FLSmidth & Co. A/S (FLS) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the FLSmidth's Annual Reports 2019. [Operator Instructions] As a reminder, this call is being recorded. Today, I'm pleased to present, CEO, Thomas Schulz, please begin.

Hello, everybody. I welcome you all around the world for our annual report 2019. And today with me is our Interim CFO, Naja. And first, to the key highlights. We had the highest revenue in 6 years. We had quite an increased service order intake, a lower capital order intake and an increased cash flow with a higher EBITA but unsatisfactory margin. We have a good demand for service, both in Cement as well as in Mining, but we see, at the same time, continued customer hesitation on large capital investments. If we then look into the guidance for 2020. We guide on revenue, DKK 18.5 billion to DKK 20.5 billion, with an EBITA margin 8% to 9%, and we proposed a dividend of DKK 8 per share. Let us come at first to the guidance. We realized on the revenue, DKK 20.6 billion, which was at the upper range of the revised guidance, which was DKK 20 billion to DKK 21 billion. We guide for 2020, DKK 18.5 billion to DKK 20.5 billion. That takes into calculation the lack of larger capital orders in the second half of 2019, despite that we got quite a package of large orders in the value of DKK 2 billion announced last week. If it comes to the EBITA margin, we had, for the year 2019, realized an 8.1%, and we guide 8% to 9% in the guidance. The reason for doing that lies, on one side, the cost pressure on the Mining capital part, our business improvement activities as well as the lack of bigger capital order intake in the second half of the year, which will create a lower revenue in 2020. On the positive note, we will have definitely a higher share of service in the revenue, and with that, of course, an impact on the EBITA. Important too to say here is no matter that it is more or less each year like that, and we saw it very much in the year 2019, we have generally a slow start in the year if it comes to the revenue, then a stronger quarter 2, a weaker quarter 3 and normally a very strong quarter 4, which was not only for the year, from a revenue point of view, the biggest year, the highest year in revenue, it was actually -- the quarter was the strongest in 6 years. If we then come to the business improvement. The business improvement activities what we announced last year are on track. We have an EBITA improvement focus of DKK 100 million, with a run rate at the end of this year of DKK 100 million, the cost will be DKK 150 million. We realized in the quarter 4 2019, DKK 40 million, which means DKK 110 million are to come. We announced and we showed quite openly the workforce adjustment, what we did up to the end -- or in the first quarter and actually end of last year, too. And that is a reduction of around 500 employees. The reason for that is, of course, a combination with the general business improvement program in Mining as well as the situation with the lack of orders in the second half of 2019. The business improvement implementation cost effect in the quarter 1 is estimated to DKK 40 million to DKK 50 million. All these business improvement costs are included in the financial guidance for 2020. Now to the market outlook. Let me start with the commonality between the Mining and the Cement industry. Aftermarket in both industries is on a good level and shows a good momentum. Customers ask with more or less everything, what they demand on so-called sustainable productivity improvement driven, of course, by digitalization, and new products by new innovation. It is very important to mention here that the cost level in the commodities in Mining as well as, to a big extent, in the Cement industry, is actually going up when we don't see the same on the top level for the commodities as well as -- or the commodity prices as well as the Cement prices realized. That, of course, puts pressure on our customers to do more to get their cost down. And that is what we can do with offering sustainable productivity enhancement. If we then look into the Mining specific. We have an ongoing hesitation on large capital investments. Yes, we got 2 large orders announced last week. And when we look into the pipeline and what we see as an activity level, the demand actually is there and on a healthy level, but it doesn't come to the final step to make the order intake. At the same time, a lot of demand, what we get, is sustainability-related, especially with tailings management and with any activity which enables our customer to attain and to keep the license to operate. License to operate was more or less throughout the whole last year and at the beginning of this year in the mining industry, risk #1. If we then look into the cement industry, it is actually an unchanged activity level where we can say that the market for big CapEx investments, new capacity is relatively low, but that now for quite a while. When we look into that what is demanded from the cement customers, yes, it has to do a lot with sustainability, but predominantly with CO2 reduction. The announcement of Germany to go up to EUR 57 per tonne CO2 as a tax, of course, goes like a big information around the world. If we then look into the pipeline for small or midsized opportunities, especially with upgrades and retrofits, that market is developing positively in the right direction. Now to the capital order or to the order intake. What you clearly can see on the left side, divided by Mining and Cement quarter-on-quarter, you see that our Service business in mining in the quarter 4 grew 6% when the capital business actually dropped 19%. Of course, large capital orders as last week are very lumpy and the timing, too. Out of that, when you look into the service, you can see that the service order intake in the quarter 4, seasonal is a little bit lower than we had it in quarter 3. That is not unusual in our kind of business. Now to the Cement part. You see 11% growth in order intake for Cement service. This is the highest service order intake in Cement, and is a fantastic performance and a proof of a good organizational structure, what we implemented in 2018. The capital part is 14% down and reflects that what I said before in the total cement industry with the subdued situation on larger capital deals. If you look to the right side, you see from quarter 4 2017 on quarter-by-quarter, the development of the order intake. When you look into it, of course, it is not that nice picture when you see that 3 quarters in a row, the revenue is higher or slightly higher than actually the order intake. But with the change or with the big announcement, what we had last week, the whole picture looks, of course, different on one side. Second, you see that our service share is actually coming up quite nicely, which is quite positive for us. If we then look into the revenue split. On the left side, you see the split between Mining and Cement. We had 59% of our business in quarter 4 from Mining, with a 9.1% EBITA margin despite the fact -- yes, or saying it like that, the 9.1% is, of course, not satisfactory for us in that industry. On the opposite side, we have 41% Cement business with an EBITA margin of 6.6%. We can say that the year 2019, cement did -- our cement colleagues, our cement part did that what we announced already in '18, to be very selective on orders regarding profitability and bringing the profitability up. Our colleagues really did a good job here. If we then look into the capital service, you see that we had the same share of capital versus service in quarter 4 '19 as we had it in quarter 4 '18, 52% to 48%. If we then go further, then I would like to give to Naja, our Interim CFO, with the financial performance.

Thank you, Thomas. I would like to present the key highlights of our financial performance for 2019 for you. I will focus on the full year performance on the first couple of slides, and then take you through the Q4 results afterwards. When you look at the key numbers of our financial performance for 2019, you will see an order intake decline of 10% compared to last year, which was caused by the low level of large capital orders. As Thomas also mentioned at the guidance slide, this will impact the capital revenue for 2020, both in Mining and Cement, but particular in Cement. On the other hand, the service order intake increased 3% compared to 2018, which will support the mix in 20 -- the service -- the business mix in 2020. Looking at revenue. You would see that revenue was up 10% compared to 2018, especially driven by Mining, but Cement grew as well. With a revenue of DKK 20.6 billion, we ended at the higher end of the initial guidance for 2019. Gross margin was down 1.5 percentage points compared to last year. EBITA margin was 8.1% compared to the 8.5% in 2018. Taxes for the year increased DKK 125 billion compared to 2018. This should be seen in the context of an unusually low effective tax rate in 2018. Profit for the group increased 22% to DKK 776 million. Return on capital employed ended at 10.9%, almost at the same level as last year. Looking into the full year cash flow for the continued business, you will see a higher EBITA of more than DKK 2 billion, which is a 9% increase compared to 2018. The cash outflow from the change in provision was roughly half of what we saw in 2018 and included a tax -- segment of a tax claim paid in Q2 2019. The development in net working capital resulted in a cash outflow of DKK 390 million, which I will explain later on. For the full year 2019, the cash flow from our operating activities in the continued business increased to more than DKK 1.1 billion compared to the DKK 953 million we had in 2018. On the right-hand side, you will see the cash flow details from the entire group, which means continued activities plus discontinued activities. CFFO for the entire group improved by more than DKK 0.5 billion compared to 2018. We spent around DKK 300 million on the IMP Automation Group. And excluding this acquisition, investments were slightly below 2018 and very close to the level of depreciations for the year. The free cash flow for the group, excluding the acquisition, was DKK 574 million compared to the minus DKK 15 million in 2018, clear positive development here. If we go deeper into the performance in Q4, you will notice a very high quarterly revenue. The service revenue in Mining was up 14%. Capital revenue was up 12%. For Cement, the service revenue was up 1%, and a high activity level in the quarter meant a 10% higher capital revenue for Cement in Q4 2019. On the right-hand side, you will see the last 9 quarters revenue and for the group, where you can see the Q4 stands out as the highest for the whole period with a 10% increase compared to Q4 2018. The order intake line, marked with red, showed that the quarter's order intake is lower than the revenue in the quarter. Moving on to gross profit. We see a 1% increase in gross profit compared to Q4 2018, but the gross profit margin was down by 2.1 percentage points compared to the same quarter last year. The main reason for the margin decline was less profitable projects in Mining and a generally higher level of project revenue in the quarter. The gross margin in Cement improved as a result of execution of projects with higher margin and a selective approach to large orders. The development in our SG&A cost underpins our very strong cost management focus, and the SG&A ratio improved in the fourth quarter. Of course, compared with a higher revenue impact from IFRS 16 and also internal efficiencies. At the same time, also lower incentive payments improved the -- that ratio. The SG&A ratio for the quarter is 12.14% (sic) [ 12.4% ], adjusted for IFRS 16%, 12.7% compared to the ratio we had in Q4 2018 of 13.4%. The EBITA margin for the quarter was 8.1%, which was a 1.3 percentage point decline compared to 2018. This is a result of the lower gross margin, as I just previously explained. At the right-hand side of this slide, you can see the EBITA bridge from Q4 2018 to Q4 2019. The decrease of DKK 24 million can be explained by an increase in revenue of DKK 138 million, decrease in gross margin of DKK 134 million and higher SG&A cost of DKK 28 million. This bridge is taking IFRS 16 impact into account. Net working capital increased DKK 539 million compared to 2018, ending at a 13.3% of revenue, which is not satisfying. Inventories were largely unchanged compared to 2018, and the current level is roughly where we expect to be if we should support our expansion of our products and the Service business. A very high activity level in the quarter led to increased trade receivables and WIP assets and only partly offset by trade payables. Further, the increase can also be explained by lower other liabilities related mainly to lower incentive payments and lower VAT compared to last year. Reducing the net working capital is a key focus for the entire organization, and we do expect a lower level by the end of 2020, how much will depend on the Service share business as well as large capital orders and the associated prepayments from customers. The discontinued activities developed as expected in 2019. The cash outflow mainly relate to used provisions for settlement of a legacy project and redundancy costs paid in Q1 2019. Discontinued activities are not expected to generate any significant in or outflow in 2020. Our capital structure is well within our long-term targets, and we ended the year with an equity rate of 37.4% and net gearing of 1.2. The increase in net debt can be explained by the impact of IFRS 16 of approximately DKK 300 million and the IMP or the -- and the acquisition of IMP Automation Group of also approximately DKK 300 million. We do expect the gearing to decline in 2020. And then I would give the word back to you, Thomas.

Thank you very much, Naja. So then from here, looking forward, we have a good progress in Service. We have an increased cash flow. We have a business improvement based or in that way that we increase profitability throughout the year 2020 and especially then, if we look into 2021. And we see vast opportunities in Cement as well as in Mining on sustainable solutions, where we are well positioned in both industries. We had a reduced capital order backlog in Cement, and our margin in the Mining capital business was really not on the level where it should be. If we then look into the management focus, it's about customers, cost and cash. For 2020, the order intake, the profit improvement and very important, the cash generation, of course, with the reduction of net working capital, but not only is absolute high focus and definitely a step change in the company. Long term, the focus on customers with our reorg, by getting the orders what we announced last week, is very positive in an area where we were in the past, in the history of our company in Mining, not that successful. We have a very good setup on the sustainability with our MissionZero to help the industry towards nil emissions in the next 10 years in Cement as well as in Mining, and that is a lot demanded, not only on media and in social networks, really in the industry. Both industries in that respect changed quite dramatic in the last 12 to 18 months. Innovation and digitalization is a driver for that, and it will help us. It will help our customers. It will help each and every one dealing with it to realize that sustainability target and maybe more. As we saw with the underperformance and profitability last year in the Mining part, our standardization and modularization program is very important and will get enforced. If we then look into the cash. You see on the left side, our cash generation since 2007. And we can say that we had, between '14 and '17, despite the mining downturn, quite a good cash conversion. '18 was not good at all, as we headed with the discontinued business. And '19 was definitely an improvement in the right direction, but we expect more. What does it mean? A company like us has to be better in cash conversion and delivering cash, not only from a financial point of view, it's a fantastic insurance towards our suppliers, towards our customers and towards our shareholders that we manage the business in an optimum good way. There's a lot to go, what we can do as a step change. One element is definitely to get the timing from invoicing or from forecasting actually to collecting the money shortened, and we work on step changes to do that. The net working capital in itself, when you look into the complete setup of the net working capital, you will see that our inventory is more or less the same as it was a year before. We believe that with the relatively low inventory level versus sales in comparison to the peers, that we are on a level where we can generate more Service business, but there is no intention to lower that more. But if it comes to the other lines, improvement potential is quite obvious. So the strong commitment is actually a big thing for us and will be definitely heavily supported by the onboarding of the new CFO in a foreseeable time. Then I talked a lot about sustainability. When you offer that into the industries, into the societies where you act in, of course, you have to look into your own house how you perform. There, on the left upper side, you see that we had the 1.6 TRIFR in the year 2019, which is a fantastic improvement from the year before and a fantastic level in the whole industry. That is super performance of my organization. I'm very proud of that. I'm very happy with it. And it shows that despite headwind, internally and in the business, our organization can perform quite well. Another thing what I would like to highlight is that our carbon -- relative carbon footprint, measured in tonnes per million DKK revenue, dropped from 3.4 to 2.2. A milestone event for us, for our customers, for our suppliers, was in November when we launched the MissionZero where we get a lot of interaction outside the industry, too, and helping us to find the partners for the technologies, what we don't have in-house, to give Cement as well as Mining the big step change in sustainability. We committed to 4 out of the 17 goals because we note here we have the biggest impact, and that is where we will put all our efforts in it. One part of that is digitalization. Digitalization will enable us with the innovation, and we see digitalization and innovation gets more and more one thing. Here we have a proof of it, it's actually an app where the app in itself monitors and gives the operator a possibility to look into and to improve performance on productivity not only on the product or on one entity, actually, on the whole process. The site connects -- to connect, digital, all the process into one. And with that influencing online, the productivity is a fantastic move in the right direction to enable customers to get their cash cost down. So the year 2019 was with the highest revenue in 6 years. We had a higher service order intake. Our capital orders went down, which means we had a lower capital order level, especially the second half was not satisfying in it. We had an increased cash flow and definitely a shift and a stronger focus on cash for the future. We had a higher EBITA, but a lower, not satisfying margin. And our guidance is DKK 18.5 billion to DKK 20.5 billion on revenue; and EBITA, 8% to 9%. And that gives a target area for the return on capital employed of 9% to 12%. And with that, I think we could start with the Q&A.

[Operator Instructions] Our first question comes from the line of Lars Topholm of Carnegie.

Yes, congrats with a good quarter. I have a couple of questions. The first one goes on the net working capital, where you see an improvement in 2020. Can you be a little bit more specific on what you intend to do to deliver that improvement? And what constituents are relevant? And then a related question on your Slide 18, you are showing your cash conversion but excluding changes in net working capital, I just wonder why you look at cash conversion, excluding net working capital changes, that doesn't make makes sense to me, to be honest. Then on the order intake, you won 2 large orders from Russian here last week. I'm just curious what happened since you suddenly begin to win these big Russian projects because it's been a while since you had any of those. And then finally, on your guidance, 8% to 9% EBITA margin, what decides whether you come out in the high or low end of that range? Is it mainly a question of where you end in the revenue range? Or are there other drivers?

So let me start with the 2 orders what we got -- yes, the -- when you look into these large orders and what we announced, it is clear that they were quite a long time in the pipeline, and it was clear that, yes, for a while, that these orders would come in one way or the other. The only thing was, of course the timing. We hoped for to have it in the second half of 2019. So it slipped over into 2020. If it is a sign that large orders are now starting all over the world, we don't see that. We have a high-volatile market. The China situation is not helping in that. We see, overall, when we talk worldwide with our clients, the customer hesitation on capital -- on CapEx spend, on large CapEx spend is still there. On the positive note is the demand to do something is there, too. So we are actually quite far in a lot of these projects, but we need the last step to go for -- that we can book it as order intake. Then I look into what you said regarding the guidance, the 8% to 9%. To come to the higher end of the range is actually more, that all the business improvement comes timely in. Second, that we have a good mix between service and capital revenue. And of course, it gets more tricky to come to that range as more end loaded the year is with the revenue. If we get more revenue into the first 3 quarters and not so much then in the fourth quarter, that helps, of course, on the profitability, too. Now to the net working capital, Naja?

So you were asking about where do we expect to see the net working capital improvements. And the net working capital improvements in 2020 are expected to come from the invoicing process and the whole collection process. So you can say trade receivables and WIP assets and WIP liabilities. So the invoicing processes, too, is actually impacting both capital and the Service business, and the same goes also to the collection process. So both of them is very high focus for the entire organization.

Then on the -- what you said regarding...

Sorry, just a follow-up question on that. Are there any milestones we should look out for in maybe after Q1 to sort of see you on the right track here?

More in the second half of the year, I would more look into the second half of the year. We already took, in the last few weeks, some correcting actions and activities. But experience shows, if it comes to the net working capital, it takes a little bit longer. It's not directly the next day. And generally, our net working capital is -- gets, how to say, a negative head start in the year. So it's easier to see in the second half of the year. Then to your question regarding the cash trend, what we had. Actually, the bars are not -- the bars are normalized or the right level, only the normalized dotted line is actually excluding that. So it's not -- the single bars are actually right, as you rightly mentioned out, but for the normalized...

Yes, the trend line, right?

Exactly. The trend line was actually -- was built up like that, as you described it, by purpose, by the way.

And our next question comes from the line of Kristian Johansen of Danske Bank.

So first, a question is on this last question in order which you announced on Friday. First of all, considering that you have ATP as a subsupplier on a decent part of this contract, is it fair to assume that the margin of the project is sort of below average? And secondly, what is the permitting risk or licensing risk around this project? Is that all done? Or is there any risk ahead of us?

Thank you, Kristian. At first, you can imagine that I can't give any real details to a single contract. We are not doing that. In general, of course, if you are with a bigger package of another supplier in, it always has a -- it always lowers the profitability, what you calculate, if you only [ versus ] only own equipment in it. Second, if it comes to the risk to lose the license to operate, we have significant regional geographical differences in that risk. We see the risk to lose the license to operate and having pressure on it, especially in the Americas. And if it comes to the Eastern part, in the East of Europe, in Russia and so on, we see that risk actually worldwide as the lowest. So we -- what we see and what we can say is we don't calculate any risk for the license, to lose the license to operate on these 2 deals.

Okay. That's quite clear. And then my last question is just will there have been any cancellations in the backlog in the fourth quarter?

No.

No. There was no cancellation in the fourth quarter.

And our next question comes from the line of Magnus Kruber at UBS.

Magnus here. A couple ones from me. Could you give us some help on what the adverse impact in the quarter was from the lower margin Mining projects? I think you previously communicated a DKK 30 million run rate. So where did we end up compared to the baseline?

Yes. We -- you can -- as we said, the DKK 30 million, you definitely can calculate in. Then, of course, we have a product mix effect in the quarter. And out of that, we had a 40 -- or on top of it, a DKK 40 million business improvement cost impact, which was largely in the Mining, more or less all in the Mining part.

Perfect. That's very clear. So secondly, you have previously suggested an improving margin and [ better ] quality in the Cement business. Is this still true in the Q4?

I didn't understand the question again, sorry.

Yes. So you previously communicated that the margin in your Cement backlog has been up year-over-year, at least up until Q3. Is that still true in Q4? The margin quality is up year-on-year?

Yes, the margin quality has improved. I have to give a lot of credit to my Cement organization throughout the world because it is difficult, we should not forget that. We had, in the third quarter in -- and in the second half of '18, too low margin. And then the management teams and our strategic people then decided to go more selective for capital orders. We did that. And of course, in a time where actually the amount of capital orders, larger capital orders is very subdued. Of course, it makes it more difficult, but our organization did a very good job and improving the internal efficiency. That is good to see. And out of that, we can say that the profitability and that what we did in -- and what we got in the fourth quarter is okay.

Okay. So would you say that the gross margin in the Cement backlog now in Q4 is higher than it was Q4 last year.

I mean, like that, the -- of course, I can't give you the figure anywhere -- the detailed level, but it is a satisfying level, what we have there. That is what I can say. It's a satisfying level.

Okay, brilliant. And just finally, in terms of the 10% target for wear parts in Mining, where do you stand by the end of the year? And where do you want to get to, in say, 2, 3 years' time?

Yes, we are over 10% as we promised to the market, but not only in Mining. This is a -- this was a group effort, to get for the wear parts over 10%, and we did that.

And going forward, do you still chase this business?

Right. Let's see how we get that. We don't -- we didn't give any information more on the wear part. Split was a spare part split. And actually, the 10%, to give that information was that, that we were really low a few years back, actually, more or less nil. And now we are definitely double digit in that, and we grow, but we are not giving more information or guiding also how much the percentage is. Important to state on that is when we talk about wear parts is what we call intelligent wear parts. We put processors on it. We digitalize it. We try to give an added productivity improvement value. Otherwise, as a newcomer in that sector, we would have a problem from a pricing point of view, and we don't. We don't. So that actually works out. At the same time, it clearly shows we are not running for any volume. It has to be a good, sustainable, profitable growth in the wear part segment. And we actually invest quite a lot into R&D, innovation, to have more wear products available in Cement as well as in Mining.

And our next question comes from the line of Claus Almer of Nordea.

Also a few questions from my side. The first question goes to your business improvement initiatives. This is impacting 500 employees. I would have thought that the EBIT impact would be larger than DKK 100 million. Is there also an impact in 2021? Or how should we think about this? That would be the first question.

Yes. And actually, Claus, very good question. You actually hit exactly the thing. It is more complex what we do because the low-hanging fruits we already did years back. This is more complex, so it takes more time. And with that, the EBITA improvement, the profit improvement is actually more towards 2021. And we try to say that we have a DKK 25 million run rate at the beginning of the year and DKK 100 million run rate at the end of the year.

Okay. And then as you mentioned in Q4 '19, that was mainly impacting the Mining division. Is that also how we should think about of this year, that most of these effects will come in Mining, both one-off costs and the positive EBIT impact?

Actually, it's a lot what we do then this year for both industries and group. Don't forget group. So it's largely in line with, as you will see, the revenue. We had a start in Mining because with the profit warning out of the Mining capital business, of course, that was the highest attention, what we had. And that created, of course, the -- by far biggest part in the mining sector regarding the business improvement cost in quarter 4.

Okay. Then my second question, this goes back to the backlog which you mentioned several times during the presentation. I know you got these Russian orders, but backlog is down in both divisions. And yes, Q1 will help. But when should we be starting to be concerned about the backlog trends? When do you really need to see an uptick in capital orders to be able to, let's just say, repeat the 2020 revenue level?

Yes. The -- we will -- as we guide only in a positive environment, repeat, close to the 2019 level in revenue because we delivered a DKK 20.6 billion, and the high point of the guidance is DKK 20.5 billion. Concerned? Yes. It's not about being concerned. It's about what we are doing out of it. If the industry would go on unlimited with hesitation on larger capital orders, of course, our share in aftermarket, purely mathematically, will increase. We see still quite good opportunities in smaller products and upgrades, what we should not forget. And then, of course, the volume would shrink, we would then take actions to align the organization to the new situation. As we would do if we see now a catch-up effect on large projects, and we get quite a lot in short time. So we are, in both directions, not concerned. So that it's not looking nice in the second half of '19 with the capital orders, I have to say that was -- with that sit-and-wait and customer hesitation, what everyone now in the industry is saying, not only us, as we had it in quarter 2. We will -- we have to see and to wait until that is over. But we are in permanent contact in Cement as well as in Mining with the customers to see how far they are.

But is that -- after some of it, then we will need to see things improving? Or there's always a lead time between signing orders until the revenue will start to kick in?

Yes. The only thing -- it's difficult to say. Or what I can tell you is if we see that we are getting not enough large orders, you will see our cost base coming down and more announcements as we had it at the beginning of the year. If you see that we get more, then, of course, we will adjust accordingly. So from that point of view, it is tricky to predict why. We have a clear view of what is in the pipeline. We don't see a change in the pipeline, not in Cement, not in Mining. We know, especially in Mining, the ones, our peers or us, we have the engineering orders, that you most likely get the big capital order. What we all can't see, and that is what we understand in the market environment from our peers, what we can't see which day it is. If you would have been asking me 3 months ago, when are the 2 orders or 2 orders in Russia coming? I would tell you, maybe next week, maybe in 3 months. So that is the uncertainty we have in, and we've built that in the revenue guidance a little bit in.

Okay. I know this was the impossible question to answer.

But you are -- your question is fully understood and fully accepted. And of course, we have a lot of intelligence out, to call it like that, to look when things are coming and how we can help customers to make a decision here and there and trying to find the best spot. For us, it's very important that the subsupply is available, what it is. For us, it's important that we have the right force there. And there, we messed up a little in Mining last year, to make that fairly outspoken and clear based on the profit [ warning ], what happened before. And that is what we regulated and are regulating. So from that point of view, we are prepared. We are prepared in the positive direction. We are prepared in the negative direction. But I can't say where the direction then will be at the end of 2020 yet. That's difficult.

Our next question comes from the line of Artem Tokarenko.

My first one is about your guidance of -- on H2 weighted revenues. Could you maybe talk a little bit about H1, H2 weighting, which you expect in your base case? And what are the primary moving parts which could help you accelerate revenue?