Gurit Holding AG (GURN) Earnings Call Transcript & Summary

I'd like to welcome you to the Gurit 2019 Media and Analyst Conference here in Zurich. I'm joined today by Philippe Wirth, our CFO, CFO of Gurit, who will present the financial data of the year under review. I'd like to introduce you to the introductory statement, which is important, particularly in times like these. The agenda of the meeting is fourfold. We give a business update, I will do that. Financial results will be done by Philippe Wirth. Outlook and summary by myself. These first 3 sections are recorded and in English and available on the webcast. Later, the question-and-answer session will be in German or English or any other language we can serve, and will be not recorded. In the course of 2019, Gurit refined its vision and mission statement, and I feel it appropriate for the executive team to present that here. Our vision is to go with passion for a sustainable future, and sustainable future for us means that we support clean energy for ourselves and our children, as much as possible with Gurit offering for global wind energy. Our mission, on the other side, is that we are now more than 3/4 a wind energy or clean energy company, supporting it with our offering in tooling, in core materials and in kitting. So 3 strong angles. That's more than 3/4 of our business. And the other, a little less than a 1/4, is about aerospace and industry and marine, that means lightweighting, make heavy things lighter, with the purpose of having more payload or less energy for propulsion. So also in that side is an aspect of sustainability. Important is that we are focusing in wind energy around the blade. So we are not focusing on towers or generators. Our focus in the wind energy market is the rotor blade, which is one of the key contributors of reducing the cost of kilowatt-hours produced in wind energy, and therefore, has a pivotal role for making wind energy, competitive and therefore, wind energy as a clean offering, successful in the market. So our focus in wind energy is in and around the blade. In the lightweighting, obviously, it is engineering and a complete suite of materials. So those people who have metal constructions or heavy constructions, if need, we can support them with engineering and then with a complete suite of materials. This is our mission. Gurit is working for a good purpose. But in the past, we have probably not talked too much about it. We have undertaken a major effort to describe what we are actually doing in terms of wind energy and not only serving a good purpose, but also do it right within that good purpose. That means use sustainable materials, use balsa wood, for instance, use recycled PET instead of virgin PET to make our synthetic cores, support recycling, co-locating sites, thus saving transport costs, recycle waste from one process through the other, so do the right thing and do within that right thing all best possible. Those are the 2 visions and missions we have. So we want to talk about it more and explain it. So we have published a sustainability report, which compared to prior years, is much more comprehensive. Also, we have applied to join UN Global Compact, which is all around human rights, employing people the right way. So about correct employment. It's about environment. And last but not least, which is evident, but also needs to reinforce every day and lift every day, anti-corruption. So that we have a clean business wherever we do business, and we don't fall into pitfalls of temptations. Within that sustainability, we have also defined the goal of reducing accident rates by 50% over the next 3 years. So we want to become even more safe than we are already because we believe in that. That's important. So those 2020 to 2022 goals of 50% reductions are deployed by an action plan of people working in our plants to make workplace safer, task reduction, better ergonomy, risk avoidance, risk mitigations. So there is no reason to work fast and incur accidents -- the art is to work fast and effective and safe, and not just effective. And last but not least, we will define in 2020 when and how Gurit is going to be carbon neutral. That's another -- is another element we have undertaken. So this took quite some focus and energy, and I advise and recommend to read that sustainability report. It's not yet perfect, but it's a very good start for what we consider. And as we said before already, Gurit is more now in 2019 than 3/4 of clean energy, and balance means aerospace and industry and marine is less than, obviously, 25%. Now the megatrend of wind energy. This is a chart you probably have seen before, but I feel it's important to emphasize. Global investment thinks that by 2020, almost 77% of financial means will go into capacity of renewable energy, and only 23% will go into equipment and plants of nonrenewable. In numbers, you have a quote below, which comes from Bloomberg in the outlook 2019. The 3 megatrends underlying the major clean energy mission on wind energy are, obviously, the decarbonization, which is clear; the decentralization and there, particularly the Indian subcontinent in some jurisdictions or in some countries, you have replacement by nonrenewable with renewable energy. But in certain countries, you have also a replacement of nothing by something. And do that in a decentralized way will help these economies to prosper. And then also the digitalization of networks and better storage of energy, which is one of the major things all renewable energies, which are less predictable, that, call it, band power, band-created power, have as a challenge. So wind energy, together with solar and other renewables, are a megatrend. And Gurit is focusing more than 3/4 of that in that area. When you look at the global power generation mix, now these are forecasts, and we look at 2050, these data are again from BloombergNEF. It shows you 2 lines, the 2020 mix and the 2050 expected mix. And there, you can see that when we are talking about 70 gigawatt ballpark of annual new investments or new installations in wind energy. This is very tiny if you compare to what people believe 2050 will look like. So solar and wind are clear growth areas. And Gurit wants to participate and help in that area. When we look at it in the more short-term way, we can see that 2019, on the slide, wind energy demand outlook has grown in terms of installation of new wind turbine by about 32%. Now that cannot be directly correlated back to our output because you have plates sometimes stored or you have turbines waiting for installations or installing fast or slower, but it's a clear proxy that the market has seen a vibrant growth in 2019. It is expected to go into the 70s now, from the 66s ballpark to the 70s. So 2020 will be another record year. This is very positive, but on the other hand, it has demanded a lot of capacity investments for the materials we are selling and has also created a massive shortage of the materials we are selling towards this industry. Not only core materials but also other components in the wind turbines have been short in supply because the demand moved from the 60 -- 50 gigawatt into the late 60 gigawatts basically in 1 year. So there was a strain on the supply chain. When we look forward in '21 and '22, there are certain events like the U.S. production tax credit ending; the tariff, the feed-in tariff in China ending '21; you have a positive the India demand step-up, which becomes now visible. India, not only a domestic market, but also an export opportunity for blades, together with China, by the way; and then certain plans of the European Union to work more on avoiding missing the climate targets. So I would say, while we have the long-term forecast, which is a massive growth of renewables in the tactical zones of 2021 and '22, there is also a certain level of uncertainty. Now one of the key factors to swing from today's 70 gigawatt into bigger is, obviously this, competitiveness of wind energy measured by kilowatt-hour of output. And here, you can see that basically, different jurisdictions over -- this is a long time spend, 2005 and 2019 as the ending point. You can see that the cost per kilowatt-hour or the auction prices per kilowatt-hour dropped by region. And nowadays, we can say that in the U.S., for instance, with the production tax credit, wind energy is the cheapest form of energy of all by kilowatt-hour, followed by solar. If the production tax credit will end, then wind will be second best after solar, but still ahead of everything else. So the walk towards competitiveness of wind energy over the last 15 years by the industry starts to merit, and production tax credits and other subsidy schemes or feed-in tariffs will not be necessary. And the industry, which we all long for, can stand on its own legs and grow. The Gurit offering around the wind turbine blade, I have referred to before, sits on 3 pillars: one is the tooling, where Gurit holds the #1 position globally. So about every third to fourth blade produced globally comes out of a mold of Gurit. We have the core materials, and here I've portrayed PET, mainly. Now PET is not the only core material, of course not. It goes together with balsa typically, in a mix into the blade. Some blades are made just from balsa. Some blades are made just from PET. Some blades are made from PET and balsa together or PVC and balsa together. But Gurit believes strategically that the hybrid of balsa and PET will form the majority of the blade core materials of the future. So that's why Gurit is investing heavily into PET last year and this year mainly. But we will also continue to focus on recycling bottles. Not virgin PET but recycling PET. Like many other users of PET like the bottle manufacturers, we believe that we should reduce the amount of working PET used and increase the amount of recycled PET used. And last but not least, the kitting position. That means cutting the sheets to the kits, which then are used together with glass fiber to laminate the blade. There, we have a global #1 position after the acquisition of JSB or Gurit kitting in late 2018. So in that offering around the blade, mold, core materials and kitting, we are clear leaders in the market. And we want to foster that leadership position by related investments. The Gurit business review 2019. The financial elements are going to be explained all by Philippe Wirth. I would just like to hit a couple of the headlines. The net sales growth, including acquisitions, was 35.5% to CHF 576 million. So Gurit is on the road, gain critical mass in that market. This is also noticed by our customers. The operating profit is CHF 51.9 million reported, and that was an increase of over 80%. The cash flow, which is the positive -- actually, for me, the most positive picture in the whole presentation, despite growing organically by 11% and despite having an extremely high CapEx for our situation -- for our normal situation, we were still able to reach a good operating cash flow and reduced debt by 33%. So we had actually a chance to grow and not borrow the money for growth, but to create the cash flow in-house. That is important when you grow. The equity ratio, which has -- which went down to 33.8%, subsequent to the goodwill amortization of the JSB acquisition in 2018 to 33.8%, improved by 6.4% to 40%. Net debt. As I mentioned already, we could reduce the net debt to CHF 52.9 million. Year before or year-end before, it was at CHF 80 million. So despite the CapEx and despite the growth, we were reducing the net debt. And the CapEx raised by 60%, or over 60%, to CHF 24.7 million. We have guided the CapEx in 2019 to be around CHF 30 million, but the different payment actualities of the extruders particularly purchased delayed that CapEx as a cash-out slightly. As a reference, you could see there, in 2018, we had CHF 15 million. What are the strategic investments in the organic growth '19 and '20? And for the purpose of those big programs, I took these 2 years together. We will add significantly and have added extrusion capacity for the PET foam, which you saw before, together with that bottle, as a product for the future together with balsa. Gurit will increase the capacity or have increased the capacity in '21 by 400% versus 2018. Plus, we have made an innovation program, which we are developing and rolling out, to reduce the cost of PET, to increase the properties of PET and to raise the competitiveness of PET further. Because that is now our key strategic material, and it needs to be top-notch. Also, we have expanded into Indonesia to get more balsa for the market. As it is common knowledge by now, balsa, as a natural product, has been under major shortage in the whole year of 2019. Too many airfreights, too much price increase, not enough wood, too many changes from balsa into other products in order for the blade makers to make blades. So Gurit undertook to go to Indonesia and open up new sources like other people do as well. The success of this is still too low. We need to improve on that and get more balsa in 2020. Particularly, the Chinese market is desperately looking for that product, and the supply chain does not have appropriate answers at the moment. Equally, PET is short -- has been short the whole time because the capacity investments take about a year a little less, a little more, depending how and who installs. But the supply chain has been following and rushing after the demand curve. And in terms of vertical integration, I already mentioned that we took energy and acquired the business of recycling used PET bottles, drink bottles, milk bottles, clean those, flake those, granule those and create our own feedstock for our own extruders. So value chain-wise, we went a step up and a step down with kitting in the value chain. When you look at the geographic footprint, last year, we started with the kitting setup in Matamoros in South of Mexico. It's at the border to the U.S., near Brownsville. We chose that location because it's in the U.S. proximity, but it also has direct access to the Middle Americas, and it's also possible to export it to the Latin Americas. That's why we didn't go north, we kept south. We will do there also a PET extrusion line, which will come ready by late summer 2020. Those 2 activities will be co-located. So geographically, they're virtually a couple of hundred meters away from each other. And the customers are also a couple of kilometers away only, so we bring everything together. So also in the sense of optimization, we will have less transport distance. We will be reacting faster. We can recycle the waste one creates by reusing it again for new material in the other, and we will reduce working capital, because we don't have to transport stuff, and stuff on transport is also bound or tied up working capital. So from many angles, this is a new concept we try to develop or we will develop more and more for the benefit, ultimately, of cost reductions and serving our customers. So this will start in Mexico. Something similar, which is the next point in the India rollout, which is the next major area. India has been an importing market for a lot of products. We believe India now as a domestic market, as an export market as well, has reached critical mass. So Gurit is going to set up a second tooling factory next to the Chinese factory. And our global service offering we have in every continent, we have service teams. Now we go to India with a tooling plant. It's time we do it. The kitting plans in the north and the south as well as an extrusion, again, co-located is under study. So we hope to find answers during the course of this year to also start with that. So Gurit, in that sense, goals, India as a manufacturing hub in the years 2020 and following. In the aerospace, the capacity expansion in our Kassel plant to produce more, to invest in new machines, but use those best possible in a 24/7 shift pattern has also been initiated in 2019. And that merger of the Zullwil, Switzerland and Kassel plant will take place in '21 as reported, and it's going to be prepared in 2020. In terms of combined CapEx, I mentioned, we invested about CHF 24 million; thought CHF 30 million, was CHF 24 million. But combining 2019 and 2020, we'll invest about CHF 50 million to CHF 60 million as opposed to normally about CHF 30 million. So we are investing about double rate than we would normally do to address those ambitions and goals we have in organic growth. As a key business note, in terms of health and safety, we started a lost time accident rate, LTAR, reduction program. So less accidents, simply said. We want to reduce those by 50% from 1929 -- from 2019 to 2022. The details are all embedded in the sustainability report. So those data are comprised in there. In terms of the wind organic growth, which is the second bullet here, we saw a global material shortage for core materials in 2019. This will stay the same for 2020. The balsa situation was exposed. It was almost -- the shortage was almost disruptive for ourselves and our clients. We saw dramatic sourcing price increases, over 100% in 1 year, which hurt the market, which hurt us, and which is not going forward way that's why we need to increase the available capacities of that natural product. We expect the normalization of this situation earliest by late 2020, not before. We have concluded multiyear supply agreements for core material, but also with kitting. So our PET investments were backed by longer-term customer commitments, firm commitments. So if you like, so almost all of our PET investments are already confirmed by customers for several years, with full takeover commitments. The same goes for kitting. We have our own PET machine extrusion know-how with our acquisition in Volpiano we did a couple of years before. So we can design our own extruders, which we do. And we have launched a new class of extruders, which are bigger in size and more optimized. And 2 out of the 3 extrusion lines coming '19 and '20 will be of the new category, means they are bigger and more performant. So 3 extruders, we basically deploy in '19 and '20, additional extruders to our fleet. One is installed already in China. One is coming more in China and the other in Mexico as mentioned already. In terms of operation efficiency, we announced that we will merge the Zullwil site products into the Kassel site and then close the Zullwil site for efficiency reasons, and also to best -- take best use of our capital expenditures we do in Kassel, replacing aged machines with new machines and therefore, get an optimum capacity utilization in a 24/7 shift pattern rather than a 15 per week shift pattern. Materials and kitting. Co-location synergies, I elaborated on that, starting with Mexico. And the footprint expansion in Mexico and Indonesia to cover those areas better. And then also, India was mentioned, but that's a plan for 2020. Acquisitions and divestments. At the right side top, you can see pictures of bales of recycled bottles. So these are drink bottles like this. After use, packed up in bales, and those bales we buy, we clean, we flake, we granule and produce new structural core material for wind turbine blades and some other industrial applications as well, not to be forgotten. So we are vertically integrated now from the recycling collection, after the collection down to the kit for the wind turbine blade. And this position is quite unique in the whole supply chain. So this acquisition was done in Carmignano di Brenta in Northern Italy. And then, we announced that we would sell the Gurit automotive business in 2018. Have been difficult to do it. Announced that we would close it in 2020, and then still found a buyer at the end of last year, early this year, and could conclude effective 1st of February 2020, which is an event after balance sheet close. A buyer in Italy for our Hungarian automotive business, which is now sold. And we can now focus with more energy even on wind energy and others. And we are happy about that we could find the solution for the product and the people, particularly employed in Hungary. In terms of new product introductions, what's new in the lines. We have a new Spabond adhesive, which is a glue for bonding blades. Looking for customers. Product is ready. We have lamination systems which have not only good behaviors and good properties, but also have a health and safety aspect, because when you contaminate your dress, you can check with UV light where that residue is on your dress. So in terms of allergies and issues of health, those resins have a benefit because you can track actually what happened to the worker working with the lamination resin. So this is a health and safety benefit embedded in the product with UV light response. And then for the automation and tooling, we have launched a new generation of power hinges. You need those hinges. This is this blue equipment you see there. You need those to open and close the molds. So our Canadian organization has launched a new hinge, which will go live in the market in 2020. So these are the 3 most notable innovations we bring to the market. In lightweighting, in aerospace, innovation in new interior materials, railway, particularly fast trains and trains going underground, have fire, smoke toxicity requirements and we developed some product range for those applications. In Marine, it is a focus, not only on the leisure marine, but also more on the commercial marine area, with our traditional materials. And the Gurit brand by now stands for a complete suite of engineering and materials as it did and helps us to promote our offering. In the business units, I would like to keep this relatively focused. You can see on the top right of these charts, always the quarterly sales. Bottom view on the offering. The net sales for 2019, obviously, a growth by 12.8% as the chart states. ForEx adjusted, 15.2% in composite materials, which is now wind materials, marine materials and industrial materials combined. In wind energy, we had a vibrant growth. In the marine and industrial, we saw rather a flattish development or a slight decline. Mainly the industrial part saw the slight decline. But that is customer -- region-specific and should adjust to better in 2020. The key business steps 2019 are all around PET, the new extruder design, the commissioning of 1 extruder in China already, and then the multiyear core agreements with our customers. These were the rate-determining steps. In the outlook of 2020, the expansions into Mexico and China, deploying of the India strategy and raised balsa volume availability for the benefit of our customers, and actually, ourselves. So these are the major steps for 2020. In tooling, we saw a very mixed year last year, a booming first half, and then a calm out on the international customers and a swing with a delay towards the local Chinese customers. So we were capacity constrained the first half year, and then the international programs ended, and we needed to find new ground with the local customers in China and expand their strategy with certain price concessions as these markets are more competitive and could now win a hoist of local orders with local Chinese clients. And we'll see, in the first half year of 2020, a mix, which is dominantly local Chinese customers. And for the second half of 2020 a mix which is a mix between international customers and local Chinese customers. So the quarter 4 2019 marks the low end and should improve now quite steadily if the virus didn't happen, right, which basically hampered us pretty badly throughout all our Chinese operations in the month of February, and will, to a certain degree, still have impact on March. And it's hard to guide. So business outlook 2020. Set up the India plant; support the market with more automation around blade production, because if you imagine a 100-meter blade to be produced, you have a lot of material to bring, a lot of lamination steps to make, and we want to support those manufacturing processes with more automation concept. Not just the mold, but also automation concepts to help the manufacturer to produce the blade faster. So to get more blades out of the mold and, therefore, have a higher capacity efficiency in the CapEx they do. And then, as mentioned, the new power hinge generation, which is partly -- mostly used by our own molds, but also other people who have their own mold making, they buy hinges, they buy auxiliaries, and that hinge covers basically their needs as an independent mold producer or the normal producer as well as our own demands. So that offering is wider than our tooling altogether. For kitting, kitting has been a very successful acquisition in terms of growth. The growth was really dynamic. We do only consolidated as mid of October 2018, but the year-on-year growth of kitting has been quite positive and very strong. On top of it, they have to redesign a lot of plates because of the core material shortage. So that kept them really busy for the first half year, in particular, but then actually the whole year towards the second part to a lower degree. It's a very strong growth track, which is very reassuring. The key business steps. Mexico and then also -- follow the growth path we have seen over the last 3 years in that business, which was below CHF 100 million then exceeding CHF 100 million, now reaching almost CHF 200 million. The business outlook. The first co-location in Mexico to organize that well. Execute India and China kitting expansion strategies, and then get to the next manufacturing technology generation of optimizing kitting machines to make those kits faster, more precise and at lower cost. So more automation. Aerospace. Net sales of CHF 53.5 million, also high single-digit growth, which is reassuring. We have a multiyear plant renewal in Kassel, capacity expansion and the technology enhancement. And since a little bit more than a year, we run aerospace again as an own business unit, which has given it more focus than it had in the past. We announced the closure of the Zullwil plant, which takes time because we need to requalify Zullwil materials to Kassel machines with our clients. And some of our clients are very busy for many other reasons. So nobody exactly was waiting for that step. But we are hopeful to close that transfer by '21. And then a focus on new interior materials in R&D. Business outlook 2020. Continuous global growth in the commercial air transport, innovation focus, new product qualifications and complete the qualification part of the transfer, ideally until the end of 2020. If it comes later, it will be early '21. That concludes the business update, and I would like to hand over to Philippe for the financial overview.

Thank you, Rudolf. Let's look first again at sales. Rudolf has just elaborated a lot about the development in the different business units. I think I shall -- I summarize this quickly here, and I also particularly do that because I like the chart very much, how it grows. So overall, strong growth in the year of 38.5% (sic) [ 38.6% ] adjusted for currency. This is an organic growth of more than 11% for the year. And if we look at a couple of highlights by business unit. So Composite Material grew 15.2%, and this is mainly due to this strong growth in the wind market. The wind piece grew mainly due to PET, while balsa volumes remain stable but at a much higher price. Tooling, with the expected weaker second half of the year and an accelerated shift from Europe to China. And this shift resulted in some price concessions, as also Rudolf already mentioned in his part. We have experienced strong order entry growth from the Chinese market in the last couple of months of the year, and we expect tooling to grow again next year in 2020. If we look a little bit at our cost and concentration and net sales by destination, our top 10 customers account now for 70% of our business, up from 51% last year. This increase is mainly due to the acquisition of JSB, which serves the same customers. Regarding the customer concentration, it is important to note that 7 out of the top 10 customer are wind energy customers. And as the acquisition of JSB shows, these customers typically take deliveries from our business unit's materials, kitting and tooling, and this demonstrates Gurit's ability to multiple offerings for our wind customers. If you look a little bit closer to the net sales by region, you see that the Europe -- the mix of European sales has decreased year-on-year. This is not a slowdown of the European market, you see that we still grow in Europe. But that has mainly to do with the business acquisition of kitting and their mix of business. Yes, they have more in Asia and in the U.S. than traditional Gurit. And the shift of tooling towards China. Less in Europe, more in China. So Rudolf mentioned that we were able to sell the composite component business unit or the automotive piece of Gurit beginning of January. So I think it's okay now to talk about the continued business if we look at P&L a little bit more closely. So the continued business, with a strong growth of 39% adjusted for currency in the year or 10.7% on an organic basis. If you go down the P&L and you look at gross profit, you see that gross profit actually declined in the continued business by 0.5 percent points. This is mainly due to the dilution effect of kitting of about 1.6 percent points. Why is kitting dilutive to our gross profit margin? If you look at the business of kitting, they buy material from a material supplier, and they convert this material into kits by slicing or cutting these materials appropriately to put it into the mold for the customers. The material they buy, they pass through at the 0 margin to the customer. So with this passing third-party materials through to the kitting supply chain obviously dilutes the margin on the gross profit level. This dilution effect was 1.6 percent points on the gross profit margin. And excluding this dilution, the gross profit margin actually improved by 1.1 percent points. Going down the lines here. SG&A increased 16.7%, and this is mainly due to addition of the kitting business. Other operating expenses in 2019 include onetime charges for the closure of the factory in Zullwil, as announced. And it also has an increased number in there for bad debt provisions in 2019. And in 2018, if you look at the positive number, this was mainly due to a reversal of such bad debt expenses. Operating profit margin for the continued business at 11 -- at a strong 11%, in line with prior year. And here on the next slide, maybe a little walk on what's happening on our operating profit margin level. And here, I would like to highlight the mentioned before effect of material price increase. In 2019, we have experienced a significant increase in prices for balsa wood. Since most of our customer contracts include a price adjustment mechanism for fast-changing material prices, we are able to partly recover these higher costs with higher sales, partly because normally, such price adjustments come after the material price adjustment. So when you look at the material price change in this chart, this is mainly coming from balsa purchase price increases. The sales price increase is lower. You would now expect that the sales price increase goes up by the same amount, right? Because what I've just said. But unfortunately, or on the flip side, we also have a sales price decrease because tooling was shifting from Europe to China. That's why the sales price increase is not exactly the same height as the material price increase. Good. Now let's go back to the overall business, and let's focus now a little bit on the nonoperational part. And let's conclude with this on the profit and loss. So finance expense in 2019 was CHF 5 million, which is CHF 4.2 million higher than in prior year. This is due to higher interest expenses, due to the timing of the loan for the kitting acquisition and also due to higher exchange rate losses in the year. The tax rate for the year remains about at the same level and is 25.7% in 2019 versus a 25.8% in 2018. With this, we finished the year with a profit for the year of CHF 34.9 million compared to CHF 19.9 million in prior year, an increase of $15 million or 75.5%. Earnings per bearer share increased by 77% to CHF 76.06, up from CHF 42.96 in previous year. And we propose a distribution of CHF 25 per bearer shares to the AGM later this year. This is an increase of CHF 5. And we propose to distribute more than 1/3, 33.5%, of the profit to the shareholders, which is in line with our communicated dividend payout range. Let's turn the page to the balance sheet, maybe quickly. As Rudolf mentioned before, despite our strong investments in growth, CapEx, net working capital, et cetera, we were able to improve key performance indicators of the balance sheet significantly in 2019. So net debt ended at CHF 52.9 million compared to CHF 80 million in the previous year. And the equity ratio increased to 40.2% at the year-end 2019 from 33.8% in 2018. So a strong improvement of key metrics is in our balance sheet. If we look at return on net assets, one of our key performance indicators that we measure ourselves on. Then return on net assets was, this year, at 12.2%, an increase of 2.8 percent points compared to prior year. With this, we were able to demonstrate that we leverage our assets with more operating profit, and we will continue on this path going forward as we exit the auto business, and we will be more efficient in aero with these programs that has been described to you on previous pages. So let me quickly turn to cash flow. A very nice story on free cash flow with CHF 42.1 million this year, an improvement of CHF 36.8 million compared to prior year. I think 3 key contributors -- or 2 key contributors to that. Of course, obviously, the higher profitability this year. But also, if you look at the change in working capital number, a nice improvement compared to prior year. Although, I know that you're going to, in detail, look at the cash flow and the annual report, you also see a swing in the trade accounts receivables. We had some quite big amounts that were paid late last year. And that, of course, is a little bit of a seasonality effect coming into this number. This allowed us to still invest heavily in property, plant and equipment. Our CapEx number is CHF 10 million higher than last year. And still, as said, our free cash flow increased significantly compared to prior year. I talked about net working capital and about CapEx. So based on the wind energy market's inherent long payment terms and complex supply chain of some of our businesses, the net working capital must be a continued focus area in our business. Hence, we are very happy to report that we are again able to improve net working capital in percent of sales this year by 3.3 percentage points. And this is a very strong result given our high growth rate. If you look at the number closely, the reduction also includes 0.9 percent points due to receivables factoring, where we sell receivables to outside parties. CapEx for 2019 increased, mainly due to the acquisition of kitting, and was mainly dedicated to acquire core material production equipment for PET as well as the new kitting facility in Mexico. Rudolf showed you the number. Gurit undertakes a significant CapEx program to increase its PET extrusion and enlarge its footprint, and we expect CapEx to be high also next year. With this very nice financial numbers and results in 2019, I hand over to Rudolf to guide you a little bit into the next year.

Thank you, Philippe. Now summary-wise, I think it's fair to say that we scored pretty nicely on growth and financial results. So we are okay about that 2019. The wind energy focus is helping us to gain the profile we, long-term, need. We have a good market development ahead of us. And actually, a very strong demand for our core materials in a market which is going to 76-ish gigawatt for 2020. And we are working intensely on our global footprint, continental supply for continental demand, less shipments, I mentioned it all. And then also the capacity expansion to solidify our market position in that wind market, but also in others like the aerospace. Now the outlook 2020 is a little bit of a tricky thing, given the environment we are having and seeing, and not exactly knowing how long and how deep it will hurt. It is clear that it will hurt. The question is how long and how much. We have tried to give a little bit light into the dark, and we have made there an asterisk and saying, these numbers and this guidance includes a moderate coronavirus impact. Now what is a moderate one? We are strong in China. We have a tooling operation there. We have kitting operations there. We have extrusion machines there. So clearly, the month of February was not good for us at all. We could produce at low levels. In most of the 4 factories, 1 factory was virtually down. We are coming back. Some of our customers are coming back. The 10th of February was an important date. But I would say the most part of the February will be heavily impacted by that situation in China. So therefore, we had expected to give a guidance, a notch above the CHF 600 million range. But given what we see at the moment, we say the growth we have in organic growth, which, if you compare it without the automotive, was CHF 558 million last year, should grow to about CHF 600 million, around CHF 600 million is what we are targeting. Not exactly CHF 600 million sharp, but around CHF 600 million, a little less, a little more. And in terms of the guidance range on operating profit, for many years now, we had 8% to 10%. So actually, we wanted to increase it from 9% to 11%, instead of 8% to 10%, 9% to 11%. But given what we have seen and are seeing now, we give a guidance range of 8.5% to 11%. Now you could say the continued business, as Philippe just elaborated before, was 11% last year and the year before. So why 8.5% to 11%? We see, obviously, the tool -- the automotive business is obviously excluded when we are talking about the continued business, so the 11% is the range. We see, however, that this impasse in China in the month of February will have an impact on our profitability. That is clear. So that will cost us maybe a percentage of margin altogether, maybe a little more, we don't really know. And it's not over. And it's not clear whether we will have other impacts in other regions. And how much? And how long? On the other hand, we have also slight price decreases. As we mentioned, in tooling, we go strongly after the local Chinese market as well. That trades at lower margins in average. So there's a little impact there. And there is still an impact on the balsa side that we have not reached our normal line of profitability we normally expect due to the erratic supply chain and the difficulties in supplying in time at that place of our customers. So this is basically -- without this coronavirus impact, et cetera, we will be in shooting range a little on the high side of that guidance. Now we are probably expecting somewhere in the middle of that 8.5% and 11%. But it's really a field of uncertainty at the moment. So therefore, please bear with us. And that -- with that message, I would like to close the presentation here and go over to the Q&A. I would like to thank everybody for listening, and I would now be open for questions.