Agfa-Gevaert NV (AGFB) Earnings Call Transcript & Summary

Welcome, and thank you all for standing by. [Operator Instructions] This call is being recorded. If you have any objection, you may disconnect at this point. Now I will turn the meeting over to CEO of Agfa, Pascal Juery. You may now begin.

Good morning, and welcome, everyone, to the Q2 results earnings call of Agfa. It's a call, but I have to say also that we have a few people in the room, a couple of analysts and [ journalists ], actually. So it's a mixed meeting and it's nice to have, I would say, the possibility to a physical opening as well, in the full respect of distanciation and hygiene rules. So Q2 results, obviously, are quite contrasted for the group. To make a long story short, I think our health care-related activities have performed extremely well in Q2, while of course, the printing and graphics related activities have suffered from the COVID-19 pandemic. Very positive message on the Imaging IT business, which actually we are showing for the first time as is, post the divestiture of -- part of the HealthCare IT activity. We are delivering on the strategic road map, and we are improving significantly the profitability. This is a 3-year journey. This is the first year of this journey, but we are very confident going forward about this activity. And if anything, we are a bit -- we are probably a bit in advance compared to our strategic roadmap. In the meantime, Radiology Solutions showed extremely good resilience. As you will see, there are moving parts within the business. But overall, we are also very pleased with the development of Radiology. Regarding the non-health care part of the business, namely the Offset and the Digital Printing and Chemical, these are businesses which have been significantly impacted by COVID-19. That's very clear and the name of the game for us has been to do some cost containment measures as much as we could to mitigate the impact on the bottom line and I would say, I believe we did that with some success. In these 2 businesses, as you know, Offset was already, I would say, structurally challenged part of the business portfolio, COVID-19 only compounded this situation. And as you know, we have been already taking steps to address structurally the profitability of this business. Digital Print & Chemicals, impacted short term, but I want to reaffirm immediately that we are extremely confident going forward about the growth potential of the division post the pandemic. Needless to say, also, Agfa is a very different company post the HealthCare IT business. And today, we are a company with significant excess cash position on our balance sheet. And the first action that we have already taken, by the way, during Q2, is to start working on increasing the funding ratio of our pension plans and as well as implementing derisking actions. So we are communicating very clearly that we are going to use EUR 350 million over the next 2 years in order to do that and to make sure that pension liabilities are significantly reduced and the volatility of this item as well. I would like also to repeat that I always got a lot of questions on the use of proceeds regarding the EUR 975 million coming from the sale of the part of HealthCare IT business. So you have part of the answer, EUR 350 million used in pension. We have also, of course, eliminated any financial debt at the company. And we've said that we will use the rest of the proceed to keep in the company. But I want to stress that our position now has not changed. Actually, we use the same word, saying for the time being, given the visibility of the business, we prefer to keep it in the company. That's -- there is no change whatsoever in our position here. I guess -- okay. This is the group. I think you know partly by the picture, the largest business is indeed, Offset. What I want to stress here is about 42% of our business is health care related, and the balance, 58%, is graphics and industrial related. That refers to my previous comment of the strong resilience of the health care business. Now if we look at the P&L, what is the story? Well, as you've seen, the COVID-19 impact has been extremely significant on the top line of the company. We lost about 20% of our sales for the second quarter. We've seen, of course, the quarter was not equal. I would say that already June was way better than April and May and the continuation of the trend of improvement of the activity is also showing in July. So overall, it was not a straight line, but still a significant impact for Q2 in terms of top line. Gross profit as well coming from the operational leverage, so significantly impacted by the top line. And you've seen immediately that for SG&A and R&D, we took steps to cost contain measures, and we could actually, I believe, be very reactive and efficient in taking these steps and mitigate somehow the impact on the EBITDA line that is more restricted and as well as the EBIT. So we're still presenting a quarter with 8% EBITDA, which is not, I would say, a normal quarter, but at least in current circumstances, I believe custom payment could indeed mitigate some of the impact. If we look further to the net profit, there are 2 stories here. Of course, the net profit does include the gain on the HealthCare IT, and therefore, is extremely high at EUR 668 million. Now if you turn to the continuing -- the profit from continuing operations, indeed, it's negative due to the high restructuring charge we took. Most of this restructuring charge is related to the project we have to shut down 2 facilities in the Offset part, 1 in Leeds and 1 in Pont-à-Marcq. I should stress that for the time being, these units are not shut down yet. We are still in the social process in France and that will go on for the next weeks. So do not expect a shutdown and any impact for us before at least Q4, and I believe it's going to be a partial impact in Q4. We'll have the full impact in 2021. That's due to the normal process of shutting down a plant. Now if I turn to the key drivers, I think I pretty much explained the story. So I'm not going to comment further on that. And I would like now to give you a view on the finance of the company. And I would turn to Dirk De Man, our CFO. Dirk, can you please comment the next slides.

So here we're presenting the net financial debt. So -- I mean, before we are actually -- we were including naturally most of the IFRS 16 debt. So now I decided just to show the pure financial debt position. So IFRS 16 is around [ EUR 85 million ], but it's still in the last quarter subtracted from the total amount, so [ accounting of ] [indiscernible]. So obviously, after the disposal, we had a very serious cash inflow. And as Pascal already mentioned, we repaid our financial debt. And overall, this created also a much stronger balance sheet overall, including also the restoration of the equity of the company. The key point I would like to make is that there was 2 key items that were affecting the cash flow. One was the fact that we already contributed a bit, an extra contribution in Q2 for our pension plan. So I will talk that in the next slide. But this was already EUR 40 million included in Q2, specifically as an extra contribution as part of the bigger plan. And the second part that affected our cash flow this quarter was the working capital. And so it was a EUR 32 million negative cash flow in working capital, but Pascal will talk a bit more about that later. So overall, a very nice net cash position. And maybe next time, I should turn around the slide and show the cash as a positive rather than a negative. So overall, a very good...

Yes because it's a negative movement. It's actually a lot of cash in our bank account, right?

Yes. So let's maybe move to the next slide. So basically, as we announced, we're basically going to do a big step forward in regards to one of our key liabilities being the pensions. So overall, our objective is to reduce the net liability for all these post-employment liabilities to below EUR 700 million over the next 4 years. And as such, that will also reduce massively the volatility on our balance sheet. So we're going to invest about EUR 350 million, which we will focus on the key funded plans. So if you may recall, these are the plans in the U.K., in the U.S. and Belgium. And there, we will do both funding, but as well, derisking, which will allow us to bring also the gross liabilities down. This year, we plan to already invest around EUR 250 million. So as mentioned, EUR 40 million was already done in Q2 and the rest will be spread over Q3 and Q4. As a result, the funded plans will get very close to funded -- fully funded status. So basically, they will become much less significant. The gross liability will be reduced, and also the investment of the assets will be more the duration matching to eliminate much of any volatility that is left in terms of net liabilities. The German plan is not a funded plan. So we continue to consider that as a predictable long-term liability. And so over time, this cash flow will be reduced by EUR 1 million per year. So at this point in time, it's around EUR 40 million. And 10 years later, it would be around EUR 30 million. It's relatively predictable, and we will continue to treat it as such, like a long-term debt with little restrictions. So the result of all this will be that the total cash contributions overall will decrease. So this year, roughly, we estimate it to be around EUR 80 million. In a couple of years, by 2026 for instance, this would be around EUR 50 million. And as I mentioned, it will continue to decrease over time. So I think it's a very big step that we're taking to derisk the company overall in regards to these liabilities that we have. Pascal, back to you.

Thank you, Dirk. And let's move on now to have a look at the working capital because, indeed, it was a covenant of the cash flow that was negative for us in Q2, but there is clearly a reason for that. We have increased our inventory, especially in the hardcopy film, medical film business, which is produced right on this side in Mortsel. The reason being, first, we wanted to -- it's a critical supply, and we wanted to make sure that we were safe in supplying our customers. We -- in a COVID-19 environment, any outbreak of COVID-19 at the plant facility would have triggered actually a significant shutdown period. So we really were mindful of this impact. Third, we need to run that plant actually flat out. It's not a plant -- either you run it flat out or you shut it down. And for the reason explained before, we really run the plant flat out during the first 6 months of the year. So that's clearly why we ended Q2 a bit overstocked on the field, with the intent to work it down during Q3 and Q4. That's really the story. It enabled us, again, to run efficiently and at low cost, the lowest possible cost of the production of film during the first half. I have to say, apart from that, we've been watching, of course, very much our trade receivables. And I'm happy to report that for the time being, we do not have any significant issues with customers paying us. And this is an item that we are monitoring, I would say, on a weekly basis. And we are doing okay on this. So this is a temporary increase of working capital. Actually, at the end of July, the working capital was already decreasing, and we expect this trend to continue until year-end. So that's also what impacted the operating cash flow of Q2 as well as Dirk explained the extra contribution in the pension area. And we wanted to give you full transparency on that. Now let's turn to the business, and let's start with HealthCare IT, I should say, the new HealthCare IT under new parameter. And here that the number that you are seeing representing this parameter. And the least I can say that we are very happy with the results of Imaging IT. As we told you, this is a business that was much less profitable than the one we sold, but we also told you that we have a strategic road map that is very clear for the next year to bring us to the high teens in terms of EBITDA. And actually, our strategy is -- has been detailed. Clearly, it's a target strategy, we target specific customer segments, we target specific geographies and we focus our activity on specific revenue streams, meaning our own software activity and professional services. And I'm happy to report, it works, it works. And Q2 is a good illustration, but Q1 was already pretty positive as well. Now Q2, let's be clear, it was also a bit exceptional because we could recognize in one row, a large contract in North America, the delivery of full-fledged enterprise imaging solutions to the AdventHealth group in Florida. And that, of course, has created a specific revenue event, so to speak. So I'm asking you not to take Q2 and draw a line for a while. It's not what it is. 55% of our revenue is recurrent -- is recurring, but we have 45% linked to project and project implementation can be a bit lumpy from one quarter to the other. However, we have enough visibility because we are also saying that our project pipeline, even this has been probably a bit slowed down by the COVID situation, it's still very healthy. We have a backlog that is well over 1 year of activity. I have to stress that we could deliver this project in Florida at the height of the COVID-19 crisis, meaning we know how to adapt also our way to work, to make it efficient at our customer and being able to execute. We are able, for instance, to work more and more remotely to execute that kind of project. So overall, now if I go back to the numbers, it translates indeed to the number. For the first half, we are already well into the double-digit EBITDA number. And the good news is it comes from pretty much everywhere. Our gross profit is higher. The sale line is not great. But again, remember that we are really focusing on the high added value part. So if I was removing the nontarget activity, actually, you would see a specific growth in H1 for this business, in the desire, I would say, sales for the business. Strong gross profit, and there is no reason why we shouldn't have also good cost management in HealthCare IT. It's about delivering for our customer efficiently, and that's what we are doing as well. So we are very pleased. But now, as I said, let's not draw a line for the rest of the year. It's still a 3-year journey. We prove that we can get there. But again, don't draw a line. Now if I turn to Radiology Solutions. So Radiology Solutions, you see about still 56% is hardcopy film, which represents still the bulk of our activity. CR and DR, 38%. So how did we fare in this business? And I probably will do the same, meaning, show first the comments and then the numbers. Well, clearly, in the DR market, the market changed dramatically during COVID. Actually, the market for radiography rooms decreased, but the demand for mobile equipment that you can put to the bed side of any patient increased, for obvious reasons. We were able adapt very quickly to this new reality of the market, stepping up also the supply chain, and we could gain share in this environment. So we are very happy to say that the Direct Radiography business has shown tremendous profit improvement during the second quarter and the first half in general. Computed Radiography market has been decreasing in the top line, but we have maintained excellent bottom line. So this is clearly a managed decline of the market. The market is moving to DR, but we do that very successfully on the profit area. Regarding the film market, and the film market is mainly outside of Europe and North America. The first market is China. China activity is almost back to normal. It's not yet 100%, but it's close to 90% today after Q1 that has been a bit impacted by the pandemic. But however, we are still suffering in terms of top line for the film from the various situations in India, in Latin America, and the rest of Asia. And that's clearly the case that, in fact, COVID-19 prevents, actually, people to go to the hospital to get normal procedures. So in spite of this top line challenge, as you can see we could mitigate it. And bottom line, this is clearly still a very profitable business, 21% of EBITDA, almost the same EBITDA in spite of the impact as last year, whether you look at Q2 or H1. We would expect these trends basically not to change in the coming quarters. Now if I look at Digital Print & Chemicals, and we have 3 businesses really that -- in this area. But inkjet is about digital printing. We sell equipment, software and inks to this market. Electronic print is our Chemical business to make it simple. And the remaining 44% is the non-medical film business, in fact. Now if I look at the comment before showing the numbers, clearly, a huge impact in digital printing for the simple reason, most of our current business is really towards commercial printing, meaning event-driven advertising, commercial activity. And obviously, it was extremely impacted during the pandemic. And also a significant part of our business is equipment. We sell equipment, we sell software, we sell ink. So equipment during the pandemic, we could deliver the backlog, but there is no new orders and no significant new orders during the situation. That's very clear. So this is the most impacted business. So what are we doing in this area? Well, first, we have 5 new product initiatives that are going to be rolled out. Some are already out, but the rest will be rolled out in the next months. So we have used the pandemic time to work on development and we are bringing new equipment to the market with specific high productivity features for our customers. Second, we have a drive for a few years to diversify away from the commercial printing sign and display market. And today, we have initiatives in floorings and leather that has -- that are already commercial and that we are rolling out. We have sold our first equipment in laminate flooring. We are about to sell another one. So it's starting. And these are end markets that are much less impacted by the situation. Third, we are developing a new application in the field of OEM inks in the field of corrugated packaging. We believe that we have a role to play in this market, thanks to our innovation. And fourth, you've seen that we have invested in capacity for water-based inks production capacity. The reason is we are OEM in business and the space is about to take off very significantly. So overall, short term, a lot of impact. Midterm, extremely confident that we can deliver superior growth in this market. Specialty Chemicals business has been quite resilient during the crisis, but not totally immune. And here, I want to exemplify a bit what is the play for the Specialty Chemicals business of Agfa by giving 2 examples of commercial initiatives fueled by innovation at the company. The first is a conductive polymer that is used in capacitors, in hybrid and EV vehicles. That's a starting business, of course, and we are extremely well positioned to take a significant share of this market and that's going to be -- that can be potentially a material business for this division in 2 to 3 years. And then also, I would like to stress, I'm sure you've all seen the green deal by the European Union with specific announcement on the green hydrogen economy with billions that will be invested in large capacity for green hydrogen. Germany has issued a similar plan. France is about to issue one. There are initiatives also here in Belgium and the Netherlands. So it's a booming, I would say, economy. Happy to say that Agfa is part of the story because we do a provide critical component namely the membrane for the alkaline electrolysis units that will work on renewable to produce hydrogen. So if I look at the ambitions by the various countries and the commission in terms of capacity, this is a business that will be... [Audio Gap] So I want to convey the message here that actually our chemical innovation does position us in the right segments, both in terms of growth and sustainability, by the way. Last, film and foil business, also impacted by COVID. The exposure to the industry is mainly in the oil and gas and aeronautics. And therefore, here, we are impacted very clearly. Turning to Offset now. And Offset, as you know, was already in a situation where we were challenged even before COVID. Of course, the COVID-19 situation has not changed the nature of the issue for the business. There are 3 markets for Offset, newspapers and magazines, commercial printing and packaging. The first 2 was significantly impacted by COVID. And therefore, we've seen that in our numbers. We have a revenue decrease of 25% in the Offset market. Clearly, this is the area where we believe that there will not be a full recovery when demand is being destroyed in this market, typically, not every -- not all the demand will come back. So that we are fully aware of it. So as you know, we have already taken steps to address the situation by reducing our capacity in Europe. And I did mention the 2 plants that we will be shutting down in the next months. But on top of that, this is just a first step. On top of that, we are actually, today, reviewing our Offset business model. We are going to simplify our organization, our go-to-market. We will streamline the product offering. So more is yet to come in terms of Offset in terms of really structural action. We also believe that current pricing levels in the industry are not sustainable. We believe there is an issue here. So we look into a way to position ourselves differently in the market. For instance, today, we give for free a lot of services to customers, and we are about to review, therefore, the way we earn our margins in this area. All this means a very negative performance at the EBITDA level. So we did the same as in every business segment. We could remove, as you can see, a significant part of our SG&A. Actually we kept our SG&A in terms of percent constant, even with a 25% top line decrease. But of course, it's not enough to mitigate the decrease in the market. And therefore, we are in negative territory for EBIT and EBITDA. As I said, we are taking the steps to address the situation as we speak, actually. So that's a bit for Offset. I'm going to end up by the outlook. What we see today for Q3 is, on the one hand, the activity level improves gradually. It is certainly not a V-shaped recovery, as we know. We are fully aware right now that, of course, the situation will take more time to get back to normal, I would say. The pace of recovery, therefore, is still quite subdued. And on top of that, we know already that we cannot repeat some of the cost actions that we were able to have in Q2. Simple example, for instance, we are -- people are taking vacation, I would say, during July, August, and we are, of course, encouraging everyone to take vacation. But when you take vacation, the company pay the full amount. While when you are in a temporary unemployment part, of course, there are schemes for you to benefit from advantages. So that's one example. We are also going to wind down our inventories, meaning we will shut down on a temporary basis some of our plants, meaning the fixed cost will also partly flow to the P&L. So actually, we are expecting a Q3 that is weak actually. And before what we believe will be a rebound in Q4 for us. The key assumption for us is that we are not entering into a new lockdown period and that the economic situation continues to improve gradually. That's our assumption. However, on the medium term, and when I say on the medium term, I'm saying in the next couple of years, I can restate only my full confidence in the solidity of the Agfa business portfolio. Health care activities will benefit midterm from the situation. I strongly believe that post-pandemic, we will see reinvestment in the health system, and we already see some signs of it. And our activities are extremely well placed to take advantage of this positive market trend. On Digital Print & Chemicals, the growth will come from our own innovation and we have a portfolio of innovation today. And again, these are commercial initiatives, not R&D. We strongly believe in their potential. Last but not least, Offset, the name of the game we'll have to probably rightsize the business given the new deal in the market. So expect some more actions in this area. But overall, again, I want to express my full confidence in the portfolio of the company with the 1 business that needs to be addressed in terms of profitability, which is Offset. I'm going to stop here and of course, I will be ready to take questions from analysts and journalists.

So we do have some in the room maybe we should start by the room, Vivian, and then take questions on the phone.

Guy Sips, KBC Securities. First, two questions. First, this year, you stated that you are not changing your view on shareholder remuneration and possible share buyback, whatever. When can we expect some news on that? And so you highlighted that you didn't change any view since the start of the pandemic comparison to today. When can we expect some news on that one? And the second is can you give some more color on the Florida contract size in the HealthCare IT business? So what was the contribution of that contract? And in Radiology Solutions, you stated that we do not expect the trend to change in the coming quarters. So can you confirm that you're expecting this Radiology Solutions that EBITDA margins be and stay close to the 20%?

Okay. On the shareholder remuneration, yes, I repeat. I think we used exactly the same wording we used for Q1. I think exactly, we have not changed. To your question, when can we expect to have market IT? It's probably a bit difficult for me to answer because I need to have visibility. And today, I think you would agree with me, the development of the situation to the pandemic, you have ups and downs, and it's probably not what we expected. So it's a bit difficult to answer your question on when because we need this visibility going forward. But I hope that we'll be able to do that in 2021, at least. Regarding the Advent contract, I would turn it to Luc Thijis, the Head of HealthCare IT business. I'm not sure we are able to provide any color here. But...

No. We have agreed with the customers in our contractual terms that we would not divulge information. So it was, let's say, very significant. Sure. But I'll leave it at that.

Yes, it's confidential. AdventHealth, we are happy for us to mention the fact that we are their partner. But of course...

Let's put it the other way around this contract, how many times can we expect a contract of this size? Is that every year, every 2 years, every 5 years? How exceptional was this?

Well, I would say that the specificity here is that we were able to deploy within, let's say, recognized within 1 quarter. And because we have similar types of contracts with other customers, but they typically take a longer time to be deployed. Here, it was let's say, within a quarter that you saw the major impact. But there are several of those. And of course, towards the future, we are aiming for more of those also. Yes. And so we have, as you will read, a very focused approach towards customers that have a high IT maturity. And secondly, customers that have a growth plan. So meaning hospitals that consolidate other hospitals, old extend service lines and therefore, grow in patient volume.

No. It shows our ability to win in this market to have such a large contract with a large provider. It's a good -- and the ability also that we have to execute very well, actually on the project. This is what it does reflect. I mean when you do it in 1 quarter, especially in the context of COVID-19 pandemic in Florida, that's what the takeaway should be. Our ability to deliver flawlessly large contracts in a difficult context, gives me great confidence. We won't have it every quarter. As Luc is saying, normally, it's typically spread over, but I think the takeaway is we are on the right track here. We're on a good track. Then you had a last question regarding Radiology. Yes, we expect the trend to continue. We are expecting the film business to continue to be challenged until the end of the year in terms of volume, but we do expect as well, at the same time, much progress on the Direct Radiography business. So overall, yes, I mean, Radiology Solutions will deliver.

Kris Kippers, Degroof Petercam. Two questions, if I may. First one, importantly, of course, on the cash allocation for the pension plan. I was just wondering what's the -- let's say, the risk profile that you have in mind for the group and what's the calculation you have made to state, we want to derisk our pension plan that we have today? And what's, let's say, a normal level that we should anticipate going forward of cash on the balance sheet in that respect? Because would you then consider, if you look at investing in, let's say, internal solutions, but also potentially externally. So would you consider, if you net out the cash that you have with the pension plan, we then consider to take in some leverage, let's say, to accelerate your growth as you foresee in some niche areas? So let's say, add on M&A and things like that. So that's the first question. Secondly -- sorry, related to that, of course, how do you make the calculation from the EUR 80 million EUR 50 million? If I understand it well, let's say, EUR 5 million, EUR 6 million stems from the German fading out and there is then a one-off effect of EUR 20 million, EUR 25 million from the proposal that you made now, roughly. Does it imply that you actually land at EUR 45 million also in 2030 when the additional EUR 5 million from Germany is coming in? And then just a second question. Indeed, you allude a lot towards the weaker Q3, temporary unemployment is indeed gradually fading out. Could you share with us some more details on how Agfa, let's say, benefited from that? And in what respect you can compensate those benefits by the restructuring that is coming up, for example, in Offset and things like that?

Yes. So on the pensions, I think we just took a cut at where we thought we should go in terms of funding the funded plans. So that's really how we went about it. So we have 3 major plans that were funded, but let's say, not fully funded. And that's basically the angle we took is we wanted to bring them to a high enough funding level. So that you could consider them fully funded with a little gap left. So in the future, when you have discount rates still improving a bit, that you get not automatically to a fully funded status or even in the future and I guess that's the long-term future because I don't see it happening very soon. If discount rates would increase significantly, you could get to an overfunded situation and potentially take them off the balance sheet completely. But that's a very long-term future. So that's what determines really our choices around the funding level. I think the second part of your question is more about leverage going forward. That will be more driven by the opportunities that come across our path at this point in time. We're not intending to make big acquisitions. I think if anything, it will be small bolt-on elements that we need to develop the businesses that we have, but who knows? And in the long term, these are indeed options, as our business develops and there are opportunities that we need to look at, that could be considered in the future. But for now, we intend to stay cash positive and debt free and use the proceeds as we go along for the projects that we have. And I forgot the third question. Can you...

The cash outflow for pension from the...

Yes. So indeed, you could consider that continuing to decrease over time, at least with EUR 1 million a year. So basically, the point there is that it's the German funds that will be very predictable. And then there is still a part of an active fund in Belgium, which is the Belgian plan, where when people retire, they take their cash in one lump, and that's also going to be determining the cash outs, but they would not be increased.

Just a point on the acquisition going forward. Let me state also that for the time being, the -- when you look at the, for instance, Imaging IT or DR, we have an organic plan for growth. We don't need a lot of capital to grow. And as I said, in Digital Printing & Chemicals, that's also an organic plan to grow through innovation. So it doesn't mean I'm ruling out anything in the future, but the first priority for the time being is really to deliver on these organic plans. That's the first and foremost priority for us. And also, I think we have a pretty good view of where we want to be in Imaging IT and in Direct Radiography. I think we still have to write a strategic road map for the Digital Print & Chemicals business, to look at the potential options we have in this space. But it's probably a bit less mature in the strategic, I would say, thinking in these areas.

Coming back on the pensions, you will decrease the cash out from EUR 80 million to EUR 50 million between today and 2026, but will we see a hike in, let's say, this year and next year? Or will it be very gradual?

Yes. I need to look at the projections. I just took the years where we had nice rounded numbers. That's why we picked 2026. But we can follow-up on that point.

And then the question on temporary unemployment.

On temporary unemployment, I mean, it's probably a bit difficult to give more color. We try to give you examples of why. And I did not only mention that, but I also did say that some of our units will be -- will be shut down on a temporary basis, which also will have -- will impact a bit the P&L in the short-term while releasing cash, by the way, from the working capital. So it's probably a bit difficult to give more color right there on the temporary unemployment, really.

Yes. We need to see.

Plus, the story is not over yet. I explained that especially, for instance, in Belgium, we favor, of course, vacation, but we are looking at our options for September as I speak. So the story is not over. Another question from the room, I guess.

You have one on the further reorganization of graphics. What's your message for the labor force right here in Mortsel? Before, you said they don't have to worry. Is it still the case? Or...

I think we have -- sorry, seems we have an issue with the microphone. What I did refer to is the industrial production in Mortsel is mainly film and chemical related, mainly. So it's not -- graphics is not the main driver for Mortsel. So I repeat that. I mean on the manufacturing footprint, in the footprint we have in graphics, I mean, which we are doing is in Leeds and Pont-à-Marcq in France. Now regarding Offset, what we do have here is headquarters. We have a lot of people doing services, engineering and so on and so on. So yes. I mean part of the Offset organization is here, but you should make the distinction between the industrial part and the plant and the headquarters. Rightly Luc? Rightly said?

Definitely. [ But it's not ] [indiscernible].

If you summarize it a little bit and managing at phase, making sure that your EBIT is high enough to cover for the pension costs and the restructuring charges. Can you give us some clue on the restructuring charges going forward? This year, they will be quite high, but how do you see them evolving over the coming years?

That's a good question. Well, in order, we -- again, we have received the cash from the HealthCare IT divestiture, and this is the opportunity to make a company transformation. We are addressing the liabilities today, the pension liabilities. I will also use the cash to make the company transformation. So when you refer to restructuring, we have the resources to restructure. I'm not in a position to guide you right now on restructuring. You need to be a bit patient. You understand that we are still working on the plan for Offset, and Offset being a significant part of the company, we will be looking at the overall company setup, of course. But it's too soon to guide on the subject. And again, yes, you're quite right. I mean I'm confident going forward with the growth of our businesses. But yes, we'll have a group that will comfortably be able to pay its legacy duties while still generate cash. This is the name of the game here. Questions? Question from the audience on the phone? I think we have one analyst and maybe a couple of journalists? If any?

[Operator Instructions]

If we have questions, I hope the sound quality will be better. No questions from the phone?

Yes, speakers, there are no questions over the phone.

There are no questions, okay. Okay. Very good. No questions from the room? Okay. So thanks very much, and thank you very much for your attendance. Stay safe and see you see you in about a quarter, I hope. Thank you.

Thank you.

That concludes today's conference. Thank you for participating. You may now disconnect.