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BE Semiconductor Industries NV
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Good morning, good afternoon, ladies and gentlemen, and welcome to Besi's quarterly conference call and audio webcast to discuss the company's 2019 fourth quarter and annual results. You can log into the audio webcast via Besi's website, www.besi.com.Joining us today are Mr. Richard Blickman, Chief Executive Officer; and Mr. Cor te Hennepe, Senior Vice President, Finance; and Ms. Hetwig van Kerkhof, Senior Vice President, Finance. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part, without written permission from the company.I would now like to turn the call over to Mr. Richard Blickman. Go ahead, please sir.
Thank you. Thank you all for joining us today. We will begin by making a few comments in connection with the press release we issued earlier today and then take your questions. I would like to remind you that some of the comments made during this call and some of the answers in response to your questions by management may contain forward-looking statements. Such statements may involve uncertainties and risks as described in the earnings release and other reports filed with the AFM.For today's call, we'd like to review the key highlights for our fourth quarter and year-end December 31, 2019, and also update you on the market, our strategy and outlook. Before we begin, I'd like to announce that Cor te Hennepe will retire from Besi this June after 18 years of service. Cor has been a solid and valued member of the Besi management team, and we will miss his wisdom and service. Cor has been a solid and valued member of the Besi team. And as I mentioned before -- my apologies, the sentence was duplicated. Replacing Cor as SVP Finance effective on March 1 will be Hetwig van Kerkhof, who certainly currently serves as Director of Internal Control and Secretary of the Board and has held various senior positions within our finance department over the past 24 years.First, some overall thoughts on our fourth quarter and annual results. Besi's fourth quarter results came in better than guidance in a market which started to emerge from the 2018/'19 down cycle. Revenue of EUR 92.4 million increased by 3% versus the third quarter and was at the high end of guidance due to better-than-anticipated shipments of die bonding systems for advanced logic and cloud server applications. Orders increased strongly by EUR 18.3 million or 22.3%, also driven by an increase in IDM bookings for advanced logic applications.Order intake from Chinese subcontractors remained solid, continuing their second half year '19 recovery versus the first half of the year. Net income of EUR 33.7 million grew by 75.5% versus the third quarter, due primarily to EUR 11.6 million of deferred tax benefits recognized at Besi Swiss operations associated with changes in Swiss fiscal policy. Excluding such benefits, net income increased by EUR 2.9 million or 15.1% versus the third quarter as gross margin and operating expense development were both better-than-anticipated.Similarly, net margins, excluding tax benefits, increased to 23.9% this quarter versus 21.4% in the third quarter and have been above 20% for the past 3 quarters. Against the backdrop of an industry downturn that persisted for most of 2019, Besi reported revenue in total of EUR 356.2 million and a net income of EUR 81.3 million, which represented decreases of 32% and 40%, respectively, versus 2018.Our revenue development was negatively influenced by supply-demand imbalances that began in the second quarter of 2018, and higher levels of customer uncertainty caused by global trade tensions, particularly during the second and third quarter last year. Besi's mobile and automotive end-user markets were most adversely affected by the downturn this past year. Despite market headwinds, Besi achieved strong levels of profitability and efficiency in 2019 based on our market leadership position and timely reduction of personnel and overhead levels in alignment with our other trends. In addition, we adjusted our Asian production model in light of global trade tensions and increased development efforts in preparation for the next market up cycle.Furthermore, we realized quarterly gross margins in excess of 55% throughout the year, decreased baseline operating expenses to their lowest levels since 2015 and maintained higher levels of cash flow efficiency. Besi spares and service activities also helped provide some cushion to operating results. This less cyclical, high-margin business generated revenue equal to approximately 20% of consolidated revenue. As a result, operating income and operating margins in 2019 increased by EUR 34 million or 58.7% and 9.2%, respectively, versus the past industry downturn in 2015 on roughly comparable revenue levels. Such results underscore our performance improvement over the past 5 years.Besi ended 2019 with a solid liquidity base of EUR 408.4 million in cash and deposits after funding EUR 167.1 million of shareholder distributions during the year in the form of dividends and share repurchases. During the quarter, net cash grew by EUR 23.4 million sequentially to reach EUR 130.3 million.Cash flow from operations of EUR 36.3 million in Q4 2019 was used primarily to fund EUR 5.8 million of share repurchases and EUR 4.1 million of capitalized development spending. As a percentage of revenue, cash flow from operations was 33.7% in 2019, remaining at attractive levels due to a reduction of DSOs, day sales outstanding, and tight inventory controls. Besi's strong cash generation supports a shareholder-friendly capital allocation program. Since 2011, Besi has returned to investors a total of EUR 652.9 million. In 2019, share repurchase activity increased to EUR 44.7 million versus EUR 35.5 million in 2018. Repurchases were EUR 5.8 million in Q4. Treasury shares now equal 9.8% of total shares outstanding and are held to cover potential dilution from our convertible bonds and long-term incentive compensation plan. We intend to propose an increase in the authorization above the current 10% cap at Besi's April 30 AGM to facilitate future share repurchases. Management Board will also propose a cash dividend over 2019 equal to EUR 1.01 per share equal to a payout ratio of 90%.Next, I'd like to speak about the current market environment and Besi's R&D activities. VLSIresearch now estimates that the assembly equipment market declined by about 30.4% in 2019 to reach a cyclical low of EUR 3 billion in total. This reflects a much more negative outcome than previously forecasted and underlines the severity of the 2018/'19 downturn in our market segment. Looking forward, VLSI expects the market to rebound in 2020 and 2021 with increases of 10.3% and 7.2%, respectively.Growth is expected to be driven primarily by 5G network expansion, artificial intelligence, the Internet of everything and innovations in packaging technology. Underlying this improved segment outlook, there was a pronounced and rapid change in market conditions in the fourth quarter last year, as is evidenced in the next chart. It appears that many of the factors contributing to the downturn, such as global trade tensions and supply-demand imbalances finally began to recede. The underpinnings of a recovery in the memory market also began to appear in the form of stabilizing prices and the normalization of supplier and end-market inventories.CapEx announcements by the leading mobile logic and memory players for 2020 also supports a more constructive sector outlook. Advanced packaging is now recognized by customers as a critical part of the value chain to supply semiconductor devices for the digital society. Besi has significantly invested in customer-focused R&D over the past many years to support such IDM device roadmaps for the next investment round. Specifically, we are currently developing die bonding and packaging solutions for smaller, highly complex and feature-packed 5G compatible smartphones with capabilities such as micro LED screens, 5G antennas, front-, back-facing cameras, multiple camera modules and enhanced 3D sensing and facial recognition features.We're also investing in the next-generation of hybrid bonding systems to facilitate wafer-level bonding, integrating multiple devices at geometries as small as 7 nanometers. Another area of current focus is the introduction of high-volume TCB systems for advanced memory and logic applications.Now a few words about our guidance. For the first quarter 2020, Besi estimates that revenue will be equal to the fourth quarter last year, plus or minus 10%. The impact of the coronavirus on our Q1 shipments, order patterns and supply chain activities is difficult to assess at present, as the situation continues to evolve post the extended Chinese New Year. As such, we've expanded our revenue guidance range for the quarter. To put things in perspective, our China revenue exposure was about 31% of the total revenue in 2019. But that's composed of both foreign IDMs and domestic Chinese subcontractors. Same holds true for our Chinese suppliers, most of whom are outside the affected provinces. Manufacturing operations in Leshan are also outside the most effected provinces and remain open and staffed. All that being said, there are still some Chinese customers and suppliers which are not fully operational, and it is too early to say whether or not this will cause disruption in delivery schedules and/or the receipt of orders to influence Q1 results.The current outlook is our best estimate we have at this moment. Based on the current revenue guidance, we forecast gross margins in the range of 54% to 56%, Q1 operating expenses are to grow by approximately 35% to 40% versus the fourth quarter. Growth is due primarily to approximately EUR 7 million of share-based compensation expense. Baseline operating expenses are expected to grow between 10% and 15%, sequentially from EUR 23.7 million in Q4 due to higher development spending and sales- and service-related expenses. And finally, we estimate 2020 effective tax rate of 12% to 15%, and capital spending between EUR 4 million and EUR 5 million.In summary, Besi has emerged from each of the past 4 down cycles, a stronger company with increased revenue, market share and profit potential. We are optimistic about 2020 and the next investment cycle despite near-term uncertainties. Our optimism is supported by long-term secular growth drivers for the advanced packaging segment of the assembly equipment market in particular. We have a leading position in this area, which is an important enabler for the digital society and the new applications to be generated along with it. In combination with new strategic initiatives, a highly scalable and flexible production model and ample liquidity, we are well positioned to take advantage of industry opportunities, no matter which way the market moves in the quarters to come. That ends my prepared remarks. I would like to call -- to open the call for some questions. Operator?
[Operator Instructions] The first question is from Mr. Peter Olofsen, Kepler Cheuvreux.
Gentlemen, my first question is on the revenue guidance. It's flat sequentially, but on a year-on-year basis, it suggests that the business is growing again. At the midpoint, it's like a 14% growth versus Q1 last year. Could you may be shed some light on which end markets or applications are driving that year-on-year growth? Or is it rather broad-based?
Well, it's primarily -- it's primarily, again, the high-end logic market. And in addition, also coming up high-end smartphones, again. Still, automotive is relatively stable.
Okay. That's helpful. And then to clarify what you said on the situation in China. So your Leshan operations are running like normal? Is that what you basically were saying?
Yes, the situation is as follows. Everyone is back to work. We have only one person which is currently not able to work. There are 4 more who have a normal holiday leave. So operations are back to normal. What is uncertain today is the delivery of system to certain Chinese customers. Some have been delayed by 2 weeks, one by 4 weeks. So early March, we will know for certain whether we have all systems scheduled for shipments to be shipped or that some may be delayed till early April. It's not a matter of orders, it's a matter of shipments. In the supply chain, there are a few smaller issues, but not critical. That's the current situation.
Okay, that's very helpful. Then maybe on -- a question for Cor. So I understand that the effective tax rate for 2020 will be more or less what you had been guiding in the past as well. So the -- what you had in Switzerland was really a one-off and, therefore, not affecting the tax rate going forward?
No, there's hardly any effect. There is some effect based on the Swiss tax reform, the Swiss changed the fiscal system. Basically, they increased the statutory rate a bit. So the statutory rate will go up slightly. But as you can see in the guidance, not significantly. And then on the Swiss law, there's this, what they call, smoothing of this increase in tax that gives you the right to have offset certain reserves against future profits, that has a value. That value has to be recorded in our books, and that is a deferred tax asset of EUR 11.6 million that you saw recorded in the fourth quarter. That's where it comes from. So the 12% to 15% in generally, slightly higher than the 10% to 15% we said last year, but it's not a significant effect. And based on this deferred tax asset, the cash out will be on similar levels as last year.
Okay. That's fair. Then a question on operating expenses. In the press release, you mentioned that there were some higher consulting expenses related to the strategic plan review, is that basically a regular review? Or should we read more into this sentence?
No. Every 4 or 5 years, every cycle, we realign our strategy. So we have done that once again. It's an 11-weeks process, whereby we define more clearly, how we can execute in the best way from this -- from current perspective in the next cycle, and that is a onetime consultancy cost.
And is there any meaningful outcome that you may want to share?
Well, the outcome is, as we mentioned in some of the sentences, we are pretty confident as we always are on our prospects in the next cycle. But as always, we still have to prove that we are able to do that. But there are no changes, otherwise, we would have mentioned that. But currently, the advance team has significant opportunities in the years to come, ever more critical to the end products of our customers. So in order to sharpen our strategy as we have done in most cycles, that is a very sensible thing to do.
Okay. That's helpful. And then my last question is on your balance sheet, on your debt. In 2016, you issued a convertible, and you actually have the option to redeem this convertible later this year. Is there something you can share at this moment on your intentions, what you will do with this convertible?
Well, first of all, as we have shared at the issue of convertibles. We do that to safeguard our strategic developments going forward. And if you simply look at the opportunities in the coming years, certainly, our financial position allows us to investigate these opportunities and also to execute on these opportunities. So that's why we have raised close to EUR 300 million in the form of convertibles to be ready to do that. And as soon as those opportunities occur, we will share that with you.
The next question is from Mr. Wim Gille, ABN AMRO.
I have 2 small questions. First of all, in the press release, you mentioned that you adjusted the supply chain in Besi to reflect kind of geopolitical tensions. Can you give us a bit more granularity on what exactly you adjusted in the supply chain? That's my first question. And the second one, if you look at your revenues recorded in the year, down 32% versus VLSI down -- sorry, your revenue is down 32%, whereas VLSI is guiding that the market is down 30%. Is it -- are these 2 numbers comparable? Or are there mix effects taking place why these numbers should not be compared in a one-on-one relation?
Excellent. Well, the first question is about the supply chain, the adjustments we made last year to be well prepared for any effects, negative effects of the trade tensions. We have more clearly defined the product ranges we built in China, and we built in Malaysia. So China for China, and Malaysia for the rest of the world. In a similar way -- this is from a production of end products. In a similar way, we have done that for parts. And you can easily see that also, the effect of this corona has, let's say, a minimal effect on us because we have all capabilities in Malaysia. Malaysia is our main hub. And China is a satellite of Malaysia. So that all ties together in having a clear focus in both supply chains. On your second question, the answer is very simple. It's not an -- VLSI is not an exact science, our revenue is. So if you compare 2018 revenue levels with 2019, the delta, 32% and is an exact science. The estimation of the market by VLSI will certainly be corrected, either the overall markets will have declined somewhat more or maybe somewhat less. That's hard to understand because they are looking at the total market. So that's not directly comparable.
Very good. And then maybe as a follow-up on that last comment. Obviously, what Besi has done very well over the last cycles is basically to gain market share and to increase profitability in each of the downturns. How do you feel about your market share coming out of this downturn as we speak?
Well, if you look back over the past, let's say, 4 cycles, the past 10-plus years, we have always declined somewhat more in a down cycle, and we have gained significant share in up cycles. And that's because of an ongoing focus on the high-growth end products. So if all goes well, and we repeat our performance in previous cycles, you should see further market share gains in the next up cycle.
Your next question is from Mr. Nigel Van Putten, Kempen & Co.
My first question is on the high-end smartphones, the showing signs of life, as you alluded to in the prepared remarks. How should we think about seasonality into the second quarter of this year? Historically, of course, there's been a bit of a bump. How do you expect that to play out based on the current view?
Well, our feasibility is typically one quarter. And the fact that the fourth quarter increased by -- bookings increased by more than 20% compared to the third quarter is, let's say, an abnormality. Usually, the fourth quarter is still slow and the first quarter and typically the end of the first quarter shows the trend for the next year. So far, we are in an up cycle, which is impacted, of course, by this COVID-19. But the overall view and what you read daily is that, that should continue for 2020, same like the VLSI numbers we refer to, '20 is expected to be a growth year, maybe with some shift. But it's hard to tell today whether that COVID will cast a shadow or how far that shadow will be cast into the future quarters. But the underlying industry trend is a positive one. That's as much as I can say.
No, of course. Maybe in terms of specific applications or innovations that you see customer demand -- I understand it's difficult to clarify or to substantiate the actual numbers, but do you think that 2020 will be, as we have talked about in the past, one of the technology cycle, maybe in addition to the cyclical recovery?
Well, our message so far has been that in a similar pattern like 2015, '16, '17, it would be more likely that '21 would be a next potential peak. However, if you look at the VLSI data today, 20% growth in 2020 and single digit in 2021. If we look at the public information about high-end smartphone trends, it is expected more 2021 to be a stronger growth year than 2020. Within '20, some first or initial 5G capabilities, but that also may change. But that's what we see.
Understood. Question on another sector, automotive. I think it was Infineon announced last month that will start to use flip chip or at least widen the use of flip chip for power supply. Could you provide some color on what you expect with this market and their positioning?
Well, so far, automotive is, as we mentioned in -- also in a cyclical downturn correction. And gradually, we may see this year some recovery. There's an ongoing trend also in power for smaller devices, using different interconnect technologies, maybe flip chip, but only for a very small portion. But that's the current situation in automotive.
Okay. Last question, just a clarification. In the order book, the share of IDM is up and also the share of shipments to Asia is up quite significantly. So am I right to assume that these IDMs are based in the U.S. but have packaging facilities in Vietnam and other parts of Asia? That's sort of the underlying dynamic. Or am I missing a piece of the puzzle?
No. You're spot on. That's the trend for this period. So Europe is still slow, mostly automotive, U.S., both logic, high-end and also mobile Internet devices. And also, as we mentioned, Chinese subcontractors are expanding capacity, which they did in the third quarter, fourth quarter, continued in the first quarter. So that's the overall picture.
The next question is from Mr. Marc Hesselink, ING.
My first question is actually also on the IDM. Showing us a pretty strong uptick in the order intake in the fourth quarter and logically, we're a bit more cautious for the guidance for the first quarter. And just to translate those 2 things, it doesn't mean that those IDM orders are more longer term? Or is that -- is there something else behind that?
No. Your assessment is very right. IDMs, typically new technology, longer term. And the subcontractors are more the mature products and also capacity expansions. So a lot of the IDM is technology wise for next-generation products. But that's the picture.
Then also clarification that those kind of investments are also winning for a longer time, and maybe 1 strong quarter and then leveling up again, then winning for a few quarters, is that the typical picture?
For some, they do. And for some, it is first round and the second run might take some time. But you could say, on average, they are more solid structure than the subcontractor will have.
Okay. Great. Then my second question, a follow-up on the -- what you said about the recovered '19 [indiscernible] and your supply chains in Malaysia and China. Is that -- given that maybe there's some delay in the Chinese part, could it be the case that, therefore, some of your demand, which shifts then to Malaysia, that it could actually be a bit of an advantage for you given that your competitors are more and more China-based?
Well, that could be. But on the other hand, in these situations, and we've had that in the past, that's hard to forecast. We have -- as I answered to an earlier question, we have a very good infrastructure in Malaysia for all of our products, in China for most of our products, but we're focused on Chinese customers. And that's different with our competitors.
Okay. And final question is also a follow-up on the new applications, on visibility on that. So typically, in the second quarter is the big 1 for the smartphone market, and maybe now this year, even more work with 5G. Is that fair to assume that the -- in the second quarter running into the first quarter, do you indeed have that visibility, if it's going to be in the next smartphones and if you want that? Or is that not something you can say?
Well, that's a very good point. We should see, like we have seen in other up cycles. The trend is important in March, April, June, that is typically the time when those expansions are launched. And the question now is which we can't answer, will that be affected or not.
Next question is from Mr. Marcel Achterberg, KBC Securities.
The visibility on the March, June time frame and that you just said was questionable to Marc. And do you have any visibility on -- or sorry, let me rephrase that, do your clients offer you any visibility on that ramp up for the next cycle?
Well, our customers, and you can read that in all public disclosures, are very positive about 2020. So the underlying, as I mentioned, on -- both in the comments and to some answers. The underlying sentiment is very positive for 2020.
So if you would -- I mean, it's difficult, I understand that if you would exclude the whole coronavirus situation, then the underlying demand for back-end equipment or in general, semiconductors is in a normal seasonal upstream as it would in a normal upturn?
Yes. Yes. The only question is, will it be in 2014 or 2017. To what extent will this up cycle expand? That depends on global economy, it depends on technology rollouts, it depends on 5G. Some people, yes, are more cautious about the 5G rollout, simply because of the infrastructure constraints. So it takes a bit longer. But those are main elements.
All right. So the structure, the main items still stand despite the politics and the virus situation?
Yes. But that's very usual. Also, well I should mention is auto should come back. So once we fire on all drivers, then you can see the full extent of the next up cycle.
The next question is from Mr. Frédéric Yoboué, Bryan Garnier.
Can you hear me?
Yes.
Okay. Okay. So I noticed that, for my first question, I noticed that in your presentation deck, that VLSI reduced its forecasted assembly market growth in 2021 from 10% previously to 7.2%. So as you said, VLSI is not an exact science, but I would like to know if you can drive through the reasons for the change in their data? I'm also asking that question because considering that you previously shared the sentiment that 2021 was likely to be stronger than 2020 for Besi based on 5G and computing applications rollout. So is it still your view that 2021 should be -- or could be stronger than 2020?
Well, we still follow the logic that you always see up cycles over more than 4 quarters. They are usually patterns of 6 quarters, sometimes, which was in '17, '18, unusual 8 quarters. But take 6 quarters. That means that the peak of that cycle is beyond 2020. Also, if you look at the drivers, and you mentioned already, 5G as an important one. We should also consider -- yes, all the computing power and memory, et cetera, needed for AI. Some people look at an extended up cycle even beyond that. So in this sense, VLSI is conservative in their view. But again, they update their view very regularly. But important is to understand Besi has demonstrated, we can ramp very quickly, 60% revenue increase quarter-by-quarter. We also are able to ramp down quickly and remain similar margins. So as I always say, for us, it doesn't matter whether we have a stronger and a longer up cycle or not because the feasibility remains limited. And you can easily see that in how our customers share their developments with the market.
Okay. Okay. And so I have a second question. So my second question is a follow-up to the previous one on automotive. You seem to have a good visibility on the road map for smartphones and logic applications. In general, what is -- but in general, what is the visibility that you can have for the automotive market because some IDMs have announced an increase in their CapEx for 2020 to support future applications, and it seems to -- and it seems also that 2021 could be a strong year for automotive applications, especially coming from EV and ADAS? Do you have any visibility on the potential for assembly equipment and your opportunities in that sense? Any development ongoing or I don't know what kind of growth we can expect? If we can have more color on that, please.
Well, in a way, it's very interesting over many, many years. The revenue from automotive in our overall revenue is somewhere between 15% and 20%. Sometimes slightly above, but mostly within that bracket. And that also is reflecting the same pattern in automotive electronics versus, yes, the logic and memory and mobile Internet device trends. So as we said, it should -- if you continue to see the same trends, automotive should gradually return to growth again in 2020. And there have been CapEx levels announced reflecting that. And if all goes well, Besi should benefit from that.
Okay. Okay. And my last question, on your guidance. So the coronavirus outbreak is certainly the reason for the wider than usual range for the first quarter revenue guidance. But at the midrange of the guidance, would you say that it already includes also a negative impact from the outbreak? Or it is mostly reflected in the range? Yes, another way of asking the question is...
The simple answer, Frédéric, is when you see orders increase by 20% in Q4. That always guides revenue increase in the quarter thereafter. So the revenue should, if there was no virus, should increase by similar levels.
The next question is from Mr. Robert Sanders, Deutsche Bank.
My first question is just if you could give us the mix between mobile Internet devices, automotive and computing in 2019? And I got some follow-ups.
32% mobile Internet devices, 23%, Cor?
Yes, I think 23% to 25%.
For high end logic. And then automotive, 17%.
17%, yes.
That's great. And on the 2023 convertible, I don't know if you've had any thoughts, but I know you can -- there's a soft call option that is coming up at the end of this year that's deeply in the money. Have you had any thoughts about whether you'll call that convert? And I've got one more follow-up.
We may, but it's too early, still most of the year to go. But we can do it in several ways, and we are prepared for that.
Got it. And then just last question, just on the coronavirus. What are actually -- there's been a lot of issues with shortages in CMOS sensor, for example, where presumably you could maybe could take share of the Korean stake share from ASM-PT. But on the Chinese packages themselves, what are they actually doing? Are they running at full steam? Or are they running below their feasible capacity? Because I'm kind of wondering, are they building up inventory and running at full steam? Or are they kind of way below the potential feasible capacity right now?
Our read is that the average utilization rate is somewhere between 50% and 70%.
Got it. For the Chinese only packages?
Yes.
Got it. Okay. And then -- so presumably then, there will be a big spike as things recover.
Yes.
And they can't build up inventory in this moment in time. So that could be a positive view in the second half?
Yes. As I mentioned in a question earlier. You have to be prepared. And usually, there's a spike after. The most significant was 2010 after 2009. But there also have been other situations, 2015, for example, the slowdown in second half. So that could well happen.
Got it. So this is not really a typical year where post Chinese New Year, you have a huge order number that gives you good visibility on '20. This is going to be more about coronavirus that may...
The huge order trend is still continuing. It's a matter of being able to deliver. So as much as I mentioned, our supply chain that's relatively so far intact. It's more the customers being able to take the systems in-house.
Got it. And you mean to certify and invoice and qualify and all of those sort of things, okay. Got it.
You have to take ownership to install. So they're still at customer sites situations where less people have been able to come back. Governments making things -- or being very cautious. And that delays installation.
Got it. So you have machines waiting in bubble wrap to be installed all over the place?
Yes, the range plus/minus 10%.
[Operator Instructions] There are no further questions. Mr. Blickman?
Well, then let me thank everyone for attending this call. And if you have any further questions, don't hesitate to contact us. Thank you. Goodbye.
Ladies and gentlemen, this concludes the conference call. Thank you for attending. You may now disconnect your lines. Have a nice day.