Andritz AG

VSE:ANDR

Earnings Call Transcript 2023-Q1

[Stefan Schantl, executive]

Good morning, ladies and gentlemen, and welcome to ANDRITZ webcast regarding the publication of the Q1 2023 results. My name is Stefan Schantl, and I will moderate today's webcast.

I would like to welcome President and CEO, Dr. Joachim Schönbeck; and CFO, Norbert Nettesheim, who will present the financial highlights of Q1 2023. After the presentation, there will be an opportunity to ask questions.

But now I would like to hand over to Mr. Schönbeck. Please go ahead, sir.

[Joachim Schönbeck, executive]

Thank you very much, Stefan, for the nice introduction. Good morning, ladies and gentlemen. Thank you very much for joining our call and spending the time with us. Welcome to our call.

It's only 7 weeks ago that we met last time, March 8. And we expected -- from last year onwards, we expected quarter 1 quite gloomy with the tight central bank policies and the predicted recessions. However, it did not turn out that way.

However, after we met last time, basically the world on your side changed a lot. On March 9, the Silicon Valley Bank stock plummeted by 60%. Day after, the bank was shut down. Basically, 10 days later, UBS took over Credit Suisse. And I think you all followed what happened with First Republic Bank in the last 2 days. They also lost 2/3 of their company value. So you are all aware of that. However, the good news is none of these banking turmoils have affected ANDRITZ and, as far as we know, also not one of our customers and projects. However, financing definitely is not getting easier under these circumstances.

But coming to the results of ANDRITZ -- now before coming to the results of ANDRITZ in the first quarter, I basically would like to do some housekeeping with you. We made some changes from January 1 onwards in our reporting structure as we have decided to report the pump business and certain parts of the Pulp & Paper business, which basically is not delivered to the pulp and paper industry, to report that under the business area Separation from January 1 onwards. And the full year effect, if you look at last year, is around EUR 300 million, which is added to Separation and taking away EUR 80 million roughly from Pulp & Paper and about EUR 230 million from Hydro.

So in our presentation, our last year figures are adjusted to this new reporting structure in order not to confuse you. And we are doing that in order to align our product and our offerings a bit according to the market, to our customers, as the pumps and these non-pulp and paper-related products, they are also being supplied in the same markets where Separation is working in. And under a very alike, similar business model, it's pulp and paper, it's energy, it's metals and mining, chemicals, iron and steel, oil and gas and water. So we believe that a lot of synergies can be taken from this setup. And it also enables further growth in all areas, which is our target.

So having said that, coming to the quarter 1 results, I would say despite everything I said before, we were quite happy with the outcome of the quarter 1. We had a very good order intake of EUR 2.4 billion in the first quarter. And even though it is 7% down from the EUR 2.6 billion last year, which clearly was dominated by 2 large orders for 1 pulp mill which we received and a large order for the hydropower sector from Mexico, this was last year, so without a large order of anything above EUR 100 million, without that, we are quite happy with the EUR 2.4 billion order intake.

The revenue grew very much. We had an increase of 29% to EUR 2 billion in the first quarter, and also the order backlog grew against the first quarter of 2022 but also against the last quarter of last year to a total backlog now of EUR 10.4 billion, which gives us a good order and good work for the months to come.

The EBITA increased basically on the same rate as the revenue to EUR 159 million, which is up 30% compared with the first quarter of last year. And the net income even rose higher by 46% to EUR 103 million compared with the EUR 70 million in the first quarter of 2022. The net liquidity remained on the same level with EUR 907 million.

Looking a bit closer to the numbers on the order intake. As I said, we had a slight decline from last year. However, with the EUR 2.4 billion, we are on a very comfortable level. I mentioned that Pulp & Paper and Hydro had dropped a bit because the previous year's quarter was dominated by large orders that we took. What is very remarkable is the steep increase in the Metals business, 34% increase to EUR 670 million order intake. That is mainly driven -- the increase is mainly driven by Metals Forming, which is Schuler received a large order for a complete press line from Asia and many, many other smaller orders. But also in the Metals Processing business, we had a very good order intake. Separation grew, continued their steady growth, by 8%. In total, the order intake we had from Europe, North America, 57%, a bit down from the previous year.

The revenue increased by 29% to almost EUR 2 billion, and that increase was supported by all 4 business areas. The highest increase, 44% came from Hydro to EUR 356 million, followed by Pulp & Paper which reached EUR 908 million revenue in the first quarter, a 22% increase in Separation to EUR 277 million ad Metals increased by 18% to EUR 422 million. Overall, this increase was mainly driven by higher Capital business. So the capital share rose to 61% compared with the first quarter of last year, and then the service business dropped proportionally to 39%.

Here, you see the split in service and Capital business for the business areas. And you see that we had a slight drop in the 3 business areas, pulp & Paper, Metals and Hydro, while Separation could continue the nice increase in the service business out of 49%, which is a real good value and we expect further increase in that.

The order backlog, as I said, a record high, EUR 10.4 billion. 70%, of course, is related to Pulp & Paper and Hydro where we have the large orders. That's totaling up to 70%. And it's a good resource for the revenues of the next quarters to come.

The earnings have been significantly up. We increased EBITA reported by 30%. And the EBITA adjusted, we increased even by 37%. The adjustment is related to an extraordinary income, which we had in the last year. So on the operational level, we could improve the EBITA margin from 7.7% to 8.2%. And on the reported margin, we increased from 8% to 8.1% EBITA margin to a total of EUR 158.5 million in the first quarter.

The profitability by business areas. Here, you see that basically, Pulp & Paper and Hydro are stable compared to quarter 1 of last year, while this extraordinary effect basically only affected the Metals business area. And here, I wanted to report that because, on the operational level, we could increase the EBITA margin from 4% to 4.9% as the Metals business area has been under a lot of questions and concerns from investors, from your side, for some years. I think that's a good proof that the turnaround has been achieved and is continuing in the right direction. On Separation, we had a very nice increase in profitability from 9.8% to 10.5% EBITA margin.

Now I give over to my colleague, Norbert, who will explain to you the financials in a bit more detail.

[Norbert Nettesheim, executive]

Yes. Ladies and gentlemen, who are on the call, also good morning from my side. And as done in the past meetings, I will lead you quickly through the financials.

Here you see the bridge from EBITDA to net income. EBITDA and EBITA is explained by Joachim already, nothing to add from my side, everything normal there. Then the first element where we have some improvements is the IFRS 3 amortization, which is now down to EUR 12.5 million. The difference is simply due to the fact that the Schuler depreciation -- amortization is now coming to its end. And that we have now, let's say, this reduced level of amortization, which we also can expect then for the next quarters to be at that level as long as we don't do a major acquisition which will then change this number again.

Financial results are improved from EUR 10.7 million in the last year first quarter to EUR 8.3 million. That is simply based on the change in the environment of the interest and of our financial investments, which is a little bit more profitable now with the higher interest rate. So this leads then to a 7% EBT, which is compared to the 6.3%, which we had in the last year, a 0.7 point and 44% increase. So we continue here, as already said, our improvement in all financial result numbers. And this also, you see then in the net income, which you see achieved EUR 102.5 million, including minorities. Excluding minorities, as it is published in the press release, is EUR 104.5 million. And this is now the first quarter with a number above EUR 100 million, and we are confident that we will stay in this range also in the next quarters to come.

So that's about net income. Going to the next page shows you the cash flow. Same picture as presented in the past. I started with net income, adjusted the noncash elements in our results. Quickly wanted to point out, effect from release of provisions is EUR 7.8 million. So these effects from, let's say, provision releases after this huge restructuring, provisions which we did in the past, goes now to its end, which also means that the net income is not supported so much anymore by release of provisions and that this transfer position to cash now comes down. So everything fine so far.

But then we have now, in this quarter, something to report, which is on the first view, a significant development, EUR 170 million, let's say, cash decrease or negative cash flow from increase in working capital. On the other hand, you all know our business well enough to understand that this is a pure effect from the execution of the huge Capital orders. Last year, we were in the phase where we mostly had, let's say, positive cash in these projects. In the early beginning, you have these down payments. At the beginning, you have engineering work. So you don't have that much cash consumption in the early stage of the execution.

Now some of our projects, especially those which we booked in the first quarter last year, is turning now into the middle of the execution phase where you have the huge cash outflow to our suppliers for purchasing of the material, and that's the supplied goods. And this then leads to a significant increase in the contract assets, which is more or less POC inventory, EUR 147 million increase in this point. And with the other dimension then in the cash, so we lost EUR 150 million cash by simply executing the orders.

On the other hand, down payments from new orders are on a normal level, so no big increase. So this last number in this table at the right side is only plus EUR 6 million. And this is more or less the major effect. All the rest is Q4, Q1 topics. Let's say, major sales in Q4 led to receivables, which are now going down, so EUR 100 million tailwind from the reduce of receivables. And on the other hand, after sending so much to customers in the first quarter, now building up inventories in completed contract area, again, which is EUR 84 million.

Overall, I would comment this as a pretty normal development in the business where we are in. In the big projects, Capital business, you have these fluctuations in working capital from quarter-to-quarter. And for the future, you will see it in both directions. This is normal for the businesses we are in. So that's the major point for working capital. Reducing then the tax, which we paid of EUR 50 million, leads to a negative cash flow from operating activities in this quarter of EUR 31 million.

Going then to the liquidity situation, exactly what I explained. You see here in the numbers, you have a decrease of EUR 77 million in gross liquidity, which is nothing else than the EUR 31 million I explained before. And the CapEx of something at the end of EUR 40 million, which then led to the EUR 77 million decrease in cost liquidity, with nearly no change in debt. This also then ends up in a decrease in net liquidity of EUR 77 million. But further on, we are still with this nearly EUR 2 billion gross liquidity on a very favorable level of liquidity.

And last, but not least, from my side, here is the summary. And I always look at the column plus/minus. A lot of double-digit pluses, all explained in detail before. And the only, let's say, not so nice issue is working capital development, the cash flow. But we are EUR 100 million negative -- EUR 136 million negative net working capital. We are still favorable in the negative, which is for us, as a Capital business provider, a range which we considered as a normal and a good range. As long as it's negative, we consider it well.

Allow me a last remark on employees. Here, this increase of 2,500 sounds a little bit -- looks a little bit big. But here, you have to consider that in this number, we have 1,200 people which came into the division -- into ANDRITZ after acquisitions of the last year, which we didn't have in the numbers in Q1.

So that's from my side, and I'll turn back to pass back to Joachim, who will continue with the divisional overview.

[Joachim Schönbeck, executive]

Yes. The good message on the employee definitely is that out of the 2,500, 1,300 could be attracted to work with ANDRITZ compared to the last quarter, which gives us a good feeling that in the battle for talent, we are well positioned and we are providing a good environment for the people we like to get onboard.

So coming to an update on the business areas. Also here, you see new names and new faces. From April 1 on, we are happy to welcome 2 new Board members to our team who are succeeding Wolfgang Semper and Humbert Köfler who have retired or, in case of Humbert Köfler, who will retire by end of September. So Frédéric Sauze is taking over the Hydro business area. He is in the energy business for over 30 years. He's with ANDRITZ since 10 years, and he's a French citizen. And Dietmar Heinisser is in charge of the business area, Separation. He's with ANDRITZ for more than 25 years, and he is an Austrian citizen. So you see that we are widening the diversity, maybe not as much as you like to, but at least we added a further nationality to our team.

So looking to the more detailed numbers and the business development in the business areas. As I said, in Pulp & Paper, order intake a bit down compared to first quarter of last year, mainly driven by the Capital business. We had a good increase quarter-on-quarter in the service business. Revenue, a strong increase by 30%, and also the EBITA rose in the same magnitude. Large increase on employees. This was this acquisition of a provider of biomass boilers and pressure parts manufacturing in Croatia. Profitability was 9.8%, at a stable level.

If we look to Metals, it's a strong increase in order intake, very good markets as well from the automotive side, basically for Schuler electro vehicles as well as conventional press technologies. But also on the Metals Processing side, we saw a very active market, especially on the stainless steel side, and we took a very important order for a rolling mill for a customer in North America, which will establish a good basis for future business to come in that area. The revenues grew nicely by almost 20% in both sectors.

And the earnings, earnings were up by 19% to EUR 19.5 million. The EBITA margin reported remained on the same level at 4.6%, but rose, eliminated by extraordinary effects from 4.0% to 4.9%. So you see we are on the right track there. The increase in employees is basically driven by the acquisition of the Sovema part of our battery business.

Hydro, excellent development in revenues. That's up 44% to EUR 355 million. It's down in the order intake by 40%. We booked a large order from a couple of modernization plants in Mexico in the first quarter last year. We are very confident that we can make up this gap in the months to come. Profitability remains stable at 6%. EBITA is now up to EUR 21.3 million in the first quarter.

I'd like to tell you a bit about what we are doing in the business. And we are very happy that Greenko selected ANDRITZ as their partner for their Intelligent Green Energy venture, which they have set up. I think Greenko is one of the most remarkable new players in this renewable energy area as they are one of the firsts, the first one in India and I believe one of the firsts worldwide, who is guaranteeing their customers uninterrupted supply 24/7 of renewable carbon-free energy. And they do it by investing in a wind farm, a solar plant and a pumped storage reservoir. And this pumped storage facility is supplied by ANDRITZ. So they can take care of the energy coming from wind and solar when there is no demand, and they pump the water up and they take it down into the lower level when it's dark and when there is no wind.

We believe, especially for India, this is very important because without their technology, you need to add in India -- for each megawatt of solar power, you need to add 1 megawatt of coal power because, on the other side, the grids will become unstable, which definitely would not support our environmental goals and also not the environmental goals of India. So we are happy that everything works well in this project. We have been awarded with the first order in 2020 and got the repeat order 2 years later, last year for Gandhi Sagar pumped storage plant. The first line will go into operation in 2024 and then the second 1 year later. And we trust that there is more to come.

On the Separation business area, they continued very favorable development. They are nicely up in all areas. Their business is not driven so much by large orders but by a much more continuous business. So order intake rose by 8%, revenue by 20%, and the margin nicely climbed up from 9.8% to 10.5%. EBITA delivered EUR 29 million in the first quarter.

So that's basically what we had to tell you. The outlook, we see ongoing project and investment activities in all business areas, and we believe it will continue on good, satisfactory levels. We confirm our financial guidance for this year that we will continue the profitable growth, and we believe we will increase in both revenue and earnings compared to last year while watching the economic and geopolitical challenges every day.

Thank you very much for your attention. And if you have any questions, we are happy to answer.

[Stefan Schantl, executive]

[Operator Instructions] Okay. We have already received several questions. The first question comes from Sven Weier.

[Joachim Schönbeck, executive]

We cannot hear you.

[Operator]

The next question comes from Sven Weier from UBS.

[Sven Weier, analyst]

The first one is on the Pulp & Paper business. I was just wondering, obviously, in the last couple of weeks, we had a few profit warnings from the industry, lower pulp prices, some issues there. I just wonder how you see the situation. Do you feel that changes anything in the investment plans of your clients? And also, if you could update us on the status of Paracel. That's the first one.

[Joachim Schönbeck, executive]

Yes. So I mean, we are all old enough to understand that the commodity prices go up and down. Pulp prices went down. We had start-up of 2 major pulp assets in South America in the last couple of months. That's the Arauco plant from MAPA and the Toros project from UPM. So there is probably a bit -- there is pressure in the market. We do not believe that this will too much impact the long-term investment strategy of our clients, but it can postpone projects.

At the moment, we had the cancellation of 2 -- basically, 3 large pulp investments in Russia last year because it could not be executed because of the sanctions. So they have been announced. Wood resources had been available, and now the market needs to make up for that. So that is -- that might come as an upside. In South America, I would say there is, at the moment, certainly only 1 project to come. That's the Cerrado project, which will start up next year, and the smaller revamp of another mill. So I would say it will not impact on the long term but it might impact timing.

On Paracel, I can basically give you no news. We are ready. We are committed to the project. We are available to support, but we heard that the financing is not ready yet. And you probably -- your colleagues and the banks know more about that than we do.

[Sven Weier, analyst]

Okay, fair enough. The second question is on the Hydro business and the Lau order you announced in December. I guess probably fair to assume that you did only book a smaller share of the project in Q1. Can you provide us with the split, how this mid-triple-digit order is going to break down between Q1 and Q2?

[Joachim Schönbeck, executive]

Which order you are talking? I missed that.

[Sven Weier, analyst]

The December order you announced for Lau, the EUR 500 million project, I think?

[Joachim Schönbeck, executive]

Yes, we only booked in the first quarter the down payment, which is roughly in the -- which is roughly 10%, yes.

[Sven Weier, analyst]

And so the rest comes in Q2 then on the order intake side?

[Joachim Schönbeck, executive]

That's my strong assumption, yes.

[Sven Weier, analyst]

Okay. And the final question from my side is just the divisional changes you outlined at the beginning of the presentation. I just wonder, does that, in any way, impact also your midterm margin targets for the divisions? I mean it has a bit of a dilutive impact on the Hydro business. It has an accretive impact on Separation. But -- or is that too early to comment on?

[Joachim Schönbeck, executive]

I mean we are telling you about the reporting changes we made. Of course, we also made some changes in the management. And we thought we gave a couple of months' time also to understand the full potential of the synergies and the market perspectives. And when we make our next outlook, I believe that we will review these figures also under the circumstances, yes. The changes were made to become better.

[Sven Weier, analyst]

Understood.

[Stefan Schantl, executive]

Thank you. The next question comes from Ingo Schachel, BNP Paribas.

[Operator]

The next question comes from Ingo Schachel from BNP Paribas Exane.

[Ingo-Martin Schachel, analyst]

The first question would be on your free cash flow. And you explained, let's say, all of the line items very well, and it's understood that it's a typical business model-related cash flow volatility in many lines. I think the one line which I found a bit surprising was contract liabilities, which did not increase despite the still very strong order intake. Can you comment a bit on how you expect contract liabilities to evolve in the next quarters, assuming that order intake remains strong due to, hopefully, book parts and so on. Should we expect a normal increase of that line? Or are you seeing higher reluctance from customers to prepay now that interest rates are higher?

[Norbert Nettesheim, executive]

No. It was simply timing of down payments and the timing of orders received. With further order intake, we also will expect this line to grow again. But what I should remark here is that when it is stable, while you increase the asset side, this is a shift because we booked projects either on the passive or on the liability, on the asset side. So it's communicating numbers. But your question was how it will develop. Yes, we don't expect it going down significantly in the next quarters.

[Ingo-Martin Schachel, analyst]

Okay, very clear. And then on the cooperation that you've outlined with Greenko Partners on pumped storage and several projects in India, can you give us more detail on the commercial relationship with that client because it's obviously a very big investor in pumped storage? Is it fair to say that you are basically the exclusive supplier to them so far? Or is there any, let's say, mechanism in your cooperation that makes you its supplier? Or will the next project to be sort of negotiated on site basis which you're probably expecting high interest?

[Joachim Schönbeck, executive]

No, we are not exclusive, at least not that we are aware of. There is no exclusivity agreement. I think it's a strong commitment that before the first plant of that kind goes into operation, that they are already committed to a repeat order. The first project is moving on very well. It's an excellent cooperation. And we believe that if we deliver as promised and it looks like that, that there is a very solid ground also to be the partner for the other projects to come.

[Ingo-Martin Schachel, analyst]

Okay. Can I just finish with a quick housekeeping question on the segment reclassification? On the pumps business that you're reclassifying to Separation, can you tell us roughly what the end market split of that is at the moment? So how much is Hydro, how much is Pulp & Paper, and how much other end markets?

[Joachim Schönbeck, executive]

Sorry, I need to -- we need to -- Stefan will take care of that and provide confirmation. I cannot -- sorry, I'm not prepared for that.

[Stefan Schantl, executive]

Thank you. The next question comes from Daniel Lion.

[Operator]

[Operator Instructions] The next question comes from Daniel Lion from Erste.

[Daniel Lion, analyst]

I would like to follow up a little bit on the order intake of the Metals division, which has gone up nicely. Do you expect this level to somehow be a new run rate for the coming quarters? It would indicate that, if you remain on this level, that the order intake could maybe increase about 20% year-on-year for the full year? Is this a valid assumption? Or do you think that the first quarter was simply really strong?

[Joachim Schönbeck, executive]

We can say that the first quarter was very strong. We know that the project, as I said, is still -- project activities are still on a quite good level. It's extremely difficult to forecast the order intake, especially for these large projects. In general, there is a huge demand for investment in both the automotive industry as well as the steel industry because they have particular challenges with this energy transformation we are now going through. So I would say we see a positive outlook on the market. But whether this continues really on a quarter-to-quarter basis, we cannot say.

[Daniel Lion, analyst]

And maybe to go into more detail here, reflecting also on the investments into new battery plants. So you had a revenue of like EUR 50 million, at least that's what you communicated. How quickly can you move up scale here in order to grow the market? Because in the end, I can imagine that there must be a huge dynamic from this part of the market.

[Joachim Schönbeck, executive]

There is a huge dynamic. And here, we're really talking about large projects. There are many projects announced for what they call gigafactories from battery makers as well as from carmakers. We are now in an intensive process. So we are bidding for these projects. We are qualifying technology, basically testing and proving that the technology is on its way to be ready from the stage where we are to the demands of the gigafactory. And that is also one reason why these projects, even though they are announced for a long time, have not been contracted with any supplier.

And as you know, there is also strong competition. In this area, we are mainly facing competitors from Asia who are very competitive, very aggressive. So our target is we are in that. Our target is to go and book one of the first orders already during this year. And then we're definitely talking about volumes significantly higher than EUR 50 million.

[Daniel Lion, analyst]

Clear. And then overall, going down to profitability level, what revenue level would you expect that you'd need in order to reach your target profitability of between 6% to 7%?

[Joachim Schönbeck, executive]

We believe that we do not need volume growth to reach that. We have a certain amount of, I would say, low-margin backlog, which we need to get out which is underway. We have strong plans to increase the service ratio. So we do not see that we need a further increase in volume beyond the level that we had. That's not the plan.

[Daniel Lion, analyst]

Okay. Sounds positive. Perfect.

[Stefan Schantl, executive]

Many thanks. So the next question comes from Peter Rothenaicher, Baader Bank.

[Operator]

The next question comes from Peter Rothenaicher from Baader Bank AG.

[Peter Rothenaicher, analyst]

Another question on Paracel. So clearly, if you would not receive this order perhaps in this year, might there be the risk that your capacity utilization in the Pulp & Paper business would go down? And how do you react on this? How do you prepare? And yes, if there are definitely risks then, perhaps latest in 2025, Pulp & Paper sales volume would decline considerably.

[Joachim Schönbeck, executive]

Yes. So if we don't book large orders, the revenue in Pulp & Paper will decline. This is easy mathematics. In the Capital business, in Pulp & Paper, we are used to the effect that there are large orders and you cannot predict them. And when they are there, you need to be ready. And if you don't have them, you need to make sure that you don't have too many resources onboard.

I would say we have adjusted our business model quite well to that kind of environment. The ability to adapt in volume, in competence, in the right level, I would say, is there, and we are not afraid of that. On the other side, we have a lot of development projects and new technologies which we introduced to the market over the past years where we see a continuing strong demand on biomethanol, on sulfuric acid generation in context of a pulp mill. So that business is picking up. As these are new technologies, we also need more engineering. So we are watching that carefully, but we do not make ourselves dependent on one big project.

[Peter Rothenaicher, analyst]

Okay. Then during the recent call, you had expressed very high confidence regarding margin development in the current year. So if I remember correct, so you were optimistic to see perhaps even a slight margin increase on a group level for 2023, is this still the case, and also here with regard to the Pulp & Paper sector, which you expressed with the team?

[Joachim Schönbeck, executive]

As I said, our view on that has not changed. And I think the first quarter confirmed that we are on a good track there to increase earnings and sales.

[Stefan Schantl, executive]

Thank you. The next question comes from Miro Zuzak, JMS Invest.

[Operator]

The next question comes from Miro Zuzak from JMS Invest AG.

[Miro Zuzak, analyst]

Congratulations. A couple of questions from my side regarding the seasonality of the business and like the line items in your P&L. So let's start with the material cost line. If I look at your typical seasonal pattern than you have in Q1, a relatively low material quota, so low materials going through your P&L, leading to a relatively high, what I call, gross margin. This year, this specific gross margin was more than 2 percentage points lower than last year. Now typically, the first quarter was the strongest one, and then the next were weaker. Is this the same this year? Do you expect this gross margin to come down over the rest of the year or the material growth to be up over the rest of the year? That's the first question.

[Norbert Nettesheim, executive]

We have these regular fluctuations in material quota and margins simply due to the POC logic in the large projects. And we don't expect further fluctuations and significant fluctuations for the next quarters. So the margin overall was, in the first quarter, good. There will be some changes certainly with the mix of the execution. But we don't see any reason for giving you any emergency messages for the next quarters.

[Miro Zuzak, analyst]

Okay. And for the wages, like the personnel cost line, Q1 is typically the lowest figure in the year. Will it be the same this year? So can we expect that personnel costs will also have the usual seasonal pattern?

[Norbert Nettesheim, executive]

Yes, exactly. The personnel cost development is simply driven by the dates when general salary increases become effective, this is in Germany and in Austria, usually not at the 1st of January, sometime over the year. And according to that, we will have in the second -- in the third and fourth quarter a little bit higher personnel cost to be expected. On the other hand, we have told you several times that we are going to also revise prices in the service business. There's also kind of a lead time until these price increases become effective. So we further hope, at least I'm convinced, that it stays balanced, that this will not have an impact on profitability in the third and fourth quarter.

[Stefan Schantl, executive]

Thank you very much. So there are no further questions. Thank you very much for your attention and for your participation in today's webcast. If you have any follow-up questions, please contact me, send me an e-mail. And yes, I wish you a happy day, and see you and talk to you next time. Thank you.

[Joachim Schönbeck, executive]

Thank you very much.

[Norbert Nettesheim, executive]

Bye-bye.