Saf-Holland Se

XETRA:SFQ

Earnings Call Transcript 2020-Q1

[Operator]

Good morning, ladies and gentlemen. Welcome to the SAS Holland SE Conference Call regarding the First Quarter 2020 Results. [Operator Instructions]Let me now turn the floor over to your host, Michael Schickling.

[Michael Schickling]

Good morning and welcome to the Q1 2020 analysts and investors conference call of SAF-Holland.I am Michael Schickling, Head of Investor Relations. Today's speakers will be Alexander Geis, Our CEO, and Dr. Matthias Heiden, our CFO. We will start with a short presentation followed by a Q&A session.I'd now like to hand over the microphone to our CEO, Alexander Geis.

[Alexander Geis, CEO & Chairman of Management Board]

Good morning, ladies and gentlemen. A warm welcome to our today's Q1 conference. This is Alexander Geis speaking. And I do hope that everybody is healthy in these days.Let's start with our Q1 2020 summary on Page 5, please.Starting on the upper left side, you can see that in the first 3 months of 2020, our sales came in with EUR283 million and with an adjusted EBIT margin of 6.5% or EUR18 million. This was, in our point of view, a quite solid quarter for us. A big step forward we achieved in terms of our net working capital ratio, which was at 13%, which is 2.9% better than in Q1 2019.Last but not least, we had spent CapEx of roughly EUR6.7 million. And, of course, given the current circumstances, we double-checked everything before we spent the money for new investments. But Matthias will refer to some more details in terms of net working capital ratio and also CapEx later on.On the right side, I would like to summarize as follows. As you can see, firstly, Q1 2020 was mainly unaffected by COVID-19, except of course China, because China also, we were closed completely in February and also in March. The aftermarket business, as you will hear later on, has a very stabilizing effect on sales and, specifically, our earnings. Then reported already last time when we gave an overview of 2019 that we started a comprehensive cost-cutting program, and this is to be continued. Our free cash flow generation strongly improved. Also, here, Matthias will give you some more details later on. And we have a very solid financial profile.Things to further focus on are still the next stage in operational excellence. We are focused on that very much. Also, execute further our SG&A savings program. I will come to that later on when I give you an overview of the regions. Further accelerate efforts on inventory management and free cash flow generation, and of course sustainably improve the quality of earnings in the quarters to come and the years to come.How the different markets developed in Q1, we can see on the next page, please. So here, on that page, speaking about the truck and trailer production in Q1 2020, on the left side, you can see starting with Western and Eastern Europe that in Q1 the truck market dropped by 27% and trailer dropped by 15%.Secondly, there was a massive decline after record high years in 2018 and 2019 in North America. As you can see, both truck and trailer dropped by about 25%.In the middle section, you can see that China got hit by closures throughout February and March, so basically everybody first closed because of Chinese New Year in the first 2 weeks in February, followed by prolonged Chinese New Year's holidays and then due to the COVID-19 crisis, mainly everybody was closed also throughout March. You can see truck minus 45% and trailer as well.Even the formerly positive markets of South America declined; truck by minus 6%, trailer by minus 7%. And on the right side, we can see with a decline in the truck business of 56% and trailer by 60%, we think that India reached the bottom now.Here I would like to pause for a minute and hand over to our CFO, Matthias Heiden, to give you a little bit more detail in the overall P&L for the Q1.

[Matthias Heiden, CFO & Member of Management Board]

Yes. Thank you, Alex. Good morning, and a warm welcome also from my side.I would like to take a more holistic view at the P&L of the first quarter to kick things off before Alex goes a little deeper into the group and the regions respectively. Here we chose the headline, and this will also be the focus of my short statements here, quality of earnings slightly improved. You saw this as a continuous item for us to work on throughout the year on Page 1 that Alex already referred to.In the first quarter, we recorded less adjustments at EBIT level. As you can see in the table, it is EUR4 million compared to EUR6 million. I would like to take the opportunity to shed a little bit more light on these adjustments because I think the structure of them is important to understand. Because, out of the EUR4 million, EUR2.4 million are PPA expenses that we regularly adjust for, and only the remainder, the EUR1.5 million, EUR1.6 million are restructuring expenses. Those restructuring expenses in themselves are pretty evenly distributed across 3 components. Program Forward 2.0 in the United States; the remainder of restructuring expenses in China, this was related to the plant closure in Xiamen; and then one item that we adjusted for the closure of the York entity in South Africa, this was part of our PMI work.The other section that I would briefly like to comment on is the finance results because if you glance across the lines and compare year-over-year, you see some movements, both on income and expenses and subsequently also on the results. In each category, they are FX related. So on the finance income, we have realized FX gains from intercompany loans and dividends, and on the expense side, this is mainly unrealized FX losses from such loans and dividends, but these are the explanation or the background for the movements that you see year-over-year.One final comment before I hand back to Alex on some data points that you do not see on the slide, but we included them in the press release that we put out earlier today. Overall global headcount numbers went from 3,537 at year-end via 3,428 at the end of the first quarter, down to 3,194 at the end of April. Thus, compared to year-end, the head count in SAF-Holland group is 10% down.And with that said, I hand it over to Alex to take us a little bit deeper into the group and the regions.

[Alexander Geis, CEO & Chairman of Management Board]

Thanks, Matthias.Before we go into our different regions, please let me summarize the group and add some more details to it. Also starting on the upper left side, you can see that our sales versus the EUR346 million in Q1 '19 went down to EUR283 million. This is a [ organically ] drop of 19%. Furthermore, there is a positive M&A effect of plus EUR1.6 million, and also a positive FX effect of EUR1.9 million.Now, speaking about the adjusted EBIT on the lower left side, you can see coming in with 7.2% in Q1 last year versus now at 6.5% in Q1 2020. Here, I can report that the gross profit margin came in slightly stronger. On the negative side, I have to still mention that the SG&A savings are not yet there where they should be. But the regional teams are heavily working on this and in the course of April we already achieved important milestones, and I come back to this a little bit later on. And last but not least, there are no goodwill impairments.Turning to the next page, please. Let's take a look how our 3 regions did perform, starting with EMEA region. On the upper left side, you can see sales came in with EUR157 million in this year's Q1 versus EUR176 million last year. This is an organic decline of a little bit more than EUR20 million. We had an M&A effect which was positive with EUR1.6 million, and the FX effect was nearly neutral.The adjusted EBIT margin still came in strongly with 9.4% versus 9.7% of last year, where both OE and aftermarket gross profits came in a little bit better than last year. Also here, SG&A is still a bit too high, but also we are working on. And 2 points to mention here is that in the course of the last 2 months of 2019 and the 2 months of 2020, we were heavily working with the Workers' Council and the metal union to negotiate a supplementary collective agreement which is now in place starting March 1. So we will see further effects to come in the following months. And secondly, in April and May, we had partly short time work for Germany where we get the compensation from the government, of course, but also on the subsidiary level, like in Spain, France and also Italy, also there we get partly compensation from the governments.Turning to the next page, and speaking about the Americas. You can see that the sales came in with EUR105 million versus EUR131 million of last year. This is an organic decline of EUR28 million, and we also had a slightly positive effect of EUR2 million in that region. Speaking about the adjusted EBIT margin, you can see coming from 5.2% of last year to now 3.9%. Here, worthwhile to mention that the adjusted EBIT margin in Q1 was affected by slightly lower gross profit margins whereas the aftermarket business was a bit better than '19, but due to the heavy drop of sales, the OE business was coming in with slightly lower GP than the year before.Also here, higher SG&A ratio still in place but as Matthias already mentioned, we did adjust further our workforce, and this was mainly in the U.S. So basically in the course of April, we adjusted the workforce here by more than 300 people with a full positive impact coming or starting in May.The adjusted EBIT margin in Q1 2019, also worthwhile to mention, was affected by passing on of the steel price increases which we did not have in Q1 2020. So basically this is it for the Americas region.So turning now to the next page. Last but not least, we speak about our APAC region. This is Asia Pacific, China and also in India. Sales nearly half due to the Chinese Year in February as mentioned before, followed by another 7 weeks of COVID-19 related plant closure that also hit us. So we didn't do any sales in February and in March.Speaking about adjusted EBIT margin, you can see we were at 2.4% negative. Worthwhile to mention -- I would like to draw your attention to the Q3 and Q4 results of last year, with a minus 14% and 15%, so you can see after 2 very bad quarters in the second half '19, we are now at a negative still at 2.4%, but it is going into the right direction.On the positive side, I can report that our January in China was positive, so we didn't burn any money anymore. We only burnt a little bit money in February and March, and this was due to the plant closures, so we are heading in the right direction.Another point to mention is on India. India in Q1, despite lower sales, was margin accretive to the overall group results. This is a good thing because we adjusted SG&A already last year and now we are heading into the right direction.After that dive into our 3 regions, I'm handing back now to Matthias to give you a little bit more insight into our financial investments and depreciations.

[Matthias Heiden, CFO & Member of Management Board]

Yes. Thank you, Alex.While we are diligently monitoring keeping a cash focus on the investment side of the house, our CapEx spending, we are still making every effort to safeguard our operational excellence program, which, on March 19 you had additional insights into by our global COO, Andre Philipp.In the first quarter of this year, we spent EUR6.7 million, which amounts to 2.4% of sales compared to 4.2% or EUR14.4 million in absolute terms in the first quarter of 2019. The EUR6.7 million in themselves went into: the Americas, EUR3.8 million; EUR2.1 million into EMEA; and the remainder into APAC to support replacements rationalization meaning automation in the U.S. and Germany, in particular in the U.S., of course, to support our program FORWARD 2.0 endeavor.When we look at the depreciation side, this is, of course, a reflection of the investment activity of the past, number one. But the higher percentage of sales, 4.1% sales in the first quarter of 2020 is of course caused by lower sales to begin with. The absolute value is EUR11.6 million. And then, if you recall what I explained earlier with a view to the total P&L, then you have the PPA figure included in this, and if you deduct that you are left with EUR9.1 million of -- let me call it true depreciation and amortization of PPA and intangibles.If we turn the page to net working capital, there we see a strong performance in the first quarter with overall number of net working capital coming down by almost 26% or EUR55.2 million in total, in particular, with the strong performance on inventories and trade receivables. Trade payables were down year-over-year, but if you look at the consolidated statement of cash flows in the quarterly report, you see that inside of the quarter, we managed this very well as well.Having touched on the positive performance on inventory and trade receivable management, allow me to be quick to add that we are not quite there yet from a management perspective. We expect additional impulses from our Cash Is King initiative, which we have started in March. It has really started to gain traction now in April and the early days of May so that we are hopeful, despite the difficult environment, to see additional contributions to net working capital and ultimately also to cash flow. Overall, related to sales over the last 12 months, the ratio improved from 15.9% to 13%.Before I turn the page, allow me to give you a little bit of guidance in as much as I would like you to take note of the footnote on the page, which describes that SAF-Holland has moved to the more traditional, the more conventional way of calculating net working capital. This wasn't the case in the past. For your benefit, we have included additional material on this in the appendix so that hopefully you have the full transparency you need to follow the numbers. The time series in itself has obviously been restated.If we then obviously do the logical next step to look at the impact of net working capital management on operating free cash flow, we see a strong start into the year with EUR25.7 million, this of course being the difference between EUR32 million in operating cash flow and the EUR6.3 million that went into CapEx, as described. If we then deduct from the EUR25.7 million, EUR21 million outflow for the remaining stake in Orlandi, our Italian subsidiary of which we are now 100% owner because the put option by the minority shareholder was exercised earlier this year, then we end up with a total free cash flow of EUR4 million, which is the number that compares to a negative EUR18.1 million in the previous year.I then turn to the balance sheet and look at net debt and the equity ratio with a relatively stable net debt position. Overall, this is of course affected by the refinancing transaction in early March, which has led to a balance sheet extension with more cash and debt on the balance sheet, which, given, as you can see on the right-hand side, a relatively stable equity value having the effect that the equity ratio has come down from year-end at 32.5% to 27% as of March 31, 2020. This is a temporary effect, as I said, due to the refinancing transaction, with the repayments that I will touch on in just a second in September in November, this is due to move back up above 30% because then the balance sheet will become shorter.If we then turn the page one more time and look at the current financing structure. Allow me to comment as follows. With the new promissory note loan issued in early March, we have significantly improved the debt maturity profile as reflected in the graph, and at the same time, are fully financed through 2023 when it comes to debt servicing. At present, we are also leveraging our liquidity position to opportunistically repurchase our convertible below 100%, which gives us some small savings on the financing cost side and a small contribution to EPS.This is reflected in the EUR95.4 million, meaning, the remaining liability from the convertible bond falling due in September. You might have expected EUR100 million there. But the fact that it is below EUR100 million is a reflection of our opportunistic repurchasing behavior because some investors have come to us and would like to have the liquidity instead, which of course we're making good use, focus there as a business case.Additional cash will be freed up, as I touched on earlier, by our Cash is King initiative, addressing AR overdues and inventories in particular, which will also help to keep the company on a stable course with regard to its financing structure and liquidity position going forward.Against this background, allow me to also state that we are very happy that our investment-grade rating has been confirmed by Euler Hermes.And with that, I hand it over to Alex who will now take a look into the COVID-19 situation, touch on markets and the outlook.

[Alexander Geis, CEO & Chairman of Management Board]

Thank you, Matthias.Before we speak about the outlook and the guidance for 2020, please allow me to give you an update of our COVID-19 world. And having said this, this is an update as of today, so May 13, please.Firstly, employee safety. It's worthwhile to mention that the health and the safety of our employees worldwide is our utmost priorities. So we took all the measures with early quarantine and we also have a global COVID-19 response team in place to take care of everything related to this.Secondly, speaking about the ramp-up of the greenfield operation in China, I touched on this earlier that we closed in February and March. The plant is back in operation since early April, and the first products got delivered to our customers already.Thirdly, speaking about other plants and subsidiaries. We had temporary production shutdowns, starting with India, 5 weeks, which was basically end of March throughout the April and we restarted last week on Tuesday. Canada needed to close down 2 weeks in April; Brazil as well, 2 weeks in April; and Singapore has been closed from mid-April, including May. The plan is to reopen June 2, so basically in about 3 weeks from now.We did and we do have selective short-time work in April and May in the German plants and also in Turkey. And last but not least, I would like to mention that we had some subsidiary shutdowns due to the close-ups in, for instance, in Italy, France, Spain, Malaysia, Romania and also South Africa. But nearly everybody is back and work at the moment.Fourth point to mention, on the upper-right side you can see supply chain and customers. Here, it's good to mention that we had no interruptions due to supply shortages. So we managed all our suppliers to get the right material in the right time. Another 2 points to mention as a second point. So there is ongoing supply chain monitoring in place to mitigate our risks, and secondly, we have of course communication lines to both customers and suppliers in place on a global basis.Last but not least, you can see the anticipated financial impact. As everybody else, at the moment, not in the position to quantify the impact in 2020 and in the future, but as I said before, this is an update as of May 13.Having said that, I would like to turn the page to the outlook of different markets for the remainder of 2020 or the complete year of 2020. This is as per today's knowledge. Our truck and trailer production outlook is as follows, starting on the left side, with Western and Eastern Europe. You can see we had an old forecast. We have a new forecast. This is based on FTR and also our own sources. You can see, in Europe trucks to be down 35% to 40%, trailer roughly 20%. In North America, both truck and trailer to be down 40% to 50%. In the middle section, you can see China with truck being down 30%, trailer with minus 40%. South America, they also got a hit, with truck minus 30% and trailer minus 35%. And India, minus 25%, and minus 30% for trailer. Considering all those facts, we would like to guide our fiscal year 2020 as follows, which you can see on the next page, please.So starting with sales. So we expect sales to decline by 20% to 30%. Secondly, our adjusted EBIT should be between 3% to 5%. Thirdly, our CapEx should be maximum 3% of our sales. And it's worthwhile to mention that this is not a profit warning. This is in light with the market developments, and frankly speaking, we had 2 options: going the easy way and take the guidance off the table, like 80% of all the other companies do that or we stick our heads together and really took all the market data, which we did, and giving a guidance like we did today.Let me, at the end, give you some more insights, which is basically I can say that we already had a good Q1 in 2020 given all the markets slowing down. We will fully accelerate the SG&A savings in the U.S. We mentioned before, in April we made adjustments already of our workforce. I mentioned that we released more than 300 people, also a lot of white-collar people. And we will see the full benefit from May on.With all the major customers' plants shut down in Europe and North America and around the globe in April, a complete shutdown of our Indian plant in April and the massive sales decline in April in all the regions, our group results for the month of April, and this we normally don't explain to the markets, is still EBIT positive, which is thanks to our great team effort, outstanding in my point of view. So we did not burn any money P&L-wise in the month of April, with all the shutdowns and declines, which in my point of view, I'll say it again, is an outstanding result. Having said that, we already see some light at the end of the tunnel. Plus, with the SG&A cuts at the highest speed in May, in my point of view, means that May and June should be even better than April.And last but not least, your key takeaways on Page 21, please. To summarize that, we do have a stable contribution from our aftermarket business, and this remains the same also in the future because the people have to repair the truck and the trailers if they don't buy new equipment. We do have a strong focus on SG&A savings and free cash flow generation, as Matthias explained earlier. We do have a very solid financial position, and operational excellence is one of our key strategic cornerstones, and we already see the efforts paying off specifically in China, but also in the U.S.I mentioned that we have a global COVID-19 response team, which is in place, and last but not least, of course, I have to say that -- and we need to say that here -- that the financial impact from COVID-2019 on the fiscal year 2020 is not fully quantified yet just in case the situation gets worse or we do face a second wave of infections or lockdowns. But from today's point of view, hopefully this is not going to happen.Thanks a lot for listening, and we are pleased to take your questions now. Thank you.

[Operator]

[Operator Instructions] The first question is from Nicolai Kempf of Deutsche Bank.

[Nicolai Kempf, Research Analyst]

Nicolai Kempf from Deutsche Bank. My first one would be on the aftermarket business. You mentioned that it hold up quite well in April. What's your expectation going forward in Q2 and also Q3, do you think, can be rather stable? Or you also see like, say, a double-digit decline over next quarters? Thanks.

[Alexander Geis, CEO & Chairman of Management Board]

Nicolai, I would like to take the question. Alex is here. Basically, let me start with stating that our share of sales of aftermarket increased a little bit by roughly 2.5% to now 27% -- or close to 27% of the overall sales. We did see already in the light of the market downturns, end of last year, beginning of this year. So say, in Q1 that the aftermarket customers a little bit cautious in ordering too much material because everybody had a focus on cash flow.So we saw already a small dip in aftermarket sales. So it's a little bit lower than last year. April was nearly the same. We had a decline in aftermarket sales, but given the current circumstances, it's still okay. And I see clearly not sign or a single sign that it will further decline in May, June or July or going forward because, as I said before, if the people don't spend their money for new equipment, the old equipment has to be repaired. And so basically I also expect a very stable aftermarket also going back to the year 2009 or end of 2008-2009 we already had -- we still had those crisis years, a very stable aftermarket, a little bit of a decline, but that was really good for the company.

[Nicolai Kempf, Research Analyst]

That's clear. Makes sense. And maybe one follow-up question. You mentioned that in Europe, the OE business was actually positive. Can you give maybe give some color on what's caused this positive effect here?

[Alexander Geis, CEO & Chairman of Management Board]

Yes, very good question. There are multiple answers or points to mention here. So the biggest hit in the trailer industry in Europe was on the curtain side section, which is the standard trailer to be manufactured by the big manufacturers. So basically the top 3 manufacturers got hardly hit. They closed also down.Thanks to our decision many years ago, we have been focusing even more on medium-sized customers and smaller customers. And of course they typically come in with a little bit higher margin than the big key accounts with the standard products. So we had less sales in standard products but kept a good share of medium-sized trailer products we sold there. That was the reason why in the GP also the OE products increased slightly.

[Operator]

The next question is from Jasko Terzic of Bankhaus Lampe.

[Jasko Terzic, Analyst]

My first question is, could you give us an indication on how your current capacity utilization is by regions and where it was in April and where do you expect it to be end of June, if all things progress as you currently expect?

[Alexander Geis, CEO & Chairman of Management Board]

Okay. That's a good question. Let me go into the 2 main areas or 2 main regions which is EMEA and Americas. So basically, utilization in April was about 70% for the main product, which is the trailer axles, of 70% roughly, and in the U.S., it was about 60% to 65%, for both -- for trailer and for the truck business.And -- well, I already gave an indication that I thought or I think that the month of April was the worst month because all our key customers and nearly everybody in Europe closed downs, so all the Italian manufacturers, the French manufacturers, the Spanish ones, U.K. also, they closed down. Big, key accounts in Poland and also in Germany closed down completely for 4 or 5 weeks. In April, they reopened and back to work on a lower volume, of course, at the moment, but everybody is not back. And we can also see that in the U.S. where we have 5 plants that most of our customers, both truck and trailer, shut down 1 week or 2 or even 3 to 4 weeks for the big truck manufacturers in the U.S. They reopened and they are back to work.So this is why we think that the month of April is, given today's facts, okay, was the worst one. May will still be a little bit bumpy because everybody has to ramp up again the production. Of course, they need to sell their products. We hope to be back end of this quarter to somewhere around 75% to 80%. And what comes then, we have to see.

[Jasko Terzic, Analyst]

And maybe a follow-up.

[Alexander Geis, CEO & Chairman of Management Board]

[ You mentioned that ] the 2 plants, 2 main axle plants in Bessenbach in Germany. Basically they don't produce, both blue-collar and white-collar in short-term work. So we get 100% compensation from the government.

[Jasko Terzic, Analyst]

And maybe follow up on that. In the inventory levels from your perception, are they on a fair level? Or do you think there could be some reselling from inventory before production gets ramped up at your sites?

[Alexander Geis, CEO & Chairman of Management Board]

Well, this is a tricky question because if I would be answering I am happy with the current level, our people would not be working harder, of course, I'm never satisfied with that. We did already some homework in the second half of last year in the first quarter.But we have a dedicated Cash is King team now consisting of 6, 7 people around the globe. They do nothing else than focusing on inventory reduction, both coming from the supply chain management but also checking again what is the A item or B or C item, what can be transferred back from subsidiary level to the headquarters to sell it back again to other customers, and also the safety levels are being checked at the moment, and also what can we firesale, of course.

[Jasko Terzic, Analyst]

And, did I understand you correctly that you said in April your adjusted EBIT was not negative?

[Alexander Geis, CEO & Chairman of Management Board]

Yes.

[Jasko Terzic, Analyst]

Yes, and you expect an improvement from May onwards. So that would mean, with your Q1 adjusted EBIT, you already have half of the EBIT accumulated for your low end of the guidance. Is there any risk for the second half you see regarding EBIT levels or for Q2 where you probably could see a loss coming from, I don't know...

[Alexander Geis, CEO & Chairman of Management Board]

Well, I don't have a crystal ball for the second half of 2020. Nobody has that. What gives me a good confidence is really that we got the figures just last night for April consolidated, and you know that we normally don't tell what the monthly reports or the monthly figures are. But I think given the COVID circumstances, it's really worthwhile to mention -- and I'm really happy and the team is as well -- it's not even slightly -- you know that we did everything put into to be breakeven. We are positive. Not highly positive, but we are positive. And we took the measures in the U.S. We don't see the impact on the SG&A side in the U.S., and this is the region with the most employees we have, and also with a very high SG&A ratio compared to the other regions in the group. And we did release more than 300 people in April, and this effect will be coming in May.So from today's knowledge, market is opening up slightly also in the U.S. So we expect a slightly higher sales in May than it was in April. And if we do our homework right, then the adjusted EBIT should be again positive and slightly more than it was in April.

[Jasko Terzic, Analyst]

Okay. But I would interpret you that you think when you didn't make a loss in April, you don't see currently any indication why other months should be negative thereafter.

[Alexander Geis, CEO & Chairman of Management Board]

This is correct. Knowing, as per the facts as of today. If there will be another wave and another lockdown and we have to close production or other countries are closing down again, that's a different story. But as per the knowledge as of today, this is right, what you just said.

[Jasko Terzic, Analyst]

Okay. That's helpful. And the final one is on your new margin target range. If I remember correctly, you mentioned that 100 basis points to 150 basis points every 10% reduction in sales would burden the adjusted EBIT margin. And you only reduced the lower end. Was our recent discussion or last discussion the reason why you don't change that much more also on the upside of the margin range?

[Matthias Heiden, CFO & Member of Management Board]

Jasko, It's Matthias. Maybe I'll take that question. So of course, a good question. Let me take one step back. If you look at the Q1 performance, we went down on the adjusted EBIT margin by 70 basis points and fell on the top line by 19%. So what I have always tried to explain -- and your memory was absolutely correct there -- was that the range that you just referred to is the range that is the mechanics of our P&L before the company starts to brief. Those were the words that I regularly used. And that is exactly the SG&A savings, and the cost discipline that we have applied during the second half of '19, are reapplying now and accelerating globally with the savings program.So we only went down by 70 basis points this quarter, which was a good performance for us. And the reason why we adjusted to the downside was to be fair to us and to you to say, hey, we don't have the crystal ball, but by the way, other blue chips have done exactly that approach. We wanted to leave guidance on the table, and the reason why we widened it was to indicate that there is a chance, all things working well, that a corridor opens up that could lead us away from the bottom end of the newly guided corridor.I don't want to create too much fantasy after the first quarter. We are in the middle of COVID, but Alex explained the current situation of the company. But this is to show that we can flex our cost base, and that we can work against this. Q1 is the first proof point, and then we will need to see how the company performs against declining markets for the remainder of the year. But if in fact markets and customers reopen, then there is a good chance for a positive trajectory. Maybe that helps?

[Operator]

[Operator Instructions] There are no further questions in the queue. Oh, we do have another question. The next question is from [ Vanna Feedman of Ascendis ].

[Unknown Analyst]

Just 2 short ones from my side. Can you give me the amount of receivables affected end of March, please?

[Matthias Heiden, CFO & Member of Management Board]

I certainly can, if you give me just a second to turn the page. So while I do that, I'd tell you where to find it. It is footnoted, as we normally do, at the bottom of the consolidated statement of cash flows. And there you find a number of EUR40.1 million as of the end of the first quarter 2020. This compares to EUR42.9 million at the end of the first quarter 2019. It's on Page 20 of the quarterly report.

[Unknown Analyst]

And second question is on restructuring. Well, after the decisive steps you've taken to reduce the cost, what amount of restructuring expenses do you believe we will see in the remainder of the year?

[Matthias Heiden, CFO & Member of Management Board]

[ Vanna ], allow me to answer as follows. This is obviously the multi-million-dollar question that is on many people's minds on the call. Of course, this is a question that we regularly get. And I'm afraid my answer doesn't get too much better inasmuch as I find it personally extremely difficult to guide to this number precisely. Not because I would want to refrain from it, which is why I touched on it for Q1 in a lot of detail. But we will need to see that we have COVID, and if we have additional restructuring that we don't know of today, we would obviously adjust it.But I think if you look at the split with it significantly coming down, I'm not saying that the one point something is the run rate. That might not be the case. But I think we will not see a number as high as last year because China has gone away. Plus, some of the measures that we are taking in the U.S. do not cost a lot in terms of restructuring expense because they were diligently planned. So if you want me to throw out a number, hopefully the company can stay somewhere in the low double-digit million amount which would be a significant reduction compared to last year. But I would ask you for patience there and follow the company across the quarters. I hope that's better.

[Unknown Analyst]

Of course, it is. Maybe, if it's not too crowded in the call, a last question from my side. On China it is. I would be interested in learning something about demand in China. I think in the last year or 2 years, a lot of business in China was exporters at the end that shipped their stuff to the U.S. I would be interested in, do you have in your [ contact ] to customers that actually want to provide the Chinese market more? Or could you elaborate on this, please?

[Alexander Geis, CEO & Chairman of Management Board]

Well, actually we do have some -- already some customers who are producing their products and trailers for the domestic markets, so to speak, China, but also a little bit for the tiger states. We have a couple of key customers or specifically 1 big one who is focused on re-exporting to the U.S., and the demand is coming back. We just recently got some inquiries for bigger orders to be shipped to the U.S., but also for the domestic market. However, the market is, due to the COVID-19, pretty slow at the moment. Okay?But we see that now everybody is opening up again or already did that in the course of April. Demand is there. Not as high as it was in '17 or '18, but is there. And of course, we have a sales team, and they are incentivized in selling to the domestic trailer manufacturers and also truck manufacturers, and this is the plan, of course. We cannot purely rely on exports. We need to have a big share or bigger share in the domestic market. And we are working on this.

[Operator]

The next question is from [ Roland Konik of Valo Holdings ].

[Unknown Analyst]

From my side, only one question is left. You stressed in your presentation that you did no goodwill impairment in the first quarter. Could you elaborate about how much headroom do you have after taking account weaker market for the next quarters because of COVID-19?

[Matthias Heiden, CFO & Member of Management Board]

Yes. I can take that, [ Roland ]. Thanks for the question, which I will, if you don't mind me doing so circumvent a little bit because I don't think we should be discussing the exact details of goodwill impairment testing which we do at regional level. But that's the first data point that is important to understand, because the goodwills are allocated at the regional level.Regularly, we get 2 questions from the financial markets. One is directed at the Orlandi goodwill, and the second one is directed at the York goodwill. In terms of the potential impact, this is obviously disclosed in the Annual Report where you can see such goodwill on Orlandi. We are very confident on the headroom because there is sufficient headroom at EMEA a level. It goes without saying, and I have also repeatedly stated that in this call, that the York goodwill allocated to the APAC region has a somewhat shrinking headroom, and in declining markets where recovery is delayed through COVID-19, that headroom can become a little tight.But with that, I don't want this to be taken too negatively yet again. This has happened previously when I tried to be transparent. It is something that we monitor regularly. And maybe you saw from the regional performance and heard from Alex's words that we are gaining market share in India. We are hoping for a recovery beginning in the second half of the year. That would then bring us back in line with the original planning that you have as an underlying for the goodwill impairment testing. So here, this is really something that needs to be taken quarter by quarter. But then, if I look at the amount involved overall, I think it would be bearable. But we will keep you posted on this, which is why we stressed this in the quarterly reporting because it's a recurring question.But if I may conclude my answer, Roland, I'm sorry, the performance of York India during the first quarter was above the group margin. So this is to show that we have done our PMI homework, number one; plus, the team has been very strong in responding to the SG&A savings requests that we put in front of them.

[Operator]

There are currently no further questions in the queue. Mr. Schickling, the floor is yours.

[Michael Schickling]

So ladies and gentlemen, thank you very much for your questions. If you have any further questions afterwards, please do not hesitate to contact Investor Relations. Have a good day. Goodbye and take care. Thank you.

[Matthias Heiden, CFO & Member of Management Board]

Thanks, everyone.

[Alexander Geis, CEO & Chairman of Management Board]

Thank you.