Dürr Aktiengesellschaft (DUE) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to the analyst meeting of the Dürr Group in 2023. My name is Andreas Schaller, I'm the Head of Corporate Communication and Investor Relations of the Dürr Group, and I will guide you through the program today. We are meeting physically with a group of analysts here in Frankfurt. In addition, more analysts and investors followed our invitation to join today's presentations and Q&A session live via Zoom. Also, a warm welcome to all participants in the Zoom meeting. Before we start, I would like to make some organizational announcements. On Slide 2, you can read our disclaimer. We assume that you are familiar with the language, if not, please take the time and read through it. You can find today's presentation on our Investor Relations web pages. Please be reminded that the analyst meeting is recorded today, 21st of November 2023 and you will find the replay on our web pages later today. During this analyst meeting, you have the opportunity to ask questions to the members of the Management Board. After the presentation, we will first take some questions from the audience in the room. After that, we will check if there are questions coming in via Zoom. [Operator Instructions] Now let's have a quick look at today's agenda. We have 7 topics we would like to talk about, including the summary. After the end of the presentation, we will start the Q&A session, and I will repeat the instruction how to ask a question one more time. And now it's my pleasure to hand over to our first speaker of today, our CEO, Dr. Jochen Weyrauch. Jochen, the stage is yours.

Thanks, Andreas. We're sharing a microphone today.

Yes, we do.

Yes, ladies and gentlemen, we had quite some news flow recently as we not only published our Q3 figures, but also informed you about our target revision for 2024 and the restructuring road map for HOMAG. This led actually to a lot of questions on your side, and this is why I would like to start with a short and concise statement on how Dietmar and I assess the situation and what we currently consider our most important tasks. Let's begin with HOMAG. We're absolutely convinced of HOMAG's importance for the Dürr Group. That's a very important statement from our end because we discussed that with a couple of stakeholders in the last couple of days. HOMAG -- and why is that? HOMAG was the largest earnings contributor in previous years. And this is where we're sure about, it will emerge significantly stronger from the restructuring. Restructuring will not only bring down the fixed cost base to the required level, it also goes in line with the shift of value-adding from Germany to best cost countries. This is the reason why we're really cutting deeper than we had done in previous cycles to prepare for the future. Before we adopted the measures, I put strong personal emphasis on an in-depth analysis of HOMAG's future capacity needs. The restructuring is exactly tailored to this and there are no hidden restructuring left from today's perspective. We firmly believe in HOMAG's ability to achieve an EBIT margin of 10%, as we previously stated, with Q3 margin of 9%, we demonstrated that this is absolutely realistic. What it takes to get to the 10% might be the question, and there is mainly 3 elements. First of all, to realize the cost savings of EUR 50 million on an annualized basis, of which we want to materialize EUR 25 million already next year and implemented in connection with this and the shifting to best cost countries. Increase HOMAG service share towards 25%, which we believe it's not an overly ambitious target, but it's 4% to 5% more than what we have today, and we'll explain later today why we believe this is realistic. Then fully execute and finalize HOMAG's CapEx program and thus enhance efficiency in production and logistics. On that basis, we firmly believe that we will achieve the 10% in a normal market environment. So far on HOMAG, apart from the HOMAG optimization, there's another central target for us, and that is making sure that the other 4 divisions continue to deliver further margin improvements. Paint and Final Assembly Systems and application technology, which basically means our automotive business will already be close to the target margins of at least 6% for PFS and 10%, respectively, for APT in 2023. In 2024, both are expected to exceed this margin thresholds. The same applies to Clean Technology Systems, our abbreviation, CTS, we should also get close to 6% this year and beyond next year. Industrial automation systems, with our newly established automation business at the center, is expected to achieve a margin above the group average this year already and will be even more clearly accretive in the following years. Our position as a caps good partner to the automotive business is outstanding, we believe. We benefit from e-mobility and are an indispensable partner for the decarbonization of other production. This is a unique position as an enabler for climate-neutral car manufacturing. And if you take for example, and it's demonstrated by the long-term partnership we've just formed with Mercedes Benz. The pipeline with new investment projects from the automotive industry continues to be healthy despite the fact that car sales are not peaking. Our automotive customers are pursuing long-term investments and their -- and as long as their cash flows remain high, they will continue with their path of making production EV-ready and sustainable. Actually, independent even from short-term cash flow staff to do this because they've announced their own sustainability targets to be CO2-neutral by 2035 or 2039, which means they have to invest today. Moreover, I want to point out that under our value before volume strategy and on the back of strongly reduced utilization pressure, we can afford refusing orders with insufficient margins. And we've done this, actually. We could have gone much further in terms of bookings than we will do as we have clearly selected projects, and this will be proven already shows in the margins and will be very clearly shown with the year-end figures. Looking at our portfolio, I would like to indicate that after several acquisitions, we also consider divestments as an option, especially as we understand that the complexity of our group is widely seen as rather a bit too high. Last but not least, there's a clear management focus on capitalizing on our latest acquisitions in the most efficient way. In this context, I want to especially highlight the potential of our newly established automation business and the relevance of recently acquired BBS Automation. BBS Automation turns Dürr into a leading player in the automation market, which is marked by a CAGR of 9%. And actually, with the acquisition of BBS, we are one of the top 3 players worldwide. There's 3 players that are above EUR 500 million. Why is this relevant? Because our customers award bigger and bigger projects and where in the past, a lot of players have been EUR 40 million, EUR 50 million, like Hekuma, which we acquired, it is clear that projects as they more and more now become double-digit million projects, those projects will be awarded to the bigger players. And we are now 1 of 3. So market with a CAGR of 9% and with almost 10% EBIT margin actually that we already reached this year with BBS Automation, this business even this year is highly margin accretive. Establishing of a powerful automation business is a major strategic reorientation and highlights what I've been aiming at since I took over as CEO, managing the group and shaping its portfolio with a clear focus on earnings and strengthening margin-strong business with future potential. So far, it was important for us to state that upfront and put things a bit in perspective. And obviously, we will now go deeper into the agenda. We have brought -- no, I'm not telling you how many charts we brought. Have we published that already? So it's a number. So this is kind of a marathon. However, please allow me from time to time to do a sprint. And if there's anything you would want to stress more I'm happy to do this during the Q&A thereafter. But some of the slides are familiar to you already. I'm changing the pace a little bit depending on the relevance. We can tell the people we are not opening champagne here in the room. This was just a bottle of water. All right. So the agenda for today is get a little bit of a feeling where we stand as a group and what are the major drivers. Then the ones of you who have been to the last Capital Markets Day, have already learned that we are distinguishing a little bit between the established business, which is relevant for us. On the one hand, it's the majority of our business today. Nevertheless, it has limited CAGR, still interesting CAGR, but limited. And this is why we're looking at it from a different perspective, and then we have the growth businesses that generate additional CAGR going forward. And what that means in our strategy in 2030, I will show also again in terms of the business mix. We then talk about resilience, including risk and opportunities, I think a very important topic right now that Dietmar will present and recap on growth and margin targets with all the issues that are happening, especially on the automation side. We are adapting growth target and then cash flow utilization and the summary. So if that's fine for you. I would now jump into more details into the presentation. So the Dürr Group today, we brought 2 agenda items, first end markets and the new structure that we are running since we now acquired or closed the deal on BBS end of August. We've introduced a new structure now beginning with the fourth quarter. And then, as I mentioned already, demand drivers in our end markets. So you know our structure of the 5 divisions, what we are doing here. And that's the first attempt, if you will, to explain the business in a more simplistic way without changing the business, but how we look at the business. And then -- and we always look at the business coming from the market. So on the one hand, you have our automotive business, which we comprise under Paintshop, Final Assembly Lines and test systems that includes not only the process, which means the plants that we built, but also the application technology business that together is about EUR 2 billion in turnover. And you see also in the bottom who are the main competitors. It is for our more construction-oriented business, companies like AE Corporations or company that's also called SUMEC, belongs to the Sinomach group in China. Then you have Geico, which is an Italian-based company, but we also have competitors in the U.S. like Gallagher-Kaiser or Giffin. So we just mentioned 2 relevant ones. And then we have application technology where the competition structure is more global. So we face the same competition in all the markets. And our 2 main competitors, as you can see here, ABB and FANUC. We are, in both directions, the more machine building type business of application and the more construction type business of turnkey Paintshop and Final Assembly. We have significant market shares, as you can also see. On a value basis, APT is about 50% of world market share in a very niche market. So you see in the headline, the beauty in most of the businesses that we're doing were active in niches. And to give you an idea, the paint robot market globally per year is 3,000 pieces. So this is not a lot. And for many companies, it's not really interesting to enter that market because if you look at robots globally, this is a couple of hundred thousand annually. Same is true for our Paintshop and Final Assembly business, market share somewhere between 40% and 50%. Then our environmental technology, battery production technology, this is CTS. The business has grown. We're touching now about EUR 0.5 billion, 3/4 of this business is orientated still into air pollution control, very stable market. We're active in all sorts of industries, be it wood, glass, pharmaceutical, chemical everything and automotive as well. But automotive, meanwhile, even though the business came from this, from automotive is less than 10%. Also, we are by far the largest player. We have more than twice the size with our market share of 20% to 30% than our next competitor. In this business, we have also allocated our battery business in terms of coating. Why is this? When we acquired our biggest competitor 5 years ago in air pollution control, this business also already had the battery coating or the cell coating business. And we still have the business in there, a business that grows nicely, and we will talk more about it today, you might have read the news yesterday that we've made another small but from a technical point of view, very significant acquisition over the weekend. But I'll come back to that. Then in our new structure, you -- which we now call industrial automation systems, you would find our traditional MPS business, which is the balancing business. No need to talk about this a lot. It's Schenck. It's been with the group for many, many years. Again, here, we are more than twice the size of our largest competitor, global market share, 40% to 50%. Then Production Automation, that comprises all the business that we've acquired over the last 4 years in Production Automation, which means Teamtechnik, Hekuma and BBS. Here, we are not the largest player, but we are, as I said, amongst the top 3 players. ATS is more than EUR 1 billion in turnover. And then we have a competitor, a subsidiary of Hitachi, which is about the same size we are. The next group of competitors, again, is less than half of our size and we believe that the market will further consolidate. And we believe that the customers, as they're awarding larger and larger projects, are not only looking for the bigger players, but some of them really also look for an alternative to the largest player in the market. And then last but not least, Woodworking Machinery, which comprises our Furniture business as well as our construction elements business, again, strong global market share of about 30%. Our competition, you can see on the bottom right of the chart, that business also includes our construction elements business, which is mainly for furniture -- for wooden houses, and we'll come to this in detail. So I think the way we've structured it now makes it maybe a little bit easier to embrace the business. So the drivers remain. The drivers we have already presented before. We've mentioned the 3 main ones. One is sustainable production basically, that says that the equipment that we provide allows our customer to produce whatever they produce in a sustainable way. And we will see examples of, for example, paint shop technology, how our customers can produce their products in a sustainable way. The next one sounds similar but it's different, sometimes connected, is the production of sustainable products. So where we enable the production of sustainable products like electric vehicles. And why am I saying the connection? Obviously, when OEMs meanwhile, produce electric vehicles, they have to do this in a sustainable way because otherwise, they will be in trouble with their own sustainability targets. And the third one on which we have strategically focused over the last couple of years, building this new group of production automation system is the driver for automation. On the one hand, driven by scarcity of labor, cost of labor, but to a large extent also now the reshoring of production, which means the reshoring of production into high-labor countries which can only work if you significantly drive automation. Give you a couple of examples for the 3 drivers that I mentioned, I'm not going to spend too much time on it. Most of you have seen those charts before. We are the leaders of carbon-neutral production of EVs. We are, right now, building and completing the building up of the first CO2-neutral plant of a Western car manufacturer in Eastern Europe, where we can really say that the production is CO2-neutral. You see some of the KPIs. First of all, what we always try is to reduce energy consumption as much as possible. Currently, on average, only to give one idea, the painting of one car body is somewhere between 800-kilowatt hours or more than 1 megawatt hours. The strategic partnership, for example, we've concluded with this German car manufacturer I was mentioning, we have a limit of 400-kilowatt hours, and we can go below 400. So first, save as much energy as you can. And the energy that is still needed, if this is provided in a green way, like electrical, if it's green electricity, we now build CO2-neutral paint shops like the one in Eastern Europe, more to follow. Another one, of course, is environmental technology. There is many processes where you have VOCs in the exhaust. VOC means volatile organic compound and we are the leaders in air purification. And even this we meanwhile do in a very sustainable way because in the past, to give one example, those thermal oxidizers, they were heated by gas. And now our newest generation also runs on electricity and gives totally new chances for customers. Then the production of sustainable products. You see here some of the names that are our customers. You see on the right side, production volumes, I think we all agree that the change to e-mobility will be happening in an accelerated way. And we've been very successful especially also in China, early days. And we're using this experience to also supply Western OEMs in all parts of the world. And again, you see here just a number of the players. And quite interesting, we've also received the very first contract in the Middle East here, which will be the local Saudi car manufacturing. We've been awarded that contract. And you might have heard that Hyundai, 2 weeks ago, actually it was during the time I was in Riyadh, also announced that Hyundai will build a local facility together with the Saudi government. So as some markets become maybe a bit more challenging, other markets open. And we're sitting here on the right trend, providing next-generation vehicles. Then sustainable products, very important wooden houses, even though the market also, a construction market overall suffered this year, the trend for wooden houses just continuous. And what's happening now is from the more manual handcrafting of wooden houses, we are now at the tipping point into the production of wooden houses, the production of modules for wooden houses. And we will see, I think, a film later in the presentation where we have supplied the equipment for Giga, the first Giga factory in Germany for the pre-manufacturing of wooden living modules. And if you read the news, there is now a number of buildings being announced. So this is not just for small buildings, you see high-rise buildings, 16 stores, 20 stores or more that are happening. And we are totally convinced that the trend for wooden house for the reasons also mentioned here will happen. It's more sustainable and, in the end, will be much more affordable. Then production automation. Before we've done the first acquisition Teamtechnik, we have clearly analyzed the market and said that this would suit our growth and margin profile going forward because we're talking about a market that will grow almost double digit over the next number of years, follows interesting market pockets. E-mobility, we already know, but Medtech is new, and Medtech has a very good margin profile. And especially now with the combination of BBS Teamtechnik, we have the firepower also for this market. So that's so far to tease a little bit, as a starting point, what are the major trends, where are we. I would now go into the progress we made on established businesses and obviously go through briefly all our divisions. Woodworking, and I think that connects well to my initial statement. What has happened here? You see this is a cyclical business, and it will remain cyclical. It was cyclical in the past as well. What we have seen in the last 3 years. Obviously, HOMAG benefited from Corona, from the pandemic because everybody was sitting at home, looking at his own kitchen and finally deciding, as many people could not spend money on traveling, for example, to invest into a new kitchen. This is why the upswing in this cycle was higher than in any previous cycle. Consequently, we assume that there would be a downturn, but -- and this, I think we can nicely explain on the next chart, the downturn was stronger than we were assuming. When we put together our budget, and that also ran into how we looked at Q1, we were already assuming the furniture business to come down somewhat. What we did not expect is that the solid wood housing would come down. This is a business that is still on a relatively low level. It was about EUR 200 million of order intake the year before, but that this business would also drop significantly this year, that I must admit we were not assuming. So the combination now plus then over time, when we were looking at Q2, we had end of Q2, our LIGNA trade show. This is by far the largest furniture trade show happens every other year. And what we would typically see is a little bit softness of the business before the show because many of the customers would wait until the show to see what's there. And then typically, you would see business picking up after the show. We've seen a lot of interest. We've received lots of compliments for new products. However, what did not happen is an uptake. This is why in Q3, obviously, when with the Q3 numbers when we then announced where we stand, we had to take a little bit of a softer view for the year. And that a little bit significantly softer view for the year, we try to graphically display it here because we had to get used now for the time being, to a run rate in order intake of about EUR 300 million a quarter. And that is lower than what we assumed before. So we were clearly watching the situation already before, of course. But this is where we then said, okay, now we don't have a chance also even though the other businesses run according to plan or even above to compensate the shortfall for HOMAG and in parallel also then announce the restructuring plan. So I hope that helps to get things a bit better in perspective, because -- and I understand that some of the analysts and also some investors said, look, what has happened? And why did you have to announce at this given point in time? That's the explanation. So what are we doing now? I've explained the cyclical downturn. And what it leads to, of course, is next year, that the existing capacities cannot be fully utilized. So we've had a number of discussions also with employee representatives, pushing more into the fact of a temporary reduction of working time and then just going back to normal after this downturn is over. We -- I mean, management said, now, we have to use this downturn to really to prepare the business for the future, make it more resilient by a local-for-local approach because our future markets are more and more in North America. They continue to be in Asia and we still have half of the workforce of HOMAG in Germany, which does not really perfectly fit together. So we now adjust the capacity of HOMAG to the level pretty much of the trough and any growth that happens that cannot be covered by efficiency down the road, will lead to a capacity increase in either the end markets or in best cost country markets. And this is why we're also ready to take the hit for the restructuring charge, which meanwhile as we're progressing quite well, we'll be booking this year to achieve the cost savings that we need and to achieve the flexibility that we need going forward. This also, as HOMAG has a very steep value-adding chain today and very good margins, we are losing on a do-nothing scenario, we would lose $0.50 on every dollar of reduced volume. And this is obviously what we have to correct in order to make us more resilient before. This is also why we had to set the guidance at a minimum of 2% and somewhere between 2% and 4% for next year. So we'd rather now really do the homework that's needed to be well prepared for the future. And this is why we are so convinced that after we've executed the measures, HOMAG will be stronger than before. So then on the 10%, you see a number of comments here. We have already done a lot of work. We have hired service employees. Why am I saying this? We're still so busy at HOMAG that most of the service employees that we have are still busy commissioning new machines rather than fulfilling the service potential out there. And that's basically also the good news, we will be, even though many of our customers are not fully utilized in their production, we're further installing equipment that our service revenues this year will slightly grow. And that based on the fact that we could not fulfill some of the requirements from customers when it comes to service. This is why we are convinced service will grow already for the next year. We have reduced already or we've closed the production of Hemmoor. We have streamlined the portfolio, and most important, we have achieved last year roughly 8% in EBIT in a very difficult market environment. If you would have added all the inefficiencies that we had last year in our supply chain, in production, we sometimes -- we shipped most of the equipment to customers incomplete, had to see a customer a second and a third time. If you would eliminate those costs, we would have achieved 10% already last year. And you can see in Q3, we have achieved 10%. So we have the potential. What we now have to do is work on the cost base, improve efficiency and, in parallel, increase the service share and this will bring us to our targeted EBIT level. So if we now flip to PFS. Here, we have announced a while ago our value-before-volume strategy. This is paying off. I was mentioning this already in my intro. And you can see that in our Q3 numbers, we have already achieved 6 and more percent. And if we look and we will -- when we talk about the year-end numbers, you will see that we've used this year in order to build a very healthy backlog that is focusing not on the absolute number of the backlog, but is focusing on the margin that's in the backlog. That's the message or the lesson learned during the pandemic and before where we were taking orders at lower margins, which we have not done now. Just as in -- you have to speed me up, Andreas, if I'm talking too much, too long. Okay. Just a quick picture on Mercedes. I was mentioning this, it's not that Mercedes says that they love partnerships with suppliers, the automotive industry is really typically very competitive and cutthroat, so there's a good reason why Mercedes has done it because they said that we are their partners for the next couple of years of making their production sustainable. And the model we have used for this partnership is mainly on a cost-plus basis as most of the contract value is defined on a fixed margin and only the machine building part in it like the robots, they have a fixed price, which for us is not a risk because we have back-to-back frame agreements with our suppliers. So target here is for the next-generation vehicles in the German facilities. This will start with Sindelfingen and there's 2 other big German plants following in the next 2 to 3 years. We will convert basically their production in a very sustainable way. So what's happening next. We've just introduced a completely new generation of atomizers. I'm not going too much in technical details. But there is -- nobody else can do this right now with the color losses because we're the only company who, in simple terms, can change the color at the very end of the robot. So when you change colors, you're basically not losing any color. Whereas most of our competitors, half their wells, their switches for the colors are very far away from the point where the car is painted, and when a color change or when you have a different color that you want on the body, you always have lots of color losses. This becomes more and more relevant in the industry now with sustainability. And there, we've made a big step forward. We are protecting our own life cycle by the introduction of RFID chips in the main spare parts because you typically sell a robot twice over the lifetime. You first sell the initial robot new. There you make an okay margin or not much margin, which is normal. It's a little bit like in the tire business. But then you sell the same value as the initial robot over 10 years in spare parts and this is where you earn the money. So you have to protect your spare parts business. And this is why in the most relevant spare parts, we have RFID chips, which have a benefit for the customer because he knows exactly the lifetime of each component in the robot and gets recommendation for maintenance or changing spare parts. For us, the benefit is that our robots would only work with our components. Very well received by the market. Then the next generation, some of you know this already, is our overspray-free painting. There we basically print the color on vehicles. We are now running with the U.K. car of a German OEM in -- we are going to see a production later this year for their colored roofs. And this is now really the breakthrough for something we've been inventing over the last 10 years. And many -- we have many more inquiries from customers than we can fulfill. Actually, to some extent, I shouldn't say that loud, but to some extent, we're hatching this new product in order to optimize our margins also for some of the other products that we supply. And you see also APT is developing very, very well. Q3 margins being double digit. So then CTS, I've been mentioning that before, our air pollution control business not only goes in the typical suspects like chemical industry, automotive. We're more and more also supplying into odor control because odor becomes more and more a hazard, if you will, and into semiconductor plants, for example. I've just been to Korea. There is one large semiconductor producer in Korea, and we have a lot of our equipment standing on the roofs of those wafer factories. So then further on clean technology systems. We are also developing well here. We had a very strong Q3. I think very important is that, all in all, we're basically reaching our 6% target that we have for the business already this year. And that still includes, for example, high R&D cost for the battery business. So internally, I'm making the joke and say, look, you can see how well this business can do when nothing goes wrong. In the past -- why am I saying that in the past, we've had projects where we were dealing with chemical process, there's always chemical process involved here. And sometimes you have nasty products that you are purifying. And what we have done in the last 2 years, at least, is that we were focusing on processes that we know and that we are sure that we can handle, number one. And we have been very clear in terms and conditions with customers for their processes, so that they really have to tell us the products that they are running through our systems and that we're taking responsibility for defined products and we're not taking responsibility for others. And you see even here, we are achieving our margin targets. Balancing, actually, balancing, which is MPS, which is shank. That's the only business we have in the portfolio that had to undergo the transition between the internal combustion engine and battery electric vehicles. Why? Because we've been market leaders in balancing high-speed turbochargers, crank shafts, camshafts, mechanical drivetrains, et cetera. So we suffered, but we've gone through the trough and now we're growing with the industries that you can see at Aviation Aerospace, very interesting high-end reel. We've gained a lot of market share. We have gone into a partnership with a Japanese company, then green mobility which is especially also e-mobility included, and that really drives the business going forward. And in a market that is 2-plus percent in a mix in CAGR, we believe that we can go much further. We are by far the largest player in the business more than twice the size of the next competitor. So good progress here as well. And you can see good progress also on the margin side. And actually Schenk, before the transition started, always did double-digit margins. So we're just on the way back to what we had seen in the past. Filling technology. This is the small pocket. That's roughly a EUR 30 million to EUR 40 million business. This year, a bit more. Here, we are doing all sorts of filling equipment, typically in the past for white goods, so refrigerators, for example. And with the boom of heat pumps and also air conditioning in many places, this business is also developing very well doing double-digit margins this year. A small business, but a very, very interesting niche we are supplying. Not to be mixed with the filling business we have within Automotive, where we fill all sorts of fluids into vehicles. This is a completely separate business under the name of Agramkow, where we are very successful in this very nice niche. All right. That was the established businesses. Now let's have a look at our growth businesses. And as we had mentioned before, also when we were announcing the strategy more than a year ago, we are focusing on 3 areas: production automation, which is again a BBS Teamtechnik Hekuma, battery production within CTS and sustainable construction with wood, which is allocated to HOMAG. If we first look at Production Automation. What you're seeing here is a self device for insulin for diabetes patients. So we're doing the equipment that produces those products. And what you can see is basically what I mentioned before. Is there -- this is a laser? No. Well, now I've moved forward without wanting to. Yes. So we first acquired Teamtechnik, shortly thereafter Hekuma. And we've now acquired BBS and Kahle is a subsidiary of BBS. Why did we mention it here, and I'll come back later to this. Kahle specialized in the needle syringe assembly. And it's a very special technology. And we're a company that's not too big is really world-renowned, that's why we put the brand here. And I'll talk about synergies on the next slide why this all makes sense together. So we've now built on a pro forma basis, a EUR 500 million business, Teamtechnik and Hekuma, order intake about EUR 200 million last year. BBS on a pro forma basis, roughly EUR 300 million on an annual basis for this year. Obviously, we only get a fraction in order intake for the year. But the full backlog, which brings us to about EUR 500 million. And as I mentioned, we are amongst the top 3 globally for those applications. So we have a complementary portfolio of solutions. I'll show a picture later in this presentation. What I mean by this? We have a very interesting geographic footprint, which also is complementary, we will see on the next slide. And we now become a one-stop shop for the whole production chain in many aspects. That correlates to the first point I mentioned. And again, I'll show on the next slide. And we have proven joint execution of large orders already, and this is really relevant. I stressed that once again. We have received an order in the low double-digit number from a U.S. Medtech company shortly after we had bought Hekuma. And the customer told me that they would have never awarded this order to Hekuma if Hekuma would not have been part now by this Teamtechnik Hekuma structure or part of Dürr because the order was about somewhere between half and 1/3 of the annual turn of Hekuma before. And that's the reason why we're now attracting larger customers, which have so far been served by our -- mostly by our biggest competitor in the field. And we've now basically moved up from, if you will, from the second league to the Premier League or Bundesliga or whatever you might call it, with this acquisition opening different customer pockets. So what do I mean by all those top line synergies? First of all, from a geographical perspective, don't be too impressed by the complexity of the picture. There's only a few relevant messages here. First of all, BBS is very, very strong in China. Half of the workforce is in China. Very modern facility, 40,000 square meters in Kunshan. And so far, BBS has been using this facility to successfully supply all the Chinese EV players. Unfortunately, some of them -- unfortunately, for some of the European players. But fortunately, for them, some of those Chinese players will now be coming to Europe as well. And we will come with them. And on the other hand, BBS was also using that low-cost facility as a preproduction facility for assembly units, which then are just completed and finally commissioned in the high-cost markets, be it North America or Europe. And we will use this footprint from BBS for Teamtechnik because Teamtechnik, even though you're seeing the light blue dots, one is Lawrenceville near Atlanta in the U.S., another light blue is Suzhou in China, we will integrate those facilities in existing BBS facilities and have major savings from a footprint point of view. And also, we're actively reorganizing the activities in Europe. So that will bring us bottom line effects, and we will be using cheaper assembly sites that BBS brings into the game. Then those are the 3 areas: mobility and e-mobility, med tech and life science. We have -- and let me give you just, for the upper 2, a couple of arguments why it makes sense. In mobility, we will see an assembly line on the next chart, how complementary Teamtechnik and BBS are. On the med tech side, we are now working already on a couple of projects where we bring together the specific know-how, as mentioned in the company Kahle, on the assembly of needles into syringes with Hekuma. And Hekuma is one of the biggest producers of complete syringes, prefilled syringes for companies like Gerresheimer in Germany or other players. So technically, very complementary. I had the management teams in last week, Thursday and Friday. It was almost like sitting in a sandbox where everybody will say, oh, I have this, and that fits together. This is nice, and let's build that, because there are so many opportunities. And I hope it's the next picture. No, I just stepped forward a little bit. I'll come back to that to finish my speech here. What you see here is a typical assembly line for e-drives. What do I mean by e-drives? It starts with the e-motor and it ends with the assembly of gearboxes, the inverter, so that you have a complete e-drive. It is a thing a bit like almost -- what would be a nice comparison? A microwave is too small, a refrigerator is too big, somewhere in between. So those electric drive units, which have become very famous, has one of the German car manufacturers has trouble producing them in their component factory. That's exactly the elements I'm talking not supplied by us. So the assembly in BBS is having a very, very strong market share in the assembly of those drive units from the e-motor to the complete unit. And Teamtechnik is very strong for the end-of-line testing. There is this Californian car manufacturer purely producing e-vehicles with an interesting owner, and Teamtechnik has 100% market share there. All the drive units that are produced are tested on Teamtechnik equipment. Now BBS has no market share with this customer. So we're now working in the first inquiries to supply the complete line. And vice versa, we will soon get, and I'm very confident, the first order from China from a customer, where BBS has always been successful for the e-drive. And we've now offered the e-drive assembly together with the end-of-line testing. And that makes a lot of sense for the customer because we take the entire responsibility for the whole system. So just to give you a couple of interesting insights. So geographically, very interesting. From a product, complementary. Very interesting in med tech, in automotive. So lots of cards to play. And I think I skip the other ones for the sake of time and look into battery production, which is the second growth area we're focusing on. And here, we've just announced yesterday the acquisition, number one, of Ingecal and the cooperation with LiCAP. Why have we done those 2 steps? We will see on the next chart. Currently, the industry is mainly driven by a wet coating process. So you put the slurry -- let me go forward and then I come back. So here on the top, you see the wet coating process, your first mix, the slurry, in most cases, in a batch process. And then you bring the slurry at very defined tolerances. Sometimes, on a cathode, you're going down to like 20 microns. It's a very thin process where you coat anode or cathode, which is aluminum or copper foil. And after you've coated that, you dry it. And the wet coating process is not very liked. Why? You need a solvent that is very toxic and expensive to mix the slurry. This solvent then is basically evaporated in the drying process, condensed and brought back into the process as it is so expensive. And then comes the calendaring, where you compress the electrodes, and then come the next process steps. We are very successful today with the solvent recovery, supplying giga-factories. For this big German car manufacturer, who's building a facility in Salzgitter, we're supplying to them. We're even supplying to Chinese battery manufacturers building facilities in Germany. On the coating side, which is a very complex technology, we are so far successful on smaller lines for the high-performance batteries. So we've announced, for example, that we work with Cellforce. It belongs to Porsche. We have other customers like [ Vata ]. But we're not supplying to the giga-factories yet. We will have to see how that develops. Very successful in solvent recovery. Now the next step and now comes Ingecal. Ingecal is already very successful for calendars that you see as the fourth production step up there. But the interesting part, and that's the reason why we've acquired them, they have progressed very far already in the development of the dry coating process. And everybody now wants -- and I'll show you a chart again thereafter, everybody now wants to get into dry coating because dry coating will be much more sustainable. You don't need the energy for the drying. You have much less CapEx because you don't need the long dryer process. Sometimes, it's 100, 150-meter long dryers. And you don't need the toxic solvent anymore. That's why everybody is pushing it. And we believe that we've really set the ground here to come into dry coating. What you need is not only the equipment, you also need the product. And this is where LiCAP comes into the play. There's only a few material producers who are very likely to succeed with the material that is -- that you can coat in a dry process. And why are we so optimistic? Because we are doing this already together with an OEM, and it sounds very promising. This is why we've done this relatively small. But from a technical point of view, very relevant acquisition for us. So let's see. It's -- I'm not saying it's a bet, but still some way to go, and we believe that we are in a good position to succeed. And the nice thing is we have not acquired a start-up. We've acquired a company that's very profitable today with the existing business of calendaring, and the dry coating would be the icing on the cake. Basically, that's what I must hopefully have said the last 5 minutes. So the market, you see we've just mentioned on the right, the European and the North American market. Why is that? Why have we not mentioned Asia? Asia is basically occupied by the Asian players, the [ Leeds ], the whatever, [ Ingris ], just name them. So we're not even pushing for Asia. But we're pushing for European Union, North America. There's different requirements, for example, also from an environmental perspective. And then the important part is really the light blue piece that you see, where we believe that in the next 5 years, there will be a significant share coming up of dry coating once the technology is established. So we're already thinking one step ahead. Technically, we would substitute our wet coating technology. But rather, we do it than others, which is very similar actually to what we do in our application technology where once, the overspray free painting perfectly works. It will start, to some extent, to substitute our overspray painting. But again, we want to be a step ahead. So then just briefly touching on it again. We have announced a while ago, pretty much a year ago now, the cooperation with Grob and Manz. Why? With those 2 partners, we can cover the complete manufacturing chain of batteries, us being more or less responsible for the electrode, Manz more or less for the battery cell, Grob then for the complete battery pack. I think I will skip that for the sake of time, Andreas. We are -- just to summarize, a couple of advantages that we believe we have, especially following the needs of the Western OEMs, which makes us confident that we will get into the market and get our market share here as a corporation as well. So here, you see a reference facility, which we've defined with our 2 partners. Just to give you a little bit -- unfortunately, we are not showing a person. That would make it easier to understand the size. But we're talking here about -- this is maybe a 10-gigawatt factory, so say close to EUR 1 billion of total investment, including building auxiliaries. So it's significant project sizes. So now coming to the third growth area, sustainable construction with wood. So what we firmly believe and all the indicators point in that direction that wooden construction would become much more relevant. First of all, this is a way to create affordable living space because it's a material that can be produced cheaply. And even more importantly, with the premanufacturing of living units in a standardized way, you can really significantly reduce the cost. And you see some of the elements that happens by automation and on our equipment. On the other hand, on the right side, this almost sounds like a disclaimer for the moment. We are impacted by the fact that interest rates are high, so we don't expect them to come down significantly shortly. But I think once interest rates have stabilized and probably come down just a little bit, that there will be more security in the market again. Because many of the customers who are, to some extent, start-ups in that respect, like [ Nokia ], our customer for the giga-factory in Eastern Germany, those customers have their business plans. And if they don't have security in their plans going forward, of course, they are delaying decisions. What we need, especially in Germany but also other places in Europe is softening of the regulations for residential construction. And especially with regard to wood, and we're seeing some progress, many of the architects are not so much used yet for wooden constructions. But also here, there's a lot of movement. And to us, that's the main factors why the business for the moment is not picking up. But the biggest factor really is the construction cost overall and interest rates. So drivers is, of course, replacing concrete. Concrete is one of the worst materials when it comes to the CO2 emittance. Actually, wood store CO2 instead of emitting it. We see really great driver in the shift of premanufacturing of building elements, as I said, and the constructions are changing. If you Google, basically almost every day, you're getting new projects for even high-rise buildings above 100 meters made of wood, and we are firmly -- that trend will happen. We're just taking a little bit of a pause right now. So we're seeing a couple of pictures regarding the products that we have. So on the left side, you see our traditional products to produce wooden walls. And more and more, you also see automation, which we are developing. And the big factor, of course, is the digitization. And we've bought a share in a company called granIT that will allow us the simulation for production flow in the production of wooden houses, so we can offer our customers the complete layout, complete production planning, et cetera. Now I've been talking a lot about Europe regarding solid wood houses. What we are also seeing now is the trend in North America. And actually, we have completed 2 projects already. And this is why we're now preparing also for setup in North America. Not explaining that in detail with the colors, but just to say, so far, very much local in Europe, and the market a bit in trouble coming back. And in parallel, we see the first avenues into the U.S. I mean the U.S. has always been a wooden housing market. But interesting enough, so many things in the U.S. are standardized. Wooden houses are still done in many cases in a very manual way. And here, we've seen big opportunity because you don't have to convince the market of the material. You just have to convince the market of the production process. So this is hopefully a film. Do I have to click one more?

Yes. [Presentation]

All right. So far, so good. Now I'm sure you had enough of my voice. I would be handing over to Dietmar at this point.

Yes, Jochen. Thank you very much. And I would like to give you actually some more insights in regard to how are we running our business, how we actually pursuing to balance risks and opportunities in order to make our business more resilient. And basically, what I would like to cover actually with my presentation within the next few minutes is 4 topics on the agenda. It's about how we handle cost inflation, first of all; secondly, how is our perspective in regard to China. And you will see why we stayed. We do see still more opportunities than risks, how we are managing with what we learned during the last 2 years, the supply chain. And also, what is our perspective regarding impact, also positive impacts coming from the Inflation Reduction Act in the United States. And first of all, it's a topic I think you're already aware of. It's about how do we handle cost inflation. And we actually started since mid of 2022 to protect our projects and focusing on big projects against cost inflation by actually negotiating with our customers then to include indices to manage the price increase for the good, but of course, also for the bad. So which means when prices are increasing, we will get compensation by our customers. When prices are coming down, we need to compensate for the benefit coming from the index development. Nevertheless, we are able to execute our projects better than we originally assumed and to actually achieve this as our benefit. That finally is paying off in our profit and loss statement. And we actually did this for all big contracts in the Paint and Final Assembly Systems over the last 1.5 year. Yes. Then secondly, our view on China. As I said, it's basically a positive view. But let's start with the risk point of view and to what extent we are actually exposed to risks in China. And you can see that as per end of June, around 14% of our group assets have been allocated to Chinese operation. So you see actually that this is a limited part. And we are also focusing on getting the cash out then in time, so only 3% of the group cash, as per end of June, was located in China. Whenever it's possible, we bring the money out and use it for the proposal of the group outside of China. And what Jochen already stressed in conjunction with the business, we continue to work in general on the local4local procurement area, which means that the volume that we are importing from China to other countries has a very limited volume. It's actually less than EUR 50 million out of our more than EUR 2 billion purchase volume that we are having. And we also made our supply chain more resilient by actually looking for alternative suppliers from other regions. And we are also having, on the other side, a high local content for the local demand in the range of 60% to 80%. And you can see that the group backlog, which was quite strong over the last years, declined, which is not necessarily a good sign. But you can see that also, with a 16% as per the end of the third quarter, it's still on a good level in regard to both directions. So that's actually what we see as the positive or, let's say, how we manage the risk. Now looking to the opportunities and why I'm confident that we have more opportunities than risk. We have an excellent position with our operations in China. We're being considered as being a Chinese supplier. We're there for already a long period of time. And this applies basically to all the areas. We have a strong local management in place. That's the face to the customer. That's the face to the government offices. We have some expatriates, some foreigners also there, but very limited. And we are really having a strong local setup in every regard. We see that the long-term trends are intact, despite the current development that is a bit depressed, as you could see from Chinese economical development KPIs. But we are also operating in areas where we are not too much in the focus actually that the government considers as being strategic where, of course, the government is focusing on protecting then key topics for local Chinese companies. You can also see on the right side to what extent actually there have been opportunities that we could realize during the last more than 5 years when the new electric vehicle manufacturers entered. Also, the Chinese market, we did really quite some projects and it was very good projects. We have a good level of cash flow. We have a good profitability development, and we are ready and we do already see the first discussions taking place to support our customers also when they move outside of China then to produce in the future at a certain point in time as well in the markets that they are focusing, whether it's South America, whether it's, let's say, Asia Pacific or when also they have significant volumes to start to build up in actually their factories in Europe. And yes, we see not so much of a utilization pressure because we can also use the network there for local projects, and we are already doing this. And we have a good level of innovation in technology so that with the advancement that we do continuously, we also see that there are entry barriers that we can manage actually quite well. So it's our view on China. I think it's a balanced view. And as I said, from our conclusion, we do see more opportunities than risks actually in that regard. Now looking to the third topic that I would like to touch. That's the de-risking of the supply chain and would like to take an example coming off from the wood working side, that applying -- that are being applicable in general. So that actually, we refocused with the supply chain shortages that we had to face during the last 2 years, establishing dual or multiple sourcing, also improving the demand forecasting. Of course, when in 2022, the water became quite rough, we secured whatever was positive, and you could see this on our balance sheet with inventories increasing. Now we improved the forecasting. We are working on reducing the inventory levels, and you could see that the balance sheet actually moves into the right direction. That the turnover of the inventories is becoming higher and that we are reducing then our inventories in that regard. And the third topic that I already mentioned is the Inflation Reduction Act. It definitely not only promotes but it stimulates investment in North America in all the industries that are very relevant to us. We have a strong local setup so that actually, we can support our customers on the local side, and we do see this positive. We have been awarded big projects during the last 12 months there. But there are also some downsides because investment in other regions of the world are currently being reconsidered. We could see that some of our customers are currently reviewing whether they should invest in Europe or whether they should invest in North America. The good thing is the order is not lost, but there will be delays in decision-making. And that will then, of course, also have some impact in regard to the timing, when are the projects actually being awarded. But we are confident with the setup that we are having, that we have sold then the customer or the supplier to go for these topics with key established business relationships. Yes. And that would actually be my view on how we balance chances and risks and how we work on improving the resilience of the Dürr Group. And with this, Jochen, only a short break for you, handing back to you.

Thank you, Dietmar.

But we'll be back later.

Absolutely. So if we now come back after all this information to recap on our growth and margin targets. So growth 2030, pretty much what you have already seen a year ago. Margins and then the financing and the project costs. So this picture is the same picture we've been showing a year ago. So we want to grow to EUR 6 billion-plus by 2030. And we want -- by doing this, significantly reallocate the share of our end markets, if you will. So first of all, not too far back in the past, automotive was the dominating piece of our business strategy. That was put out. And now being accelerated is -- of course, not deflecting the potential we have in e-mobility, but in general, to control the size of the automotive business, which technically would reduce the share of the automotive business to 30% in about 7 years. On the other hand, we want to grow our furniture and especially the housebuilding business. That's the element that will grow, of course, faster pretty much in line or a little more than the overall growth of the company. You see from 37% to roughly 40%. Furniture will be somewhat slower. Wooden houses will be much stronger, bringing us to a nice share of 40% as we plan. And then also the industrial business, the industrial automation business by 2030, including batteries, would also have a share of 30%. So that -- if we achieve this, I think we would have 3 nice pillars or legs to stand on and a different margin profile compared to today. So a bit more specifically, paint shops and final assembly systems, pretty much keeping the business at the size it is today, improve the margin portfolio or the margin mix by actively working on the service business and work on new products and improve our margin following our value-before-volume strategy. On HOMAG, so furniture and housebuilding, I mentioned before, the traditional furniture business with growth of CAGR of GDP slightly above. And the areas to grow is really the service. And as I mentioned before, there's so much more potential out there that we already -- that even today, we don't serve. And with the new equipment and the big numbers of machines we've brought into the markets in the last 2 to 3 years, I mean we can't do so much wrong that we could -- that not automatically, this business would grow. And if we then -- and, of course, then our solid wood housing, 10% in terms of CAGR for the next 6, 7 years. We believe it's definitely not overaggressive, looking at the small share this business has at the moment. Once markets pick up, then the share of this business within the market will grow. That's definitely achievable. Then battery, talked about it. Especially now, us preparing for the next level of dry coating, we are definitely convinced that we can achieve the growth rates that we are showing here. Same is true for automation, med tech. I hope I could explain that at the market, CAGR of 9%, and us being so much better positioned compared to before. If we cannot outgrow the market, I would really not be happy. Or the other way around, I'm totally convinced that we will do so. Environmental business, tightening emission standards help that business. Nevertheless, we've been relatively conservative with the potential growth because even in our plans, we don't show the 9%. We're rather 3%, 4%, 5%, and we believe we can achieve this. The balancing business, coming from its trough in a way, digesting the reduction of the business with the internal combustion engine. Now sitting on e-mobility and some future trends. I'm convinced that this business can easily grow 5%, 6% going forward. But also here, we've been relatively conservative. So that brings us, in summary, to the picture that we have shown exactly the same way with one exception because if you look at the middle, here, we have now adjusted the potential for 2030 to above EUR 800 million simply for the fact that we've acquired EUR 300 million. So the old target, which was roughly EUR 500 million, of course, is not valid anymore as we have outgrown it already. For prefabrication of wooden construction elements, the potential of being up to EUR 500 million is the same as well as our electrode coating dry and solvent recovery business of EUR 300 million to EUR 500 million. Here, I'm really hoping that we can probably push it more to the upper part with more cards to play now, but we will have to see. So that brings us to the chart that we have shown before, where we differentiate in terms of the margin potential between the machinery business where we say we have to achieve 10%. We have significant positions in all the businesses. The machine-building business with proprietary parts and service potential offer higher margins. And then we have the more construction-type systems business, where we say we have to achieve at least 6%. And you can see where we are with the '23 estimate. Application technology, tick. We're basically there. Woodworking machinery, we've been almost there. Now we have to take a break and come back. But again, I explained why we believe that, as a midterm target, that is still valid. And then we have industrial automation systems, where for the BBS part, we're close to the 10%. We still have to do some homework at Teamtechnik with a few old orders coming -- still sitting on our books from the pandemic, where we had to face the cost increases of components. And that business is weaker. That's why in the mix, we're at 6.5% to 7.5% for the year. But next year will be again a step forward. And then PFS as well as CTS, pretty much being at the targeted level. So I believe we have done a lot of successful work, however tainted. And of course that's true by where we are with HOMAG in terms of having to go through a special market situation. So I can hand over back to you.

You can do, Jochen. Yes, coming now to this topic that, of course, at the center of the considerations of the CFO, talking about liquidity, talking about cash, talking about financing and related costs, but also touching on realizing internal synergies. And I would like to start, first of all, with the financial costs in our financing cost development. And you could see that historically, during the last years, we operated with around EUR 20 million. We had some peaks actually in 2020 when we secured cash to actually be able to act in the COVID period, when there was a lot of uncertainty. And we had a higher level of financing cost in 2021 when we did a prolongation of the pool contract with the former owners of the former company and had to reflect the parts of this agreement also in the financing cost. And yes, with our acquisition of BBS that Jochen explained in depth, that is providing us growth but also profitability opportunities. We actually entered into a higher obligation, higher debt. We are expecting around EUR 8 million in financial cost for this year and an impact of around EUR 20 million in financing costs additionally to the normal level than for next year coming from the BBS acquisition. But we are also using available cash position. We'll show this within one of the later charts. And then also for actually the funding of the acquisition, so it's not a one-on-one that we are increasing, that we are balancing, again, our cash position and our financial. Before getting more into then the financial situation, some words on what you might have realized that actually since 2021, with a program ongoing called OneDürrGroup, where we focus on internal efficiency. We are pushing forward with digitalization in order to not only improve our process so that they are more stable, more reliant, but they are also more efficient. And we have a couple of programs actually running with quite some of the programs like OneHR, OneCRM, OneMES, OnePC, we already achieved more than 50% of the progress. Some of the programs are at the beginning stage, like OneSRM, OneERP, the transition from SAP R/3, which cannot be used at a certain point in time anymore because SAP is not providing maintenance anymore. That is ongoing, and we are currently spending a level of around EUR 20 million per year, and that's also what we are planning to do for the next few coming years. So that's equal to less than 50 basis points of our sales. It's all well set up. It's an excellent project work that we could achieve. We do this basically in the similar way how we are actually running the project together with our customers. We have a lot of know-how, a lot of knowledge. So we have a high level of confidence that we will manage these projects and also very well. Yes. Then moving on to more the cash flow side and how are we using actually our funds. And the cash conversion, and we mentioned this last year during our capital market day, [ being declined ] has a high level of importance to us. You can actually see that over the last 3 years, we managed to achieve a cash flow of around a bit more than EUR 100 million that we are targeting this year, again, a level of EUR 50 million to EUR 100 million. And that in a medium-term perspective, we want to achieve a cash conversion of more than 80% of the net income. Now with the announced restructuring of HOMAG, we will have some special cash outflow next year. Actually, it's not going to have any impact this year. So nevertheless, we maintain the target, and we also clarified here beyond 2025, we expect actually to develop with this cash flow development. And there are a couple of levers that we are pulling that's to further improve the earnings quality. So Jochen gave you insights how we are doing this from the various business perspectives but also how the portfolio, the mix of the business, is contributing to do this. Net working capital is and will remain definitely a focus area. So managing our exposure in the projects in the business with the initial payments but also with the milestone payments of our customers. And yes, we have established a CapEx program at HOMAG that helps to enhance the setup, the footprint, focusing on improvement, efficiency and productivity in logistics and production. The majority of spending was this year and will be next year. So we expect actually that after 2024 also to get to lower CapEx ratio, which I will show actually here on the next chart. So you can see that for this year and next year, we are moving in the area of 4% to 5% of sales. But we expect then from 2025 onwards to move below what we did historically, a level of 3% of CapEx in percent of sales. And yes, net working capital, already mentioned. Definitely, always an important topic to us. You could realize with the figures of the third quarter that we had a significant increase. You don't need to worry because we also don't need to worry in that regard. Around 1/3 of the increase in net working capital, close to around EUR 180 million, from end of June to end of September was from an operational side. It declined in contract liabilities, and the HOMAG side could not completely be compensated. And around EUR 120 million, which is around 2/3 of that EUR 180 million, is coming from the first-time consolidation of the BBS Group. And you can see, even with this consolidation and maybe we've not yet the perfect net working capital management at the BBS Group, where we are also working on improvements in this area, we stay as per end of September in our target range of 40 to 50 days. We are looking into the potential, and I can assure you there are potentials. And we are working on to bring down the net working capital, let's say, more to the lower level of our target range of 40 to 50 days when moving forward. Yes, on the next chart, I would actually like to come back to the topic of resilience, this time talking about our financial policy. We explained that the long-term growth drivers for our business are intact, that we have an excellent position with our market leader position, with more than 25% market share typically in our business that we are running, with continuously focusing on pushing further, improving our equipment, using innovation, but using also opportunities to add competencies from the outside. And as Jochen explained, to grow in a profitable manner to a level of EUR 6 billion, so we will make our business in conjunction with the measures that I explained additionally a few minutes ago. More resilient also in that regard, and we will use our global footprint to the full extent. We are operating basically on a conservative approach in regard to balance sheet and cash flow. Already mentioned the 40 to 50 days net working capital. This also means in regard to our debt exposure, that increased now. We continue to focus what we perceive as an investment-grade level for us despite not being rated, working with a leverage of below 2. And we will continue now also to reduce then the debt level. We are still having the firepower to do smaller projects. You should not expect now bigger projects like BBS for the coming periods, let's say, quarters to years. But let's see. In case opportunistic opportunities are coming up, we will, of course, look into this. But we are not going in a hazardous way. We are conservative in that regard, and we balance also risk and opportunities well. And on the right side, and you could see this, and we talked about this also in depth regarding how does ESG play a role for us. I think Jochen gave also quite some hints in regard to that we are not looking into what can we tell to the outside. But what are we providing as opportunities to our customers with a well-defined framework that is covering our internal activities, but you could also see how we are contributing to the climate strategy to become climate neutral for our customers. Resilient business also means to have comfortable liquidity available and to have a decent maturity profile. That's what you can see on the next slide. Currently close to EUR 1.5 billion in funds are available. This consists of EUR 0.5 billion cash credit facility that is actually not drawn. And as per end of September, cash and cash equivalents to amounting to more than EUR 900 million. In regard to maturities, what's coming up for next year, that's a smaller Schuldschein loan amounting to EUR 100 million. And we are targeting actually to refinance the bridge loan that we established for the acquisition of BBS then also with a long-term instrument. So it's what we are working on. And as already mentioned, in regard to indebtedness and leverage, it's an important topic to us. We want to remain below the level of 2 in regard to the leverage, and we are focusing on de-leveraging going forward. Jochen also mentioned that we are reviewing our portfolio, what still fits well to us, what maybe are activities where other companies could be best owners, when the opportunities can be realized. And we will also use this to reduce the debt levels. And you might have in mind that pension liabilities are not really a topic to us. Exposure over there is very small because already quite some time ago, actually, our pension systems have been reviewed and have been adapted in order to control then the risk that might derive from this one. And at the very end, what do we want to do with this, which is also important to us, returning also then cash to our shareholders. We have a stringent dividend payout policy that is sustainable. We are paying out typically between 30% and 40% of the net income. You can see that we had peaked a couple of years back at a level of EUR 1, with more than EUR 1. Since 2020, we increased to a level of EUR 0.70 that we paid out last year. And when looking into what are we going to pay out as a dividend for 2023, we will actually take 3 areas into consideration. First of all, it's about the capital market aspect, so it's about sustainable dividend payment. It's about what can we afford, when looking to the net income, the target range of 30% to 40%. And how is our cash flow position so that actually, we can fund well the dividend payment. And that's a little bit more of insight in regard to financial aspects. And with this, actually, I would like to hand back to you, Jochen, for the last time.

Very last time, very last chart. Thank you, Dietmar. So what do we consider the key takeaways for today? We've made progress in aligning the portfolio with profitable growth. We have our established businesses showing solid margin improvements and getting closer to our mid-cycle targets. HOMAG enters a cyclical downturn, which we will use to do the right restructuring measures. We're very close to the management and have, as I mentioned, discussed in very detail. Actually, we spent 2 days with the management discussing each and every measure in order to now use the current situation to prepare for the right steps and emerge even stronger from the downturn. We have growth businesses with very good growth prospects and further strengthened by acquisitions. Now the last one of Ingecal, and really strengthening our resilience remains the focus. So for us, the time now is more the time of consolidation. We've put a lot of the parcel together, and now we have to start benefiting from it. Yes, go through the period of [indiscernible], but continue to work also in the other businesses to prove that we reach and maintain our targets. And of course, as [indiscernible] was mentioning just on the previous slides, disciplined cash management and a sustainable dividend policy. All right. So much from us, as long speeches and hand back to you, Andreas, and you tell us what's happening next?

Okay, happy to do so. Thank you very much first for the presentation. I think there was a lot of content building on the Capital Market Day of last year. And now we come to the Q&A session. We will first take questions here from the room. But we will then also look at questions from Zoom. And just as a reminder, if you want to ask a question in Zoom, please raise your virtual hand or if you are on the phone, press *9 and we will see this also as kind of raising your virtual hand. I've already seen one question here from Zoom. But first, we take questions now from the room, and I would like to kick it off and Christophe Belfort is the first one.

A couple of questions, please. First of all, you highlighted your willingness to reduce the complexity of the group and bought some assets for sale. What are your main KPIs when you screen your portfolio and look for those as [indiscernible] candidates? The second question is on BBS. What should we expect in terms of integration cost for Hekuma and Teamtechnik into BBS and related restructuring costs in order to achieve your cost synergies? The last question is on free cash flow. How should we think about free cash flow generation next year with HOMAG's earnings in decline and cash outflow for the restructuring? And is there a risk that free cash flow drops to zero next year?

All right. Thanks, Christophe. On the complexity and the potential to divest, we actually don't have assets held for sale. So we are revisiting the portfolio constantly. And what we do is a very simple portfolio analysis, maybe a little bit following the experience I have from my private equity time. So what we do is, we analyze the growth potential of a certain business against the competitive positioning. And then we had, I can really say we had interesting discussions with our division heads, and everybody believes his business is unique and cannot be compared with any of the other businesses. And unfortunately, we now found the format we agreed on where we make business compare and we do it exactly that way. On the Y-Axis, you have the market potential, going forward with a number of factors, which is market margins, growth CAGRs, et cetera. And on the X-Axis, you have the competitive positioning. And there, we really show our businesses. We define targets of how things should change, especially when you're sitting on an exit position. And this is how we look at it, and we look at it as a management team, and it's a very interesting and open process, which we do in our strategic meetings. On BBS integration cost, it's not significant. We are basically covering this within our operational business. So it's not about laying off hundreds of people. It is about realigning over time value streams. So don't expect any double-digit number or whatever. On free cash flow, Dietmar, you want to mention something for '24 and cash flow positive, et cetera?

We'll do maybe, just to add to what Jochen mentioned and we indicated this as well from the BBS acquisition, we will have PPA impacts coming from the purchase price allocation where we have some depreciation elements amounting to EUR 8 million to EUR 10 million for this year and EUR 25 million to EUR 30 million next year. So that will be covered then with the extraordinary effects where we will then make it, of course, also transparent. In regard to the HOMAG restructuring cash outflow, we expect around 80% of the amount that we indicated EUR 35 million to EUR 50 million restructuring expense that will be paid out next year. So you can see that even with deducting, let's say, like maximum EUR 40 million, considering our cash flow development in the last years, the target for this year, we will remain cash positive. And I have to be honest, I stress on the dividend topic because I want to assure you that we have set-up available so that we will continue to pay dividend also under this situation.

Are there further questions from the room? Are there any at the moment?

Maybe a question to the [indiscernible] operations. How would you describe the current [indiscernible] situation in this segment? Of course, and you mentioned this is a very huge potential. But what you -- do you think when will this materialize?

Thanks for the question. We have had roughly EUR 180 million, EUR 200 million of order intake last year. And this will be down, let's say, to EUR 100 million, EUR 120 million this year. So that gives you a feeling, say, 40% down this year. We assume this to pick up somewhat next year. How much? Difficult to say right now. But in the long term, we really stick to the potential we are laying out simply because the share of the [indiscernible] is still so small. And everything, if you follow the discussions that we have right now, there is in France, regulations under discussion in Spain, that the certain share, I think in France, it has even passed legislation that a certain amount of public buildings have to be using sustainable materials. So this will come. I have no doubt. How fast it will come, how strong it will come? It will be a debate because we were taken by surprise this year. Nevertheless, we continue to be optimistic. Nevertheless, this year, we have to digest a reduction in order intake of about 40%.

Then we have a question from Marta Bruska from Berenberg.

I have a couple of clarifying questions. So actually, following up on the divestment question from [indiscernible]. Is that correct to understand that you don't really consider any synergies in between the businesses as a factor in considering what would you potentially put under strategic review? And whether you could mention at all some examples that would be of the possible candidates at all. I would understand if you don't want to mention as well. And then I have some more questions, please.

It's very difficult to theoretically talk about businesses that we might theoretically look at to be sold. But you can, of course, assume that we even would take dissynergies into account before making any decision. I understood your point that whether we look at synergies from businesses that we might take out, right? Yes, so if we sold those businesses, if there were any synergies with the existing business, we would, of course, look at the situation after a carve-out and what that would mean.

Just a clarifying question. You mentioned OneERP system. Is that really one for the entire company you're aiming for or is that called one because of one in your name?

It's both, because we will have some of the elements in ERP accounts, there's some steps in the ERP that are exactly the same. We will have, in some parts of the template some differentiation between our more machine type building business and the more construction type business. But nevertheless, it is, most of the ERP system will be one system. But it's much more than ERP. We have just introduced OneCRM system based on Salesforce that will be used by everybody. We have just launched our OneHR system, so one human resources. That's based on Oracle. That's for the whole group. We will be launching next year, the first step of our OneSRM, supply relationship management. It will be one system for the whole company and so forth.

Okay. Then I think we go for one question here from the Zoom. It's actually coming from the mobile phone. So I grant permission to ask the question now, and please unmute yourself and ask the question.

Hello?

Yes, we can hear you.

Philippe Lorrain from Societe Generale. So I've got a couple. The first one is on the acquisition of Ingecal and I thought that was a very interesting deal. And I would like to understand a little bit better what you were saying with regard to calendering. I understand this was a step in the wet coating technology that you did not cover before. And if I look really at the slide, it seems like in the dry coating process, that would not be really needed. But at the same time, you made a comment that let me believe that it was still like [indiscernible] that you would need to have for the dry coating adoption. So can you clarify what would happen actually with a calendering step during the process of the increased penetration in dry coating technology? So that's the first question. And then I'll have a second one, but I'll come back to that.

Thanks, Philippe. And thanks for asking the question. Ingecal is relevant for both. So first, as you perfectly described in wet coating, it is the step that happens after the drying of the electrode. And we did not have this as our own technology, however, and this is why this acquisition happens. So how should I say, friendly and seamless, is that we have a long-standing relationship with Ingecal already because we're using, we're basically in larger projects, we're buying their calenders today because they are part of the scope of supply in many cases that we provide. So it is a running business, it continues to run, now it is part of our business, and we supply now a product that is in our own hands. Now for the dry coating. This is where I've probably not been explaining this well enough. In dry coating, you use a very -- basically the similar technology like calendering to bring the dry material on the electrodes. So what you've been doing before with our quota where you had a slot-die and there you had the slurry coming out of the slot-die being put on the electrode, you're now doing this step with a dry material with a calender. So you have the foil running through 2 rolls. And then you press the material, which is dry on the electrode. And you're using the similar technology like the calendering. This is where Ingecal brings in the know-how. This is why it is a different step in dry coating because it really the calender is the coating device. So it replaces basically our quota in the wet coating process. So you don't need the traditional calendering anymore as you perfectly described, but you're using the same technology for an integrated process to bring the material on the copper or aluminum foil.

Okay. That's actually very clear.

Yes. It's a little bit of process like when you press wooden chips through cluster boards, actually where you have also different tolerances.

And if I may add, even though you haven't asked it, important is the material. And this is why we've also formed this cooperation with LiCAP because they have a special material where we believe that the combination of the equipment, the material and our know-how will bring the right results.

Okay. That's clear. The second question is actually on [indiscernible]. I think on Slide 25, you made the comment that you already are about to reach the 6% margin target this year. And just if I look at the chart, so Q1 margin is 2.2% and jumping to 6.5% and then 8.3%. So I was just wondering if we should expect within like, let's say, the future performance of that segment, such a seasonal development of the profitability or whether there is going to be a slightly smoother margin development across the different quarters in the year?

Yes. I would almost say the bad news is there's also some seasonality in that business. But it is not necessarily as strong as it is in our construction type business. Nevertheless, there is a seasonality in the business, which actually, in the case of [indiscernible] helps us quite well from the point of acquisition, end of August because we have [indiscernible] last 4 months in our books. But nevertheless, not as strong as you might know it, for example, from PFS or so.

Okay. So this is valid for CTS as well and so for the Clean Technology Systems?

Yes. CTS also is very much seasonal, if I may use your words.

Okay. Yes. That was the division really I was asking about.

As you were looking at -- yes, go ahead. Sorry, Philippe.

No, I was meaning I was looking at Clean Technology Systems, not [indiscernible].

Okay. Sorry. I understood BBS. You said CTS. Yes, CTS also is, to some extent, seasonal. So the 8.3% that you see in Q3 is not necessarily the annual number. We would love to have this. Maybe one day, we will see it. But here really realistically, it is on an annual basis to achieve 6% and more percent.

Yes. But should we expect that division to actually perform like similar to this year, which is like very low single-digit margin in Q1 and then expanding towards the high single-digit margin by the end of the year or is it something [indiscernible] we should expect going forward?

No, Q1 was, I would say, relatively weak for a few factors.

Okay. Perfect. And then if I can squeeze in like the last one, which is just housekeeping really. Is the 2x leverage that you aim for in terms of net debt to EBIDTA, is it a valid target for like, let's say, on a running basis or is this valid for, let's say, excluding bigger M&A?

Philippe, the bigger M&A would yes, first of all, need to exceed 2x leverage, but the target is then to bring it down again to the level of below 2x.

I can assure you, Philippe, I've seen a physical reaction [indiscernible] who was not comfortable talking about above 2.

Okay. Thank you, Philippe. So once again, if you want to ask a question from Zoom, please raise your hand. And otherwise, I look into the room, do we have follow-up questions maybe from the room? Marta has a follow-up question.

What are some of the technical difficulties still left to commercialize the dry coating technology?

Yes, there is still a way to go. And this is -- everybody is looking at it. And I'm not saying that we are 100% there, and there is still risk in it. We have been assessing the market. We have been talking to a number of customers, and I said that we also have -- we're very close to one specific OEM when it comes to this combination now of the calender, the material and us, which makes us very hopeful. But this is -- there's still a way to go. And this is not something that will come on the market next year, potentially not even the year after. The good thing here is that we're sitting, and this is also what we've paid for the business, we've paid for the business based on the current profitability. And we've made some sort of an earn-out, which is based on the success of the new technology. So are we 100% sure and can we guarantee today that this will be perfectly successful? No, we cannot. But we are sitting on a very promising R&D path.

Yes. But also what is the problem now, the main problem that you need to address in order to bring that...

The main problem would be a 5-hour speech on material composition, on friction between the rolls of the calender, the material either being too sticky, not sticky enough, the material being too abrasive, ruining the rolls of the calender. So there is a ton of issues still to be solved.

So that's on the process, basically the stability of the process?

The process in combination also with the material. And again, this makes us quite confident because so far, with all we know, we have a promising path.

Okay. I think we have a question from the chat. Yes, right. We have got a question from [indiscernible]. And this goes like which -- with so impressive market shares and also pretty high service share, why don't you have more pricing power and double-digit margins?

That's obviously a good question. First of all, we're never completely unknown. And automotive, I'm in automotive now for a number of decades, and OEMs always find ways to generate competition. Nevertheless, in order to confirm in some way, we believe that there is more out there. We've proven some progress in some of the businesses. And this is why for HOMAG, we also believe 10% are feasible. But when you come to the more construction type businesses like PFS where we are buying in a lot of material and we're buying in a lot of standard material, that there is limits to profitability because you will never get the service share above a certain percentage. We don't have so many proprietary spare parts. And this is when looking at the total volume and comparing against competitors, if you compare against companies like Taikisha, for example, there's not so many that are publicly traded in the paint business. We are doing [indiscernible]. On the other hand, if you look at the business, this is what makes also the lower-margin businesses that we carry quite attractive CTS and PFS, because PFS, for example, runs on negative net working capital. So if you look at any returns on capital, this is already today a very attractive business.

I think if I interpret this correctly, we have a follow-up question also from Philippe on the call.

Can you hear me again?

Yes, yes.

Great. Perfect. So I have like a quick question on woodworking and the comment that you made on high-rise buildings. I'm a bit surprised because I did not really have the impression that the wooden construction would be really like a topic for high-rise buildings, especially not in the area of 100 meters or also like 20 more storeys. So can you tell a bit more about that trend, whether that applies really like to wooden structures and also frameworks or whether that's going to be like a bit more like perhaps more decorative elements?

No, no. Yes. Thanks, Philippe, for asking. There is a number of projects. If you Google, for example, highest or tallest wooden building, et cetera, you would get examples from -- there's -- I think the first one was in Norway, then Hamburg. There's a big building coming, [indiscernible]. There is a big building under construction and what really is a very strong construction material. And let me go one step back. I was for the sake of time, not diving too much into it because when I talk about this business, actually, we would have to differentiate again between 2 different value streams. And I'm trying to explain what I mean. We have 2 companies that we acquired in the last 4 years, [indiscernible] both being located in Denmark, and they do construction elements for buildings. [indiscernible] uses timber from the mill and scans the pieces, the construction pieces for imperfections, cuts those pieces out and finger joins the elements of wood to have a homogenous building material that is used really as a construction material that takes loads. So it's really part of the construction of a house. And then [indiscernible], which is the other company in that respect, they do from individual timber pieces, construct cross-laminated timber pieces. So they press different pieces together to get strong structures of those elements, which you use for roof construction, which you use really as static elements in big buildings that can really replace concrete beams. So that's the one part of the business. And this really benefits largely from wood becoming more construction material. The other one is for -- and that's also the video you have seen where we build prefabricated living modules, basically we preproduce walls, ceilings, floors that are put together on site for basically living cubicles. The 2 sometimes really well go together because when you do big constructions from the construction material, often also walls and ceilings are made of wood but not necessarily. This is 2 separate streams we're involved in. And really, when you look at those high-rise buildings, in many cases, really the structure is made of wood.

Okay. That's interesting. And do you think that perhaps like some different, let's say, region by region, perhaps will bring a certain limit to the market expansion that you anticipate there? In other words, is it something more like for Northern Europe and so on than Southern Europe, for instance?

No, it is. I was trying to explain there is. There is a common sense in Europe now that politically, but also from companies, from start-ups that this is a good avenue to go, for the sake of costs, sustainability, especially, for example, there is a big trend in the cities to how we call this, to increase the density of living or to add basically to existing floors to add additional floors. So you have multifamily building that has 4 floors, but you could never add another 2 concrete floors because statically, the building would not support it. Now the discussions are, why not adding 2 more floors from a wooden construction which is much lighter and works. So this is projects we're seeing a lot. So there's a lot of movement in Europe. We see movement in the U.S. from a different perspective, they are used more on the single homes for wooden constructions already today. Now it's about making a step to the premanufacturing of those houses. So this is where I see the biggest potential. But theoretically, you could see markets in Korea and China as well because also those countries have a long tradition of wooden housing. But I'm not trying to put it to an extreme, if we would only get a decent share of the business that should be available in Europe and partially in North America, we would already be at our growth targets.

Okay. Then the second follow-up was actually like on PFS and your value, let's say, before volume strategy. How can you ensure that you're going to remain true to that strategy in the future, especially in cases maybe when the pricing pressure is going to take off from the customers' perspective [indiscernible] how flexible is now your cost base in order to be able to sacrifice these are low profitability volume in case you really don't want to address it?

Yes. Philippe, it's a good question, and there is no perfect answer to that. This is our daily business. I mean we have -- we're constantly even on the way to Frankfurt, for example, I was discussing with the team, the pipeline, we look at certain projects. We define target projects where we believe we can differentiate. And sometimes you have much higher margins, sometimes you have to sacrifice a little bit. In the end, it's a question on how we manage the backlog and the profitability in the backlog. And this is a constant fight, I can almost say, yes. And this is why in some cases, and you've seen we had a very strong first half of the year, which is good because we created healthy backlog in PFS, then we had a relatively weak Q3, we will have a better Q4. So this is constantly ongoing. And I think the main message still remains that we took away the pressure for the business to constantly grow, but focus on what we can do right, best use our existing resources, not overstretch them, et cetera. But this will continue. This is automotive business.

Yes. Okay. And then if I can ask the last question, but this one is a relatively small one. Did I understand correctly that currently [indiscernible] HOMAG is maybe in the low 20s and you want to increase that towards 25%? Did I catch that correctly at the beginning of the presentation?

Absolutely. We are at 20%, 21% right now. We want to grow it to 25%, not because we will be -- next year sales will be decreasing. That would be too easy way to get to a higher service share, but by really also growing the service business. And the target is really on an ongoing basis to be at 25%. With the business portfolio that we have, this is absolutely feasible. We have not, in the last years focused enough on the service business, partially because there was so much new equipment business out there and because many of the people commissioning equipment at customer sites did not provide enough capacity to also follow up on the service business. So yes, your assumptions were absolutely right.

Okay. And if I remember correctly, HOMAG was always like a little bit below in terms of service share, especially at the time of the acquisition. But if I remember also correctly, you had as a group target that you wanted to get like close to 30% service share overall. So that would imply that the stand-alone ex HOMAG like the old, let's say, older structure plus the BBS and new assets that you brought in that you [indiscernible] 30%. So is it also true? Or is it like an aim, let's say, longer term because HOMAG would converge to 25%, the rest would be above that and then overall, you would get 30%?

Yes. It is an aim. And actually, we had achieved the 30% already. And the 30% in a way, I wouldn't say it's a theoretical number, but it is, obviously, as it is a share, it is relative to our total turnover, which means, it's a competing number with the new equipment business. So we -- I think it's a fair number is -- in the first step, we were saying, oh, we have to do EUR 1 billion in service. Then we had achieved the EUR 1 billion. So we said, what do we do next? Oh, let's do 30%. So it at least grows with the overall business. I think the real way to do it would be to really look at the service potential by division because again, it's much different between CTS, APT and PFS. And because -- and even within what we call service, again, the profile is much different where service in PFS does not include so many spare parts. It is more like brownfield jobs, it is rebuilding some of the production sites of our customers. If you then take -- and this is why it has a lower margin compared to the service business, for example, of APT and HOMAG as there are many more spare parts involved. So it's very difficult to just use that one number and apply it. It deserves a look at least a level deeper. Not a perfect answer to your question, but trying to put things a bit in perspective.

Yes. Obviously, I understand that the share depends as well like on the performance of the new business versus the rest and also like how do the different components in the overall service activity. And also I thought from the beginning that you had a completely different service activities between the different divisions, especially PFS versus the rest [indiscernible]. So nothing really completely new. Just like a follow-up maybe like on the HOMAG service share here, it's just like -- how should I look at the current level of 20%, 21% maybe versus the past? Has it come down or has it evolved like more like, let's say, sideways since you acquired the company? And yes, how confident then are you that you can actually like increase from maybe a naturally low level because you could not satisfy the whole demand right now on your benchmark?

Yes. There's obviously 2 factors that help. First of all, the new equipment will come down. So automatically, service share will be higher. And second, we will have more capacity to satisfy the needs of the service business. Historically, we would have to check. I would assume that the service share was not much higher, if at all, in past years. It could be maybe 1 or 2 percentages because in the last 2 years, we had so much equipment business relative to the service business. Nevertheless, we believe that we can -- in a normal mix of new and business and service business have that share at 25%. And we've been looking at it for each and why are we so keen about improving the service share, especially at HOMAG because we have so high margin. We have 60% margin in the service business. And each percentage point that we increased the share, we believe that we go up 25, maybe 30 basis points in the overall margin.

Interesting. You said 60 like 6-0 or 60 like 1-6?

6-0, gross margin, not EBITDA unfortunately. Gross.

Yes. But that suggests that it's mostly spare parts anyway, no?

Exactly right, yes.

I hope it was not already asked. Do you see weaker business also in your other business lines than HOMAG? And if so, where is it? And if it is, you always say we don't take low margin business. So what do you do in HOMAG? And yes, if business slows more, then you will do it again?

It's a good and fair question. First, on HOMAG, we have to sacrifice a little bit on price at the moment, which we can afford in terms of the gross margin because we have increased prices 15% to 20% in the last 2 years. And so that's really only kicking in. And second, we have some relief on the material cost side in HOMAG. So we're seeing commodity prices coming down. So we're hedging this. Overall, what we're seeing is the pipeline in automotive continuing to be solid. So it's not that we're seeing the market to come down. We have a good pipeline for next year. We said, we've already said, for example, that [indiscernible] it's a very big project and a few others. So we have no indications at the moment to say automotive is depressed. There's no more new orders coming. And that applies for both PFS and APT. We don't see at CTS, market weakness. We've had this year basically because we're always trying to also hedge from a geographical point of view for CTS. China has become weaker. On the other hand, the U.S. has been performing quite well, and we continue to see this into next year. We even see some slight improvements or momentum in the European market, which has been quite difficult also for CTS. [indiscernible] we were talking about the various markets we're in, and the aerospace industry is doing quite well. So all in all, if I hedge things out, we have a solid pipeline. And the question is fair, what happens if everything drops? What we have to protect is the margins. It is in many of the businesses that we do, there is not a fixed price level. Automotive, for example, we have [indiscernible] because of also some arrangements that Dietmar described. We've connected our costs to our pricing. So what one would expect is if markets become more difficult, then also the material cost comes down and that we are in a position to hedge it. But at the moment, that's relatively theoretical as we're still looking at a pretty healthy pipeline.

May I add here with the EV market somehow hitting -- hitting what this is called the road bumps, you also see that and maybe Tesla doesn't need as much machines as they needed before?

No, not in general. We're seeing a little bit of a shift. There's been lots of projects in China where we benefited from. To some extent, we will benefit from the internationalization of those customers. We have seen a number of projects then in Europe, and that's been a bit of the focus. What we're now seeing is that after those, if you will, new kids on the block like a Tesla or Lucid in the U.S. that the established players will have to invest significantly. The U.S. is strongly behind the rest of the world with this share of battery electric vehicles and people are still more reluctant to buy electric vehicles, but it will come. So not necessarily, I'm seeing this to come down sharply. On the other hand, for us, the main driver is really to convert the existing production and most of those plans. What you're referring to is more the new installations made by the new kids on the block, but the existing car manufacturers still have a long way to go to convert all their facilities into sustainable facilities. And I think Mercedes again, is a good example. If you look at all the other big car manufacturers, they still have a very long way to go. Plus, also a paint shop is -- doesn't live forever. So the fleet of paint shops out on this planet, and I think there's about 700 paint shops that we take seriously, as real automotive paint shops, there's an ongoing business just from either refurbishing them or replacing them by new ones. So it's not that our business. It lives or dies with e-mobility as such in terms of capacity additions.

Just to this question, wasn't that the case that in Europe, your last competitor [indiscernible] just went into some financial distress and issues that projects aren't really being managed and maybe you're picking up the business from them as well?

Yes, we did, but that's long over basically, and...

There is nobody else then?

There is. And this, as I said, automotive manufacturers are always making sure there's competition. And our life would be very nice if that was the case. So this one company that went bankrupt was -- they were one of our biggest competitors and a highly reputed competitor, say, 10 years ago. And then they first were not so successful anymore in Asia, especially China, then North America. So business was limited to Europe and then in simpler terms, they also screwed it up there. And we benefited like 2, 3 years ago to some extent because we were finishing some of their projects. But car manufacturers from there are building competition. There is a small group of people that separated from this old group, who are teaming up with another firm, and they get support from our customers because they want to make sure there is competition. So it would be a dream, but I've never seen this come true that we would not have competition. Sometimes, our customers blame us and saying, oh, you are strong, et cetera, but that's the normal game, and they will make sure that there is competitive bidding. And this is also not where we base our scenarios on that we say, this is all our arena.

Some good questions already. We are also a lot over time. So maybe its a final question. I don't see that's the case. And I would say that we close the analyst meeting for today. So thank you very much for your participation, for your attention and for your questions. Jochen, your final words to the audience.

If you have [indiscernible] run out of words at some point. So no, thank you for the good questions. Thanks for the physical participation, but also online participation. I hope we could convey the messages that we wanted to bring over, that we see, of course, still homework to be done, significant homework to be done. On the other hand, potential to bring this company to the next level. And if some of that found its way to you, we're very happy. And again, thanks for coming, physically or virtually.

Thank you very much. That's the end of the analyst meeting. You may now disconnect from the Zoom. Thank you very much.