Basler Aktiengesellschaft (BSL) Earnings Call Transcript & Summary

So I think we are almost complete here. So I'm going to start the meeting now. I welcome everyone to the third quarter results of 2023 or 9 month results in these challenging and turbulent fiscal year. For those of you who don't know me, my name is Hardy Mehl. I'm CFO, COO of Basler AG. Before we start the presentation, I would like you to remind you on the disclaimer. I'm making forward looking statements in this presentation. And by nature, they are subject to significant unknowns and risks and uncertainties. So please carefully read the disclaimer. And I would also show you the agenda of the presentation. I will start the presentation with an executive summary. This is followed then by the deeper dive into the financials, having a quick glance at the share performance, and then coming to the outlook for the remainder of the year. And after that, we have also quite some time for a Q&A session. Let's start with the executive summary and starting with the environment around us. So the market environment in total has not had big changes over the course of the last month. Starting with China, the situation remains. Everyone is waiting for the rebound of the economy. The economy is still muted. And on top of this, we are having quite some high intensity of competition due to our domestic rivals in this region. In Asia Pacific, this region also remains weak due to the ongoing low demand in semicon and consumer electronics, where this region has a very high exposure, too and we have also excessive inventory levels at customers, and I come to this point later on and what the customers tell, us how long these inventory levels passive inventory levels now. In North America, also in Q3, again, here also still a weak demand, a weak market situation. Here also a combination of the weak end markets in semicon electronics and especially also in logistics. Together, and combined with excessive inventory levels at least here from the logistics sector in North America, we hear at least qualitatively a better outlook for next year. But as you might have realized already in our bookings in Q3, there is no material change on the bookings side yet. In Europe, the situation has changed. It has changed as expected. And as announced already in the last earnings call, Europe has been strong for the first half of this year, so the total opposite of all the other regions mentioned above. But we are seeing and have seen in Q3 a slowdown of the European economy and also markets within Europe. The recent numbers from the VDMA, so the German machine builder association, billings are down 11% year to date and bookings are down 19%. If we look at the recent numbers of the Q3, and also especially in September, these numbers are more towards 25% to 30% down in bookings and billings. So there is a clear trend that this market is cooling off. And there is also another indicator we look on a regular basis at, which is the PMI for the industrial goods. And this was down. And so the whole atmosphere or trend is going down at the moment in Europe. So what were our results compared or in this environment. So on the bookings side, year to date, we are down by 39%. Billings, we are down 23%. So if you compare this to the VDMA numbers, we have to say that we are weaker than our European peers who are attracted in the statistics. This is mainly due to our higher exposure in Americas or towards Americas and Asia, and these markets has been going down into a decline already starting mid of last year. If we just look at our European figures, this is a strong difference. Our European numbers are up by 10% year to date. You might recall that by middle of the year, they were up around 25%. So here, we clearly see that we are against our peers, on a good track. And we believe in Europe that we even though the market is pulling off now that we are winning market shares. So on the gross profit side, we have to say that the numbers are pretty weak year to date, 43.4%. I come later to the quarterly numbers, and you will see that the margins even further dropped in Q3. There are multiple effects. There are legacy effects of spot prices we have done in the past for higher price during the chip prices. There are currency effects. There are low utilization rates. And there are also, obviously, in China with the heavy domestic competition, also certain pricing effects involved. So in total, year to date, we are our earnings are minus EUR 16.1 million. As you know, we are in a restructuring situation. The adjusted earnings before tax value is minus EUR 5.8 million. So there is a roughly EUR 10 million extraordinary effort that is connected to our restructuring program. The process on the restructuring runs according to plan. Our strict cost and investment savings measurements and moat has shown significant impact in terms of reducing cash outs and costs on the downsizing that program that we have, so reduction of at least around 2,200 full time equivalents. This is mostly executed after 1 quarter only. So we have very much speed up the process here to go through this quickly, and we will see already certain positive effects and reduction of personnel costs during the course of Q4 and the full effect starting in Q1. The vast majority of our restructuring costs are already booked in Q3. So with this high loss of EUR 16 million, we have put in as many costs as possible also to create good transparency and what's going on. So you there will be, let's say, no major extraordinary costs coming on top of this in the fourth quarter. Let's have a look to the team. So by end of third quarter, the team size is roughly 1,035 full time equivalents worldwide. You see the breakdown of the split. This doesn't have changed much. By end of September, compared to Q1 this year, there are already 100 full time equivalents less on board. And the remainder, let's say, of the reduction towards the delta, towards the 200 when and the majority will leave in the months of the effect -- being effective in October and being effective in November. So our R&D investments are still pretty high for the first 9 months. So we talk about roughly EUR 30 million, which is an equivalent of 19% from sales due to the situation that we have increased the R&D staff significantly over the course of the last of last year especially and the revenue fall-off the cliff this year and there is a mismatch. And this is also why, in the coming months, you can expect that we will further reduce the R&D stuff. So the remaining 200 FTEs of the delta of the target and what we have done so far, there will be quite some R&D people included in that. Yes. Our R&D efforts are, I mean, running full throttle, even though with the situation we are in, we have the capacity. The major releases recently in Q3 were software releases. We brought out our software development kit pylon in the version 7.4. In this software kit, there are many new functions included, but one of the main functionalities was to better support our so called boost speed cameras and the CSP interface cards. These are hardware products for demanding high speed, high performance applications. Also on the vTool tool side, we have made progress. So there were quite some news regarding product software product availabilities during Q3. Also in the third quarter, we have launched our new website. I'm pretty proud of it. As you know, these are major projects. We brought forward this project. And this new website, please have a look at it. baslerweb.com is now even better supporting our transformation from a single component company to a full line provider with a lot of value add services also on the website product, configurators, for example, giving customers much better advice and putting together the combination. Also a lot of training videos involved. And all in all, this pays into our company strategy, our transformation. I have shown multiple times in these calls where we transformed the company step by step from a single component, namely camera company that was mainly acting in fax automation step by step going into the direction of the upper right in expanding our product line and expanding the market scope to become a computer vision full range provider that is offering hardware a full line of hardware software products that is needed in order to design and build a vision system. Yes. Having this said, I'm coming to the end of the executive summary, and I want to take you by the hand and looking deeper into the financial situation starting with the P&L from top and then go further down. Looking at our bookings and billing situation, here also the trend is there is no change in the trend. So what you are seeing is that our bookings continue to go down. Good sign is the cancellations are out now. We have reported a lot cancellations in the last quarters. So these are out now, but the booking level of Q3 at around EUR 34.3 million is at a very, very low level, and the sales or the billings level with 41 as well due to the fact that we are now in a situation that our extraordinary backlogs are more or less out. So there is a fast or a high correlation between the incoming orders and the billings. There is only a delta typically now of, let's say, 1 or 2 months. What we are seeing is that customers are starting to order pretty with a short notice. So this is also why we were still able in Q3 to eat a little bit out of our backlog. But all in all, we have to say, yes, the market is and remains weak in Q3 and also what we can see from October so far. Yes. In total, we have realized in the first 9 months in terms of sales EUR 157.5 million. The split has not changed substantially changed the regional split from the quarters before. So Europe remains to be strong with 38%. That has changed compared to last year because of the sound growth in Europe and the weaker markets in Asia and the U.S. So this is why we had quite a shift. Asia by now is 46% of our sales and used to be around 52%, 54% last year. So this has continued also in Q3. And in Americas, we are at a low level with a weak business level of 16% of the overall sales. Yes. Coming to the gross margin and gross profit. Also here, you see the quarterly development. Looking at the fiscal year 2023, I mean, we I have reported or we have reported in the previous quarters already relatively low levels, 45%. These were mainly lower than in the past where we typically operate at around 50% due to legacy and spot prices. We have acquired a lot of material in the hot phase of the chip supply. The demand went down, so our inventories are full now, and we still have material on stock that we have purchased for relatively high prices in the past. This needs to be eaten up. We also have, since beginning of the year, challenges and headwinds on the currency side. The RMB is pretty weak, and we have a substantial amount of sales in China. And also, on the Japanese yen side, the currency as well, it's very weak. We have ongoing price pressure in China and what comes on top now. And is the Q3 effect here, going down from 45% to roughly 39% or 40% in gross margin. There is on top now the effect of lower economies of scale in the production and in material. We have certain fixed costs and the revenue level went down from EUR 60 million roughly in the previous quarter to EUR 40 million in the third quarter. And this drop of more than 30% is causing higher fixed cost portion and decreasing the gross margin. On top of this, due to the restructuring, we also have written off some material. The value is roughly EUR 700,000. So this was also an extraordinary effect in Q3. All in all, we believe in the long run, coming back to the 50% gross profit margin to give you also a certain direction here, but it will take some time. So at the moment, we estimate that over the course of the next 5 quarters, step by step coming back to the 50% gross profit margin, but we definitely need higher demand kicking in, in order to compensate for the lower economies of scale due to the lower utilization. On the earnings before tax, yes, until mid of the year, we were able to keep breakeven. We started with a loss, then we had a slight positive result in Q2. So we closed the half-year results with breakeven, and then we started the restructuring process. And in Q3, due to the combination of low revenue, low gross profit and extraordinary results, we are seeing them showing now a significant loss in the third quarter. So EUR 6 million before restructuring. And if we put in our restructuring costs of the extraordinary efforts on severance packages, on write offs of material and certain intangible assets on the R&D assets, we closed the quarter with EUR 16.3 million loss before tax. So to give you an overview of all parameters over the period of the first 9 months. So order entries, pretty weak at EUR 128.3 million, so a decline of 39%. Sales, EUR 57.5 million, decline of 23%. Year by year, the gross profit went down to 68.3%, so a decline of 33%. And also the margin, as elaborated earlier, went down by 6.3 percentage points to 43.4%. The adjusted EBITDA result, plus EUR 9.7 million. EBITDA unadjusted, EUR 3.3 million. The adjusted earnings before tax over the course of 9 months, minus EUR 5.8 million. And the adjusted -- and the unadjusted earnings before tax, minus EUR 16.1 million. So the net income with minus EUR 16.5 million was even lower than the earnings before tax. The reason behind that is that in some of our regional entities, we are still making profits and need to pay taxes there. This is why we have a situation where we are running at significant losses on the one hand, on the other hand still paying taxes. Yes, let's have a look at the cash account. We started this year with EUR 28.7 million in cash account. Looking at our cash flow from operations, it's more or less neutral over the course of this year. Looking at the investments, we invested EUR 11 million. And these are investments on capitalized R&D, but also investments in what I would call classic CapEx in tangible assets. The free cash flow in total, EUR 11.1 million minus, and we had compensation measures on the cash flow side. On the financing side, we pulled in extra loans. We sold treasury shares over the course of the last 9 months earlier this year, and we also paid out dividend payment. So that by end of the period, we are at a sound and solid cash account of EUR 33.7 million that enables us to go further through this process. As mentioned earlier, the majority of the cost has been booked already in Q3. Also the majority of the cash outs are in already done in Q3. Some of them are remaining in Q4, but this gives you also an indication with the development of the cash account and what's in front of us. Yes. Looking at this from in more detail regarding the quarters. Also here, looking at first quarter this year, we started the year with a significant negative free cash flow of EUR 7.7 million. We then started all our cost measures in Q2 and then finally ended up in the restructuring in Q3. You can see that the measures we have taken are also showing impact on the cash flow side, limiting the negative results of the free cash flow and leveraging the cash burn per quarter. Yes, the share performance, I think, due to the situation we are in, it's clear the share performance shows a significant decline. We started the year with EUR 30 per share roughly. We were at EUR 9.8, so roughly EUR 10 per share by end of Q3. Let's see what the fourth quarter brings. But as we don't see, let's say, at the moment, material changes in the market demand, it's clear that most likely, the share price development will be not significantly and changing. On the share structure side, no major changes. I mean, the major change that we had was in the second quarter when we sold treasury shares. But on the other side, the shareholdings are pretty safe. Yes, let's come to the outlook. Looking at the assumptions of the upcoming months for the remainder of the year, yes, as I mentioned earlier, I mean, we see weak market conditions to continue until the end of 2023. We believe bookings will stay at low levels in the fourth quarter, and we expect recovery earliest beginning of 2024, most likely more towards, let's say, the second quarter of next year. As typically when we look at the larger markets of semicon and electronics, they have they are also there is certain correlation to Chinese New Year. And typically, these markets do not pick up before the end of Chinese New Year. So this would mean then more towards the end of first quarter. Obviously, the geopolitical uncertainties remain or even increase, ongoing highly competition landscape in China as there is no market rebound looming at the moment. We have also we need or we believe the high intensity of competition will continue. And in Europe, we expect that also the cool down or cool off will continue in Q4. We are not yet sure how long it will take in Europe. We believe the amplitude of the downswing will not be as high as in the U.S. or especially in Asia. But as Europe just started to enter into this cool-off period, we have also to be cautious how long this cool off will take Europe. You might have seen also the recent numbers of the whole machinery business, which also points to the direction of further decline in Q4. So our with regard to the gross margins, I told this also already. In the near future, we expect slight improvements, but for these improvements we also need definitely a better utilization rate. So we need certain demand kicking in, in order to be at a higher level than EUR 40 million sales per quarter. So with regard to the operational business, I mean, we are facing high pressures. Also in Q4, we believe due to the market headwinds, our executed restructuring measures will reduce the cost base already in Q4, but we are not fully through the restructuring. And also the markets are very weak, so this means also bring high pressure on the margin of the company. With regard to the restructuring program, we are very positive about the speed of execution, and that we are have finally executed the program by end of 2023. And the main extraordinary restructuring costs have been already booked or has been already booked in the third quarter, some minor left for the fourth quarter. So that in total, we come for the assumption of the year. We confirm our fiscal year guidance for 2023, but we narrowed down the corridor at the lower end of it, of the prognosis or of the guidance because of the weak market situation. Our guidance is narrowed down to -- in terms of revenue from to EUR 200 million to EUR 205 million. And if we are in between those 2 marks, we expect a pretax loss between minus 18 a pretax loss of EUR 18 million to EUR 20 million. A little side note here. This is also continuing our confirmation. The extraordinary one-time restructuring costs are included in this pretax loss guidance, and we expect them to be within the corridor of EUR 11 million to EUR 30 million. As mentioned in earlier calls, the outlook for 2024 and also the midterm outlook, you can expect from us during, let's say, end of Q1, we want to make sure that we fully understand and decipher the market conditions we are facing in the midterm in order to give you a proper guidance. Having this said, I'm coming to the end of my presentation, and we can start the Q&A session. I'm having just a glass of water here. And I would like you to either raise a hand so that you get unmuted or please write your question in the chat. Are there any questions?

None so far. Yes, again, please raise your hand, and I will unmute you. In that case, you just need to confirm by unmuting yourself afterwards. But so far, no hands have been raised up and no questions in the chat also. Let's wait some time. Someone has raised a hand. Okay. All right. Just give me one second. So Robert van der Horst, you have unmuted yourself. Is it possible that you unmute yourself trying to click in the meantime...

Yes, it should work now. Can you hear me?

Yes, we do.

It works, Robert.

So a couple actually. I do have a question considering the order backlog and order range. So you already mentioned that the times where orders came in like scheduled for the next 3 to 6 months are over. Would it be fair to assume that this EUR 40.5 million are scheduled at least most of them for the fourth quarter now? Or are there still orders in the backlog with kind of increased lead time?

So there are still some of it and for already the new year. So 2024, but vast majority is for the fourth quarter. Don't know the numbers by heart, but to give you a direction, at least 70% of it is for Q4.

Okay. Perfect. And you mentioned write downs on the inventories. Are the inventories now really at like market levels? Was this all the spot price effect reduce so that we can also expect maybe from the write down? I mean it was only EUR 0.7 million, if I recall correctly, but can we expect a positive gross margin effect from that in the fourth and the first quarter and kind of an end to the burdening effect of to expensive materials?

Yes. Here, you cannot expect a relief because the EUR 700,000 material depreciation were mainly on material where we decided in the restructuring program to discontinue certain products in order to reduce complexity and also, to a certain extent, when we stop some development projects due to the situation that some people are leaving. And we have to decide also on the portfolio that we have excessive material on certain products. This does not -- stays not in correlation with these increased general purchasing prices and spot price phenomenon. They are still in our inventory values and need to be eaten up over the course of the time.

Okay. Understood perfectly.

It's not a one off correction also. Just to make this clear.

Okay. In terms of cost effect from the restructuring it would it be fair to assume that I think that the ballpark we talked about previously, and also in the measures in the short term or temporary measures that were taken in the first half of the year, and this will be about EUR 6 million per quarter in terms of cost reduction, is that still fair to assume?

It is still fair to assume. This is then also including HR and OpEx costs.

Sure. Yes, of course. And the last question from my side. You mentioned the competition in China several times in the presentation today. This is not a new phenomenon, right? So we've always been in heavy price competition in China. So is there something that substantially changed? Do you consider it temporary, the extent to which it maybe has increased in the last couple of months? And what's your perspective going forward? Would it be more production in Asia maybe or I mean, in the past, it was mainly the lean designs. Will your full range supplier approach maybe also help you in China? So what's the current situation here compared to the past price competition? And how are you going to move forward with the situation?

Yes. So you're absolutely correct. The phenomena of this higher competition intensity and higher price pressure in China than in other regions is not new, but it has accelerated, especially in, let's say, starting middle of last year when the combination kicked in of a very weak market and, let's say, aggressive competition who has pretty aggressive growth plans also and are struggling to realize those growth plans. The reason news, we also got, let's say, from one of those Chinese rivals was also that they are down by 30%, and these companies are eager to grow with double digit numbers. So at the moment, we have, due to the weak market situation, even a worse situation than normal. But looking into the future, definitely we cannot assume that the pressure goes away. It might be relieved a little bit, but the pressure will remain. And our way forward is the, let's say, solution provider or the full line provider with much more software value add from the software development kit and more room to differentiate in when you can combine different single components to a full it's not a full solution. It's a sub solution, but this gives you the possibility to differentiate better than on a single component level. And this is strategically our answer to these, let's say, competition situation that at least in the in China itself and maybe in some other Asian countries, we need to expect to remain in the future as well.

Yes, I see 1 raised hand and 1 question or 2 questions in the chat. Maybe we can start with Thomas Schießle. I would try to unmute you. You unmute yourself. Okay. That's perfect.

It's a question on customers and customer migration. You just elaborated quite intensely how the situation really evolves in China. But if it comes to the future, will there be a move onshoring back to Western countries? And what does that mean for your overall company structure and your sale? Does it mean that we will have to follow or will you head the development?

Yes, Thomas. Thank you for the question. What we are seeing is but definitely that the geopolitical situation step by step, I mean, it's definitely not happening overnight, but we see much stronger tendencies than 1 or 2 years ago to really establish a high tech machinery business again in the U.S. and also more even in Europe as well. So and what does this mean for us? This means, for us, we definitely want to use these opportunities. And this means, for us, we need to be prepared for in the coming quarters and years to over proportionately invest in those areas, namely in the U.S., in Europe, but also in countries like India or Vietnam instead of putting more eggs into China. I think this is the situation we are in, and this is also how we adjusted our plans. I mean we want to realize what's possible in China, but with regard to over proportional investments, we are clear that we need to put these investments in areas that are geopolitically not at this risk. And the investment then mainly means everything that needs to be close to customers. So sales, field application engineering support, marketing communications. It doesn't mean necessarily R&D and production. Especially when we look at countries like the U.S., there is pretty high salary levels. It doesn't make sense to establish an R&D there. However, it does make sense to have much stronger field application engineering capacity close to the customer in the U.S. just as an example.

What about the new plant in Singapore? Is there a future for this plant if you are to go down?

Yes. This is definitely, for us, let's say, still a risk mitigation. And also this has a good future because of with the situation that Singapore is part of the ASEAN Trade Association in kind of Switzerland and Asia. We see from a geopolitical standpoint that it is a good spot to have production and the hub established in Asia.

Coming to the future revenue level of the company. Is it possible to reconquer the, so to say, precrisis level of -- revenue level of Basler or will we see a lower level of revenues but a higher profitability because of your new full solution provider approach?

Yes. So our aim is definitely to remain a growth company. I mean we are going through a restructuring. Now we are taking quite a big hit regarding top line this year, unexpectedly strong. But mid to long run, we want to be, and we are confident about it, to stay a growth company and to come back to growth rates that we have shown in the past and also step by step revenue levels we have already achieved last year. Yes. How long it will take to come back to at least the level where we were last year, so the EUR 270 million, EUR 280 million, this needs to be seen because this is this has a strong, let's say, connection to the question after we have seen a lot of upswing in demand due to, let's say, COVID and chip crisis effect. We now see the downswing, and it's really hard to figure out where is the normal level, so to say. But definitely the change in strategy does not mean we stay at the top line where we are right now and make it more profitable. We want to grow top and bottom line in the future after having successfully gone through this crisis.

Thanks for your questions. So no hands raised up right now, but we have 2 questions in the chat. One is on our wage assistance provider, what are the main competitors? And a more specific question, this is the second question, is Hamamatsu from Japan considered as a competitor?

So maybe the second question first. We don't consider Hamamatsu as a significant competitor. I mean, we see them in some super high end life science applications where we are typically not strong. They are so but in our bread and butter business, Hamamatsu doesn't play a role, and we are not playing a big role in the super high-end scientific imaging part. The more relevant competitors that we have, when we look at the different regions in Europe, the relevant competitors are TKH as a public listed tech holding, and a smaller midsized private owned company called IDS. In the U.S. or Americas, the strongest competitor is by far, and this is also on a worldwide base, a strong competitor is the company, Teledyne, so the Teledyne Group. And within that, there are certain different imaging brands included. And when we go through Asia in the APAC region, outside China, we have only smaller local competitors. So no big brand that would bring a bell to you. And in China, we have a couple of strong competitors. Top on the list is the company Hikvision. Second on the list of the company that is called Dahua or nowadays iRAYPLE. Those companies are acting in security surveillance and the machine vision or computer vision. And both companies are also with their security products already on the banned list of the U.S.. So these are large companies, multibillion companies. Second tier in China are company names like OPT or Lastar, but they are significantly smaller. However, we see them also locally acting. And on top of these, let's say, handful of larger players, including us, there are maybe another 30 small niche players that do certain niche products or strong in a certain region. But these competitors we believe will be taken over in the consolidation process over the course of the next couple of years.

Great. Thanks for your reply. One additional question came up. It is how do you see the recovery? Which industry should be the first to recover in term of order for Basler in USA, in Asia and in Europe?

So if we look at the larger clusters, so maybe the I mean, the biggest market we are addressing is the electronics inspection market. So everything around electronic assembly. Here, at the moment, we have no signs of recovery at the moment. We get some signs of recovery in semicon, which is typically then the early indicator, but it's only signs of recovery, no substantial order entry. This is why we believe a strong year in electronics most likely would not be in '24. It will be more out towards the year of '25. But it's a guessing game at the moment because there are no news of it happening. What is more promising for next year is logistics. Here, we at least get a qualitative sign that things are getting better. I mean the investments in logistics or in fulfillment center optimizations fall-off eclipse this year seems to be a willingness to invest more than last year. And as this is a growth market. In this sector, maybe we can even be at or above what we have realized last year. But the exposure also to bring this into context of logistics for us is in good years at the moment, roughly 8% to 10% of our overall revenue, whereas electronic inspection is at the range of 25% to 30%. For the laboratory automation sector, and we also do not expect a significant improvement short term. And for the general machinery, also here we think the situation will improve when the overstocking is out because at the moment, the majority of our customers still tell us they have at least 3 months of excessive stock at hand. So it will take at least until end of the year to take out these excessive stocks. And maybe also on the positive side, we believe the investments in battery production for electric vehicles will remain strong and will accelerate also in regions outside Korea or outside China, where most of the production is done today. Yes, these are then maybe when we come to the verticals a better insight.

Thanks. I see no raised questions right now. No additional questions in the chat. We can, of course, wait some additional seconds. You also have the option on our website to send us your questions, of course via the Investor Relations form, the correspondent e mail address. But right now, it seems that no questions are open. Thomas, you wanted to add a question, I think?

Yes, please. I'm going to do so.

Go ahead.

Yes. Hardy, question concerning plan B. So what if in end Q1 in next year there is no material improvement in overall business conviction? What will be the plan B?

I mean the plan first of all, our -- let's say our restructuring program is significantly lowering the breakeven point of the company to a level, let's say, at a normal business run rate of roughly EUR 190 million to EUR 200 million. So if the situation is not improving, we, first of all, would take, again, temporary measures to reduce the breakeven point. To be honest, if, let's say, the order entry stays at a level of where they are right now, 35% or maybe 40%, I mean it's easy math, then we talk about EUR 150 million to EUR 160 million in sales per year. This would then require a further structural program to further lower the costs. Do we believe in that? No. The likelihood is very small. Is it 0? No. It's also not 0 at the moment because you see what's happening in the market. But we will definitely track these, let's say, the market developments very closely and will act timely along the way.

So this has any implication for the dividend?

Indication would be I mean it's early stage. But our dividend guidance, our policy is 30% from earnings after tax as there is no earnings. Most likely there will be no dividend paid out next year or the we will not propose it to the main shareholders meeting.

All right. In the meantime, no additional questions came in. I think this is a good point yes.

And if there are no further questions, I thank you very much for your attention, also for the lively questions. If there are more questions, my colleague already told you, please don't hesitate to contact us, my colleague, Verena and I are looking forward to answer your questions if you have more of them. Yes. Again, thank you very much, and have a great afternoon.