Elringklinger AG

XETRA:ZIL2

Earnings Call Transcript 2020-Q2

[Operator]

Dear ladies and gentlemen, welcome to the conference call of ElringKlinger Group. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Dr. Stefan Wolf, CEO, who will lead you through this conference. Please go ahead.

[Stefan Wolf, Chairman of the Management Board & CEO]

Yes. Well, thank you very much, ladies and gentlemen, a warm welcome to all of you to our conference call regarding our figures for the second quarter 2020. Quite a difficult quarter as you can imagine. Our agenda today is as follows: I will start with a short introduction on markets and of course, on the key issues of the second quarter 2020, which could be labeled as the coronavirus quarter here in Europe. Afterwards, our CFO, my colleague, Thomas Jessulat, will present the financial figures of the second quarter. And I will then close with the outlook on the fiscal year 2020. And of course, at the end, as usual, you have the possibility to ask questions, and we are more than happy to take your questions and answer your questions. Yes. Companies with relevant activities in Europe and North America have been particularly hit in the second quarter of 2020, while the first quarter was more the Asian or Chinese quarter with regards to the coronavirus pandemic and its consequences. This applies, above all, to the automotive industry, to our industry, in the supply industry, of course, as well. From March on, production in many European and North American countries has been scaled down or were even closed for a couple of weeks. As a result, we noticed a harsh impact on our industry. On a micro basis, the collapse of international auto markets was reflected in a sales decline of ElringKlinger of 41.9% to EUR 252 million. Adjusted for FX from foreign exchange translation and M&A activities, the revenues fell by 40.5%. Compared to the contraction of global auto production that was at 44.5%, we could manage to outperform the market once again by 4 percentage points. The substantial slump in revenue in the second quarter of 2020 as a result of the coronavirus pandemic led to an EBIT of minus EUR 32.4 million. Including the solid first quarter, you remember, we had EUR 60 million in the first quarter, EBIT stood at EUR 16.4 million, minus EUR 16.4 million for the first half of the year. Even against the backdrop of the corona crisis, we were able to continue on our chosen path. You remember that from the last calls and from last year, we achieved in this very difficult situation a positive operating free cash flow of EUR 25.8 million. And we were able to further reduce our net debt by EUR 23 million. Over the past 12 months, just to remember you, over the last -- the past 12 months, we have improved our net debt even by EUR 120 million in total. At ElringKlinger, we luckily have not -- have noticed a relatively low number of coronavirus infections so far, and we are really happy about that. Among others, it can be attributed to the fact that we have implemented preventive measures as early as the end of February, but we also see a high group-wide discipline in implementing and living our protective measures like comprehensive hygiene rules, special office guidelines or of course, global travel restrictions that we implemented already end of February. When we look at the year-to-date, 2020 has been impressed by the coronavirus pandemic, of course, which led to extensive measures being taken by states around the world from February or even the end of January 2020 on for the purpose of protecting the citizens of those countries. As a result, economic activities came to a standstill in most countries. If we look to Asia, especially China, that was already in February. And if we look on the European and the American continents, that started end of March. From the end of April on, a number of European and American countries, gradually relaxed their protective measures again, first in Europe and later also in the North and South America. Accordingly, automobile production resumed little by little. However, demand within the automotive market remained very sluggish, especially in Europe. In North America, it developed somewhat more dynamically. And China, the world's largest automobile market, has largely returned to its normal level since early April. The rest of the year mainly depends on the sustainability of the demand situation in our industry. If there is a very slow or even no recovery, the cut in our industry will be quite deep. More about that in our outlook that I will do later. So now let me hand over to Thomas Jessulat, my colleague on the management Board, our CFO, responsible for financing, and he will explain the quarterly figures.

[Thomas Jessulat, CFO & Member of Management Board]

Yes. Thank you, Dr. Wolf. Ladies and gentlemen, a warm welcome also from my side. I would like to comment the financial results for the second quarter, starting on Slide #5. The economic consequences of the coronavirus pandemic are reflected in the group's order books. Order intake slumped to EUR 193 million in the second quarter of 2020, and this represents a decline of EUR 227 million or 54.1%. Adjusted for currency effects, order intake decreased by not more than 51.5%. The same pattern can be seen in the order backlog. After EUR 1.63 billion of June 30, 2019, the group recorded orders worth EUR 929 million in this year's half year reporting date. Therefore, order backlog is down by 12.6% compared to the prior year figure. Due to the collapse of international vehicle markets, group revenues fell by 41.9% to EUR 252 million, while it amounted to EUR 434 million in the same quarter in 2019. In organic terms, which means adjusted for the effects of currency translation and M&A activities, group revenue fell by 40.5% in Q2 and by 25% in the first half. Revenues in the second quarter 2019 were diluted by currency effects of EUR 4.9 million in the second quarter and by the divestment of the Hungarian Industrial Park with an effect of EUR 1.1 million. Compared with the global vehicle production, which contracted sharply by 44.5% in the second quarter and by 33.2% in the first half of the year, ElringKlinger once again managed to outperform the market as a whole by 4 percentage points in Q2 2020 and by good 8 percentage points in the first half. The revenue shortfalls recorded in the second quarter 2020 affected all regions. Let me focus on the main 3. In Europe, including Germany, group revenue from sales fell in Q2 by 42.9% to EUR 128.5 million. At 34.8%, Germany saw a less pronounced decline. Group revenue in Europe, therefore, proved significantly more robust than the European vehicle market, which suffered a 63% decline in production output in the second quarter of 2020. In the region of North America, sales revenues slumped by 54.3% to EUR 53.4 million. Here too, however, the impact on ElringKlinger was less severe than that felt by the market as a whole. With the downturn in production output of 69% in Q2 2020, the North American market was hit particularly hard. In Asia Pacific, ElringKlinger recorded the smallest regional downturn in sales revenue with a decline of 13.3% in the second quarter of 2020, although China was affected by extended New Year holidays in February and subsequent planned closures due to the COVID-19 pandemic. The situation returned to normal in the second quarter. By contrast, the situation in other Asian countries, including India, did not improve in the quarter under review. With regard to our segments and business divisions on Slide #7, we see some revenue shortfalls. The OE business remains the largest segment, representing 3/4 of sales. Revenue fell by EUR 173 million or 48% to EUR 188 million in the second quarter of 2020. Within the long-standing divisions of Shielding Technology as well as Cylinder-head Gaskets and Specialty Gaskets, revenue in the second quarter of 2020 fell by more than half in each case compared to the same period in the previous year. The Lightweighting/Elastomer Technology division, which develops and manufactures innovative lightweight structural components in addition to engine-related parts, was relatively less affected and therefore, enlarged the share of group sales. The E-mobility division, which comprises the areas of fuel cell and battery technology as well as electric drive systems, also recorded a below-average decline in revenues, generating EUR 5.8 million in the second quarter of 2020 compared to EUR 8.4 million in the second quarter of 2019. Slide #8 presents the earnings figures for the second quarter, which are linked to the volume impact of the pandemic. The group's EBITDA was pushed down into slightly negative territory at minus EUR 0.9 million in the second quarter of 2020 after EUR 39 million in the second quarter of 2019. The ElringKlinger Group EBIT fell to minus EUR 32.4 million in the second quarter after EUR 10.2 million in the quarter in the previous year. Therefore, the EBIT margin was at minus 12.8%. Compared to the same period a year ago, net finance costs fell to minus EUR 6.3 million in the second quarter of 2020. The group recorded an improved net result from currency translation, a better net interest result, but a lower share of bottom line result of associates in Q2 2020 compared to prior year figures. At EUR 3.1 million, the group's income taxes were in positive territory in the quarter under review as part of the government's COVID-19 aid measures. The group took advantage of tax relief in Germany including tax deferrals. As a result, net income for the ElringKlinger Group stood at minus EUR 35.5 million in Q2 2020, also after noncontrolling interests. Calculated on an unchanged basis of 63,359,990 shares, earnings per share attributable to the shareholders of ElringKlinger AG amounted to minus EUR 0.56 in the second quarter. We now come to Slide #9. The substantial slump in revenue in Q2 2020 as a result of the coronavirus pandemic was cushioned slightly in terms of earnings performance but not compensated for in full by the existing efficiency program and measures initiated by the group at an early stage to adjust capacity levels and intensify cost savings. They are the following drivers to be identified. The impact on sales volume by the pandemic also affected earnings and instruments like the German Kurzarbeit or similar ones in other countries helped to compensate the decline of EBIT. All in all, the coronavirus impact amounts to roughly EUR 67 million. External factors like tailwind on the raw material side or reimbursement of duties improved earnings by EUR 3 million and the efficiency program includes several dimensions. Savings have been realized by reducing personnel costs, selling expenses as well as general and administrative costs and helped to offset the negative effects of the crisis to some extent. Let me now turn to Slide #10, showing the performance of our segments. The adverse effects of the coronavirus pandemic on the automobile industry had the most significant impact on the Original Equipment segment, as it is directly affected by changes in the volumes requested by manufacturers. As mentioned, segment revenues fell by 47.9% year-on-year to EUR 188 million in Q2 2020. With regard to earnings, the long-standing divisions had improved their earnings performance in Q1 despite declining revenues, due in part to the efficiency program, but we're still well below the breakeven point due to the significant sales decline in the second quarter. Even though conditions were difficult, the Aftermarket segment recorded an encouraging increase in revenue, which grew by 6.7% and to EUR 91.3 million in the first half of 2020. In the second quarter, the segment succeeded in maintaining the supply of spare parts to the market in all major regions despite far-reaching logistical and trade-related restrictions. And as a result, revenues generated in the second quarter remained high at EUR 39 million, and the high level of efficiency related to materials planning, warehouse logistics and trade channels as well as forward-looking inventory optimization are reflected in the segment's solid earnings performance underpinned by group-wide cost discipline. The Engineered Plastics segment has been faced with declines in orders and revenues, which were recorded, for example, in the mechanical engineering and automotive sectors and regionally in Germany, Europe and the U.S. Segment revenue in Q2 fell by 17.1% to EUR 23.8 million. And with continued strict cost discipline, segment EBIT amounted to EUR 1.3 million in the second quarter. Revenue and earnings contributions of the segment Other are of subordinate importance, accounting for less than 1% on of consolidated revenue. Now we come to Slide #11. The net working capital has been managed down to EUR 417 million over the past quarters. Compared to the end of March 2020, a decrease by EUR 36 million. While we have already focused on reducing and optimizing these items in previous periods, developments in Q2 2020 were influenced in addition by the decline in orders and revenue in the wake of the COVID-19 crisis. Purchasing volumes and the inventories were proactively adjusted downwards. The decline in revenue which had reached dramatic proportions in February first in China, then also in Europe, led to a reduction in trade receivables. As part of the efficiency program, we followed a disciplined approach in our CapEx activities. In response to the COVID-19 crisis, measures were stepped up even further. Key investment projects, however, were not halted. Projects associated in particular with new business areas, which are of significant importance to the group's strategic positioning, will continue to be implemented. All in all, CapEx in property, plant and equipment and investment property amounted to EUR 10.4 million in the second quarter after EUR 20.7 million in prior year's quarter. The CapEx ratio was down at 4.1% in the second quarter. Net cash from operating activities was used to fully finance payments for investments and also to build up additional liquidity reserves. Therefore, the ElringKlinger Group generated operating free cash flow of EUR 25.8 million in the second quarter. Due to the solid financial situation, the group was able to further reduce net debt in the first half of 2020. As of June 30, net debt amounted to EUR 580 million compared to EUR 595 million at the end of 2019. In the period under review, there were no significant changes in credit terms not even as a result of influences from the coronavirus pandemic. As of June 30, ElringKlinger complied with all covenants agreed with financial institutions. And as of June 30, the debt ratio, which is the net debt to EBITDA, was 3.8% compared with 3.3% at the end of 2019 and 4.4% at the end of the first half of 2019. Regarding our maturity structure, you can clearly see a positive effect of our syndicated loan with a volume of EUR 350 million. And with regard to the current liabilities, we will not have to refinance the full EUR 149 million in 2020 but only EUR 3 million. The rest is either short-term revolving or due in 2021. Last but not least, I would like to focus on the liquidity position of EUR 295 million including unused credit lines, which still is quite comfortable. Having said this, I now turn it back to Dr. Wolf.

[Stefan Wolf, Chairman of the Management Board & CEO]

Yes. Thank you, Mr. Jessulat. We will now look first on the markets for the rest of the current year. In general, the economic impact of the coronavirus pandemic still cannot be accurately assessed as the uncertainties are simply too pronounced at present. It is rather impossible to predict how quickly the demand situation in Europe will improve nor is it possible to assess how the economy in North America will develop in the near future. What is more in view of the rising number of corona-19 cases in numerous countries such as the United States or -- especially Brazil, also India or even some European countries, it is really impossible to predict whether there will be a further wave of infection in individual countries or across the entire continents. Thus, renewed restrictive measures in the course of the pandemic cannot be ruled out for the rest of the year. And these measures would, of course, hit the economy or the economies worldwide severely. Based on today's perspective, Q3 and Q4 will also show a decline in light vehicle production year-on-year. Having all this in mind, we expect for the fiscal year 2020 that the Chinese market is going to decrease around 15%, European and North American markets probably fall down by around 25%, and the South American markets are going to shrink by around 30%. And that, of course, leads to a decline of global light vehicle production by approximately 22% for the full year 2020. I will close this presentation with the outlook for the group on the fiscal year 2020. Due to the described major uncertainties, it remains difficult to provide a sufficiently reliable and accurate outlook for this year. Based on the information and estimates available today, ElringKlinger can confirm its annual guidance presented in Q1 2020, and we anticipate that the change in revenue will be slightly better than the figure relating to global light vehicle production. And as I said before, experts are currently forecasting year-on-year decline of 22% in production output for the annual period as a whole, so we are going to be a little bit better. And looking at the second quarter, we see already an improvement. If you look at revenues in April and May was double-digit million, and June was already triple-digit million. So there is some improvement. In terms of earnings, the group is, again, anticipating an EBIT margin that is visibly lower than in the previous year. The group also continues to assume that in 2020, the return on total capital employed, the ROTCE, will be lower than in the previous year. Yes. Last but not least, our expectations for the remaining indicators for fiscal year 2020. You see that now on Slide #16. As shown in the first 2 quarters, ElringKlinger will maintain its disciplined approach to capital expenditure on property, plant and equipment as well as investment properties. Due to the postponement of measures, active targeted project management and the general market situation, the group is adjusting its outlook for the current year. In relation to group revenues, the volumes is now expected to be below 5%. Previously, it was below 7%. The group will also continue to optimize, of course, net working capital. We are working on that really hardly. Taking into account the expected decline in revenues, the ratio for the fiscal year 2020 is expected to be approximately the same as in the previous year. Overall, the group will be looking to record a positive operating free cash flow for 2020. We managed this already in the first half of 2020, and we see that also for the full year 2020. Despite the expected positive operating free cash flow, it is unlikely that the net debt ratio, which is net financial liabilities in relation to EBITDA, will improve further in view of the anticipated earnings situation. Instead, the group anticipates a number above prior year's figure of EUR 3.3 million. With regard to the equity ratio, ElringKlinger expects to generally remain within the long-term target range of 40% to 50% of total capital, so not going below 40%. And the group expects R&D costs, including capitalization to account for around 5% to 6% of the consolidated revenues. Overall, therefore, the group can confirm its medium-term outlook. However, the exceptional consequences of the coronavirus pandemic must be taken into account, especially against the background of the high degree of uncertainty in the forthcoming reporting periods. I talked about that already that almost everything is uncertain. Well, ladies and gentlemen, that concludes the presentation on the results of the second quarter and the first half year, also the outlook and general market expectations, and Mr. Jessulat and myself are more than happy to take your questions now, and we are going to answer your questions. Thank you very much.

[Operator]

[Operator Instructions] And the first question is from Christoph Laskawi, Deutsche Bank.

[Christoph Laskawi, Research Analyst]

The first one will be on EBIT and also operating leverage a bit. You're breaking out the cost savings that you could achieve during the quarter. So the first question would be, how many of those are actually sticky? And how much of those are just very short-term measures that you could implement also given the low activity? Would you expect part of that to reverse in Q3 and Q4? Or is it really very sustainable measures? And then would you be willing to quantify the short-time work or Kurzarbeit impact on your earnings? You've included it, I think, in the one tab, that's not quite clear breaking out? Or can you -- or are you unwilling to quantify those impacts? That's the first question.

[Thomas Jessulat, CFO & Member of Management Board]

Yes. When we look at the EBIT bridge, then we see we have EUR 8 million personnel costs indicated. And as part of the decline in sales, we have another EUR 32 million roughly, EUR 32 million. So overall, in Q2, it is close to EUR 40 million reduction in personnel costs. It's a mix, I have to say. It's a mix between short-time furloughing in the international context, and also the efficiency program. And therefore, we have taken that apart. And my expectation is that what we see there, the roughly -- the higher single-digit amount that we need to have continued savings on the personnel side as we go into the second half of 2020, yes. So that amount or the amount close to that, I would expect to be sticky in regard to the second half. So when we look at short time in Germany and maybe in Europe, particularly, it's probably roughly 50% of the overall amount because we have, of course, in North America and the Americas, we have had furloughing in the U.K. as well. So a little bit more than 50%, I would expect, to be coming out of short-term working here in the European area.

[Stefan Wolf, Chairman of the Management Board & CEO]

Maybe one amendment from my side. You have to see that the positive effect of this coronavirus pandemic is that you learn a lot. So I'm pretty sure that our travel expenses will be much lower after that than before because we learned that we can do a lot through telephone conferences, video conferences. So this is just one example. And I think there are a lot of issues that showed not only ElringKlinger, but a lot of companies that things can be done differently, and that expenses that we had before are not necessary anymore. And that we can sustainably change processes and change behaviors in companies that will result in a quite good reduction of costs.

[Christoph Laskawi, Research Analyst]

So I take it that going into H2 most of the savings will be sticky and that the support when you ramp-up activities from measures like short-time work, its savings will not weigh on your operating leverage. So we could assume actually that the performance that you've shown in Q2 will be close in Q3 and Q4 when it comes to operating leverage, say, around the 25%.

[Thomas Jessulat, CFO & Member of Management Board]

Yes, it will be adjusted to the lower sales levels that we have in the second half. So the answer is yes to that. We'll see some effects and we'll see some increased effects relative to what we had planned initially on the efficiency program, and that will give us some better performance. Yes.

[Christoph Laskawi, Research Analyst]

And the second block on working capital and free cash flow essentially. You had a decent working capital performance in Q2. Now the question is obviously, when activity picks up again in Q3 and Q4, will we see a partial reversal of the numbers that you've shown, say, in inventory and also then the receivables build again? And on the receivables, I take it like for every -- most of the other suppliers, at least factoring should have been a headwind in Q2. Do you expect that to reverse as well in the second half?

[Thomas Jessulat, CFO & Member of Management Board]

Yes. On the working capital, overall target remains 25% of sales. We see now a normalization of sales on a little bit lower level. What happened in the second quarter initially was, of course, the delay or the stop of the supply chain in terms of the raw materials that came in. We finished a lot of unfinished production orders in the group by then and gave ourselves a good position for the restart because we had on the finished goods side good levels of inventory to have a smooth restart in June. What we see at the end of June, we see a good inventory basis as a result of that process and we'll continue to work on a reduction of inventory for the rest of the year. Now I see a normalized level also between accounts receivable and accounts payable in the group. So in that sense, I would expect that we continue with some improvement here on the working capital. On the receivables side, we had, in Q2, headwinds from a liquidity loss of EUR 20 million, 2-0. Yes. And that is picking up immediately again now beginning of Q3. Yes. But when we look at the cash flow situation here in the second quarter, we, in fact, had roughly EUR 20 million of headwind coming from that.

[Stefan Wolf, Chairman of the Management Board & CEO]

One word to the working capital in a situation that it's not only in our company like that, this is in general. The situation that we had, it's pretty clear that working capital goes up tremendously because if you look at the situation in our industry, you get your orders, your order intake, you get predictions for the production and for what the customers, the automotive customers are going to order always 3 months ahead, 6 months ahead. And of course, with not knowing that factories worldwide are going to be closed widely in April and May, we, of course, ordered already in January and February material for the original volumes that were in our books. That's pretty clear. And then all of a sudden, we got the material, but we could not produce because the customers didn't need the parts because they closed their factories. Yes, that's pretty clear. And this will -- of course, this material now flows out as sales are increasing. And as I mentioned before, we had in April and May only double-digit million sales. And in June, already triple million sales. So you see the improvement, and that, of course, will lead to the fact that the material goes out and that working capital goes down.

[Operator]

And the next question is from Marc-René Tonn, Warburg Research.

[Marc-René Tonn]

A few couple of questions. Firstly, when you look at your expectations -- the expectations you mentioned regarding activity in the second half from I think IHS or other institutes and you compare that to what you actually see in the order colors regarding your product, is that confirming your view? Are you becoming more, let's say, optimistic or, let's say, constructive regarding the second half year? Or do you see that these estimates still have some risk to the downside? Of course, we have now to exclude anything like a second wave for the second half, which we could not foresee today, but just to see on how the current situation does look like in this respect, that would be helpful. Secondly, I think you, in line with many of your competitors or other companies from the industry are reducing CapEx quite significantly in the current year. Could you give us some indication how much of that CapEx you may potentially have to catch up in the years ahead? Or how much of that you can really save, which was consequently not a return? And perhaps can you give us an -- I actually can understand that you can't give us any things like a more precise guidance on the second half year, but do you have any kind of, let's say, revenue number in mind for the OE segment, at which you would see results turning -- returning to breakeven with, let's say, a bit of help from short-term work following on the one hand side and the efficiency measures you have implemented on the other side?

[Thomas Jessulat, CFO & Member of Management Board]

In regard to your first question, the activity or the order situation that we have relative to projections, I think that what we see, it reflects what we read in studies and in information from different institutions. We are going to be heading towards a total sales reduction of probably 20% relative to previous year overall. So I think production numbers and expected sales from us roughly is matching also in the regions. On CapEx, we have canceled some. We have deferred some, and we have to catch up maybe a little bit. But what we have to take into account that the preparation that we have done here on different projects, the development is such that the projects also are being delayed. So it's not necessarily the case that what was planned as SOP for 2021, that what we had planned CapEx for, that, that is still on. What that means that customer time lines here, SOP dates, are shifted also into the future. So yes, I think there is some part of what we have deferred in 2020 is going into 2021. And otherwise, I think it's just a shift on the time axis into the future based on what we have experienced here this year. Okay. Your last question?

[Marc-René Tonn]

Well, let's say, point to the direction that with the structural matters you've done, whether you could give some kind of indication at which, let's say, kind of revenue level you will return to breakeven in the OE segment?

[Thomas Jessulat, CFO & Member of Management Board]

I think this is a too easy question because we have a change in the sales structure for the second half, and there is also an expected lower sales number for 2021. So what we have to do now, we have to adjust the cost basis through our efficiency program in order to shift this breakeven back to the nominal level that we have seen in terms of profitability, but on a lower sales basis, and this is effectively what we do for this year and also for 2021 that we have to reduce the cost base and to maintain a profitability level that we have seen in, for example, Q1 2020. So those activities are underway, and we have to report ongoing as -- and you'll see the impact of that. But the goal is clearly to stay on performance levels such as we have seen in Q1 2020.

[Marc-René Tonn]

Okay. Just lastly, one additional question regarding free cash flow. Did you have any, let's say, meaningful tailwind or headwind from factoring in the second quarter as receivable volumes were presumably coming down?

[Thomas Jessulat, CFO & Member of Management Board]

I'll just mention that the headwind in the second quarter was EUR 20 million cash outflow from reduced factoring, lower receivables and then less possibilities to sell receivables, and the impact was minus EUR 20 million. And I expect that to be reversed largely in Q3.

[Operator]

The next question is from Henning Cosman, HSBC.

[Henning Cosman, Analyst]

You've actually answered my questions, but maybe I can ask you something on fuel cells and hydrogen and the bipolar plates. More of your larger competitors are starting to talk about this a bit more. And I'm conscious, of course, that you have sold Hug in the past to Faurecia, which is one of the well prospective market leaders or intended market leaders by their own ambitions anyway, together with also Michelin or Schaeffler, for example, is talking more about it. So could you just -- I know you've talked about it 1 or 2 calls ago, but could you just remind us of our ambitions there in the fuel cell and bipolar space? And if you could imagine that you could possibly divest this in the future to free up capital to reinforce your ambition somewhere else? Or is this really a very key part of what you want ElringKlinger to be going forward, if you could just discuss your ambitions around that, please, again?

[Stefan Wolf, Chairman of the Management Board & CEO]

Well, we have a clear strategy here. And to be honest, of course, we do not disinvest that. This is the future of ElringKlinger, fuel cell systems and also our battery systems. And also, of course, components for fuel cell systems and also components for battery systems. It's basically a 3-pillar strategy. We still believe very much in the combustion engine. And I personally believe that we will have combustion engines even in 2050 in much larger numbers. And we see -- going to see a consolidation in our classical business that is parts for the combustion engine, and we will see here, as I said, a consolidation, and the market becomes very interesting for somebody that is leading in technology in those parts for the combustion engine because our customers still build those engines for many, many years. So that is -- we are going to invest in that area under proportional, but we are going to invest to keep us on this high technical level where we are so that the customers basically finally probably say we have to go to ElringKlinger to get parts for our classical business because they know how to do it. The second pillar is that we are going to supply to OE customers but also to very interesting new customers, new players in the automotive market components for battery modules and also components for fuel cell units. I'm happy that fuel cells and hydrogen and also all that becomes more and more popular. Everybody talks about it. The government in Germany has installed a person that is in charge of this hydrogen strategy. So we will sell components. And of course, our main component for fuel cell systems is the stack, the fuel cell stack. Of course, we can also sell bipolar plates if somebody develops their own stack. So we are very flexible here, and this will be a big part of our business in the future. That is the components for those systems. And then, of course, the third pillar is the systems. Here, we are going to be more or less a niche player because the investments would be too high for us to really go strongly in those systems. So we concentrate here on niche applications, interesting niche applications where we can deliver small numbers of systems, be it battery systems or be it fuel cell systems, and I think this combination is very good for the future development of the ElringKlinger Group. So this is our strategy. And of course, we see quite a dynamic development with regard to fuel cell systems. I expect that fuel cell systems and also, of course, components, we have R&D projects with customers and potential customers also with regard to components, that this really will get even more dynamic development in the years to come. So that is the strategy. And just one thing, as you mentioned, Hug, Hug was never in battery components or battery systems or was related to fuel cells. Hug developed and produced exhaust systems. And we decided when we sold Hug that we are going -- not going to invest -- further invest in those exhaust systems, which we see now was a good decision, and we did this decision right in the right moment. So yes, maybe you meant the company New Enerday that we sold because Hug has never had any relation to fuel cell systems. New Enerday, we sold, that was a pretty small company, and they were related to the SOFC, fuel cell, that means the hot fuel cell that operates at a temperature of around 800 degrees, and we don't really believe in that technology anymore. What we do is the so-called cold fuel cell, the cold stack, which operates at a temperature of about 50 to 60 degrees Celsius. And that's why we sold New Enerday, and that was also the right decision because we are very much focused on mobility, fuel cell systems in mobility and the SOFC with this temperature of 800 degrees will never be used in mobile applications. It only will be used in stationary applications and that's where we not are focused on that.

[Henning Cosman, Analyst]

Okay. I meant Hug, not because they are also involved in fuel cell or battery, but because maybe you also previously thought that this may be closer related to what you want to do in the future and then you sort of reconsidered that. So I just wanted to make sure that there's no chance for you to reconsider wanting to be in, for example, fuel cell stack components. Or maybe to ask it slightly differently, you're convinced that you don't need very large-scale to be competitive in this market? So one does need, for example, 20% market share also in bipolar plates to be competitive with potentially larger competitors.

[Stefan Wolf, Chairman of the Management Board & CEO]

No, no. We are going to be very competitive here in that business.

[Operator]

The next question is from Akshat Kacker, JPMorgan.

[Akshat Kacker, Analyst]

Three from my side. The first one, coming back to your 2020 guidance on outperformance, you mentioned that you expect end markets to decline by 22% and slightly outperform that number. In the first half, you've outperformed by more than 5%. I'm just wondering if there is any end-of-life contracts or any big changeover that we should be aware of in the second half. Or is it just a cautious guide based on what volumes could do in the second half? That's the first one, and I will follow up with the other 2 later.

[Stefan Wolf, Chairman of the Management Board & CEO]

We said -- we just said that we are going to outperform the market, but we didn't say a percentage number.

[Akshat Kacker, Analyst]

I read slightly outperform. So I was just wondering if there is anything in the second half that makes you more cautious.

[Stefan Wolf, Chairman of the Management Board & CEO]

Well, slightly can be also 4% or 5%.

[Akshat Kacker, Analyst]

Okay. I just wanted to make sure.

[Stefan Wolf, Chairman of the Management Board & CEO]

It's a question of definition.

[Akshat Kacker, Analyst]

That's all right. Follow-up, can you quantify the CapEx number for 2020? Is it possible to quantify it as of now?

[Thomas Jessulat, CFO & Member of Management Board]

Yes. For 2020, the it would be a mid-double-digit amount in euro, and it's going to be below 5% of sales.

[Akshat Kacker, Analyst]

The next one is on your headcount. I've seen that you've reduced personnel by more than 4% in the second quarter versus year-end. Can I ask if these changes are permanent in nature? And where are they coming from? Are they basically people that are retiring that you're not replacing? Or are they from voluntary severance schemes? Are there any restructuring costs that we should be aware of? And if you're planning to intensify these measures because I see that currently, only 1/4 of that reduction comes from Germany. Just wanting to understand how you're thinking about that. And also, if you could comment on temporary workers, how much have you reduced temporary workers in the first half?

[Stefan Wolf, Chairman of the Management Board & CEO]

We have reduced around about 1,000 people. And I would say the main effects are coming from ElringKlinger U.S.A., ElringKlinger Automotive Manufacturing in the U.S.A. and ElringKlinger Abschirmtechnik in Switzerland. Those are, let's say, the main companies in the group that have reduced personnel, and that is related to restructuring the production, to increase productivity, also rationalization, automization (sic) [ automatization ], all that kind of stuff. But also other companies contributed to the reduction of personnel because, of course, in our global efficiency program, which has a lot of parts and a lot of aspects, but also one aspect, of course, in the global efficiency program is to very closely look into the situation with personnel and to see if we can reduce personnel. And as I said, it's around about 1,000 people that we reduced since the end of last year. And that, of course, is sustainable.

[Akshat Kacker, Analyst]

And the last one on the maturity structure. Can I get a number, please, for 2020, 2021 and 2022 specifically for each year? And how much of that needs to be refinanced?

[Thomas Jessulat, CFO & Member of Management Board]

Yes. From a nominal basis, EUR 3 million, like I mentioned in the presentation, for 2020 is left. It's roughly EUR 100 million in 2021, and it's roughly EUR 100 million 2002 (sic) [ 2022 ].

[Operator]

And the next question is from Michael Punzet from DZ Bank.

[Michael Punzet, Analyst]

I have 2 questions. First one on your spare parts business. Spare parts business performed very well, not only in H1, also in Q2. Could you give us an idea what we should expect for the remainder of the year? So for the second half, will there see -- will there be some reversal effects from the good performance we've seen in H1? And the second one is on your E-mobility and also on your Lightweight business. Can you give us an update on new orders? I know in some cases, you are not allowed to mention names, but maybe you can give us more general view on that, especially also with regard to the cockpit being -- that we have for instance.

[Stefan Wolf, Chairman of the Management Board & CEO]

Let me start with the last question. Indeed, we are not allowed to mention names, but we received a very interesting and very good order from a competitor. It's a new OE. It's a competitor of this very successful company in California that produces electrical cars. So we are well implemented in this area of new OEs. And this is a real, real good order that is related to lightweight parts, not only the cockpit carrier but other parts. So we are pretty well equipped here. We also have very good discussions with the traditional OEs with regard to those parts. So that will be one of the important product for the ElringKlinger Group in the future. Also, of course, with regard to E-mobility, I mentioned that before in our 3-pillar strategy, of course, with regard to E-mobility, that means battery technology and also fuel cell technology. We, of course, have a nice project with customers, traditional customers in China, also traditional customers here in Europe and also with customers in the U.S. So that really is very promising. Your first question with regard to the aftermarket. This is a general trend. Every time when the OE markets are down, the aftermarket is going up. That's a general principle that I'm now since almost 25 years in this industry. So always, when we had a downturn in OE production or in the OE markets, then the aftermarket was picking up. So people just keep their cars, and they have to repair them. So this is a trend, and I see that this trend is ongoing in the second half year, which is good for us because we have achieved very good margins in the aftermarket, and we are well positioned. And you have to see that we started a strategy about 2 years ago in the aftermarket. We are very, very strong in Europe. I would say we have almost 80% of the market here in Europe. We are not that strong in China, which is an important market, and we are not really strong in North America. And we implemented business -- Aftermarket business in North America and in China, which is really, really growing fast and growing good, and we see additional effects from those 2 markets in the second half year.

[Michael Punzet, Analyst]

Okay. Maybe a follow-up on your E-mobility and also on lightweight business. Do you recognize any change in the customer behavior with regard to E-mobility due to COVID-19? So if you compare demand, let's say, 6 months ago to now, is there a change?

[Stefan Wolf, Chairman of the Management Board & CEO]

What we see is that all customers are very much focused on, I would say, this issue new propulsion systems. So all the projects that they have, be it the new OEs, or be it the traditional car manufacturers, they have not stopped those projects, and they have not stopped the means for those projects, the investments. They are fully working on that. Most of the customers do not have short-term work in those areas. They have the people really working on that. And that's what we see, too, and what we have, too. We also are very much focused on that. And of course, people are working full power here at ElringKlinger with the customers on those new propulsion systems. The savings and the short-term work and all that stuff is rather related to the traditional business than to those new projects because they know they have to hurry up to be competitive with maybe Chinese manufacturers or Korean manufacturers. So they really are very much focused on that.

[Operator]

And there are no further questions at this point, so I hand back to Dr. Wolf for closing remarks.

[Stefan Wolf, Chairman of the Management Board & CEO]

So thank you very much for attending our conference. Thank you very much for your interesting questions. And I just want to mention that we have our conference call for the third quarter on November 10, 2020. And I think we all hope that we can deliver good news and that this corona pandemic is over pretty fast. So let's hope on that. Thank you very much for attending our conference. Stay healthy all of you, and I'm looking forward to talking to you again in November. Thank you very much. Bye-bye.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.