Kloeckner & Co SE

XETRA:KCO

Earnings Call Transcript 2021-Q1

[Operator]

Thank you for standing by, and welcome to the Klöckner & Co. Q1 2021 Analyst and Investor conference call. [Operator Instructions] I must advise you the call is recorded today on Thursday, the 29th of April 2021. And I would now like to hand over to your first speaker today, Mr. Felix Schmitz. Please go ahead, sir.

[Felix Schmitz]

Yes, thanks, and welcome to our Q1 analysts and Investors conference call. With me today is our CEO, Gisbert Rühl; our Deputy CEO, Guido Kerkhoff; our CFO, Oliver Falk; and our CEO, Americas, John Ganem. They will guide you through the presentation. After the presentation, we are looking forward to your questions. With that, I'd like to hand over to Gisbert Rühl.

[Gisbert Rühl]

Yes. Thanks very much. Also a warm welcome from my side. And let's then jump directly into the presentation.Starting with Slide 4, the highlights of the first quarter this year. Yes, you all seen what is happening in the market. We have significant price hikes. But there's one difference, of course, compared to the former price hikes, which we had every couple all the time throughout the last 15 or 16 years.The difference, I think is this time that the supply chains have really run dry on all levels. And with this, the price high -- or at least high prices are much more sustainable this time compared to previous years.Our shipments in the first quarter were 5.7% below last year. Last year was, if you like, a pre-COVID quarter. So we're seeing, on the one hand, that we're still lagging a bit behind. But on the other hand, sales went up by 5.3% especially driven, of course, by these higher prices. Accordingly, gross profit also significantly up with close to 36% from EUR 285 million to EUR 388 million. And also our EBITDA increased significantly from EUR 21 million to EUR 130 million, driven of course, by the price dynamics and then also through our Surtsey -- through the effects of our Surtsey program.The operating cash flow, despite this high price is positive with EUR 18 million compared to minus EUR 97 million. Last year, we were also able to increase -- to decrease our net debt -- net financial debt significantly by EUR 200 million compared to last year from EUR 563 million to EUR 363 million, and we increased, on the other hand, our digital sales significantly by 10 percentage points.And with this, I hand over to Oliver Falk, who will lead us through the digital transformation and the financials.

[Oliver Falk, CFO & Member of Management Board]

Yes. Thanks, Gisbert, and warm welcome from my side as well. So let's have a look on Page 5, the development of our digital transformation. Starting with the left-hand side.So our sales share via digital tools went up tremendously by 10% points year-on-year to now more than 45%. This was primarily driven by our Kloeckner Assistant, which we launched roughly one year ago. So quarter-on-quarter, the development of our digital sales share was more flattish due to the special market conditions, where especially EDI sales at Becker were reduced. So therefore, we see that as a temporary effect.So meanwhile, our Kloeckner Assistant made great progress and is gaining more and more traction. We already processed EUR 500 million in sales, thereof, already EUR 200 million alone in the first quarter of 2021.We are now preparing the Assistant for more complex orders of processing the first pilot, including a feature for processing services is now live in Switzerland and running well. Further country organizations will follow shortly.In addition to that, we launched a procedure in the U.S. also as a pilot that now already gives the tool, the space to take its full effect. We let it run more and more without manual intervention in the sales process. So to say, zero-touch sales on the basis of clear business rules and backed by dynamic pricing.Continue with XOM. XOM is also process -- progressing. The GMV in Q1 amounted to around EUR 150 million, more than we achieved in 2020 in total. XOM is currently, especially, focusing on software as a service for the e procurement solution. Based on that concept, we can better react on the demand of material procurement and on different market conditions.In Q1, we entered into the U.S. and Latin American markets. And the next steps will be to integrate administrative processes from the world and generate an advantage for them. With that, XOM will achieve a greater data harmonization and thus reduce inefficiencies along the supply chain.We now move forward with the financials, and I continue with Page 7. We look at the shipment sales and gross profits of the first quarter. So shipments were still suffering from the COVID-19 pandemic, as Gisbert just pointed out, at the beginning of the year. And we saw the decline from 1,365 ton in Q1 2020 to 1,287 ton in Q1 2021, which means a reduction of 5.7%. However, we saw a recovery of the volumes towards the end of the quarter, the volumes picked up by the end of the quarter.So after a relatively weak Quarter 4, we saw a quarter-on-quarter uptick of 92,000 tons, meaning 7.7%.Sales in contrast improved year-on-year by 5.3% despite the lower shipments due to very favorable selling prices. This is even more true quarter-on-quarter, where sales increased by 23.8%. And our inventory prices were still lagging, our gross profit went up by even 35.8% year-on-year from EUR 285 million to EUR 388 million. And quarter-on-quarter but even 41.7%.Gross margin went up year-on-year from 19.7% to 25.4%, also benefiting from a continued margin over volume strategy. Quarter-on-quarter margins picked up by 3.1%.On Page 8, you see we had really an exceptionally good first quarter. In fact, this was the strongest quarter in 12 years and the strongest first quarter since our IPO. The EBITDA before material special effects strongly increased from EUR 21 million, the bar on the left, to EUR 130 million. The reported EBITDA included a disposal gain of our mansion side of EUR 10 million. The reported EBITDA even came in at EUR 141 million.Volumes, as already said, were still negatively impacted by the COVID pandemic with an effect of minus EUR 16 million. Given that our price level for stock were low, we could participate from soaring sales prices, resulting into a very strong price effect of EUR 136 million especially in the U.S., but also in the distribution Europe business. However, we see that the situation is improving month by month.Talking about OpEx. OpEx amounted to EUR 23 million, mainly driven by higher bonus expenses for our sales force, bonuses for our country management expenses under our virtual stock option scheme and salary inflation. So these tremendous increases are, of course, affected by the strong sales prices increases and need to be seen in this context.We had some smaller FX effects of EUR 8 million. And our certain measures contributed with EUR 20 million to the OpEx savings, a great achievement and a substantial contribution to our strong Q1 result. The EBITDA contribution from Surtsey will amount to more than EUR 100 million annualized in full year 2021 with an increasing quarterly run rate towards year-end. The reason for that is that final implementation measures and associated layoffs will occur in -- during the course of the year. All in all, a very great quarter, for which the foundation was laid already last year with Surtsey and also a very far-cited net working capital management.We are coming now to cash flow and net debt on Page 9. As you can see, we had a positive cash flow from operating activities of EUR 18 million in quarter 1, about EUR 110 million higher than previous year. Our very tight net working capital management limited the cash out for net working capital to EUR 126 million, despite the current price hike and the usual buildup in Q1. Interest payments were EUR 5 million, and we had a cash out from taxes of EUR 2 million. The net cash from other operating assets and liabilities amounted to EUR 10 million, gross CapEx to sustain our business assets in Q1 was EUR 16 million, disposal proceeds of EUR 6 million, mainly resulting from sale of sites in the U.S.Thus, our net 'cash flow from investment activities came in at EUR 11 million. Accordingly, free cash flow was EUR 7 million.Our net financial debt increased moderately from historically low level of EUR 351 million at the end of 2020 to now EUR 363 million.On the next Page 10, our funding portfolio and maturity profile. I talked already about the net debt, the EUR 363 million. In April, we extended our currently unused syndicated loan by another year until May 2024. All our core banks participated in the extension and the extension is now improving our average debt maturity to approximately 2.5 years. You can see in the maturity profile that we have only one major maturity this year, and that's the convertible bond, offering an investor's put right in September. The bond is currently trading around 108. So it does not look like a clear put case from our perspective. And just to remind you, the conversion price is EUR 13.33 and the maturity is in September 2023.However, if the price of the bond would change and if investors would decide for early repayment we are well prepared to repay the bond from existing cash reserves and credit facilities.So overall, based on this strong headroom, an equity ratio of 40%, the gearing of 31%, we consider our financing capabilities as being very strong.So with this, I would like to hand over to Guido Kerkhoff.

[Guido Kerkhoff, Chairman of the Management Board]

Thanks, Oliver. If we come to the outlook, no major changes to what we said a few weeks ago, there is some uncertainty that remains. However, general developments are very positive. Vaccination in Europe develops and U.S. and U.K. are already far ahead.Gradual sector recovery continues, while supply is still very tight. We're expanding our margins and are very disciplined and keep managing our net working capital smartly. This is, by the way, also the reason why we expect our shipments to be only slightly up quarter-on-quarter. But I guess that's not really something new.Overall, pricing dynamic remains in place with rising prices across all regions, supported by disciplined supply side and associated with recovering demand and stimulus coming our way, especially in the U.S.Our long-term and through the cycle prospect is especially positive due to a changing steel environment. There's an ongoing recovery in the ongoing vaccination campaign, first time in years, we have a very high degree of discipline in the market, backed by realizing that higher pricing is feasible. First, similarly, are about to take hold and looming infrastructure bill in the U.S. would, of course, be very supportive, not just for the short, but for the upcoming years ahead.In this surrounding are higher for longer in terms of either pricing and demand should not be ruled out. It's difficult not to be optimistic at this point in time. As a consequence, we expect a substantial growth of real steel demand in Europe and the U.S. in '21, and U.S. will certainly perform even a bit better than Europe.Now let me come to Europe and the sectors. Construction came steady through the pandemic. We have some lagging effects. However, growth is about 5% for '21 expected. Start of the year was a bit weak due to severe weather conditions, especially in Switzerland and Germany, but is already catching up. Nonresidential expected to recover a bit slower due to investment restraint, economic uncertainty and office base demand is in terms of rising remote work, but we have stronger growth in residential and in civil engineering, expected due to infrastructure.In general, we're positive for the sector, especially with a warmer quarters now ahead and vaccinating progress over the course of the year.Machinery and mechanical engineering, improved growth is above 5%, severely impacted by the pandemic, gradual recovery is still underway, but below pre-crisis level as long as pandemic takes hold. Overall, business confidence continues to improve, machinery and plant engineering sectors anticipate to catch up COVID setback in the current year.The energy sector expected to be flat in '21. There is no positive impact right now in a low visibility regarding midterm views, future investment restraint, some mechanical engines.Automotive, which was most severely impacted by COVID-19, strongly up in '21. Recovery of '21 continues, especially driven by demand from China. However, improvement of European auto sales still gradual and production is still below pre-COVID levels. Chip shortage, of course, an issue, but less harming due to tight supply. Pickup is expected for the second half. And the expectation of very significant growth in '21 is still there.Shipbuilding. No changes see it. It is under pressure. However, gray ships do sell. Cruise ships, in particular, are not there at the moment.With that, I'll hand over to John for the U.S.

[George John Ganem]

Thank you, Guido. And obviously, you can see from the slide that the situation in the U.S. is very similar. Construction expected to improve considerably in 2021, driven mainly by a very strong residential sector, supported by low mortgage rates, which had trended up temporarily but have recently dipped back down in recent weeks. The Federal reserve came out yesterday and indicated that interest rates are going to be kept low for the foreseeable future. And as we mentioned last time, there are some very favorable demographic trends starting to develop, which points to a robust housing sector for this year and in coming years.Housing starts actually surged to $1.7 million on a seasonally adjusted annualized rate in March, very, very strong. And the National Association of homebuilders Housing market index remains very elevated, which points to continued forward expansion.Nonresidential, which has been kind of in a downward trend since the beginning of the pandemic is starting to show signs of stabilization. Recent architectural billings index as well as the Dodge Momentum Index, which are leading indicators, all turned to positive territory last month. Prospects for a stronger recovery in nonres now much improved. Fiscal stimulus is starting to boost state budgets. And of course, as Guido mentioned, the increased odds of a long anticipated infrastructure bill, which appears to be one of the Biden administration's top priorities, would certainly give a boost to nonres in the long-term as we look forward to '22 and '23.Remodeling is very, very strong, mainly driven by this post-COVID situation where people are now focused on their homes and improving their situation home -- is working from home has become the norm.Switching to manufacturing and mechanical engineering. We expect this also to increase significantly in the U.S., we see our light flat-rolled contract OEM base already back to pre COVID levels in the first quarter. And the heavy equipment sector is indicating trends of upwards of 10 -- greater than 10% year-over-year growth. The March ISM manufacturing index reported at 64.7, which is the highest since the early 1980s. And so very positive outlook in manufacturing.Energy, we certainly are at the bottom of the energy cycle here in the U.S. It's a big market for KMC, especially in the southwest for Kloeckner Metals in the Southwest. Oil prices have rebounded recently, and the -- obviously, the developing, improving situation on COVID is certainly leading to increased travel. We're seeing that at the airports. And the general consensus is we're at the bottom of the energy cycle. And that the recovery is imminent, but probably much stronger in 2022 than this year.And of course, the focus on renewables is now going to be a top priority, and there's going to be a significant investment needed here in the U.S. to shift our energy consumption towards renewables. Automotive severely impacted last year because of COVID, production is still under pressure because of the supply chain issues related to semiconductor chips. However, sales remained extremely strong, $17.7 million on a seasonally adjusted annual rate in March. The auto company seemed to be able to keep up with this demand here in the U.S., but inventories remain very, very lean at the automotive dealerships, and we would expect that, that bodes well for production once some of these supply chain issues are resolved, which we're hoping would be completed by the end of the second quarter.And then for shipbuilding in the U.S., we have a heavy focus on defense that has been strong throughout COVID. We see further growth this year and next year and the barge segment also continues to be very robust, and we're expecting positive year-over-year growth. That's it for the U.S.

[Gisbert Rühl]

Yes. With that, we'll come to the outlook. Let me start with Q2. What we will see is just a slight increase in shipments that we expect. As I explained, it's a tight supply, and we have a clearly smart net working capital management. But anyhow, this is going to lead to considerably increase in sales, this process is still moving up. And therefore, our EBITDA expectation is even exceeding our good Q1 numbers by EUR 130 million to EUR 160 million before material special effects.If we take a look on to the full year '21, what we can clearly see is that shipments and sales will be significantly above the prior year level, that we expect. The EBITDA before material special effect is expected to increase very considerably year-over-year. I mean, even with Q1, we were better than last year. And this will be supported by an increasing support from the Surtsey effect and the Surtsey disposals to be in the net income then later on in cash flow as well. With that, we'll hand over to questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Seth Rosenfeld from Exane.

[Seth R. Rosenfeld, Research Analyst]

A couple of questions, please, starting out on pricing outlook and then, secondly, on cash flows. When it comes to market development, in your prepared remarks, you touched on particularly low customer inventories supporting perhaps sustainably higher prices. Just looking forward in the second half of the year, it does look like there will be more supply growth, particularly within the U.S.Do you think that -- in that market outlook, are we nearing a plateau of prices or further upside in the coming months? And then would that need to restock, would that potentially help cushion the blow of more supply growth as we enter the second half of the year? I'll start there, please.

[Gisbert Rühl]

Well, Seth, let me start on the second half. What we see. I think it's true for the U.S. and for Europe as well. The whole supply chain is pretty empty. So stocks are empty and need to be refilled, as you clearly said. So I think it's going to be seen even if more production is going to come online, how long will it take to refill. So I think we will see even for the second half, a positive start, and then it remains to be seen how it develops. We will be clear with that once we have Q2 in. But so far, we're rather positive.

[Seth R. Rosenfeld, Research Analyst]

And when we think about the drivers for cash flow, I guess, 2 points. First, on working capital, obviously, very tight performance in the first quarter. To what extent would you expect further investment in working capital in the second quarter or beyond and then on the restructuring charges?In the past, you've given some guidance on restructuring cash outflows early in the year. Can you confirm how much has already gone out the door or what more is going to come into Q2?

[Gisbert Rühl]

Well, let me maybe start with what we see in the working capital, and then Oliver is going to take the rest. We expect that our networking can will continue to be rather conservative in going forward. So it's flattish, maybe slightly increasing.

[Oliver Falk, CFO & Member of Management Board]

Yes. And of course, even if we keep the stock volumes on the same level as we have it right now, the increasing prices will move our net working capital up, the trade receivables will be higher, and the inventory will be higher but payable thus far. So we will see a moderate increase of our net working capital throughout the year.But you know at year-end, we will come back down because we have the typical seasonal effect at the end of the year. And overall, I would say, and we have a very high EBITDA and positive operating cash flow. We will not negatively impact this trend by a too high net working capital.

[Seth R. Rosenfeld, Research Analyst]

And on restructuring charges, please?

[Oliver Falk, CFO & Member of Management Board]

Restructuring charges are booked last year. What we see for this year is only the cash out for, for instance, redundancy payments. So just to give you an idea, the cash out from the restructuring for the rest of the year will be about EUR 40 million, but we also have cash in. We expect cash in from asset disposals, which are even beyond that figure, so close to EUR 50 million. So net, there will be a positive effect on the full restructuring for this year.

[Operator]

Our next question comes from the line of Alan Spence from Jefferies.

[Alan Henri Spence, Equity Analyst]

I've got a couple of questions, so I'll just do them one at a time. Windfall benefits. Can you just give us a rough sense of how large they were in Q2 and what you're expecting them to be in your second quarter guidance?

[Oliver Falk, CFO & Member of Management Board]

Yes. So for the second quarter, we see at the moment, windfalls of EUR 60 million. And yes, that figure is a bit smaller than the one which we see for quarter 1.

[Operator]

Okay. Clear. Kloeckner Assistant, if I had the numbers right, it was about 15% of sales in the first quarter, which is quite substantial. Can you talk a little bit about margin benefits from up sales done via Kloeckner Assistant very more traditional sale?

[Gisbert Rühl]

Well, you have -- that's a bit hard to say. Look, first of all, the platinum system is helping us on the efficiency. So we reduced the time that it takes to get the orders done and get them into the system. On the other hand, it allows us to be faster in all RFQs out there to the customers. So we expect the growth coming out of that as well. And it's hard to see what RFQs you've finally won. What we see is increasing and the faster you're out there, the better you are perceived in the process. And that's indeed something timing is for our customers of [ Athens. ]That's something that we have double checked in our current new strategy setup as well. So timing of an answer and timing of delivery later on is valued very highly by customers.

[Alan Henri Spence, Equity Analyst]

Okay. And then last one, just at the high steel prices out there, are you seeing any of your customers having difficulty to secure financing for purchases?

[Gisbert Rühl]

No. No. That's not what we've seen. I mean, what you always have to bear in mind that the steel price relative to the sales price of the products of our customers is rather low. I mean, if you take a look at the car, how much of a car is steel, that's 3 quarters of the weight, possibly, and it's about EUR 1,000, which is the steel in the car. So compared to what the whole product is, it's not that big.

[Operator]

The next question comes from the line of Carsten Riek, Crédit Suisse.

[Carsten Riek, Director & Co]

Three questions from my side. I start with the first one. We've seen a very strong performance for Kloeckner Metals distribution in the first quarter. The strongest actually since the introduction of the new structure, what has driven the performance or -- differently asked how much inventory related gains contributed to the quite outstanding results? That's the first question.

[Gisbert Rühl]

The smart networking capital -- yes, yes. The smart net working capital, as we always outlined, was clearly contributing to that. But never forget the Surtsey effect in that organization as well. Both of it were contributing, but the working capital was very helpful there.

[Carsten Riek, Director & Co]

Okay. Is it fair to assume that it's about 50%?

[Gisbert Rühl]

Well, you can -- I can live with that.

[Carsten Riek, Director & Co]

Okay. Cool. Fine. The second question I have is on XOM. Any considerations to IPO that business? And what would be the rationale? Could that business actually be separated from Klöckner?

[Gisbert Rühl]

Well, clearly, it can be separated from Klöckner. I mean, what we're now seeing is that the GMV is indeed increasing. And therefore, we're evaluating cases, who's going to participate in it and who -- what customers will we find and how can we grow the business. And this doesn't have to be Klöckner owned, well the majority, at least not, clearly not.But we have to see how far we can take it and what others are willing to see and pay. What we can clearly say is with all the e procurement and what we're doing, it is already a success for the company.

[Carsten Riek, Director & Co]

Okay. The last one I have is on the sourcing. Is sourcing from steel mills more difficult at the moment and plays at a role why your shipments in the second quarter are not improving more strongly?

[Gisbert Rühl]

No, not that much. I think that is true largely for everyone that it's a bit more difficult to supply. I think it's rather for us an advantage that we have long-standing relationships with the mill that we get supplied, and that we did the smart network net working capital management. So we could supply longer than some others of our competitors that did not have enough material on hand.So yes, it's tight and that drives the prices. And in some cases, we have to be cautious that we can take new orders, yes. But compared to others, I think our situation is not bad.

[Operator]

[Operator Instructions] Our next question comes from the line of [ Horner Monese ] from Kepler Cheuvreux.

[Rochus Brauneiser, Head of Steel Research]

It's Rochus Brauneiser from Kepler. On these supply constraints, is it possible to get a better sense how much that has impacted your Q1? I would guess that your shipments have been in Europe, at least, probably half of what we usually have sequentially in Q1. And we know that the economy was still in recovery mode. So to what extent was that weaker growth driven by the winter? And how much was it driven by your sourcing constraints?The second question is on financing. Can you give us a feeling how much your position is relatively improving to smaller competitors, which probably might have more problems to arrange the financing for their working capital compared to a list company? And maybe I have another question afterwards.

[Gisbert Rühl]

On the supply side, look, we were not that much affected. There was maybe some spot business not happening with the supply was timed. But otherwise, we were in good shape. It was largely the winter. In Germany and in Switzerland, that was affecting us and is seasonally affecting us. And never forget, previous year, it was pre-COVID.

[Oliver Falk, CFO & Member of Management Board]

If I may add to that, do not forget that in the first quarter as we have seen, let's say, those tight replenishment situation we, of course, run the margin over volume strategy. So we try to, let's say, increase our gross profit, which we did, if you compare the gross profit from quarter-to-quarter, and therefore, we did not sell -- did not increase the turnover to the highest possible extent. So it was really intelligent, let's say, to increase the gross profit, which we did. By the way, if you look on the segment of Europe, then you see the gross margin improvement year-on-year was EUR 8 million against a turnover decline of 23,000 tons. So this is also impacting the turnover.

[George John Ganem]

Yes. And Oliver, let me add to that in the U.S. The main driver for the year-over-year decline in volume was the closure of the 4 sites we did in the middle of last year. If you look at it on a same-store basis, we were essentially back to Q1 2020 levels. And I would also agree with you that we could have increased sales if we would have been more aggressive in the marketplace, but we were focused on maximizing margins. Certainly no impact, I would say, in the U.S. from supply constraints.

[Rochus Brauneiser, Head of Steel Research]

Then the question on the financing?

[Oliver Falk, CFO & Member of Management Board]

Yes. So okay, you know our financing situation. Of course, we do not know from all our competitors of how much financing is impacting their business. What is important for us is that despite the high prices which we see right now, and they might increase even further. We are not running into financing shortage, which might be different in companies who have not overcome the COVID situation of last year. So if somebody did not react on COVID has -- is conducting its business on the same cost base. It's not profitable, then, of course, they are in a much worse situation regarding financing.

[Gisbert Rühl]

Yes. And clearly, what you have to add is that the bigger you are. And if you are a stock listed company, there's a broader range of possibilities to refinance than smaller, maybe come owned companies. So we have access to more sources than others.

[Rochus Brauneiser, Head of Steel Research]

Okay. And then maybe on your inventory, can you confirm whether your inventory in tonnage has increased or decreased sequentially in the quarter? And are there any parts of the supply chain where you see that customers are more successful than others in getting some restocking done?

[Oliver Falk, CFO & Member of Management Board]

Yes. So regarding our stock, we have our stocks are lower in comparison to the first quarter of last year, substantially lower in tons, not the inventory, but the inventory is also lower. Stock is lower by 148,000 tons and inventories lower by EUR [ 78 billion. ] And the second question is -- say it again, please?

[Rochus Brauneiser, Head of Steel Research]

I asked for quarter-on-quarter.

[Oliver Falk, CFO & Member of Management Board]

Quarter-on-quarter, it's down by 5.2%. I mean...

[Rochus Brauneiser, Head of Steel Research]

Okay. In volumes?

[Oliver Falk, CFO & Member of Management Board]

Yes. In volumes. Yes.

[Rochus Brauneiser, Head of Steel Research]

And is this now -- is this everywhere in the supply chain? Did you see the stocks go down? Or are there any clients which are successful in getting some restocking work like automotive? Is there anyone who's getting inventories up?

[Gisbert Rühl]

No, the situation from our point of view is getting tighter.

[George John Ganem]

Yes, yes. In the U.S., the MSCI, Metal Service Center Institute inventory data through the first quarter shows that service center inventories have fallen in each month of the quarter and hit the, I think, historic low of 1.6 months of inventory at the end of March. It just shows that there's been virtually no ability to restock and frankly, I would be surprised if we see a significant amount of restocking just based on the higher prices. So I think inventories are going to remain extremely lean for the foreseeable future.

[Rochus Brauneiser, Head of Steel Research]

Okay. Makes perfect sense. And then maybe a last one. You mentioned the expiry of the convertible. Except from the convert, your overall debt maturity probably is relatively short. So 2.5 years, as you said. How do we think about this in a more longer run?

[Oliver Falk, CFO & Member of Management Board]

Yes. We do not consider that as an issue. So the opposite is true. We think we are perfectly organized on the financing side on the maturity profile. And we are currently working on the Swiss facilities, the bilaterals and move them 3.5 years further to the future. We are close to making the deal. So we are perfectly organized on the financing side. No issue, no risk at all. It was easy for us to achieve that. That's how we look at that. And a lot of the refinancing even got done in the last year during the pandemic -- which shows at lower numbers. Even there, we were clearly able to refinance at better conditions than before. So I don't see any risk in that.

[Rochus Brauneiser, Head of Steel Research]

No, I'm not asking to -- because I see a risk for you. The question is more, your still kind of inventory -- interest rate drop. And so the question is, would there be a point in time where you would to lock in this kind of low interest rates longer just to benefit from the interest rate structure?

[Oliver Falk, CFO & Member of Management Board]

Yes, the interest rates, let's say, which we have right now puts us on the ABS program, and really, really competitive. I would say they are really outstanding. And we have a long-lasting relationship also on every kind of net working capital financing. So we feel ourselves well financed also regarding interest.

[Operator]

We have no further questions if you wish to continue.

[Gisbert Rühl]

Yes. Okay. Then it's my job now to say goodbye to you all at my first quarterly call in 2006 after we went public. And I don't know how many of you were participating in my call in 2006, probably not that many. But nevertheless, since then, we had good years, we had bad years. We were surprising. We were also disappointing. But you always -- you were always challenging but always fair. And I want to clearly thank you for the support throughout the years, and I hope I see you all somewhere. Again, thanks very much. Bye-bye.

[Operator]

That does conclude your call for today. Thank you all for participating, and you may now disconnect.