes. Yes. Okay. And my last question really is on the M and A side and with regard to potential M and A pipeline and especially with regard to maybe inquiries from family companies. I mean when you acquired Schuller, you were talking about a network of family companies that approach you from time to time. I just wonder whether the current environment increased the or make the seven again? What do think about that? Yes. I mean, so far, nobody desperate has called me and asked me to come. He wants to give away his company. I think it's also too early. I mean the experience from 2009 has been that the recovery has come very at least the improvement of the atmosphere and the mood has come very quickly, and there were no emergency sales. Will it be different this time? I mean if you look at the stock exchanges, everybody thinks this is just very temporary and we are back to pre COVID levels. That obviously has an impact on family companies also. If situation stays a little bit more difficult and expected for another two quarters, maybe there are some opportunities here. I think currently, have the same problem as we had in 2009 that current year, obviously, is affected by many or many companies are affected by the current circumstances, but everybody says, okay, this year and next year will be normal. And do we want to bet on that? If it's a perfect company for what we're looking for, maybe. But if it's a company that fits well, but we can also live without, we probably would not want to take the risk. Okay. Very clear. Many thanks. And the next question received is from Daniel Lyon of Erste Group. Your line is now open sir. Please go ahead. Yes. Thank you for taking my questions as well. Good morning. I would like to follow-up a little bit on the restructuring. Could you maybe provide us a split on the provisions in this in all of the areas you're planning to restructure? And what kind of savings are you expecting next year on from these restructuring steps? Is this mainly related now to reduction reducing personal costs, or is this also organization wise? Maybe a little bit more color here. It obviously has to be a mixture of everything, of not only the workforce, but also the structure of the organization and also questioning certain units, certain locations. All that will be done. The better part, the biggest participant of this project will be Schuller, followed by Hydro and then followed by the others with some small numbers. And would you expect also some impairments? Or are there impairments already included in this figure that you mentioned or at least the range that Yes, we are you obviously checking it regularly. I think end of this year will be, how should I say, decisive whether there is something necessary or not. Currently, we don't foresee that. But again, it depends on how the next five months are developing. What do you see in terms of order dynamics, market dynamics broken down in the respective regions currently? I mean, China is quite active. Asia as a whole, I would say also. South America is dead more or less in terms of new projects. And North America, U. S. Has its difficulties because obviously there is the COVID problems are in full swing and still I think accelerating. And that certainly will have an impact on the level of new projects. And obviously, the restrictions on traveling do not play a big role on the order execution because you can do that by video and people have already been on-site or we have companies in this country. So I think we have done an excellent job in keeping the sites working. But to develop new projects is obviously with customers is obviously impacted and the appetite of customers to concentrate on new projects obviously is also limited. And everybody I think is waiting to see how next few months develop that will define what the budget will be for next year. And if that is clear, our customers and the employees of our customers will know what is their scope for activities beyond what has to be done on maintenance and consumables and variables. And that will be fine. And I think that is for this, we need to wait until we see a substantial pickup. But obviously, we hope that Q2 has been a bottom, but I would say it's a mixture of hope and some good reasons to think that also. But again, a lot of that is hope. At least that's what most of the market participants expect for the time being. It's important in many aspects. Maybe coming back as a follow-up to this restructuring, would it be fair to assume some maybe half of the provisions that you take as a permanent cost savings from next year on? Sorry, you didn't answer the question for the savings. I mean this is, in essence, an adjustment to a lower volume, but it is also an activity to get rid of under absorption, under utilization in the current performance. Obviously, we have in Schuler, we have we are incurring under absorption because we have lower capacity and the same to much electric plants that still applies also to hydro. So if we get rid of that, obviously, the underlying, let's say, operating profitability is somewhat higher than what we can show today because we have this under absorption issue. Okay. I understand. Okay, perfect. Thank you very much. As we receive no further questions, I hand back to Doctor. Leiter for closing remarks. Thank you very much. Nothing more to say, and I look forward to talk to you in about three months. Thank you.