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

Good morning to all. I hope you can hear me well. If it is not the case, please, please react through the chat or any other way. We want to make sure you have a good listening condition on the call. So good morning to you. I'm Pascal Juery, the CEO of Agfa. I'm sitting here with Dirk De Man, our CFO, and the rest of the executive team who will be here to answer any detailed question after the presentation and as well with our investment relation team. So I'm very pleased to have the opportunity to walk you through the first half results and the Q2 results of Agfa. And let me get started by saying that in a very volatile environment and an environment marked by inflation. We have quite a contrasted set of results across the group portfolio, and I'm going to try and comment and give you more color about where we stand on the various activities of the group. So first, positive, I would say, top line growth driven by DPC and Offset Solutions, but very different nature of growth. DPC is all about volume growth, 20% growth in Q2. Offset Solutions is exclusively about pricing growth. So the growth of DPC is fueled by the price increase and the volumes are actually below last year. Second comment. Although HealthCare IT as a first half that is below last year, we are still expecting a full year in line with what we communicated to do, meaning top line growth for the year and a bottom line, roughly in line with last year. As you know, part of our business is really related to project implementation, and we have a good visibility on the implementation of projects during the year, and we know that actually Q3 and then especially Q4 will be stronger quarters. What gives us also a lot of confidence going forward is the order intake during the first 6 months. So the order intake of the business has increased by 20% which is, I believe, a very good performance, in line with our expectations. And therefore, we are pleased with the development in the HealthCare IT business. We still have also a very strong order book. Then three, I mean, the performance of the quarter for Radiology has been impacted by a lot of events. First, as you're aware, the COVID lockdown situation in China has decreased, we believe the consumption of film in the end market by about 20% during Q2. So we were not immune to this. And on top of that, we have some seasonal impact of export contracts that did not materialize in Q2 but will materialize in the next month. So very, very weak quarter of Radiology that, of course, is weighing a bit on the results of the group. So total EBITDA, EUR 32 million better than Q1 but much lower than last year. On top of that, we are going through the normal uptake in working capital. As you know, most of our production is more done in the first half, and we use the second half to, I would say, adjust the production according to the level of the business. So that is a normal uptick, but that was amplified by 3, 4 different events and Dirk will walk us through, but supply chain issues is still creating more inventory than needed. The cost inflation is mechanically increasing, of course, the working capital. We have incurred digital working capital on top because we have closed the business. And on top of that, we have a specific situation also in HealthCare IT, where we have a lot of contract assets due to the nature of our contracts, some of it are with the government and the -- I would say, the billing process is a bit different for government. But again, this will be corrected during the second half of the year. Good news also is positive impact of net pension liability, and I will let Dirk walk you through this part. Last but not least, we made an acquisition, as you know, during Q2, Inca . We are pleased to say that we have completed the first phase of integration and that one of the key areas of synergies, meaning being able to plug Agfa's inks in the Inca printing engines is well on track because we are about to present in the commercial show in the U.S. in a few weeks, actually, and Inca machine with an Agfa set of ink. It's a bit ahead of our schedule. I have to say, and we are pleased about it. So if we turn to numbers. Overall, top line growth -- but as you've seen, a lot of contrast between different businesses. At the gross profit level, we're still able to increase in absolute terms. But in fact, when it comes to EBITDA, we see that we are not able to, across the board, reflect the increase of SG&A of the company. And when I look at SG&A, let me tell you that what has been increasing the most is selling expenses and not G&A expenses. G&A expenses are totally under control, even in an inflation context due to the transformation programs we are undertaking in the company. So that gives an EBITDA of slightly below 7% and an EBIT of EUR 16 million. If I go down the P&L, the main characteristics, as explained, as you know very well, as a company still in full transformation. We had a very heavy, I would say, restructuring and nonrecurring set of expenses that relates to the various transformation projects that are ongoing, the IT transition to an external partner, the finance reorganization, the stand-alone of the Offset division. So that reflects this part, and therefore, that leads us to a negative net profit. Well this I already covered during my introduction. So I will now turn to Dirk to discuss the free cash flow performance of Agfa.

Yes. Thank you, Pascal. So overall, the free cash flow was negative with EUR 59 million. And as you can see from the bridge, one of the key impacts is the impact from the increase of trade working capital, and I will come back to that point in a couple of slides. CapEx is at a normal level, while provisions are actually also a seasonal effect as with many companies in Q2, there is a large payout of employee benefits and that includes incentives related to the previous year, vacation pay and all those kind of things. So that's quite a normal increase, and that has actually reversed during the other quarters of the year where we're basically accruing for those things. So income taxes at a normal level. Pensions also at a normal level. So we do not have any extraordinary derisking actions anymore. And then finally, restructuring and nonrecurring items are at quite a high level, and this is basically the cash execution of the many projects that we have also announced in the past. So that includes the CR restructuring that we're doing in Germany and the ongoing transformation programs regarding the stand-alone of offsets and the other operating model projects that we're executing. So if we move to the next slide, that brings us to the overall net cash position. So in addition to the normal free cash flow and normal operating activities, we obviously also closed the Inca transaction in Q2, which was around EUR 48 million. We also finalized our share buyback program that was around EUR 13 million. And we also did transfer some pension liabilities of our ICS people that transferred to our outsourcing partner, which obviously also had to compensate it on a cash basis. So in total, the net cash position was reduced with about EUR 141 million. If we then move to the next slide, working capital at 31%. So that's a very high percentage and not a result we're happy with. Now one key thing to mention is that this includes the assets of Inca, which we acquired. Obviously, we do not have the past 12-month sales in the base. So therefore, that increases the percentage. In total, that's roughly around EUR 16 million impacting the working capital. But overall, as you can see, even excluding that, inventories are up substantially. This is the normal seasonal growth. Now last year, we did not have that, and that was rather the exception. So this year, we're back to a normal seasonal growth. But as Pascal mentioned, it's amplified by the many things that we've discussed already at length, including, obviously, all the inflationary pressures are translating into the inventories. But also the supply chain is slowed down in a sense that it takes longer to transport, meaning that there is a lot more inventory in transit, but also we may have and DPC, for instance, is an example of that, where we are left with unfinished equipment because we're waiting for certain components to come in, and that obviously also delays sometimes the execution of the delivery to our and installation to our customers. Now obviously, it will continue to be a key focus area for the rest of the year. And as usual, we will work very hard at reducing the working capital through the rest of the year.

Maybe a word on HealthCare IT.

Yes. I will cover those in need. So I think Pascal mentioned it. One other element that has been increasing substantially in the working capital is the contract assets in HealthCare IT. Now this relates to the collection of regarding very large projects. And that's also a bit chunky sometimes. And that was increasing quite substantially, but it's temporary. So clearly, already in Q3, as we speak, we are collecting on those things. I think in Q3 in total, EUR 17 million of those projects are being collected, mainly in the month of August, which we already received in the month of September. So EUR 17 million of that already will be eliminated in Q3. Now the other element I wanted to mention it's a bit, again, a COVID-related comment in China in our joint venture. They also have a bit of delays in collection due to the administrative processes that you need to follow in China, farmers not being available, government employees not being available. And there, we have had an increase of the overdues, but we also are very confident that this is a temporary situation. And as these lockdowns are subsiding also these collection processes will get back on track. For the rest of Agfa, the overdue management continues to improve in line with the programs that we have launched some time ago. So net, indeed, net working capital is speaking. But over the next 2 quarters, we do expect this to come down significantly. On the pensions, yes, indeed, there was a lot of movement. We discussed in previous quarter that the discount rates were increasing. So we decided -- normally, we only do this at year-end, but we decided for Q2 to do a full actuarial update of the pension calculation. So the result is on the slide, a reduction of EUR 142 million versus the end of last year. This is primarily driven by the discount rate, which more than doubled on average close to 3% now. And the key impact on this is really in the German pension plans. As you know, we have done a lot of derisking in the -- in the other regions in the U.K. and U.S. and Belgium. So the key impact here is really on -- primarily on the German pension plan. On the next slide, we're just reiterating a bit the different elements of the P&L and the cash. So this is in line with what we communicated before. You can see the cost and EBIT is EUR 10 million for the first half year. Interest costs, total pension costs at EUR 14 million and pension cash out at EUR 28 million. So that's the overall view on the pensions. And let me hand over back to Pascal regarding the rest of the...

Thanks a lot. So you understand a bit of a perfect storm in working capital on the different elements, but everything can be worked out and will be worked out. and good news and indeed on the pension. Let's turn now to the business and let's start with HealthCare IT. If you look at the headline for HealthCare IT, we are still, after 6 months. In fact, we are helped by currency, but without the impact of currency, actually, we are still in a negative top line growth for the first 6 months. The first message is the next 6 months will show a reverse of trend with a significant top line growth for the business. And again, this is something we have a view on, given the level of the order book and the order intake and the planning of project implementation. Gross profit, no issue there. Margins are actually at a healthy level. As already communicated, we are investing in the business and you see SG&A and R&D being higher than last year. The way it works is the sales cycle is pretty long in this business. So we have to invest a bit ahead of time. So it gives an EBITDA that is below last year with the same level of business. But again, I repeat, when we look at the next 6 months, we are very confident that, indeed, we are going to catch back on the second half. And we are already quite a good view on this. So it means for me, clearly, we are on track for HealthCare IT. I said a number of times, let's be a bit worried right now looking quarter-by-quarter. We need to have a longer period to make an assessment of where we are going in terms of business. But I confirm what we said all along, 2022 will be the return to top line growth, not the case yet in the first half, but will be the case after the year, and we'll have a performance bottom line, in line with last year. It's a consolidation year. But what gives us confidence is indeed the dynamism of the order book -- sorry, of the order intake and as well the good level of the order book. So we have a good -- I would say, we have -- I would [ qualify ] it as a good momentum for the business. Nothing is -- it's just a quarterly variation that we are seeing here. Radiology, a very different story, a very disappointing quarter for radiology. You can you can see the impact on the top line. Actually, that reflects the lack of -- the lack of volumes and a little bit across the range, by the way, in Radiology, and that translates immediately back into the margin in an inflation environment on top of that. So disappointing performance for us, a number of reasons for this. First, indeed, China is the first market and China COVID lockdowns did have an impact on the consumption. It will continue a bit in Q3, a lot less. But the situation is not totally back to normal. And it's fair to say that China will not give up the zero COVID policy. But apart from China, we had a bit of a delay in export market contracts, which can be a bit lumpy in some regions, for instance, in Middle East or North Africa. That should come back to normal during Q3 and Q4. So it was really a bad quarter. And even in DR, we had a flat quarter and normally, DR is growing quite significantly, but not this quarter, a lot of market volatility and also a lot of, I would say, delays in implementing contract. So that's also part of the story. We are increasing prices also in Radiology across the board. We still have action that will kick in, in Q3. So we are constantly trying to do that. One thing you should note is on the raw material side, silver has taken a different turn since a few months, it's decreasing. But what you are seeing in Q2 and probably still in Q3, it's still the top price of silver in our P&L, actually, because as you know, in this business, it takes more or less, I would say, 6 months to change the P&L. But this has turned for this business as well. DPC, but DPC, I would say the good news is we are growing the business, unfortunately, for the time being, it does not translate yet into bottom line impact. for a number of reasons. I'm going to try and explain. So you see good top line even when it's currency corrected. Gross profit is increasing in absolute terms, but you see already the impact of inflation in percentage. And same story for SG&A, and it's mainly the freight and logistics expenses that are increasing, and we have yet to fully reflect it in our selling price. That's clearly the story here, but it's not only this. Well, our digital printing goes quite well. Ink service, everything is growing very healthily in a very healthy format. However, our equipment business during the first half was actually more into the entry or mid-range level of our equipment. The larger printers actually did not -- were not so much recognized in revenue. The main reason being that we had component shortage, which created a backlog for this part of our business. So our large printer order backlog has increased throughout the beginning of the year by double digits. We expect to be able to, I would say, deliver the backlog part of it at least during the second half of the year. And that's typically I would say, equipment area where we have larger -- higher margins than in the low end. So that's also was a bit depressing for us. Inca integration evolving as planned. Indeed, I would say, in Inca is integrated fully today. And as I said, the good news is our inks are already ready to be used in Inca printing range. And we are going to commercially kick it off in the U.S., I think it's in October, I guess. So that's good news because it didn't take us very long actually to develop the right set of inks for the Inca range. I think also, I can say that, as you know, we bought Inca, not only for the existing business but also mainly for their development. The next development is speed set. The speed set has entered and that's news into a commissioning stage, meaning we have finished building up the first machine in our Cambridge site, and we'll start testing. So just to tell you that things are advancing as planned in a way. Zirfon, really a very good orientation of Zirfon, a very dynamic demand. We today have a number of active customers over 50. If you go back 2 years, it was not even half this number. And the business is not yet significant in Agfa numbers, but it's now, I would say, visible. So the name of the game for us is to ramp up our production on site. Actually, we'll start doing shift production in September for the fund. So that reflects really the ramp-up. And also the news I would like to share with you is we have selected the site to build our next Zirfon unit. We'll build it actually across the road in Mortsel, which makes sense because this is where we have all the infrastructure and the know-how. And we have started engineering studies for an investment decision that will be finalized during Q1 '23. It's also a way to show our commitment to our customers that we are making the necessary investment to make sure we are going to be here for there when the demand is ramping up. We have announced, as you know, a significant contract volume to Thyssenkrupp Nucera. That's going to kick in, in '23. But I would say we have already -- we are in contract form with Thyssenkrupp Nucera, which is a very good thing. The other good part is film and foil volume has recovered. It was hit during COVID. It has recovered, and it's well oriented right now. So what we have yet to do in DPC in order to translate the growth into the bottom line is more, first, we've got to make sure we solve our supply chain issues so that we can effectively deliver the high-margin goods. That's for sure. And we need to continue to do price increases. But you've got to realize that it's a bit like we explained to you last year in Offset. It takes time because right now, if we take an order for a machine at a new price, you're already in '23 actually. So there is indeed a delay in implementing prices, but we are committed to do it. And what's important for me is to see that our commercial drive and our top line growth is really well oriented. So it means really our offer in the market is matching well with customers' demand. Offset. Offset, a quarter in which, indeed, we have been successful. This is a reflect of our price increases. This is not the end of it. We still had some actions that we are kicking in, in Q3. But -- but it took us, I would say, about 9 months to a year to get to this result. Very successful price action by the team. Also, a very good focus on value segments, whether it's geography or application in the Offset, strong cost discipline and therefore, producing results for Offset turning around a bit, I would say, the profitability gap that we've seen in this business. So overall, very pleased with the development. And Offset were the first one confronted, I would say, with the inflation wave. It takes time. I explain because it takes time because just like in DPC, we have hundreds of customers. It takes time to increase price, but we do it and we will do it. And in Offset you have now seeing these results. Now what to expect for H2, I'm not going to make predictions about the economic scenario and whatnot. But what we are seeing, cost inflation is not going away. That's for sure. It is still there. However, in metals, for instance, we have seen the [ tide turn ]. Aluminum is below its peak, silver is below its peak. But you won't see it yet in the P&L. It's going to come, but with a delay. However, cost inflation is still here for everything else, I would say, so far from energy to packaging and also salary inflation. So we'll still be facing this impact. We are not expecting supply chain issues to disappear. We are probably expecting some improvement but not yet back to normal situation in the next quarters. And of course, as I said, we don't -- I still believe that the China market will be disturbed by potential COVID lockdown actions that will impact the demand. So that for me, overall, I would say it stays. It's probably a slight improvement on some fronts, but not a general release. Well, I'm not making prediction on the level of demand. And I know there is, of course, a talk of economic slowdown. I would just note that typically in an economic slowdown, the HealthCare is quite resilient. And in fact, the part that tends to be a little bit less resilient and subject to economic activity, capital goods, of course, investment decisions that tend to be delayed and also everything that relates to commercial activity in printing. But for the time being, we are not seeing anything on this front where we are seeing a stabilization of the demand, but absolutely no signs of specific slowdown in our activity. Still a lot of action to take in order to fight this inflation. As I said, it takes time because we have a lot to address and a lot to do. So we are still taking, as I speak, price actions in, I would say, almost across businesses that does also exist in HealthCare IT, price actions in order to face to make sure we can restore margins in some cases or at least stabilize. And we are continuing with our transformation actions for in IT, in finance, in other also to make the company more cost competitive, simplify our operations and make us more agile. And here, I think the projects are on track. So bottom line, it means, yes, we are expecting our H2 that is going to be better than what we've seen in Q2, indeed. Specifically for HealthCare IT, we already communicated it. I think Offset will do -- will continue to do well. Radiology, I expect to see some improvement -- gradual improvement in Q3, but I would say. And DPC will also, I guess, slightly improve during the second half. So that's a bit what I wanted to share with you today, and let's open now to questions, and I would first like to take questions from the room. Of course.

Kris Kippers from Petercam. Two questions to start from my side. Radiology, clearly disappointing in Q2. Of course, some hiccups in the market. You explained in detail already quite some items there. What is on the outlook there? Do you see some improvement? And are you also adapting other things considering other measures? Or is it just a temporal market situation? And is there -- or is there more that's happening? And then my second question would be on offset. We've seen, of course, probably you cannot comment in detail, but we've seen some comments, of course, in the press from well-informed journalists. Could you share with us what the situation would be on the carve-out and then on the divestment potential? And any comments on that, of course, would be highly welcome, I guess.

No, not sure. On the first one, on Radiology, I think first, the good news is the film business overall, the volume of the film market is not decreasing. It's pretty stable. We have variations, and we have a situation in China that was not favorable, and the lost demand will not come -- will not be made up. I mean what is lost, is lost. Then it's going to -- the consumption is going to go back to the previous level, but we are not going to catch back, so to speak. So what is lost, is lost. To answer your question, yes, we are expecting a better H2? And Q3 and especially Q4, at the end of the last quarter of the year. Are we taking specific measures, yes, we will also try to streamline part of our operations in Radiology. As we've been doing already for many years. We did it for CR and there is further opportunity to do that. So that's also what we are going to do in Radiology. So difficult indeed difficult quarter for Radiology. Now as I said, we start seeing a bit of a relief in the raw materials of making film, first with silver and potentially with the chemical components as well. But again, these are impacts that come about 6 months after the news. Regarding Offset, no comment, no comment. I can only comment on the carve-out, which is on track. It's not fully completed. We still have a few things to do, of course, but it keeps on track. On the rest, I'm not commenting. I don't know if the journalists are well informed or not. There has been market rumors and speculation. And of course, there is no comment from our side.

Okay. And just a last follow-up then. Regarding Zirfon, could you just share with us an idea on the cash out of such an investment that you have to make potentially in '23, will you make the decision?

We already gave an indication of between EUR 30 million to EUR 50 million in terms of CapEx, that actually will be spread over several years, by the way, it's not a given year. But we'll be in a position as we have started today our engineering studies will have a much better estimate probably in Q1 next year.

I'm Guy Sips from KBC Securities. One question on the [ EUR 17 million ] of working capital absorption that was done through the HealthCare IT contract. Does that mean that what you indicated that also in Q3, we will see a big contract lending and that having a position...

Secularly a working capital thing. So in HealthCare IT, there is -- it's a complicated system of when you recognize when you bill, and when you collect, there's a discrepancy and timing. So I was only commenting on the contract assets and the working capital. And so they were actually increasing because we were waiting for the payments to qualify and they qualified in Q3. And that's the only comment that I made. In terms of deals, yes, there are many things in our pipeline that hopefully will come to fruition in Q3, Q4 and the quarters after.

So in fact, we recognized -- the revenue is already recognized and the EBITDA is already recognized indeed, but the cash part is a bit delayed due to the billing conditions, especially with government contracts in the U.S. So that's a lag, if you want. You need to see it as a lag. Right, Nathalie. Any other...

Yes, we currently recognize specific milestones. Commercial customers have 10%, 20%, 30% milestone, the U.S. government, nonnegotiable give us milestone at 80%. So we have to deliver 80% of the work on the implementation before we can actually build, but when we build, then we get paid within a few days, which is happening in Q3. So the more volume of U.S. government, we have to go by these terms.

So in fact, when you have government business, it means your working capital is increasing. A simple story is this one. And we are very successful with the government business, which is for the Department of Defense and Veterans Affairs. This is good business. We like the business. We are one of the main vendors to the U.S. government, but it has this impact.

And then a second question also related to the net cash situation. You indicated there was an effect of the pension portfolio. Can you quantify that?

Yes, that was around EUR 2 million. Yes. So it's not material. I'm just saying there was a lot of things coming together in Q2 on top of, let's say, the normal operational things. So it was not that material.

Cash out was mainly EUR 48 million for the acquisition and EUR 13 million for share buyback.

Yes, share buyback.

And the remaining was the delta in the working capital.

Yes. Primarily, yes.

No, we have a cash situation in which we have this working capital peak. But let's not forget that we have also a significant cash charge due to the restructuring and the transformation of the company, as we already announced.

Maxime Stranart from ING. Two questions actually on my side as well. First of all, on DP&C, would you -- would it be possible to single out the scope impact of Inca from the rest of the performance? And also you on volume and price would be helpful? And secondly, on Offsets, if you could share some view on what would happen if actually the price of metals, as you mentioned are already coming back down? What would happen if it would continue that way?

Okay. Very good questions. For DPC, I'm not sure it's possible to single out volume and price. Regarding Inca, you want to answer, [ Vincent ]. I mean the impact is... very much.

No, the impact is limited. Dirk already mentioned the impact on working capital. So there, we have the full impact, of course, of taking that on, and that's about EUR 16 million. The impact on EBITDA and on sales there, it's a very partial and difficult to today to give a correct image on that. So -- but it's not material. I would say that the more material part is indeed on the working capital today.

Volume and price, it's difficult to as DPC has a lot of different activities. It's difficult to single out, I would say, volume and price performance, but I would say volume performance is coming from...

So in terms of volume performance in all of DPC, I would say that all of the businesses are growing with the exception of PCB film. Those are films for PCB, printed circuit board production. Our biggest market there is China and there also, we were impacted by the lockdowns in China. So that market is really down quite a bit. There may be at 70% -- between 70% and 80% of where they are usually. And we don't see that coming back also on that part. The other market that is down for us, it's small in terms of overall number, but it's a growing business for us, which is the industrial inkjet parts, where we are also selling OEM, we have different segments there, but one of the segments is OEM inks. So inks we make for third parties in China again or we make it for different markets, but one of the markets is China. And also there, we've seen this year that China is quite a bit down. But all of the other markets volume-wise, and DPC have really been growing. So be it our inkjet sign & display both ink service and equipment, be it our Orgacon conductive polymers or Synaps range of synthetic papers, Zirfon is growing quite a bit this year, NDT, nondestructive testing film. All of those markets are really growing versus last year.

On the price performance, maybe you want to...

Yes, also on price performance. So I would say on all of those segments, including actually the ones that are declining, we are implementing price increases to cope with the inflation that we're also facing. So I would say price performance is good, but not good enough as you've seen in the margin performance of DPC is something we continue to work on to actually, I would say, cover the inflation effects.

And an offset, the question was what's going to happen to us with the aluminum price decrease. Luc, do you want to comment on that?

Yes. So in fact, it's already happening. You have seen the evolution of aluminum. First of all, we pass through. So that means if LME, the LME portion of aluminum will go down at a certain moment in time. Of course, we will give it back to the customer that's very transparent. But this is not the only element. You have the premium, you have the conversion cost. Currently, we are discussing about energy surcharges on aluminum. So it's a whole bunch of elements that we took into account in our pass-through of our prices of the raw material prices. So yes, if LME goes down at a certain moment in time and depends a bit on the contractual situation. We have net of value contracts, but there is a balance. We have other ones where we adjust the prices every 3 months, roughly. But that will drop in. But net bottom line, it should be the same.

It should be the same because at the time, we are going to see the benefit in our P&L, we are going to adjust back to the customer the visible part of aluminum price. So neutral.

Alexander from Kepler Cheuvreux. So last call, you mentioned that your geographical mix in Radiology in Q1 had a negative impact on margins. And going to correct itself in the next quarter, is it now safe to assume that the geographical mix has not really changed? And how do you see this going forward? And maybe also elaborate on what's then the margin difference between the regions?

Geographic mix was unfavorable also in China because you have different provinces in China in which you have different situation to make a long story short. As you know, some Chinese provinces have gone through an auction process where prices tend to be lower. And so it depends on your mix also intra-China. And then it's depending on the various market prices across the globe, and that varies, I would say, on a regular basis. And we are also busy increasing prices. So it's difficult for me to do a ranking. But let me say just that China is the largest market, and that's also where the prices are higher.

Okay. And DPC, I guess also you had a big impact there from PCB films in China. Could you maybe elaborate on like how much this -- how much of the total PCB revenue this is? And also how much it contributed to the margin decrease.

Although it's smaller PCB for overall, what is it globally, it's 10% -- less than 10%?

Yes.

Less than 10% of the total DPC business.

Around 10%, let's say, yes.

And what makes you then so confident that the situation there will completely...

On PCB, and I have not heard that.

We're unfortunately not saying that we don't see it picking up yet because especially China, we really don't see the lockdowns easing up. So we expect that actually the rest of the year, they will continue to be at somewhere between 70% and 80% of their normal capacity.

Okay. So the increase will then come from the other regions then.

Oh, yes. But the growth is coming from PCB...

The growth will not be coming PCB film, no.

All right. Perfect. And then on Zirfon, just a reminder, you talked about the Thyssenkrupp contract already. When can we expect this contract to kick in on the revenue side because it's already grown nicely from 25 to 50 customers. But I guess [ DPC ] Group is only one. So probably the largest contract amongst it.

Let's say that the large contracts will start to kick in next year. I expect that for '23.

Any other questions? So if not, let me just conclude. Clearly, a very contrasting quarter. Again, I want to repeat the confidence we have in HealthCare IT for which, again, we believe the prospects are really positive. Confidence also on DPC, although right now, we are in a situation where we cannot translate yet the growth into bottom line, but this is something we're actively working on. It takes a bit of time in the inflation environment, but I'm confident we will eventually get there, but it takes time. Offset will continue to perform very well. I believe in the next quarter, no doubt, and Radiology. I think we'll see a gradual recovery during the rest of the year. And as far as working capital is confirmed, indeed, you will see a significant decrease by year-end of working capital. We explained why it was a bit exceptional at the end of H1, but this is an area that will commit to totally correct by the end of the year. So thank you very much for your attention, and we'll see you in November, I guess. Now, thank you. Thank you, operator.