Earnings Call: H1 2018

Aug 2, 2018

Dear ladies and gentlemen, welcome to the Half Year Results 2018 of Andros 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 Wolfgang Greitner, CEO of Andreas AG, who will lead you through this conference. Please go ahead, sir. Thank you very much. Good morning, everybody. Welcome to our half year conference call. Overall, I think we are satisfied with the results we are showing in Q2 and also with the first full first half year. And obviously, especially satisfactory has been the order intake in Q2 with over €1,700,000,000 very high value. Now we have seen an increase since four quarterly results in order intake. And also looking backwards on this level, we last time, we exceeded €1,700,000,000 order intake in the quarter has been nearly three years ago. Sales have developed into, as expected, into the right direction compared to Q1 twenty eighteen, an increase. EBITA result and profitability overall are satisfactory. However, two big differences between the business areas with especially the one business area, meaning metals, certainly substantially too low compared to what we expect. And during the quarter, obviously, as you certainly have followed, we also have made a few acquisitions. I will not comment on the biggest one on Serium, which currently is under execution, and we expect that to close in the fourth quarter of this year. But to the smaller ones, I'll come back in a few minutes. If we move on to the presentation on Slide two. As said, group order intake by more than €1,700,000,000 is very favorable, particularly driven by Pulp and Paper. And within Pulp and Paper, the main driving force has been green energy production orders, both based on biomass and on sewage sludge, but also on the recovery boilers for the pulp industry. Sales increased to nearly €1,500,000,000 so making good the shortfall of the first quarter. EBITDA in Q2 increased compared to Q2 twenty seventeen. If we adjust Q2 twenty seventeen for the one off effect from the sale of the Schuller Technology Center in China plus the sale of the real estate Schuller in Standard And South Germany, in the aggregate €25,000,000 Fiber, we have not been able to completely compensate the Q1 EBITDA shortfall. If you look at the business areas, operating based by excellent profitability, hyper and separation, good and stable profitability and as already mentioned, weak performance of metals. Obviously, with our peak order intake, we also have been able to increase the order backlog. On Slide three, the details. Order intake on the left side. Q2 year to year, plus forty three percent and first half year, plus 18%. If you look at the business areas on the upper right hand side, you see that in Q2, but also for H1, across all four business areas, we have seen an increase of order intake. Order intake by region, maybe the worth to mention is that China, the share of China has gone up from 15% to 21. And the share of North America, despite the split of Trump's efforts to invigorate economic activity, went down from 23% to 15%. Overall, we certainly are satisfied with the split between the developed markets and emerging markets, which basically is half half, which we think is a very healthy split, avoiding any substantial dependence on any one of the regions. On Slide four, earned sales, increase of 6% in Q2, practically compensating the minus 7% from Q1. So overall, we are minus 1%. We see quarter to quarter an increase in practically all of the business areas for the first half year, a slight decline in metals. Similar picture on the geographic split with North America still being higher in sales, the share of sales of 20% and China still at 14%, which obviously will be changed as the orders are being going to be executed over the next one to two years. Slide five, earnings development for the quarter. Year on year, overall, minus 14%. However, after adjusting for the €25,000,000 one off in last year, we are plus 9%. Profitability wise, excluding the one off event, from 6.2% last year to 6.4%, including its 7.9%, down to 6.4%. Slide six, first half year. Also after adjusting for the one off event last year, we are still minus 9% compared to last year, basically caused by the low profitability of metals in this year from 6.6% to 6% or 7.5% to 6%. On Slide seven, once again, the business areas. First half year for hydro, stable development, practically unchanged. Pulp and paper, excellent development from 8.5% to 9.2%. Clearly, we have been able to finish and finally turn over a few larger contracts, and therefore, profitability has been exceptionally high in the first half of this year, both in absolute terms but also in relative terms. Metals, as already explained, negative development, very low profitability, 2.4% after 5.3% last first half last year after already adjusting for the €25,000,000 We will come back to that in somewhat more detail. And separation, stable development. Typically, the second half of the year is substantially higher in sales, and therefore, we are still confident that we can slightly improve profitability of separation until year end. Slide eight, improved order backlog, as I said, increased based on book and bill ratio, typical picture with hydro accounting for about 40% of our backlog. Slide nine, some more detailed numbers. If I comment briefly on the boxes that you find on the left side, Financial result is down from plus €3,500,000 last year to minus €10,000,000 Basically, the difference is evenly split between lower average, less than net liquidity, as you see it further down, Then a substantial lower substantially lower interest rate in Brazil, where we used a substantially high cash or liquidity drop in been in the range of 500 basis points. And the third one is interest expense for the bond for the short term Dalai that we have issued in June, which obviously, for the first half of this year, has come on top of the interest payments that we so far have been paying. So all three of them typically contribute to the same extent to the decline in the financial results. Then the cash flow from plus €81,000,000,000 to minus €101,000,000,000 it's about €45,000,000 of that due to the decrease in the earnings in EBT and about €221,000,000 as a consequence of change in net working capital. If we go down to the bottom box, increase in net working capital from minus €120,000,000 to plus 90,000,000 so a total of €210,000,000 About €100,000,000 of that is due to an increase in inventory and especially work in progress in connection with contracts that are accounted for with a completed contract method and about €100,000,000 or slightly more, are caused by an increase of POC receivablesdecline in POC payables. So all factors went into the wrong direction, which caused a substantial increase of net working capital, which, as we have discussed, I think, last time already, has become a focus of our analysis of our activities. We have started several projects to manage net working capital in a better and more stringent way. And we hope that in the next two to three quarters, we can show some improvement there. Also, a certain element of that will take longer when payment terms are converting into sales. Net liquidity is down from $817,000,000 to €569,000,000 consequence of lower customer advanced payments as well as with some cost outflows, which have been reserved for already in the cost provisions. But obviously, once they become or have to be paid, have a negative result on the net liquidity. So now to Page nine. We then move on to the business areas, Slide 10. Hydro, still unchanged. So the yard project, tough competition. We see also larger projects under development. However, this will take several quarters, not to say years, until the majority of those projects will be actually will go forward and will result in actual bookings of electrical and mechanical equipment. Pumps continue to be so good project activity. As we have seen also today, we have announced the order intake for in the range of about $120,000,000 for a very large rebuild of hydro power plant in Tajikistan, going to be the biggest hydro power plant in Central Asia. This has not been booked in Q2 but will be most likely be booked in Q3 of this year. On Slide 11, you'll see the numbers for Hydro. The order intake was €753,000,000 for the first half of this year, substantially up also, as you remember, up from a very low level last year. So with the €750,000,000 we are, I would say, at a reasonable level, but certainly could also still be higher. Sales are practically unchanged, and profitability is also practically unchanged. Slide 12, Pulp and Paper. Good first year project activity, as I said, especially in renewable energy, in biomass, in sewage sludge and in recovery for us for pulp mills. Paper markets, reasonable activity, also not really dramatically high. And from a competitive standpoint, stable situation. Large projects are definitely very competitive and fought for. But overall price level, I think, is reasonable. On Slide 13, the numbers. Order intake, euros 1,180,000,000.00 for the first half year, up 5%. In sales, up by 2%, especially with sales from service. And profitability, as I said, due to certain release of cost provisions, excellent profitability with 9.2%. Slide 14, Metals. Metal forming, good project activity. We are very happy that we've been able to book three Asian orders for forming lines or price lines for the automotive industry. For the new automotive industry, continue to see good development of Yadong in China metals processing. In principle, low project activity. However, there are certain projects. And due to this low project activity, obviously, a very tough market with regard to pricing, where we definitely have to if we want to book an order, we definitely have to make compromises with regard to pricing and gross margins related to such projects. Slide 15. Order intake up, substantially up in Q2. And this comes predominantly from metal forming but also metals processing, was able to increase the order intake. Sales are down by 6%, especially in the metal forming sector with sugar and EBITDA. EBITDA, substantially down. Main reasons are cost overruns on some projects and also low gross margin already when we book the orders, which are not being turned into sales. And so that's all that leads to the decline, which obviously is less than shown here if you deduct the 25,000,000 from the comparative figures from last year, but still, it is in the decline and definitely is something that we are concentrating on. And we are looking into the need to further increase our capacities in Asia to follow the project activity there, which means that we will continue to gradually reduce capacities in Europe, into Germany. We're in the process of analyzing that. It's we do not currently we have no plan yet. But currently, we do not expect any dramatic restructuring costs. Current expected, but that's definitely preliminary. I would say the cost of such capacity adjustments could be in the teens. And but we will as most likely, when we hear from each other for Q3, we definitely will have better understanding of what our plans are and what the related costs of our current estimate in the teens of millions of euros. Slide 16, separation. Continuing good project activity in mining minerals. Lithium is active, where we are very active and have a good position in Chile. Chemicals have become more active. Foods, slightly better project activity. Municipal, as I said, switch lodge is good. And competition is not our main problem, I would say. Market is big enough. On Slide 17, order intake is substantially up due to a large order for switch lodge drying, which is part of the separation and incineration, which is part of pulp and paper for Shanghai, which obviously is a very prestigious order apart from the fact that it adds substantial value to the order intake line. Sales are slightly up 5.8%. EBITDA and profitability were less unchanged as sales pick up further. That should also increase slightly over the second half of this year. To conclude, Slide 18, the outlook. Hydro, as we said, unchanged, now with the order intake of €120,000,000 to be most likely to be booked in Q3. And also for Q3, hydro order intake looks reasonably okay. But clearly, we continue with our capacity adjustments and do not expect a substantial pickup of project activity short term. Pulp and paper, good project activity. On the greenfield side, we continue to believe that there will be most likely one project based on press releases and confirmations that have been published by our customers, which would be in South America. Other announced projects most likely will not see their final go ahead with orders in this year, but obviously, there is a pipeline for next year. Metals, project activity in metal forming continues to be okay, to be good. So we hope to continue with the recent because for the impact in metal forming, we will adjust the capacities as discussed just a minute ago. And metals processing, no real change. We also do not see I mean the margin in for both parts of the metals business area will stay under pressure for the next several quarters. On the shoulder side because of these three orders for automotive price lines in Asia, where we are and basically, then we also optimizing the cost base, but that will only be visible to the full extent once we get the next orders for that. And in Metals Processing, due to the still low level of investment, pricing remains a big challenge, and therefore, the margins there will continue to be under pressure. Separation, good market activity, we are confident we will be above last year, both in order intake and sales and also in profitability. So that's my summary, and I look forward to your questions. Ladies and gentlemen, we will now begin our question and answer session. If you have a question for a speaker, please dial 01 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, The first question is from Jack O'Brien, Goldman Sachs. Your line is now open. Good morning and thanks for taking the question. First question is just on the outlook for 2018. You've mentioned you expect stable sales relative to 2017. Obviously, the first half is flat. But if we look at the order intake, it's up 18%. So do you think there's scope for actually revenues to increase in 2018? That's the first question. Yes. I guess we prefer to stay with a stable sales outlook. Some of the orders or many of these orders that we booked in the first half year are sizable, and that means that over the first two quarters, typically, into the three quarters, basically, it's engineering, which obviously doesn't add a lot to the sales. And just thinking about through the rest of the year, you mentioned hydro order intake through the third quarter looks okay sort of on preliminary level. Any other comments you could make by division on how you're expecting order intake through the rest of the year and tendering activity and so on? Yes. As I said, I think project activity is good, continues to be good. It's always difficult to say what will be our share of projects that are actually placed, the orders that are placed. Obviously, we had a very good Q2, which we certainly cannot multiply by four. And we also had a very good H1, which probably might strong And have 20. We expecting a reasonably good quarter order intake for the second half. And And just one follow-up, if I may, on the Metals division. Obviously, slightly more challenging there. Can you just give us a bit more color on these cost overruns and how long we should expect these to persist? Obviously, you've mentioned slightly lower margins on some of the new order wins and so on. But if we're thinking about some of the costs you're incurring, can you help us out there, please? The main factor the cost of runs have been a main factor for the part of metals, excluding Schuler. There have been some cost of runs in Schuler also, but mainly it was in the other part. This project has started up. Mean the plant has started up. It's running so far, it's running well. So hopefully, we know or we are we do not expect any more substantial surprises or any more substantial cost of wealth on this one project. It's a combination of surprisingly low sales in certain areas on the Schuler side, which we are confident but partially can be recovered in the second half. But clearly, the orders for these new markets have low margins. We have a plan to increase and improve these margins as we execute them, but obviously, we cannot yet that account for that in the POC sales that are currently underway. And most likely, to the full extent, will only be visible once we get the next orders in this regard. So I think there is some hope for the second half on the sugar side, metals processing. The other part, I would take into account the highly competitive pricing environment, I would be cautious on expecting too much of an improved improvement there. And perhaps just one final question on working capital. Obviously, quite a significant outflow given increase in inventories in Service business, and you talked through one or two things there. Would you expect we could see some reversal in that by year end? We have become increasingly, let's say, paid increasing attention to that issue, which has, I think, to be honest, has been undermanaged by ourselves. Certain parts of that, if they are managed more closely, could show results quite soon. Others will take one or three years until they are fully realized as these respective orders are being executed. It's not really a change payment terms that much. Maybe there's one or the other one that has somewhat delayed payment. But clearly, we are not incurring any payment risk from our customers. Everything is fully supported by bank guarantees or similar things or in Europe. But it's also that a combination of several developments, as I said, PLC receivables has gone up, POC payables has gone down. And also, completed contract side, this has gone up. I think we are in the final stages of defining a plan, what we want to do in this regard. I would hope that I definitely hope that this trend does not continue, but it's too early to comment to any specific goals. But it certainly has caught our attention, and we are working on that. The next question is from Sveng Baier, UBS. Yes. Good morning, Doctor. Leithner. Good morning. For taking my questions. First one is just quickly following up on the Metals comments you made because I think I remember last time in the call, you said that in the medium term, you would see kind of a 100 basis point dilution from what you've just mentioned. So last year, you had 6% margin. Does it mean that, let's say, in the medium term, this business should go back to 5%? Or should we assume that with the restructuring that you're also now doing that this could also go beyond this kind of 5% level? That would be the first question. Thank you. If you allow me to ask in a diplomatic way, it's probably or most likely based on our current expectation between the two numbers that you have mentioned. Good. The other thing I was wondering, you also said probably a bit challenging to take first half times two. But I mean, given that I understand you that you think the Irelco project is going to be awarded still this year. So is that a common challenge that without winning that project? But with winning it, it would be easier, obviously? I mean, as you know, we always need some large orders to fulfill our basic order level. So I would not want to exempt or exclude any specific project from a forecast. But obviously, if we would end up getting 100% of the Arauco project, which so far, nothing indicates that. So we have no reason to see more than 50% to see more than 50% probability. Or actually, maybe less because, obviously, it's there's also probability it would be split. And then the question of how should we get taking your theoretical, if you would get all of our ALCOP, then obviously, I would be more optimistic on the H1 times two. Okay. But without it's yes, as you said, a bit more challenging. Okay. And then you also said there are a few projects, obviously, coming in the next couple of quarters. So would you say that's then more loaded to the first half of next year, those decision makings? And how many projects do you think we talk in total on the greenfield side? I would not see them I mean, it must be I don't want to communicate my personal subjective assessment client announcements or customer announcements, so that would be inappropriate. So I would see them split over the full year. And I would not I'm not saying that we are very close that more projects would go ahead, if not this year, than in the first quarter of next year. I would not say that. Think it's even this year. And maybe as a follow-up, I mean, the more base kind of business, refurbishment business on the parts side, are you also seeing that maybe clients are delaying this at the moment because they are so busy and highly utilized that they just can't afford any downtime? So does that mean there is still a bit of a tailwind once the situation normalizes? Or what's your perception? No, I don't think that's the case. I think the other way around. Obviously, we have an excellent situation on the pulp side with, for the next two years, no new capacity coming on stream on short fiber. With Susana or Fibria, VirTra will take over. We have now with 11,000,000,000 to 12,000,000,000 tons, by far a leading market leader, which and together with the ABB Group with 7,000,000 tons, these two are really having a very strong position. And so I would say the expectation that the pulp price stays at reasonable level, not as high as today, but at attractive levels, is very high. It's driven, to a large extent, also by the limitations of wet paper imports into China so that Chinese paper producers are very anxious about securing their raw material base. We see a booming market in dissolving pulp, replacing cotton. So all that clearly is, I think, is a very good background for projects for the pulp industry. Maybe you should put my question slightly differently because what I really meant is there couldn't be your order intake even higher, but some clients are so highly utilized at the moment that they couldn't do any brownfields, let's say. Yes, brown, yes. But these are even the also large brownfield is takes one to two years. Yes. Obviously, they currently are producing as much as they can. So could that have an impact, a negative impact for us? Yes. But we rather see it may in the end than delay the finalization. But currently, we see many projects that are under development, under analysis, what could be done in expanding in adding a second line or similar things. So the current project activity certainly is not limited by lack of attention or lack of time to develop this project. In the end, it may be. But on the other hand, if the prices continue to be higher, the earlier you have the capacity running, it's usually the related shutdowns. And even the second line, the shutdown of the first line, if at all, is very short. And also, I mean, we have been doing very large refurbishments in Northern Europe, and the shutdowns have been very, very short because everything is being done to keep them as short as possible. I mean are you seeing yourself gaining a lot of market share? Because if I compare your results to Walmart, they have been quite weak in pulp for some time. So you have been doing quite a bit better than them for a couple of quarters now. So is that also your observation that you get a higher share of wallet? No, I don't think so. Okay. The last question from my side, if I may, was just more of a housekeeping because you mentioned some provision releases in pulp. On the other hand, we had some cost overruns in metals. So is it fair to assume that both is kind of a wash and doesn't really have an impact net net? Yes. Yes. Next question is from Andre Finke, HSBC. Yes, thanks for taking my questions. A few of them have been answered already. Maybe two follow ups on pulp. You mentioned the waste paper ban in China has been supportive of pulp prices, but did you also see domestic pulp production in China being becoming more of a topic on the back of that paper ban? And maybe likewise for Russia, think you indicated the last call, there's more political support for pulp production in Russia again. I mean Russia has always been political support to create more value added in Russia and not export rather than exporting wood, export pulp or export paper. So that has always been the case. Whether one or the other project goes ahead remains to be seen. In China, I don't think there will be more pulp projects. I think there will be maybe more investment on recent processing waste paper in outside China in the adjacent countries and import it then as pulp as market recycled pulp into China. There may be, as you've seen from the acquisition of Eldorado by Performance, this is Performance Parts of the APP Group, or Paper Performance, Paper Excellence of Paper Excellence, which is part of the APP Group in Brazil. So I think this type of investments, we'll see. There's also been an announcement that the Aprid Group has acquired a company in Brazil with the goal to build a second line or a new line there. Sensing has announced plans to do something there. So I think we will rather see a continuation of new pulp capacities, conventional pulp, but also dissolving pulp in Brazil, where there is still plenty of land available. And also, there has been under development plantations. So I think that supports the trend that we'll continue to see in these projects in Brazil gradually, maybe in other countries in South America. But I would not expect it's complicated. The expected headwinds in China. It's better to produce pulp where the wood is growing rather than shipping wood chips, which would be a reasonable requirement if you would want to produce pulp in China. Okay. And the second question also relates to China. You mentioned last time that or you received the order in Q3, I think, on pumped storage power plant, the reentry into the Chinese market. You sounded quite confident to see more orders in 2018 2019 than at the Q1 call. Is that still the case? Do you more activity in China and hydro? I would like to rephrase it. We hope to book something in China in the rest of the year, but we be to pump it in the way we expected. Okay. Very clear. And last question from us on M and A. You said, I think, the call that you would like to comment on a few Sorry, I forgot that. On the pipeline as well. Yes. So KLM, I think we have covered you. It's a very good fit into our Pulp and Paper aftermarket business. It's a high-tech product. It's a consumable. I think it has all the ingredients of fitting strategically to us. Obviously, the price, I would say, has been the full price. And the other acquisition we have announced is Dirtec. That may sound a little bit surprising to you. It's they are manufacturing machines, equipment to produce diapers, both baby diapers but also adult hygiene products. And it's a natural extension of what we are doing within Pulp and Paper already. Approximately €200,000,000 of sales, of our sales in pulp and paper, go into machines to produce nonwoven fabrics. And a substantial part of this nonwoven fabrics goes into the diaper production. So to be able to control or to benefit from now understanding the technology, not only the nonwoven production but also the following diaper production. We hope that we can provide additional value for this industry. We have acquired a small manufacturer in this industry with about $4,050,000,000 sales. But we think it has a good potential, and we hope to be able to develop it from there over the next several years. We acquired 70%. The management will stay on and stay shareholder with the 30%. Obviously, we've put in calls in place. But we think that is a very good addition to our pulp and paper business. The third one is a very small one, Loviviante, is the drying technology for tissue. It's something would like to discuss in detail. On the pipeline, obviously, the clear of acquisition, we are not particularly eager from a balance sheet standpoint to make another big acquisition very short term. So we contemplate definitely next several quarters on continuing to support Xerion to integrate them cautiously. There's barriers to overlap, but clearly, it needs to be integrated into our pulp and paper organization. It adds many locations. There's 28 manufacturing locations, which produce equipment but also service locations, which hopefully create some leverage with our existing paper business. So should you expect another acquisition of this size in the next few quarters, I would say the chances are very low. The next question is from Graham Phillips, Jefferies. Your line is now open. Yes, good morning. A couple of questions, please. First of all, just on paper and pulp. Can you talk a little bit about how much of the business you are focusing more around biomass and energy and sewage sludge collection and so on? Because clearly, that part of the market has got some very interesting dynamics around flu class sulfurization and so forth. Can you give us a flavor of how much the sales split or the order split between those two areas as opposed to paper and pulp is? And what the growth rates look like between the two? Yes. I mean the energy side, which also includes the recovery boilers for the pulp mills, so that's a a core of the pulp mill. But they can order all the complete energy side is probably about onethree of our order intake in the first half of this year was would fall into this energy category. And then have you specifically made a target to move more into energy as a complement of this business? Because clearly, I can see the synergies there. I mean it's under paper and pulp, but clearly, it's moving into a totally different market. No. I mean, technically, it's very similar. I think it's more driven by a very active market. For example, in the biomass side, Japan has we've been very successful in Japan after having booked the first order probably one or two years ago. And now we've booked one or the other consecutive orders. I think it's more driven by being successful and being able to increase our market share on this biomass side. And the sweet sludge Shanghai project is, I would say, a one off, but obviously, we are happy to have received this, again, this large switch plant. So definitely, we are not neither are we moving away from core pulp and paper into energy nor do we want do we specifically focus more attention, whatever, on this energy projects compared to pulp projects. I think we go after each and any of the projects that are accessible from a technical standpoint from a reference standpoint. And I would also not expect this share to first half of this year has been very active on the energy side. Are the margins in this area any different to the remaining twothree of the business in paper and pulp? No. If you're I mean, these are capital orders. Obviously, service part is substantially higher margin, but comparing to the other capital, divisions is the same. Okay. And then my second question was around Zerium. I know you said you didn't want to comment much more about it. But can you talk about how the business will be financed, how you're going to pay for it? And when we look at your net cash position, clearly, of this position relates to customer prepayments. What is your debt borrowing capacity? What would the sort of expectation for interest rates be once we assume the full cost of this goes into your balance sheet? Yes, we're going to pay cash. The cash purchase price is about €100,000,000 to $240,000,000 I guess. We're also going to look at the balance sheet there and optimize that. So clearly, our net cash position will go down. The asset side, we have POC receivables and weight loss of the 30%. So there is no concern. I'm not sure I understand either concern or your question. And last year, we have issued a bond or this short chain dalen, which you are probably familiar with, at 1.55%, 1.6%. So currently, we continue to see good interest rates being available. We would certainly plan to if we would raise additional money, go under the fixed interest side. And I think we would still be in this range. So if more liquidity would be needed, we are confident we could obtain that very competitive still very competitive interest Right. Okay. So you're paying €200,000,000 You're absorbing a lot of their debt to make up that EV figure that we were given. So they've obviously already got borrowings out there. And I guess my question is how does those interest rates as well compare to what you may be paying? Is there some scope for refinancing? Yes. Definitely, yes. Okay. Another question was around the hydro business. When we think about the 8.5% to 9% margin corridor, can we get to there with the current size of the business? Clearly, it's been shrinking over a number of years. Or do we have to think that, that is very, very much a long term number and we're not going to get there for a long time without another major round of restructuring? Because the employee level numbers I see are basically flat in this business. Yes, they are, but they are always influenced a lot by first of people hired for a specific construction site. So that is not an indication that we are not reducing our, let's say, engineering or execution people. So we are we definitely, I think, reduced that and I'll continue to reduce that. I would not discount yet the Onyx target because what we see is that we definitely need to besides having, to a large extent, adjusted, and I think we're in the final stages of these adjustments will be done next year. The capacity to that, we also see substantial potential to improve our order execution. We still have too many deviations. Now we have deviations both in the negative and in the positive side, which on a net effect is okay. But if you look at it from the level of our current, our cost estimations, our current is our good execution, that's clearly not sufficient. And we have started substantial reorganization. We also have made one or the other management change there, and we'll continue to do that. So there is substantial. If we succeed in maintaining our positive deviations but reducing our negative deviations, without being unrealistic, we will always see these deviations in large projects. But if we can reduce it to what I would call an acceptable level, then these margins that we have published as our goals still would be feasible. You. Obviously, this is a challenge. Would I bet that this will be achieved by the end of this year? No. But I think if all the measures are in place, hopefully, we can see an improvement of the current margin level. Okay. And just finally, you were very helpful in talking about why working capital and net cash was lower than expected. There was two other items, really, from the first and the second quarter. I can see the provision reversal on the cash flow statement, minus EUR 33,000,000 in the first quarter, minus EUR 25,000,000 in the second quarter. So almost another EUR 60,000,000 there. What is that exactly? And which divisions is this coming through on? Is this where you're actually physically paying cash for restructuring, removing people? Because obviously, it's a reduction in the profit. No, it's basically, it's project order related. So it's where you had to pay something out in the final completion of some projects or you've underestimated the cost? Yes, both where had to pay out something that has been provided for earlier quarters or where we have released provisions we have made in earlier quarters that which would have been booked as a on a liability side, but that reduced net working capital. And as that is being reversed and goes into profit, obviously, the net working capital would increase because the liability side would decline. Yes. I'm not talking about the numbers coming through the working capital line, I can see. But are these the new numbers in the top bit of the cash flow statement? And what's the guidance for the remainder of the year in that number? Because that still is quite been quite sizable in the first and second quarter. I don't think it will disappear, but I think Michael will get back to you on that. I will get back to you soon. Okay. Thanks, Michael. As there are no further questions, I would like to hand back to you, Mr. Leitner. Thank you very much, and we look forward to our next appointment in three months approximately. You. Ladies and gentlemen, thank you for your attendance. This conference has been concluded. You may disconnect.