ams-OSRAM AG (AMS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. My name is Emma, your chorus call operator. Welcome, and thank you for joining the conference call on the first quarter 2023 results. [Operator Instructions] I would now like to turn the conference over to Aldo Kamper, CEO and Interim CFO; and Moritz Gmeiner, Head of Investor Relations. Please go ahead, gentlemen.

Good morning, ladies and gentlemen. This is Moritz Gmeiner. I'm very happy to welcome you to this morning's conference call. With me is our new CEO, Aldo Kamper, who will lead you through the business and financial developments of the quarter. And with that, I would like to turn over to Aldo.

Thank you, Moritz, and good morning, ladies and gentlemen. I'm very happy to welcome you to our first quarter 2023 conference call this morning. As I'm sure you're aware, this is my first earnings call as a CEO of ams-OSRAM and I'm very glad to be able to speak to you this morning in my new role. Let me start with some personal remarks before we head into the updates on the quarter. I'm extremely pleased to be at ams-OSRAM. It's partly a coming home or coming back as I have worked for more than 20 years for OSRAM before mainly as the CEO of the semiconductor division. But it's also much more than that, as it's now ams-OSRAM, the combination of the metal based world of OSRAM with IC and sensor world of ams, an exciting combination that holds a lot of promise. From my perspective, there's a strong industrial logic for this combination, creating a European-based heavyweights in the semiconductor based optical solutions space. And I have to compliment Alex Everke on having executed this vision. More [ eversionally ], it means a lot of listening and learning at the moment, obviously, to get to know the part is completely new to me, the previous ams side with the specific technologies, capabilities, location and people, but also to reacquaint myself with the previous OSRAM side as also in the fast pace of the semiconductor space a lot of progress has been made in the last 5 years at [indiscernible] way. Starting to get to know the organization was my main focus of the last weeks and I must say I'm impressed. Impressed with the vast scope of technologies that combined company offers, impressed with the enthusiasm, drive and desire of our team to move these technologies forward to innovate and thereby bring new ideas to market, enable new applications of our customers. Impressed with the speed of integration, especially considering that the combination of the 2 companies happened during the global pandemic. The next step will be for me to get to know the few of our investors and very importantly customers, which I will now focus on. I'm looking forward to the exchange with our investors this week and meeting with customers that follow thereafter. Based on all these inputs, internal and external, I will work intensely with the management team on further sharpening our way forward, not to change course dramatically, but to see how we can continue to unlock further potential that company in its combination of capabilities inherently has. Given the current market environment and the associated challenge it poses on our financial performance, unlocking these further potential swiftly and widely becomes even more important. So please give me some time to develop these thoughts with the team and come back to you with a clear concise plan on our way forward. And please bear with me in today's earning call, as it's only after 1 month with the company. I might not have all the answers yet that you could be looking for. With that said, let's now move on to today's presentation of our first quarter results. I will start with key developments in the quarter as an overview and I'm on Page 2 of the presentation here. Our first quarter results were in line with the guidance range that we had given, but they also reflect the continuing difficult market environment and the effects of global economic trends. We are experiencing in demand situation in important areas that remained unfavorable in the quarter and in turn resulted in a significant negative impact on profitability. Our automotive business showed very good strength in the aftermarket side of the business, while the semiconductor side declined moderately sequentially in line with our expectations, mainly due to continued inventory adjustments. The consumer business was very muted in the quarter due to clearly lower customer end market demand year-on-year and quarter-on-quarter, enhanced by seasonal and certain mix effects. Our industrial markets recorded mixed results with expected lower sequential demand for LED industrial outdoor and horticultural lighting, but certain signs of improvement in other product areas. Very positive is that we closed the last communicated disposals, and we just had fully completed the planned disposals. Also, our synergy creation successful and remains fully on track. As communicated, we are investing heavily in new capabilities this year, which [ resultantly ] shows up in a significant sequential increase in CapEx, mainly driven by the investments into our new 8-inch LED front-end fab. Let me now update you on the divestments in more detail on Page 3 of the presentation. We have now closed the last 2 remaining disposals: entertainment lighting in March, so within Q1; and the Digital Systems business in Europe and Asia at the beginning of April, so at the start of the current quarter. This means we have successfully completed the planned portfolio realignment following the acquisition of OSRAM in just about 2 years' time, which is a tight time line to implement this whole set of transactions and I have to compliment the team on that, especially as evolution of the M&A and market environment was not making this transaction easier to implement. I'm therefore very happy to report this completion here today. We expect the total cash inflow this year of high double-digit million euro figure from disposal proceeds, the majority of which still have to be received. Including the last transactions, the total combined proceeds from all divestments since 2021 are expected to close to EUR 600 million. It is an excellent result and well above the expectations formulated of the outset, which were EUR 500 million plus. Please note that we will see a substantial last deconsolidation effect in Q2 from these disposals. This will amount to around EUR 80 million revenues that are deconsolidated when comparing Q2 to Q1 revenues. Looking at our synergy creation -- I'm now on Page 4 -- providing our latest update, we have created EUR 305 million of total synergy and savings at the end of Q1 '23, which is fully in line with our plans. This means 87% of the total target of EUR 350 million on a run rate gross and pre-tax basis. With this, our synergy creation and integration program fully on track, and we're confident to achieve our target total at the end of Q1 '24 as planned. We have incurred around 70% of the estimated one-time integration cost at the end of Q1, again, in line with our planning. This means that a further approximately EUR 80 million remain based on our total cost estimate of around EUR 270 million. Moving to our capital expenditure on Page 5 of the presentation now. We are continuing our significant investments into state-of-the-art and industry-leading manufacturing capabilities, which is a key element of our long-term strategy. In line with this, we saw a strong sequential increase in CapEx in Q1. This was predominantly driven by the investments for the industry first, 8-inch LED front-end facility we're building at the moment in Kulim, Malaysia. We're fairly satisfied with the progress of this very large-scale project. Construction continues to progress on schedule, as I could also see myself during a visit there 2 weeks ago. We are closing in on completion of the building. Next to this, we will see the build-out of support infrastructure and more and more planned equipment deliveries, which will -- driving further substantial CapEx as we move to 2023. Let me emphasize the development of CapEx in Q1 and what's expected for the remainder of the year is fully in line with our plans. Total CapEx for '23, we expect it slightly below EUR 1 billion currently. So you'd expect CapEx to be strong through the year, but track to that number in total. We reduced the CapEx spending compared to the previous assumption of over EUR 1 billion, reflecting the current market environment with establishing the new capabilities require still very significant spend, which leads to a peak in CapEx when compared to the last and the next years. This also means that we expect a meaningful year-on-year decrease in '24 in line with existing plans. Let's now take a look at the development of our business, starting with the Semiconductor segment on Page 6 of the presentation. Semiconductor automotive business recorded modest results overall that were in line with expectations. In our part of the automotive semiconductor market, we saw further inventory adjustments in our downstream supply chain in Q1, which impacted our top and bottom line. However, we saw this adjustment stabilized at the end of the quarter, which is a positive development. Still, our semiconductor automotive volumes were sequentially lower in Q1 and order momentum in our automotive market remained mixed in the quarter. Despite the [ unsupported ] short-term momentum, we are seeing continuing good design traction for advanced automotive lighting solutions for exterior and interior applications that are adding to our overall mid and long-term pipeline. This also includes more market success for efficient automotive display backlighting solutions. Larger displays are becoming more and more relevant factor in the interior design of upcoming car platforms, and we're happy to support this. Furthermore, we see a high level of interest for intelligent multiple LEDs for automotive interior applications which we are addressing with a new family of products. And we are also preparing to ship our highly pixelated headlamp solution into the first vehicle platform for a large European OEM, beginning a measured ramp in the second half of the year. Our consumer business remained subdued in Q1 as shipment volumes for several consumer lines showed a negative sequential trend. This development reflected the lower year-on-year volume demand in the global smartphone and mobile device market, which continued to be largely driven by macro-economic impacts on consumer spending habits. In smartphone business, we saw sequential seasonal and product mix effects influencing our business. And at the same time, the China and Android market did not show a notable improvement in the quarter. Our business in the wearables segment saw meaningfully weaker quarter-on-quarter volumes, again due to end customer demand. Our development activities and customer engagement in the consumer market remained on a high level, and we are seeing good traction for future opportunities in a number of areas, including display management and different optical sensing applications for mobile devices. We also continue on our development programs, which support our previously mentioned expectation of an improved market share in the consumer market in 2024. At the same time, current demand momentum does not point to a rebound in mobile device volumes in Q2 on a global basis. Semiconductor, Industrial and Medical business showed a mixed performance in the quarter. As Phil called out before, certain industrial markets, including LED industrial and outdoor lighting and horticulture solutions, experienced sequentially lower demand in the quarter, which had an impact on total segment performance. Other industrial, medical products were more supportive and in line with expectations. Let me adhere that the strong development initiatives, efforts for our leading smaller structure sized microLED technology are continuing very much in line with our plans. Market feedback is confirming the strength of our technology position in this very exciting area. And I can just say, I'm excited to see how far this technology has come now from the early R&D efforts I was involved in a number of years ago and then fulfill those [ now ]. These activities will remain a key area of R&D spending, investment as we move along our path towards realizing high-volume manufacturing of our microLED technology in the world's first 8-inch LED front-end facility. Looking at microLED in general, we see increasing and broader activity in the market around different larger structural size microLED technologies. We appreciate this positive dynamic because these developments only confirm our strategic focus in this area. And our expectation is microLED will be the next generation of display technologies for consumer and other markets. Now looking at the Lamps and Systems, or L&S segment on Page 7 of the presentation. Inside L&S, the largest portion is the automotive business built around legacy mainly halogen based, traditional lighting. Here, we recorded a very nice performance in the quarter, which was clearly driven by our global automotive aftermarket business for lamps. This business, where we hold a clear market leader position globally, saw strong seasonal demand in the quarter despite macro-economic trends affecting demand developing in certain regions. In terms of seasonality, the aftermarket generally has the SKU to the winter semester that is the fourth and the first quarter of each year. Our other conventional lighting business within L&S showed mixed signals as the market is slowing due to macroeconomic development. With Ingo Bank leaving the company at the end of April, as communicated before, and Rainer Irle joining on July 1st, I will also present today our financial results in more detail. Before I do that, let me thank Ingo for a significant contribution to ams-OSRAM, and I wish him all the best in his new endeavors. A few comments upfront to keep in mind during the financial section. Then we refer to adjusted financial metrics. We refer to adjustments for M&A-related transformation and share-based compensation costs as well as results from investment associates and sale of businesses, and you will find the reconciliation to the IFRS basis of the presentation available on our IR website. Let us now take a closer look at the development of our group revenues. I'm on Page 9 here on the presentation. With revenues of EUR 927 million, we came in within our guidance range. Sequential revenue development reflected difficult market environment with lower volumes in important markets, given the prevailing macro-economic trends. I would also like to highlight the substantial deconsolidation effects of over EUR 70 million due to disposals when comparing the revenues on a year-over-year basis. We'll now turn to our revenue distribution on Page 10. You can see the revenue contribution from our 2 reporting segments, with semiconductor at 59% and Lamps and Systems at 41%. The split reflects a strong contribution from L&S, which was particularly driven by our automotive aftermarket business in Q1. Our end market split shows that our Automotive business contributed 50% of revenue in the quarter, Industrial and Medical, 34% and Consumer, 16%. I already commented earlier on the development of our business in these end markets. Moving on to group profitability, now Page 11 of the presentation. Adjusted gross margin was 29.3% in the quarter, slightly better compared to the prior quarter by lower revenue -- while the lower revenue base for Q1 results in a decrease in absolute gross profit. Cost mitigation efforts in our manufacturing helped produce, but by far did not compensate a meaningful underutilization effects we referred to earlier. At the same time, we remain ready to serve higher demand and low [indiscernible] as they materialize. Group's adjusted EBIT margin came down -- came in at 5.4%, in line with the guidance range and also reflecting the lower gross profit base. Here, we were able to benefit from our cost mitigation efforts related to OpEx, which we will see more clearly on the next page. We achieved a further significant reduction of total OpEx in Q1 as latest addition to a successful sequential improvement of OpEx over the last quarters, supported by cost mitigation and synergy creation efforts. These included tight cost controls across the business for the focusing of certain corporate activities and functions and a review of external services as well as operating cost improvements. Adjusted R&D spending therefore came in at EUR 115 million or 12% of revenues in the quarter with a quarter-on-quarter decrease in absolute terms. We're also continuing to streamline our R&D and development activities in accordance with our overall strategic approach. Absolute adjusted SG&A expenses also came in lower than for the prior quarter at EUR 116 million or 9% less sequentially and 12% of revenue. In [Technical Difficulty] terms, we did see an increase in Q1, which was, however, to the sequentially lower revenue base in the quarter. Now let's have a closer look at the development of our reporting segments in the quarter on Slide 13. Revenues for the semiconductor segment were at EUR 574 million in the quarter, a sequential decline compared to the prior quarter as well as to the previous year. And then to my earlier comments on the end markets, the meaningful sequential decline was driven by quarter-on-quarter and year-on-year reductions in volume across important markets for the segment. This impact our Automotive, Industrial and Medical as well as in particular our consumer semiconductor business in the quarter. We also created a noticeable [ end ] utilization of manufacturing in the quarter, which in turn had significant impact on the operating profitability of the segment. We implemented mitigation and cost reduction measures also in Q1 and were able to partly compensate this impact. As relatively above, adjusted EBIT margin came in at minus 3% for the quarter, which is a strong sequential decline that was in line with our expectations. Let me adhere that while I'm still building my full understanding of our business and its levers, I'm not satisfied with our current financial performance. Therefore, it will be a clear focus for me and the management team in the next month to define a path forward to address our challenges and deal especially with the [ muted ] demand situation in the best possible manner. The Lamps and Systems segment, on the other hand, showed a very robust performance in Q1, coupled with substantially stronger profitability. Revenues for the segment were EUR 380 million, which has declined sequentially and year-on-year. However, when you exclude our investment-related portfolio effects, that is on a like-for-like revenue basis, revenue were almost unchanged to the period 1 year ago. This is a very good result, and this was clearly driven by our L&S Automotive business, particularly here by the strong performance of our aftermarket business in an [indiscernible] market economic environment. I'm also very pleased to report the substantial improved profitability of the segment, which recorded an adjusted EBIT margin of 17% for the quarter. On the one hand, this excellent performance reflects a strong market position and execution power of the business. On the other hand, it shows clearly the positive margin effects resulting from our disposals and portfolio streamlining compared to last year. Turning to the net results and EPS now on Page 15. The adjusted net results for the group was positive at EUR 6 billion in the quarter. The unfavorable development of adjusted net results in the quarter was largely related to a negative adjusted EBIT development we recorded in the quarter. That includes a net rental result of minus EUR 32 million, which was mostly determined by interest payments. As a consequence, this translated to lower adjusted basic earnings per share to the first quarter of EUR 0.02 or CHF 0.02, which reflects the muted profitability of the quarter. IFRS reported net results on the other hand, came in at minus EUR 134 million. Let me now complete the review of the company's financials with a look at our cash flow and debt position on Page 16 and 17 of the presentation. Operational cash flow continued to be strong in the quarter at EUR 162 million or a very solid 18% of revenues, and actually up year-on-year. Free cash flow came in negative as expected at minus EUR 139 million, which is based on the high strategic capital expenditures in Q1 as planned and communicated. And as mentioned before, we also expect CapEx to come down meaningfully again from this year's level in the coming years starting in '24, in line with our overall target spending of around 10% of CapEx compared to revenues on average through a cycle. Turning to Page 17 now. The group's cash and cash equivalents amounted to EUR 861 million at the end of the quarter. The sequential decline you see here, particularly resulted as a consequence of the high CapEx spending in the first quarter. Net debt stood at EUR 1.9 billion, reflecting an expected increase when compared to the prior quarter, which was largely due to the lower cash balance. Overall, this development translated into an expected uptick in group leverage to a leverage factor of 2.5x, which still reflects a solid level. As a reminder, next to our cash balance, we have around EUR 1 billion of available multiyear lines at our disposal. This includes our fully committed multiyear EUR 800 million RCF, which remained undrawn at this point. With regard to our debt structure and planning, we do not have major maturities coming up before 2025. On the left, we're already engaged in defining the refinancing approach for these maturities in more detail. This includes potential instruments, the potential combination as well as timing considerations. We may opt for a staggered approach here and are keen to take [ refined ] steps in a timely manner before we are getting close to the 25 maturities. Let me now conclude with the outlook for our business on Page 18 of the presentation. All the following expectations are based on the current exchange rate and available information. We're experiencing a demanding market situation, which is continuing in the second quarter as macroeconomic trends are impacting demand on a broader basis. In our automotive business, demand is expected to stabilize further, but we still need to see meaningful positive momentum coming on. Order patterns with automotive customers still appear inconsistent. Our aftermarket business will be influenced by summer seasonality. Our consumer business continued to be impacted by reduced levels of end customer demand. This is due to ongoing weaker year-on-year volumes of smartphones and certain consumer devices, given macroeconomic impacts on consumer spending. Historically, the smartphone market has also shown negative seasonal effects in the second quarter. It typically resulted in a seasonality stronger -- in a seasonally stronger second half compared to the first half of each year. Our industrial and medical business is trending towards the stabilization of order intake and compared to beginning of the year. In the current quarter effort, demand for Industrial and Medical lines still remains mixed. Given these dynamics, we expect lower production volumes to continue in the second quarter with associated utilization levels in our manufacturing and ongoing negative impact on profitability as shown in our guidance. We, therefore, expect second quarter group revenues of EUR 800 million to EUR 900 million, including quarter-on-quarter disposal related deconsolidation effects. This is equivalent to revenues of EUR 880 million to EUR 980 million, excluding the deconsolidation effects, which means a sequentially flat revenue development at midpoint. Based on this revenue expectation and other factors mentioned, we expect an adjusted operating margin of 3% to 6% for the quarter. These expectations reflect deconsolidation effects, including from closing Digital Systems Europe-Asia divestment, which reduced expected second quarter revenues by around EUR 80 million on a comparable portfolio basis. Furthermore, expectations reflect disposal related to consolidation effects on a year-on-year basis with a second quarter revenue effect of around EUR 150 million. Looking further ahead and take into account current macroeconomic and market trends, we continue to be cautiously optimistic that we will benefit from an improving demand environment in the second half of the year across a number of our markets based on current information and exchange rates. And with that, I would like to now open it for questions.

[Operator Instructions] First question is from the line of Janardan Menon with Jefferies.

Welcome aboard, Aldo. I just wanted to go a little bit more into the second half. You said you're still cautiously optimistic that you could see some improvement in the second half of the year. What is the basis of that? Is it that new smartphone models will be ramped in the second half, which -- your consumer revenues have fallen to a very low level of 16% of revenue in Q1. Does -- is it that, that number will start moving up in the second half because of new models? Or is it because you see some renormalizing of demand after the inventory correction? Just any clarity on what you're seeing? Or is it more coming from the automotive side? Any clarity there will be great. And I have a couple of follow-ups.

Yes. Actually, it's both. It's I should say, seasonal to have your ramps in the smartphone and wearable area in the second half of the year. So we are planning for that. And also, we hope that inventory corrections for automotive will basically be done by the second quarter, and then we will see some volume coming back in general. And also further new product introduction on the automotive side, that also should be supportive of the second half of the year. So both aspects will contribute. And then at the late part of the second half year, we will again also see the aftermarket automotive business, of course, return as well in Q2 and Q3, normally, that's the low point for that business and for that little term.

And on that aftermarket in the L&S business, where you reported a very strong margin of 17%. What is the sustainability of that margin level? Is that sort of -- I mean even if there is some seasonality into Q2 and Q3, is it that you're broadly going to be sort of at the mid-teens range of margin going forward? Or was there something exceptionally strong in Q1, which took you to that level of margin?

Well, it is, in general, quite a healthy business. You might note that we are globally by far the market leader in this segment and actually are able to continue to expand our market share here and also have been quite active in passing on cost increases even in this environment. So that helped, combined with the strong demand in the first quarter, to really drive the profitability. I would expect that, that business stays healthy. But of course, it's a volume effect in Q2 and Q3 when you have lower demand out of the seasonality that this business inherently has. The second part to the L&S segment is, of course, that -- also the profit from the sale of the less performing parts of the L&S business over the last quarters and years. And as you start to see now as well in the improved margins that you've seen in the segment reporting here.

And then just a last question for me is on the outlook on '24 from the impact of the ramp of the Kulim fab, because you are sort of spending the CapEx and building out that fab this year. But previously, you had said that the microLED revenues, the volumes will come in 2025. My question is, will this be a margin headwind in 2024 because you have a reasonably kitted out fab without meaningful production levels? Or is it that the advanced LED production will start kicking in next year and compensate for some of that and so it won't be a margin headwind?

I would expect that, as you say, the factory and the ramp of the factory will be a certain headwind that we have to manage through. That is, I think, part of the planning. It is clear that you have ramp-up costs if you build up a new fab and especially on the new technologies, you start to work through the kinks in the cable in '24 to be ready for '25. That will be costly. So there will be some headwinds out of that. And of course, we will work hard to minimize ramping a large facility like that. That will have a certain impact. But I think that has been so far also already communicated. There's nothing new about what I'm saying here. Also Ingo I think on last quarter's call -- if I remember correctly what he said, that '24 we'll see these effects and then in '25 we'll see first volumes out of the fab.

Next question is from the line of Francois Bouvignies with UBS.

I have 2 quick ones. The first one is on the semiconductor division. I mean, you delivered the minus 3% in EBIT margins. And one of the main reason you mentioned is the underutilization charges. So I was wondering, can you quantify the underutilization charges impact into the quarter for the semiconductors? And maybe more broadly at the group level, and by looking at the Q2 guide -- EBIT margins, what will it be in Q2? Would be also very helpful. The second question, Aldo. I mean, I understand you just joined and you may not have all the answers yet, but I just wanted to have your view from a high-level perspective. You talked about the discussion you will have with the management team in the upcoming months to unlock the potential and deal with the unsatisfactory financial performance as you quote, especially in the context of your CapEx being relatively high. When you look at the balance sheet, your cash -- growth cash was maybe EUR 1.2 billion 2 quarters ago, we are now at EUR 800 million. And with the guidance, it seems that it's going to be lower. So can you maybe help us understand the time line that you give to yourself to decide a bit -- the decision you would have to make? I understand you won't give the options, but at least give us an idea of when you want to take decisions, especially in light of the current challenging environment?

Well, let me -- that's a multifaceted question that you're asking here. So I think there are 2 parts to that. First of all, as I said in my introduction, I will work very closely with the management team over the next months to fine tune our plan and to see where we can make further optimization adjustments to really have a very targeted pointed way forward that helps us deal with the current demand situation in the best possible way, while still, of course, supporting the long-term trends that I strongly continue to believe in, given our technological capabilities. So that will be an exercise over the next month and I think in next quarter's call, we will already see quite a bit out of that discussion that we can then share with you as a basis for further discussion. In terms of the financing side of things, I think it is not unexpected what happened in this quarter. We had communicated a very significant CapEx spending that happened. Actually operational cash flow was quite strong in Q1 and actually slightly above Q1 of last year. So I think we're showing that we are managing cash and that we are -- of course, continue to push that. But with the high CapEx, it's obvious that cash flow will be negative. We still have significant headroom. We are standing at the moment, EUR 861 million in the cash balance. There is still proceeds coming out of the sale of the businesses that we have communicated. That will help. But obviously, still given the high CapEx, we will see a further step down in the cash flow -- or in the cash balance, sorry, in the second quarter as well. And as we said in the call, of course, we are noticing it and already now start to think about how best also to work on the refinancing. I mean the maturities are 25, but we want to be ahead of the game and also start to already think through what that could mean. That's also part of the exercise that we have to go through with especially the finance community in the next months and quarters to get a clear plan.

And Francois, let me tip in on the utilization question you had. I think if you compare gross margin in Q1 this year to Q1 last year, a large portion of the delta you could attribute to the underutilization cost that we carry. And if you look at Q2, you probably would expect that to be on a similar level in terms of impact on the group compared to Q1.

Next question is from the line of Sandeep Deshpande with JPMorgan.

My question is regarding, firstly, on Lamps and Systems. When we look at that big improvement in profitability, I mean 6% in Q1 last year to 17%, can you walk through that delta as such in terms of almost EUR 40 million of EBIT in terms of improvement, where that EUR 40 million has come from? How much of it has come from removal of losses associated with any disposals? And how much of it has come from actual improvement, profitability of the ongoing business? And I have the same question regarding the semiconductor business as well. I mean there has been a big change in the semiconductor profitability as well. How the delta has moved from utilization, from pricing, from weaker revenues?

With the Lamps and Systems business, it is a big step up. The larger portion actually comes out of the better performance of the business that we continue to carry, but there is a positive mix effect by the sale of disposals of less performance business. And it is in the automotive aftermarket business, is a combination of strong volumes and at the same time, also good price and quality, and that really both contributed to good profitability as well as overall good execution of the team. On the semiconductor side, the large part, I mean you've seen the drop year-on-year in terms of volume, and that's just in a very -- capital-intensive business really hurt. So the vast majority of that is utilization or demand driven. And you see --also should see a similar uptick if volumes start to return. There is a bit of pricing in there, but that is by far not a major concern. It is really mainly volume driven and with that [ utilization ] driven.