Bossard Holding AG (BOSN) Earnings Call Transcript & Summary

Thank you. I will also say something. Welcome to our Annual Financial, Analyst and Media Conference 2022. I'm very happy that we are back to a physical meeting. We are streaming this event, and it will be available on our website later today. Stephan Zehnder, our CFO, and I would like to guide you through the following agenda. I will start with some highlights 2021. Stephan Zehnder will then navigate through the financials before I will close with a strategic focus and outlook 2022. So let me start with the highlights. The Bossard group closed with a record sales of CHF 995 million and an EBIT of CHF 123 million. The economic tailwinds throughout the year helped us to achieve these numbers, whereas the ongoing pandemic global supply disruptions and cost inflation post unprecedented challenges to the organization. Our proven supply chain resilience through double sourcing of key products from different sources and regions and safety stock up to 8 months helped us to respond to increasing customer demand without significant shortages. Our proven productivity services, namely Smart Factory Logistics and Smart Factory Assembly were in high demand to reduce total cost for our customers. They opened opportunities for new business and for creating customer loyalty. Throughout the year, we continued to implement our Strategy 200, particularly our digitalization and cultural transformation plan to improve our internal efficiency. In October, we announced the acquisition of Jeveka, a high-quality distributor in the Netherlands, which post us in a strong market position in a former market wide spot with analogs And last but not least, we conducted our first Capital Markets Day, where we had the opportunity to communicate our strategy and business model in more detail to interested investors and analysts. All this was only possible with a motivated organization. What you see here is a picture from our last pre-Corona leadership conference in Portugal. Stephan Zehnder, our CFO, will now guide you through the financial review 2021. Stephan, please.

Good morning, ladies and gentlemen. Bossard looks back on another extraordinary business year. The COVID-19 pandemic continued to create major challenges for the group from a variety of angles in 2021. However, one could almost say with completely different signs than in the prior year, but those not less demanding. While in 2020, the group was challenged by the maximum extent to prove its operational efficiency and thus guarantee the delivery capability to its customers as a result of the lockdowns and global interrupted supply chains. In 2021, the global economic upturn and the resulting high demand led to supply bottlenecks, capacity restrictions and longer delivery times, which were coupled with significant price increases for raw materials and freight costs. The fact that Bossard was able to hold its own and to take advantage of the market opportunities even in this challenging environment is impressively demonstrated by the 2021 annual results. We are, therefore, pleased to present to you today results that are exceptional in the Bossard history. We were able simultaneously increase sales, EBIT and net income to new record levels in 2021. And hence, not only to significantly surpassing the results from the prior year, but also those prior pandemic. The Bossard group achieved sales of CHF 995.1 million in 2021, an increase of 22.4% compared to prior year, whereby the currency effect of 0.2% was for once deductible. Organically, sales growth was disproportionately high compared to the prior year, with an increase of 21.1%. The newly acquired Dutch company, Jeveka, consolidated since October 2021, contributed 1.1% to the group's sales increase. Thanks to its consistently high delivery capability, Bossard benefited from the strong global economic upturn. As a result, Bossard was able to report double-digit growth rates, not only in all 3 market regions, but actually in all the countries. There is no doubt that the investment backlog caused by the pandemic in 2020 and the high resulting dynamic demand in 2021 helped us to significantly increase sales and profits. However, the growth is also an expression of our internationality and the group's broad customer base in a wide range of industrial segments. The focus on growth industries such as robotics, electro mobility, railway and medical technology paid off. And those segments developed particularly well. The EBIT amounted to CHF 123.3 million, representing an increase of 42.8%. At the same time, the EBIT margin improved from 10.6% in the prior year to 12.4%, which means that the group's earning power has again improved markedly. Despite the volatile market conditions paired with significant cost increases, both in raw material prices as well as operating expenses, we managed to keep the EBIT margin in the upper part of the targeted range of 10% to 13%. This shows how solid our group performed in this very challenging environment. The positive underlying condition also had an impact on profit. Compared to prior year, net income increased from CHF 67.8 million to CHF 98 million. The return on sales amounted to 9.8% compared to 8.3% in 2020. With that, the Bossard group can report the best annual results in his history, and we are proud of that. Three key factors were decisive for the success over the last 2 years: firstly and foremost, the flexibility of our 2,700 employees around the globe, who did a tremendous job and whose performance was exceptional on the difficult conditions; secondly, the purchasing strategy we have practiced for years, which is based on several procurement sources; and finally, our general stock keeping. Although this represents the largest balance sheet item with a high capital commitment of over CHF 338 million, it was of central importance in order to ensure the best possible delivery capability to our customer in this exceptional demand situation. In addition, the strong performance is also preceded by various upfront far-sighted investments and expenditures made over the last years. Worth mentioning are here, the investments in people and the organization, the expansion of office and warehouse capacities in various markets as well as our targeted acquisitions. Also, our focus on special parts engineering services and Smart Factory solutions as well as our investments in digitalization of our processes and services, supported the strong sales and profit growth in 2021. Examples are our new e-commerce platform or our real-time manufacturing service, which enables our customers to obtain [indiscernible] prototype parts quickly and reliably at a reasonable price. Another example is our new service Smart Factory Assembly, which is supporting our customers' digitalization of their assembly processes. Now let's have a look at the sales development in the individual market regions. In America, sales increased by 12.4% to CHF 226.2 million or 15.3% in local currency. This gratifying development continued due to the ongoing diversification of our customer base, among other things in the field of electromobility. The digitalization accelerated by the pandemic had a supporting effect, which also led to sustained high demand in the electronics segment in 2021. In Europe, sales increased by 23.1% to CHF 574 million compared to last year, while in local currency, the increase was 22.1%. Especially in Europe, we benefited from the broad customer base in industries such as medical technology and railway. The acquisition of Jeveka contributed to the gratifying sales performance. Adjusted for acquisition, annual sales totaled CHF 564.4 million. In Asia, we remain on a growth path. The continued strong demand throughout the year resulted in a sales increase of 34% to CHF 194.9 million. In local currency, growth amounted to 31.8%. That this growth was broad-based, is reflected in the increase in sales of all business units, some of which were well into the double-digit range. Malaysia, India and Taiwan are particularly worth mentioning at this point. As for the industrial segments, it was primarily robotics, automation and electronics that recorded strong growth rates. Now we review on the balance sheet. The above average growth rate also and also the investment activities of the group led to a significant increase in total assets. Compared to the prior year, total assets increased by 20.5% to CHF 773 million. Despite the high profitability, the equity ratio fell from 50.3% in the prior year to 45.2%. This decline can be explained by the fact that Bossard offsets the goodwill from acquisition in 2021, CHF 38 million directly against equity. The market increase in total assets is driven by higher customer receivables as a result of the substantial increase in sales on the one hand and on the other hand, by the higher inventory levels. While the increase in receivables was in line with the sales growth, the increase in inventories was above average. Besides the higher sales volumes, the increase was due to higher raw material prices and freight costs. Furthermore, inventories were deliberately increased to ensure the best possible delivery capabilities to our customers in view of the continuing market uncertainties and long delivery times. Last but not least, the acquisition of Jeveka also contributed to the increase in total assets. In relation to net sales, the operating net working capital increased slightly from 42.7% in the prior year to 43.8%. As a result of the high level of investment activity and accelerated growth, net debt increased from CHF 156 million in 2020 to CHF 217 million in 2021. The gearing net debt measures against equity recorded a slight increase from 0.6% versus 0.5% in the prior year. The debt factor, the net debt in relation to EBITDA, nevertheless, remains at the prior year's level of 1.5x. Thereby, Bossard continues to have solid balance sheet ratios, which allow room for further growth and investments. To stay with the latter. In 2021, we invested in various areas in order to keep pace operationally, but also technologically with the current and planned growth ahead. In total, we invested CHF 35.3 million. Thereof, around CHF 6 million relates to 2 ongoing infrastructure projects. In France, we are currently expanding existing capacities. And in Taiwan, we are investing in a completely new office and warehouse building. Hereby, we more than double our logistics capacities in both cases. We invested CHF 11 million in digitalization, the biggest share of this investment was dedicated to our new group-wide ERP system. The first rollouts are planned in Denmark and Sweden in the second quarter of this year. In total, we will invest about CHF 70 million into the new ERP system and the global rollout of it over the next 6 years. About CHF 140 million was spent for replacement investments in ongoing operations. Particularly, I would like to mention the investments of CHF 4.5 million into SmartBin, which we invested -- which we installed at our customer premises and are the core of our Smart Factory Logistics solutions. This means that we sold quite a few Smart logistics solutions in 2021. Or in other words, every Swiss franc spent increases business volume and process efficiency. And at the same time, boost the competitiveness of our customers and therefore, is the basis for long-term partnerships. Now the business growth and the investment mix had an impact on the cash flow, too. Cash flow from operating activities before changes in net working capital increased by striking 39.7% to CHF 126 million. By contrast, cash flow from operating activities after changes in net working capital rose from CHF 91.6 million in the prior year to CHF 65.9 million. As already mentioned, this is mainly due to the higher inventory levels. Cash flow from investing activities increased quite a bit from CHF 41.2 million in 2020 to CHF 92.3 million in 2021. On the one hand, this is due to the acquisition of Jeveka last October -- or in October 2021. And on the other hand, due to higher investments in property, plant and equipment and intangible assets, as already mentioned. While the group reported a positive free cash flow of CHF 50.4 million in the prior year, a negative free cash flow of CHF 26.4 million resulted in 2021, due to the significant growth and the investments made. Finally, a word on the dividend. As you know, our dividend policy provides for a 40% payout of net income to shareholders. After 2 extraordinary years influenced by the pandemic, we will return to our normal payout ratio. Accordingly, the Board of Directors will propose a gross dividend of CHF 5.10 per registered A share at the 2022 Annual General Meeting of Shareholders compared with CHF 4.40 in the prior year. This corresponds to an increase of almost 16%. Ladies and gentlemen, this is review -- with this brief review, I conclude my remarks. I thank you very much for your attention and with pleasure hand over back to Daniel. Thank you.

Thank you, Stephan. An amazing year behind us. I would now like to elaborate on our strategic focus and what we expect for 2022. As we have communicated earlier, we have developed the Strategy 200, which is a strategic journey we follow until 2031 when Bossard turns 200 years old. We aim for accelerated, profitable and sustainable growth based on our proven business model, organically and through acquisitions, to achieve relevant market shares in our key markets through 7 strategic initiatives. We have elaborated on them at our Capital Markets Day in October last year. What is now the focus for 2022? One of the focus areas is the Sunrise Industries. Those are industries which we expect to grow above average in the next years. Particularly, we talk about railway, electric and electronics, health care and electric vehicles. To make it more tangible, I'd like to give you some examples for each industry. We have been working with railway companies for decades. This is particularly interesting because we see a lot of global government spending on railway infrastructure, namely in U.S.A. and Asia, China and India. And on top, railway is considered a sustainable mobility technology. A prominent customer example is Alstom Bombardier, which we are serving globally as an engineering and Smart Factory partner. Similarly, we are engaged with stadler rail around the globe, Hyundai Rotem in Korea; or CRC, China North Railway in China and in the United States. Through our acquisition in the Netherlands, we became the key fastener supplier for ASML, the global leader in the development and production of semiconductor equipment with a global market share of around 85%, growing exponentially. Besides ASML, we are a strategic supplier for Dell in the U.S. and Ireland with the rapid acceleration of global digitalization, we are happy to be positioned well in a number of electronics companies around the world. With the globally growing demand for health care services and sales diagnostics devices, our focus on the health care industry continues. A good example of a long-term partnership is Roche Diagnostics, where Bossard is supplying the majority of fasteners, but is also engaged as an engineering and Smart Factory partner. Similarly, we work with other global customers in the segment, such as GE Healthcare, B. Braun, Siemens or Metrohm, a Swiss-based global producer of chemical analytics devices. Electric vehicle manufacturers from start-up companies to mass production companies have been and will be in our growth focus. Lucid Motors is a prominent example of a customer where Bossard was engaged in engineering from the very beginning some 4 years ago. Last year, Lucid chose also as the key supplier for fasteners for the ramp-up on 0 production in Casa Grande, Arizona. Lucid is producing a luxury sedan, targeting the global markets. Another example of a new project in the ecosystem of electric vehicles is our engineering collaboration with Northvolt in Sweden. Northvolt is a 6-year-old Swedish start-up company who joined with Volvo, Volkswagen and Porsche to develop their own battery systems with the ambition to serve the global market with batteries for electric mobility. Last year, Bossard was chosen as the engineering partner and key supplier for fasteners. Looking at electric vehicles, our product solutions are used in the body, in the interior in the exterior, in the chassis, in the battery as well as in the powertrain and inverters. We have created an industry-specific product solution assortment, which allows us to run focused marketing campaigns globally. Dedicated industry assortments have not only been developed for electric vehicles. but for all other previously mentioned Sunrise Industries for electronics, health care and railway as well. Our other strategic focus in 2022 is our proven productivity promise to our customers. Our product solutions assembly technology expert and Smart Factory services are key enablers to make our customers more productive. When if not now, when wages and overall costs are skyrocketing, should we promote our solutions that enable customers to reduce their total costs in C-parts management and assembly significantly. What you see here is an exemplary, but typical, Smart Factory layout. In this case of a white goods or a washing machine producer working with Bossard on multiple levels. Through our Smart Factory Assembly technology services, we advise customers in selecting the right products. What you see here is a teardown project where we take a customer product apart here, a washing machine drum and proposed optimization potential in the design by reducing fastener varieties or by applying more innovative product solutions. The benefits for customers are higher safety, higher efficiency in assembly and finally increased productivity. Our Smart Factory logistics solutions enable customers to manage their C parts automatically, ensure an optimized and real-time inventory management and a smooth flow of parts through the factory from the central storage location to the point of assembly. The main benefits are higher availability at lower total cost, and again, increased productivity. With our Smart Factory assembly services, we secure customers' assembly processes by providing smart tools and digital work instructions. These enable assembly workers to avoid mistakes, speed up the assembly process and onboard new unskilled staff very efficiently. Consequently, Smart Factory assembly services are another lever to make our customers more productive. The Bossard group sales volume is driven by product sales, whereas the services are creating customer value, trust and loyalty. While we sell product solutions to purchasing, which look for the lowest price, we promote Smart Factory services to production and logistics specialists, which want a lean production and logistics flow. Likewise, we sell assembly technology expert services to designers and developers who need innovative and safe solutions instead of just low-cost products. And finally, we aspire to sell our complete service package to P&L owners, usually the C-level, to demonstrate the full potential of total cost savings and to underline that by applying the complete portfolio of services. Customers typically save 3 times more in process costs than they actually spend on product. Some of you may remember the iceberg model. So services can be regarded as a shoe horn to sell products, in our view, an absolutely indispensable shoe horn because we would not be where we are today had we not focused on services in the past. In summary, our strategic focus for 2022 is to run the business and ensure we achieve profitable growth by focusing on Sunrise Industries, retain and penetrate existing customers, but also win new business through our strategic services, especially now. We will sharpen our view on sustainability, both socially and environmentally and for the latter, collect data and set realistic short-, mid- and long-term targets. Besides running the business, we are fostering change by implementing our strategic initiatives. One of them being our operations engine, where we will be introducing the first release of our new ERP system this year. The sales engine will help to provide us with a joint structure, processes and systems to acquire new business. While the together we create initiative is the foundation of our cultural transformation journey for better and more efficient internal collaboration through the application of our new guiding principles, leadership development and talent management. This leads me to the outlook for 2022. Looking at the purchasing manager indices, they still indicate a very strong global demand. The current global supply chain situation looks a bit more challenging. The war in the Ukraine does not help to stabilize the current supply chain challenges. Yet we have no dependency neither on Ukraine nor on Russia. The EU has imposed antidumping taxes for steel fasteners from China as of February 17. This means we'll need to forward 20% to 80% higher product cost, depending on specific suppliers to our customers in European Union. In general, fastener prices are on the rise again. Lead times went up to 30 to 50 weeks with 12 weeks in normal times. So you're waiting 1 year for fasteners. Freight costs are still peaking at around USD 13,000 per container from Asia to Europe, prices unfolded in the last 12 months. We are currently facing scarce port and container capacities all around the globe. And then we see ongoing inflationary trends on wages and raw materials. In a nutshell, this means we are still in a strong seller's market, and will act accordingly. Our stock levels are sufficient, so we are not expecting significant shortage in the short or midterm. And we will continue with price increases and ask customers for longer commitments to secure their supply. In summary, the strong global demand and the great market potential in Sunrise Industries sent very optimistic signals. The volatile environment with the ongoing pandemic waves, the war, the supply chain disruptions may pose unexpected challenges to our business development this year. Since we think long term, we will continue to invest in our future, namely in our operations engine, our new ERP system and in our Strategy 200 initiatives. With this, we're still optimistic for 2022 and focus on what we can influence. And part of what we can influence is our attitude and spirit Together We Create is the motto of our cultural journey. Through better collaboration across regions, functions and hierarchies and also with suppliers and customers, we strongly believe we can be more efficient as an organization. Not reinventing wheels, collaborating on global projects and sharing best practices much more than in the past. We want to unleash the potential of all our employees by applying our new guiding principles, which are summarized and described in the first Bossard comic that each one of you can find on your table. The comic serves as our global employee handbook. We have translated it into 8 languages. Please feel free to take one with you. With this, I would like to thank you for your attention, and Stephan Zehnder and I will now gladly try to answer your questions. Thank you.

Okay. So now I was advised that we first take the questions from the room. And then in the second stage, we will address the questions from the online platform. All right.

Yes. I have a question first on the Russian invasion. You said you have no exposure, but you have no exposure to the train neither to Russia nor to Belarus? [indiscernible]

It's -- when we talk about the supply chain, we have no exposure in the sense that we're not buying from Ukraine or Russia. When it comes to sales, Stephan, maybe you want to [indiscernible].

So we have some sales about the CHF 300,000 in Russia, and it's about CHF 0.5 million in Ukraine. But we have no physical assets. We have no employees. It's just export sales into these countries.

And Belarus?

Belarus, it's about CHF 100,000.

May I ask a second one?

Yes, sure. Please go ahead.

You had inventory increase by CHF 80 million in 2021, and you say inflation is increasing. How do we have to think about inventory in 2022? So do you expect that this is going to increase further?

We will expect further increase. I mean, if we would say just the business remains as it is, it will still increase because there is different reasons for that. It's still -- we receive goods, which are to a higher price because the way we bought and also when we placed orders last year, it was already to a higher price. So this goods coming in only now. The other one is still that we work on the service level, which I was also mentioning. So we also have the plan to bring it up again. It's not an issue today we can serve, but it's not where we want it to be. And the other part is also that we still -- based on the supply chain, you also place a bit already technically [indiscernible] from that perspective. And hopefully, yes, we will increase the business. So by higher volume, also the inventory will increase. So the expectation -- we need to expect it's increasing. I would say midterm, when the supply chain normalizes, then also the, let's say, the capital commitment, as I also mentioned in the percentage of sales, should normalize and should rather come again in the range of 40%.

Maybe if I can add to that. The worst thing that can happen to us is that we cannot deliver. That's truly the worst thing. So -- and now the prices have been increasing, and it's kind of a natural cycle that we're getting in higher cost products, but increases our availability. So that's why it's kind of a normal cycle. Of course, prices have been going up, maybe more than in the past, but still availability is high. And we're managing -- trying to manage this balance of how much do we order now, when is it going to go down? Okay, tell us.

I mean if we see the cloud or the slide or the points, I mean, we have to plan cautiously ahead. Any other questions?

Dan Polin from Vontobel. You talked about investments in Taiwan and France. Could you talk a little bit about your investment and growth initiatives in 2022? Where do you plan investments, both in tangible and intangibles? And could you maybe provide a -- for modeling CapEx guidance?

Yes, I answer on the CapEx one. So the plan is about CHF 50 million to CHF 52 million. If we break it down, then it's about CHF 12 million dedicated to the ERP system. We have about CHF 14 million dedicated to the 2 infrastructure projects. And the remaining about CHF 26 million is for ongoing replacement investments. Again, as I always said, it's a wish list. We will be cautiously -- always look and we always work on the principal kind of pay as a go. But that's the kind of the framework which we have for 2022 in our plans.

Marta Bruska from Berenberg. Fantastic results congratulations. I was wondering whether you could give us a little bit of a feeling in terms of the inflationary environment in 2022 with price increases. Whether you have any expectations how much of the growth in 2022 for Bossard would come from price increases? And then I have 2 follow-ups.

Well, maybe on the price increases. One element that we haven't talked too much in the past is wage increases. And we see in Eastern Europe, wage increases double digits, 10%, 12% Czech and Poland. We see in U.S. also wage increases going more towards 10%. So those wage increases somehow also obviously turn into higher cost, and we want to convey that to customers. So part of our price increase discussions is because of wage increases. To give you an example, John Deere some 6 months ago, they strike. So their employees got like 12% more salary. Now the whole region of Iowa, they were kind of under pressure, so people ask for higher salaries also at Bossard. Now we have to pay higher salaries. We went now back to John Deere and said, hey, now we need to increase price. So they shoot themselves in the foot. No. I mean wage increases are part of the overall increase, and it's significant now. So -- and raw material prices will still increase, and it's the seller's market. And what we try to do is, of course, ask customers for longer-term commitments. But I guess, for this year, there will be another round of at least, yes, 10%, 20% in 2 steps, maybe throughout the year, I would expect. So prices are still steadily going up. Besides the fact that we have EU antidumping taxes up to 80% for steel fasteners into the European Union, which we will pass on straight away. So there will be no -- we've just added 40%, 50%, 60% only for the European Union. So we will continue in the range 10% to 20%, I guess we will have to do. Do they all come through, through the whole year? No. It's a process. But it's a seller's market. And the question is for the customer, can they get the goods.

So 10% at least of growth in 2022, that's from price increases. And I have one follow-up. If you could please contextualize a little bit your growth in the Smart Factory Assembly and how the project pipeline is developing there? That would be really appreciated.

Yes, we're currently scaling our Smart Factory Assembly services. We have started some 3 years ago with ramping up the system. We currently have 12 pilot customers around Europe, which we're serving, which is RUAG, Metrohm , Komax, Hilti. And we're now scaling into China, Denmark, Germany. And so the pipeline is -- looks very promising. Now we have more of the challenge that we can actually manage the project. We have much more demand then we can actually manage the projects. So we're very, very optimistic. And the challenge is now not to stumble over our own feet, to make this system truly stable and scalable and then continue our rollout. I don't know if that answered bit of your question. More questions?

You're still operating in a very fragmented market. Your balance sheet is pretty strong. Could you talk just a little bit about your M&A pipeline? What opportunities do you see? How do you see current multiples for acquisition targets, just qualitatively, obviously?

No. No, we cannot talk about any names or potentials. But in general, we see -- of course, as we said, our acquisition plans are to grow another 1/3 over the next 10 years through acquisitions. There is a few targets in sight, which always -- well always the goal is to make us better, not just bigger. So in the Netherlands, it was that -- it was a white spot for us, and we saw a great industrial environment. So we said, okay, that's good, or we invest into technology companies, which provide new innovative technologies. So we're looking into these and it will be going. As you know, we have also now a function Head of M&A, Mr. Rolf Ritter. So be sure he is not going to be bored.

Thomas Hong from GAM. I have 2 questions. First, the EU antidumping will that change your sourcing strategy going forward?

Well, first of all, the short answer is no, not dramatically. We have always had antidumping taxes in the past, and we already have sources outside China. Now of course, we're shifting more procurement to non-Chinese countries. That's true. But we have also done that in the past, and our sourcing strategy has always been to source from multiple sources, not only single source. So for us, it's relatively easy to switch to others. The problem now is, of course, everybody else does the same. So yes, we're switching some of the suppliers, but no, we're not changing strategy.

Okay. And my second question will be the effect of inflation. So there are various effect, high raw material prices, wages and so on. What has been the effect on the margin in 2021?

Well, that's a difficult question to answer, besides to calculate. And I think we have to put this in perspective. I mean, we serve more than 30,000 customers with more than 1 million items. And some of it we sell to different customers, and we have 11 ERP systems. So that's not a number which we can provide or give you a split on that one. It's for sure that with the price increases we have done in 2021 that the share of the growth was for sure bigger than in the past, but I cannot give you any number.

Okay. Let's switch -- sorry.

I would like to ask, in the past, there were certain differences in profitabilities per region. I know we don't disclose the details, but just in general terms, have you seen any catch-up maybe in Americas? How is it developing with the new general manager there?

Yes, we have refocused the strategy in the United States. So we have refocused on growing industries East and West Coast. We have changed the organization fundamentally from a sales structure, namely. And we have a new management in place with some more ambitious targets, I would say. So we're following that path. I cannot give you any numbers, but we're so far happy with the development. Okay. Let's switch to the online.

[Operator Instructions]. First question is from Sebastian Vogel from UBS.

Can you hear me?

Yes, yes.

Perfect I got 3 questions. The first one is on the electric vehicle side of things. You have shown this slide with the different pieces and fasteners going into an electric vehicle. Just can you quickly remind maybe -- of course my past understanding was that you have been mainly active in the interior side of automotive. And that slide sort of conveys the impression that you would be all over the vehicle in that regard. Is that the change? Or was it just a wrong perception on my side in the past? That would be the first question. Then the second -- you want to go forward?

Yes, maybe I can answer to that. It's not a change. Maybe we haven't made it that transparent in the past, but it's not a change. We're expanding also into the ecosystem, which is batteries, charging stations and so on, which is the -- more the ecosystem of electrically. So it's not new in that sense, but maybe we haven't made it transparent in the past.

Understood. With regard to the Smart Solutions, can you sort of give us a rough ballpark figure, what is the sort of revenue contribution you have seen so far in 2021? And what are your ambitions for 2022, given the decent ramp-up plans, what you have outlined as well there?

So that one we have talked about earlier many times, the contribution of services is minor. So it's a few percent of total sales. But that's not the point. And -- so the goal is not to make that, whatever, 50% share of our sales. The goal is to use this as a shoe horn to create customer value. And again, had we not sold those services in the past or serve customers the services, we would not have created the loyalty and stickiness our customers. So in that sense, it's marginal. And the targets are to continue using them as a tool to create product solution sales.

Understood. Then my second last question with regard to the customer mix. In the past, you mentioned that you have 2 major customers and then there are all the others that are, on average -- at least the business, what they do with you is rather small. Does that also apply to the other large names that you have mentioned throughout the presentation, Alstom, Roche, et cetera?

Well, those are key accounts, but still, we are very broadly diversified. We intentionally now didn't bring up the variety of customers we have. What we showed today is more of a focus that we said those are growth industries that we can join and join forces. So they are key accounts, but we're not dependent on them.

And they are not most definitely dependent on you because they are outsourcing also elsewhere. Is that the right reading?

For some, we are almost single source, which is a nice problem for us.

The next question is by Andreas Muller.

Andreas Muller from ZKB. I've got 2 questions. One is on the margin progression this year. I mean, you mentioned you can pass on price increases and also the tax increases, the latter immediately, the rest probably with some delays. And with that, also with the investments in ERP and so forth, would you be able to increase margin this year? Or should we rather look for a margin decline with say, high revenue progression?

Here, I would refer to the second half of 2021. I mean we have seen growth, but we also have seen cost increases. And as we already talked about and elaborated, I mean we see further cost increase, input cost on the product side and trade costs. But we will also see further increase also on the operational cost. Also here to mention is that we have -- we are 120 employees more, and we have added a 60 in the second half. So the annualized -- just the annualized cost will have an impact, too. So I would say that for the whole year, if you look at the second half of 2021, that's around what we see also continuing this year. But again, there's a lot of uncertainties right now around this topic.

Okay. I understand. Did I hear that right, so you're thinking that at least -- that the price increases are going to grow top line at least 10% just this sector? Is that correct?

I wouldn't bet on that. It's -- the question was, are we going to go out with price increases again this year? And this is probably going to be like 10% again, and then we will see what happens, maybe another 10% during the year. Now will the impact come directly through to the sales? A, there will be a time lag. So we don't do that from first of January; b, you can imagine with large customers, it's kind of a negotiation to do that, and it could take even many months before that comes to effect. So the effect for the whole year, I would rather expect around a few percent than full 10%. But again, this is very difficult to say how it continues for the rest of the year. And in that sense, it's hard to give you a number here. But those are indications that we see right now. We need to at least go out with another price increase around of 10% and maybe another 10% later. That's what we see today. Will the impact be 10% or 20% on the top line? No, because of time lags, because of negotiation rounds, because maybe we can only convey it partially, but there will be a part of that impacting our sales. So I don't know. That was probably too vague for you, but that's how it is.

It's okay. That's more of giving some indication, I think. And my last question is on Americas growth dynamic in Q4. I mean that came down a bit relative also to the still strong auto regions? What was the reason there?

The main reason is that we had quite a good performance in the last quarter of 2020. So we had a basis impact. Besides that, if we look again, the customer base we have, also we have -- the way we have started into the year. So we are happy with that development so far.

[Operator Instructions].

Good. If there is any more question -- no more question here. It doesn't look like, then we would like to thank you very much for your attention and wish you a great day ahead. Thank you.

Thank you.