Cementir Holding N.V. (CEM) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Cementir Holdings 2020 Preliminary Consolidated Results and Industrial Plan Update Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Marco Maria Bianconi, Head of M&A and Investor Relations. Please go ahead, sir.

Thank you. Good afternoon, and good morning to everybody, and welcome to Cementir Holdings results release and industrial plan update. This is Marco Bianconi speaking on behalf of Francesco Caltagirone, who sends his apologies as he is unwell and he could not attend this call. So I'm happy to take questions at the end. I'm sure there would be, shortly, another opportunity for each one of you to ask questions to him directly. So moving to the deck we just released, on to Page 4, to the preliminary 2020 results highlights slide. Just a few key highlights. Revenues were up by 1.1% in 2020 to EUR 1.2 billion, which is a historical record. Cement volumes were up 13%, thanks to a 39% increase in clinker and cement volumes in Turkey. EBITDA was unchanged during the year, including a EUR 0.6 million net one-off positive impact. If we look at the recurring EBITDA, it was up 2.2% year-over-year, taking into account the EUR 6.4 million extraordinary land revaluation in 2019. These results was led by good performance in Nordic and Baltic, Turkey, Egypt and China; lower EBITDA in Belgium, U.S. and Malaysia. There was a progressive improvement in Turkey and the stabilization of the currency. Net financial position was better than expected to EUR 122.2 million. And in the last 12 months, it declined by EUR 117.4 million. Excluding the IFRS 16 impact, it was EUR 118.8 million better. This includes EUR 10 million one-off due to share buyback and the antitrust fine for Cementir Italia back in 2016. Okay. Moving to the next slide, Page 5, there is a detail of the quarterly performance in EBITDA and the net financial position. Overall, the COVID-19 impact hit EBITDA by around EUR 20 million over the year. As you know, we undertook a number of actions to preserve profitability and cash and some CapEx deferral measure to contain cash outflow and costs. Overall, cash generation was better than forecast, as mentioned before. Moving to the next slide, #6, you can see that overall EBIT was up 3.6%. Recurring EBITDA, as said, was up 2.2% despite difficult macro context. And there was a very good performance from an industrial standpoint with gray and white cement volumes up 12.9%; ready-mixed up 7.8%; and aggregates down slightly, 1.8%, over the year. We'd like also -- have given the update of the industrial plan. We have a full year guidance. We expect for 2021, revenues in the range of around EUR 1.3 billion and EBITDA between EUR 285 million and EUR 295 million, net debt around EUR 30 million and CapEx of EUR 95 million. I will shed more light on the details afterward. Now let's move to the industrial plan. I will try to be quick. Page 9, just a few words about the main priority, which remain unchanged from previous plan. We want to keep our cement global -- white cement global leadership, focusing on high value-added solutions with the launch of FUTURECEM. We want to invest in innovation and improve profitability and operating efficiency; continue to pursue product and geographic diversification; and leverage on our uniquely vertically integrated platforms in the Nordics, in Belgium and in Turkey. Moving to Page 10, a few highlights about the key industrial initiatives during the industrial plan '21, '23. In the Nordic and Baltic, we expect some infrastructure and commercial projects to underpin volume growth. We have a natural gas pipeline to invest in and a multi-burner for white kilns in 2022. In Belgium, we are adding to the capacity of aggregates and improving our ready-mixed footprint. In Turkey, we would like to improve our ready-mixed competitive position with some plants opening. In Izmir, we are opening a new line of aggregates in Turkey. In Malaysia, you know that from Malaysia, we serve Australia, which is a market where we're #1 worldwide in white cement, and we want to increase our commercial presence there. And in China, we aim at increasing clinker production capacity by about 10%. I'd like to stress our commitment to sustainability, Slide 11. We started this journey in 2019 with a new organizational setup and the sustainability governance in order to move from a simple mandatory reporting to a voluntary disclosure. We established the Sustainability Committee. We committed to a reduction in CO2 emission target by 2030 by 30%. And we have specific targets in the industrial plan. And we defined clearly a detailed action plan for each subsidiary. Recently, in December of last year, we've been upgraded to B rating from F by CDP, which is the most important rating agency in this field. Moving to Page 12. Again, on the 30% CO2 reduction targets, which are unchanged from previous plan. You can see from the slide that we have a reduction path that would start with a 6% reduction, increasing to 20% in gray cement. In white cement, we immediately start with 26% reduction, getting to a 35% reduction in 2030. You have here the target also to reach a gray cement emission by ton of 500 kilograms by 2030. It's important to stress that in the new Taxonomy Regulation, white cement is not included. And we expect the new regulation to actually be applied, really, by Q2 of this year. On the right side of this slide, you can see the focus area. We are aiming at low carbon cement, as you know, with FUTURECEM. We are improving our process efficiency using more alternative materials, increasing alternative fuel over 70% in gray cement. And we are investing heavily in sustainability, with windmill with the production of FUTURECEM with calcination plants, with kiln upgrades, everything targeted to a better and more sustainable industrial footprint. On Page 13, there is a detail of the single initiatives. I'm not going to dwell on the details. But just to give you an idea, we clearly have very clear and identified path for each target with action plans and individual management targets for each one of the actions you can see on the right-hand side of the slide for both gray and white cement. Moving to Page 14, a few words about FUTURECEM, which is one of the key pillars of our sustainability path. It is a proprietary technology which is patented worldwide, which enables a 40% clinker reduction in cement production and would yield around a 30% CO2 reduction overall. This would allow us to produce a greener and more sustainable concrete. And we are aiming at commercializing these products starting from this year. And clearly, it is a fully acknowledged solution for clinker ratio reductions by the International Energy Agency. Moving to Page 15. Product innovation is another key pillar of our industrial plan. We are investing heavily in high value-added solutions. You can see here 3 product families: High-performance pre-mix, Aalborg Extreme; high-performance ready-to-use mortar, Aalborg Excel; and ready-to-use mortar allowing 3D printing, which is Aalborg Explore. Page 16, digitalization. As many of you know, we are investing heavily in this new technology. We aim at achieving around EUR 15 million of savings, run rate, by 2023 from digitalization. The focus areas are future-ready production, smart maintenance and streamlined supply chain. On Page 17, I think it's a useful slide to give you an idea of the CapEx and investment plan. As you know, we've upped our overall CapEx during the plan from EUR 100 million to EUR 107 million in green investments. These investments should yield around EUR 30 million of cost savings from 2023 onwards. You have here on the right side of the slide, a breakdown by category: the sustainability, the digitalization, and the maintenance and expansion CapEx over the time span of the plan. And you see here some of the main initiatives, such as the kiln upgrade in Belgium, district heating in Aalborg, FUTURECEM windmills and natural gas. Page 18, our financial targets for 2023. Again, it's a bit down the road. So -- but it's important to give you a perspective. What we expect by 2023 is sales of around EUR 1.47 billion, EBITDA in the range of around EUR 340 million. Again, EUR 30 million should be contributed by green CapEx. We are including in this forecast, fuels and electricity increase ahead of inflation in constant currency. We, as you know, have free CO2 allowances until the end of 2021. From then, we have to purchase around 600,000 tons of CO2 per year, which are in the plan at EUR 30 per ton. The EBITDA margin should improve by a few basis points, thanks to digitalization, sustainability CapEx and cost control. The yearly maintenance CapEx should be around EUR 66 million with a CapEx-to-sales ratio of around 4% to 6%. As said before, the 3-year cumulative green CapEx is EUR 107 million, and we expect to reach, by 2023, a net cash position in the range of EUR 250 million. Just a few words about the difference with the previous plan on Slide 19. You can see, I think, the most important point here is to underline the acceleration in the growth rates of sales, that from 3% go to 6.3%, that's twice as much; and the acceleration also on EBITDA growth over the 3-year plan. The EBITDA margin remains broadly the same, the average yearly CapEx as well, and the cumulative green CapEx is slightly higher. We wanted also to be more precise on the objective for net cash at the end of the plan. Last slide, Page 20, growth drivers of EBITDA, just to summarize, starting from EBITDA of 2020, EUR 264 million. You see the bridge, the EUR 30 million between digitalization and sustainability CapEx; and then organic growth, cumulative EUR 46 million, to reach our target of EUR 340 million. This ends my presentation, and I'm happy to take your questions.

[Operator Instructions] The first question is from Emanuele Gallazzi with Equita.

A couple of question from my side. The first one is on the business plan. If you can just give us some indication on the main assumption behind the plan in terms of both the volumes and pricing, and clearly, on your expectation for the Turkish market. Then the second one is, looking at your target for net cash in 2023, can you comment on your dividend policy? Because, well, reading the press release, you mentioned flat dividend assumed in the business plan. And if I may, on the M&A side, if you can just give us some color on your strategy.

Thank you, Emanuele. Yes, I'll start with the first question. Yes. In terms of volumes, I mean, the main assumption, I mean, I can -- I'll try to be as granular as I can be at this stage because we're going to release the full year results on the 9th of March. But at this stage, I can tell you that we expect overall cement and clinker volumes to grow in the low single digits year-over-year. And clearly, there will be differences between different regions; can be more precise in a few weeks' time. But there are more mature regions, as you may imagine, where this growth is at the end -- at the low end of this range, and regions where the growth is a bit higher. And I'm talking about clearly Turkey, Egypt, Malaysia and China. Overall, for the group, we're talking about this amount. You're talking less than 5% growth in cement and clinker volumes. In terms of aggregates, there is a significant step-up in the growth, especially in the first year, because of the new business line that we have announced to open in Turkey. So it would be a step-up. And then a growth of low single digit as well in aggregates. Because as you know, besides Turkey, the business is concentrated mainly in Belgium and a smaller business in Scandinavia. In ready-mixed, the picture is pretty much the same. It tends to be a bit of a higher-octane business compared to cement in the upside and the downside. So with the low single-digit growth in cement and clinker, ready-mixed should be slightly higher than that. This is overall in terms of volumes. Prices. As we said in the press release, we expect them to be in line with major market trends. It's nothing spectacular. Clearly, we are -- we know we have to recover some of the CO2 that we have to buy. We said in the presentation, in the press release, that we expect some moderate price increases to recover this CO2 shortfall. In terms of major input costs, as you know, energy, thermal energy in particular, is a big element, both electricity and thermal energy. We expect, as indicated in Slide 18, that both fuels and electricity will increase ahead of inflation in constant currency. This means that, depending on the region where you're forecasting, clearly, if you see a big devaluation of the currency, there might be a growth that is ahead of what we're seeing. But overall, in constant currency, this area should grow a bit ahead of inflation. But on the other side, we will counterbalance that with our usual cost containment. We're very closely monitoring all costs. And so we expect that also the investment in efficiency will offset the energy cost. And so the margin should gradually increase both because of that and operational leverage. And it's important to underline that the CO2 cost is included in that plan assumption at EUR 30 per ton. And this pretty much gives you the picture. I cannot honestly add more at this stage. In terms -- the second question was dividend. Yes, I confirm that in the plan, the dividends are assumed to be flat year-over-year. This is the indication at this stage. This is something that has to be put to shareholders. But the Board decision has to -- was today to keep dividends unchanged. Clearly, you know very well that the company is very cash-generative in the past. And the strategy of the company has always been to reinvest more profitably with a high return within the business. And therefore, clearly, M&A has played a big role. You know that in the last 3, 4 years, we've significantly overhauled the portfolio by exiting Italy, getting the majority in the U.S., swapping Italy with Belgium. And so we've done a number of things. And clearly, we know that a balance sheet with net cash is somewhat inefficient from a financial standpoint. So I'm sure that's either going to be an M&A at some point, if and when the opportunity will arise, or there's going to be a consideration regarding the dividend if this is not going to be achieved. But I trust that there will be opportunities to grow because this is the objective of the company. I cannot say more about M&A at this stage.

The next question is from Matteo Bonizzoni with Kepler.

So the first question, around free cash flow and the use of cash. Basically, from a rough calculation, assuming a flat dividend, you are going to generate per year over EUR 150 million in 2021, '23. So a lot of cash, okay. No dividend increase. What about, for example, greenfield initiatives? There are no greenfield initiatives in this plan. In the past, you elaborated on a potential expansion in white cement via greenfield initiatives in Southeast Asia. I mean is it still in your plan? Should we expect this to be announced next year or at a later stage? The second question is on -- I was seeing the alternative fuel percentage used in gray cement versus white cement, very different. Just to know why technically -- I think there are some technical issues also which justify the fact that the alternative fuel in white cement is going to remain so low. Can you just clarify the reasons for the big delta between white and gray cement? And if I may, the third and last question. You are not providing quantitative EBITDA indication by country for 2023, which is the terminal year of your plan. We see this around 8% to 9% EBITDA CAGR. As regard Turkey, starting from a very low level, can I ask you around the range of EBITDA which you are factoring in 2023?

Thank you, Matteo, for the questions. So let me start with the first one. On cash, yes, you're right. I mean, clearly, if we don't up the dividend, the cash generation is going to be significant. And I can only reiterate what I said in the previous question. We are relatively confident, given the track record, that we would be able to find suitable ways to reinvest this cash profitably for shareholders in the core business. If this is not the case, I'm sure the Board of Directors will then submit to shareholders some alternatives with regards to dividends. I mean there are different ways to return cash. But I mean, the industrial plan, the way that we tend to draft it is at constant perimeter because it's always very difficult unless there is already something like a greenfield committed capital to highlight what could be lines of external growth. So the plan is at constant perimeter and it tries to give you an idea of what we can extract from the assets we own today. Any M&A is going to be on top. And going to, then, your second question regarding the greenfield. You are right. We've been, in the past, hinting at the possibility of investing in a greenfield in white cement in Asia, especially in China and Southern China because China is a very interesting area of the world. It's growing fast. It's the largest market worldwide for white cement, and not only for gray. And Southern China is going to be the frontier for the next, say, 20 years for the country. Having said this, as you know, white cement plants are not easy to find. And so it's -- we are considering the possibility of a greenfield. It's not always easy to find suitable limestone reserves of the quality necessary to grant the level of Hunter scale of whiteness in white cement that our clients in China are used to. And so this is why it's taking a bit long to find the suitable opportunity. This is also the reason why we have not included and we've not disclosed any formal project in this regard because we're still looking. It is an area of strategic interest, but we've not yet found anything tangible to share with our shareholders. In white cement, definitely, the greenfield route is the route because there are no, say, entity targets that realistically we can look at. With regards to your question on the alternative fuels, you're absolutely right. There is a difference between gray and white, and the difference is very simple. White cement is a niche product, as you know, that has specific feature. A key feature of white cement is the consistency of color and chemical and physical characteristics for our suppliers, which tend to be the large dry-mix companies worldwide. This is a plus because once you enter into the recipe of dry-mix companies, there are high switching barriers. But there is also -- there are constraints in terms of the characteristics of the product and the consistency of the product. So burning alternative fuels, we have to be very careful because it can damage the whiteness of the product. This is why it's not -- we cannot use the same percentage of alternative fuels for white as opposed to gray. Gray cement is a different story. It's sold in a different manner, in bulk. And it lends itself much better to this alternative fuel thing. So this is the reason. And so I would not expect the bridge between white and gray cement alternative fuel usage to close. There are different areas where you can work on. You can work on alternative raw materials, you can work on the process, you can work on a number of other things, but not on this because it could prejudice the quality of the whiteness. With regards to the question on Turkey. Clearly, I think it's very important to stress that it is that swing factor, especially in Q3 and Q4 of 2020 results. And it is also one of the key drivers, as we said in the presentation, of our EBITDA progression. I have to bring you back to the old days when the company used to make anywhere between EUR 20 million and EUR 30 million of EBITDA year in, year out, with a peak of over EUR 80 million. Clearly, there has been a big devaluation 2 years ago, so you have to translate that in current currency. But still, I mean, we managed to turn back into profit towards the end of last year, and we expect this progression to continue in '21, '22 and '23. So clearly, I'm not saying that we will go back to the historical norm, but our expectation is that if, and I have to make a big if, the macroeconomic scenario in Turkey continues to be the one that we're seeing in these last few months, we are confident that we can go back to a decent level of profitability. And you can look at our historical track record on our website, and I'm sure you have all your numbers, to see what we can do. So clearly, it's a big if because the country has been volatile in the past, especially in terms of currency. But today, we see the currency going in the right direction, and we see also volumes and prices going in the right direction. I hope it will last. This is what I can say today.

The next question is from Bruno Permutti with Intesa Sanpaolo.

A follow-up on Turkey. If -- it was impressive, the volumes recovery you had in 2020. So as an upfront, starting from capacity utilization around 50%, now you could be around 70%. I'd like to know if this is correct or not. And how much is the export in the contribution to the growth registered in 2020? And looking at the future, you are -- so you believe that Turkey will continue to be a growth driver in terms of volumes also in the plan you outlined. And so what is the target of production capacity utilization you are looking at for the country? Then if you can give us also an idea of how the 2021 started -- has started. So if you see -- what are you seeing on the market overall in terms of the potential impact of COVID-19? So what are you seeing in your markets in terms of starting -- at the start of this year? And the last one regards the investment in digitalization. If I'm not wrong, looking at your slide, it seems that you will have most of the benefit in 2021. So the EUR 15 million benefit in terms of cost savings to reach, if I'm not wrong, 75% in 2021. So I would like to understand better why the impact is so concentrated. And if you can give us some example of cost savings you are [ actually seeing ].

Thank you, Bruno, for your questions. Yes. On the first one of capacity utilization, you're right. We're north of 70% utilization, that's correct. There's been a big swing in volumes in Turkey. And answering also another question of yours with regards to the backdrop and the outlook. I mean what we can say about Turkey is we already gave some flavor during Q3 results a few months ago. Definitely, there was a big upswing and recovery after the COVID pandemic during 2020. And for probably a temporary phenomenon, a number of traditional export markets, like West Africa for example, where the Turkish exports tend to go usually, have been significantly short of clinker. So lots of export have been sucked more and more by a number of countries like Africa. And that has been the period, and still is where there is broadly a shortage of cement product in Turkey, which is very good because you know that there is a structural overcapacity in the country. And so it is probably has to do with some mismatch between production and mothballed capacity during the COVID pandemic, et cetera. But this backdrop is very favorable. And as hinted before, volumes and prices are moving in the right direction because of this. And I have to say, overall, we think that if the macroeconomic conditions continue to be supportive, there could be a period in which real investments and building materials demand in this country could continue to grow. We have slack capacity. As you know, we have over 5 million tons of installed capacity. In the plan, we expect volumes in Turkey to grow. The big swing has been in Q3 and Q4 of this year, but it will continue to grow in '21, '22 and '23 with a recovery in pricing. The prices in Turkey, average prices, are among the lowest in the Western Hemisphere. And so I think there is margin to catch up also because, in real terms, they are very low. So I think that there are supportive conditions for a profitability upswing in this country. And clearly, this will -- is reflected in our figures. The COVID-19, today, I can tell you that January, I mean, it's early -- I mean I can give you just a flavor, but it seems that the situation and the trading is as expected. So we do not see particular pressure or dead cat bounces or things like that because of COVID in the main geographies. And you know very well that we're going towards a couple of quarters when the comparables are going to get easier because of what occurred last year. So we don't know how long this will continue, but I have to say, so far, so good in terms of trading. The digitalization, you are right. If you look at Slide 16, it's absolutely correct your interpretation that the bulk of the profit, the savings run rate, will be achieved during 2021. And I would say these are the low-hanging fruits that we are getting from this investment. I mean, broadly speaking, it's not rocket science. It's going towards lean manufacturing. You know that we've invested in the past quite a lot in Lean Six Sigma and statistical methods to reduce waste and get more efficient in production. We are increasingly using automation and the technology to do that. This is particularly true in manufacturing with regards to monitoring, to predictive maintenance, which is an important OpEx of ours, and this is one of the major sources of savings. So smart maintenance, what we call smart maintenance; the reduction of downtime; the optimization of kiln performance, which would then yield a better kiln utilization, a better capacity utilization and therefore better margins overall. This is clearly reflective of one of the investments we're doing. The other big area is supply chain because sometimes we concentrate too much on the manufacturing as manufacturing companies. But supply chain is a key element of our value chain. And smart logistics based on real-time information is quite important, and it's quite important also the use of technology in -- for quotation and request for proposal process to shorten lead times to -- for procurement and all these kind of things. So the reason is that digitalization started earlier. It's made of a number of smaller initiatives and smaller investments that are done singularly at each plant and in each division, where sustainability has to do with longer lead times and slightly bigger investment that would take a bit longer to achieve. This is the reason, let's say, of a different timing impact of the two. I hope to have answered your questions.

Yes. Yes. If I may steal a last one. Now regarding the CO2, right, you are budgeting 600,000 tons at EUR 30 per ton. So what I was asking is, more or less, if I'm not wrong, the EUR 30 per ton is around the current price. So should there be an increase in the prices, you are confident that you will be able to translate on the cement price or we should consider a possible sensitivity to this EUR 30 per ton?

Yes. Thank you, Bruno. Yes, you're right. EUR 30 is the price that we use internally when we do the any opportunity cost analysis and internal project return rates. And it's clearly the price at which CO2 emissions were quoting at the time the plan was drafted and released. I -- if I'm not wrong, today, it's slightly higher than EUR 30, and we clearly don't know where the CO2 emission prices are going to go. But I think it's better, rather than give you a monetary value like we have done in the past, that indeed makes your life easier and it's clearly for investors to know what is the actual ton shortage we have. So then you can look at the price and understand what is the monetary impact in our P&L. Having said that, as you correctly pointed out, cement is a peculiar industry. It tends to account for only 3% of overall construction cost. I'm not saying that demand price is inelastic, which could not be for a commodity. But it's also true that given the volumes you're talking about, a small price increase can recover quite a significant amount in terms of CO2. So what we are forecasting and assuming in the plan -- and please take this with a degree of caution because any plan has a number of assumptions that have then to be proved correct as that goes on. We have assumed that this shortage of 600,000 tons per year will be fully covered by price increases in different markets. So this is already incorporated in the figures.

The next question is from Alessandro Tortora with Mediobanca.

Okay. I have 4 questions, if I may. The first one, if you can come back to the point you mentioned before on CO2. You mentioned the 600,000 shortage of tonnes you have. Can you tell me which is the country that is generating the bulk of this, let's say, deficit? And why are you so confident considering also that we have the incoming, let's say, ETS revision and that probably we are going, let's say, to a much more stringent emission system. So the question is, I understood your confidence but to just understand that wherever you -- let's say the country generating the deficit, why you are so confident not to pursue this cost increase because this is also a significant item [indiscernible] to the business plan.

Thank you, Alessandro. Absolutely. Thank you for your question. Yes, let's see, the confidence is given what is the current outlook and what we know with regards to discussion and what the draft circulated within professional bodies, et cetera, of what the scenarios are for legislation. As we stated in the presentation, we expect by the end of Q2 of this year, the official regulation to be released. And at that time, we clearly will have to see what the actual caps and system and mechanism will be. What we can say is that -- and this is public information, if you go on the European Commission's website, there is a detail of the emissions by plant for all European manufacturers. But I think it's quite intuitive to think that the emissions are concentrated in the areas where we have the biggest concentration of capacity, meaning in Europe you're talking about Belgium and you're talking about Denmark. Because Turkey generally is outside this scheme. So this is the scenario. Clearly, when you have to draft a plan in our industry, given that we have every 5 years, as you know, new releases and legislation is clearly going towards a certain direction of CO2 and in environmental sustainability, we clearly have to try to plan with what we know. And so we try to give the best picture possible given the current knowledge of events. But absolutely, you're right. We have to wait the end of Q2, or when the European Commission will release the official legislation, to be absolutely certain about the legislative framework. But the 600,000 are based on the historical production and what our assumptions are of the cap mechanism central scenario, let's put it this way.

Okay. Okay. And just to complete the picture on the valuation side, so you are not assuming any different change because there is also the discussion on carbon border and therefore an implication in case that need to be the new scheme on, for instance, Turkey?

Absolutely. We have not included in the plan any specific impact of a carbon border tax. I mean this clearly is a big area, and it's a very interesting area. I think there are serious challenges on the implementation front for a number of reasons, not only for cement, for a number of other products which incorporate a certain element of carbon. But having said that, clearly in our footprint, if you look at our capacity, we have a very big capacity outside Europe in terms of gray cement and also in white cement. So we have to see what the net impact is going to be because we could be benefit on one side and maybe being hit on the other. But net-net, we don't think we're going to be significantly worse off. So let's say, we have, let's put it this way, a natural hedge by having a portfolio with a capacity that is both within Europe and outside Europe, but we have to wait and see what the legislator will provide us with.

Okay, okay. Then, let's see, the last 2 questions were. The first one is on the working capital because it's understood in the press release, you also mentioned a very good control on this side. So if you can, let's say, give me an idea of which level of working capital on sales you consider sustainable going forward because that also has, let's say, result on the debt for the year, let's say, [indiscernible] management. And the last question is on the cost savings you mentioned. I understand you have around EUR 15 million from the digitalization of procedure. With [indiscernible] let's say, CapEx and sustainability cost savings 15 million by 2030, and you also had EUR 30 million. So just to understand, the total is EUR 30 million or EUR 45 million at full speed?

Sure. Okay. On the working capital front, well, what I can tell you is definitely there has been a very, very good performance on this front, which has to do partially also with the digitization effort that we've made with, like, remote monitoring of inventory levels. So we've managed to actually lower the inventory levels in a number of plants. And this clearly has improved this element of the working capital. In terms of receivables and payables as well, I think we're stretching, I mean, definitely the situation because we are paying -- receivable days and payable days have been going in the right direction for quite some time. So I believe that the, let's say, the easy results have been reached in the last couple of years. So I would not expect working capital to be a significant source of, say, financial -- of cash flow income going forward. So I would probably model for a modest working capital absorption in line with the expected growth, but not -- no big absorption but not even a release of working capital. So a usual, I would say, standards with nothing -- no exceptional issues that we expect going forward. In terms of the other question that was, I think, I don't remember. What was the other question, Alessandro?