Heidelberger Druckmaschinen Aktiengesellschaft (HDD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Together with our Chief Financial Officer, Marcus Wassenberg, I would like to welcome you to the Annual Press Conference of Heidelberger Druckmaschinen AG. Thank you for taking the time to participate in this webcast today. In normal times, we're looking forward to meeting you in person at this point to present the balance sheet. Due to the current situation, we are unfortunately unable to do so, but I think the whole world is now enjoying the benefits of virtual communication, which also has a positive ecological effect. Nevertheless, the personal conversation with you remains extremely important. So we'll certainly invite you to visit us again in the future. Following our remarks today, there will, as always, be enough room for questions, and we look forward to a lively discussion with you. Today, we will be taking a look at the past financial year and what lies ahead. Alongside the figures for the past financial year, we will also report on our progress in implementing our action package and tell you about the key milestones we have already reached. We will also talk about Heidelberg's realignment, which represents the most extensive reorganization in our company's recent history, and our strategy for the future. However, let me first give you an assessment of the past fiscal year and tell you where we're currently standing. First of all, for us, the 2019, 2020 financial year was the year of clarity and consequences. In November, we started work on one of the biggest transformation programs in Heidelberg's recent history. We analyzed relentlessly and took radical decisions such as separating of long-standing loss makers, even if they are technological leaders or cutting our management more than half. There was no mention of corona then. We had set the course to make Heidelberg's healthy core even better and stronger and to lay the foundation for the future growth. Our focus is clear: profitability, competitiveness and securing the future. We are well on track with our program. We are already benefiting from the first effects. More on this in detail later. But it's also clear that the COVID-19 pandemic has left its mark on the balance sheet for the past financial year. And has had a strong impact on our fourth quarter, in particular in the months January through March of this year in operational terms. And it presents us with major challenges in the current fiscal year. Our realignment program is not the answer to corona. We have set all the important points in advance. Our program is fundamentally repositioning us, in a sense, it's a medium distance race. We have started this medium distance race at high speed. We can do it because we now have the fitness race. Not least because of the financial stabilization of Heidelberg, which we informed you about in March. Indeed, Heidelberg is in a more stable position today than it has been for many years. What was right before the crisis is even more right in the crisis. That's why we are not only maintaining the pace of transformation, but also increasing our efforts with additional short-term crisis management measures because corona turned our medium distance race in a 3,000 meter obstacle course, so to speak in limited visible conditions. This makes a forecast for the current fiscal year even more difficult. But we are confident that Heidelberg will come through the year in a stable manner. We are already seeing a rapid recovery in print volume in China, our largest single market. Other markets are also showing the first signs of recovery in print shop capacity utilization. The decisive factor now will be how our customers translate this into investments. But for us, it's also very central. We rebuild, but we don't just deal with ourselves. Our focus is clearly on our customers, especially in this time of crisis. Our customers are also feeling the effect of the pandemic, whether through postponed print jobs, more difficult customer contact, or due to hygiene requirements or the availability of lesser operating resources. We have launched a comprehensive program to continue providing our customers with a 360-degree support during -- in the COVID-19 pandemic. Tagged #We4You, we are also offering digital solutions that enable customers to keep doing business successfully. What are we doing specifically? Heidelberg keeps customers up to speed on key market developments from a data pool of around 5,000 connected presses worldwide with its print media industry climate report, helping them to keep going through this crisis. This includes analysis of the current print volume in specific market segments and countries. Since we are early to connect our presses to the cloud, we are able to help customers optimally monitor press status, track processes and thus enhance the overall print shop performance. Packaging printers, in particular, are considered to be systematically relevant during the crisis and had to cope with increasing print volumes during this period. This is where Heidelberg helps to ensure smooth and reliable production. The backbone of this network, the Heidelberg cloud now holds data from a total of over 13,000 press installations worldwide. During the crisis, our customers can rely on first-hand expertise, including free training videos provided by Heidelberg U.S. on our Connect platform. Live from our print media center, we provide customers remote demonstrations of our printing and finishing equipment. This service lets people experience our machines up close and interact with our experts from the comfort and safety of home. Our rapid response to the new challenges raised by the pandemic was only possible because we did our homework on digitation and networking as well in advance as digitization pioneer Heidelberg supports customers at all levels, offers innovative solutions and help them better to navigate the crisis. I'm particularly proud of the commitment and dedication shown by our employees who, despite these difficult times do their utmost to assist and advise our customers day in and day out. I will now hand over to my CFO, Marcus Wassenberg, who will present our key financial figures. Marcus, please.

Thanks, Rainer. And once again, thank you, everybody, for joining our webcast today. Rainer just mentioned it, the economic impact of the COVID-19 pandemic is just massive. And that was clearly felt in the first calendar quarter. The majority of our companies still expect the business situation to deteriorate. And for the entire industry, it is basically operating in a historically difficult environment. The factors of the print media industry have always been -- also been hit in different ways by the effects of the global shutdown. And more on that in just a moment. As you all know, actually, since the beginning of our financial year in April 2019, Central Europe has been experiencing an economic slowdown. That can be seen, for example, in our biggest European market, Germany. However, up to 3 quarters of our financial year, we were still able to report sales for the group as a whole at the previous year levels, basically because the weakness of European markets was offset by the growth in China and strong business in the U.S. But as you all know, our financial year differs from the calendar year. What basically happened in the first quarter of the calendar year 2020 impacted our fourth quarter. And that is traditionally our strongest period during which we generate very large proportion of the sales with a corresponding effect on earnings. So the traditional year-end rally that we do on quarter 4 was brought to an abrupt end by COVID-19. As we can see in the graph, the COVID-19 pandemic caused sales to fall below prior year level, in our growth markets, China, which, as you know, basically was hit first by the virus. So here, the decline begins that basically then continues a little bit later in the U.S. As a result, order intake was significantly lower than previous year. It amounted to around about EUR 2.36 billion. At the end of the financial year, order backlog was at EUR 612 million. Basically, the impact of the crisis can be seen in most of the important metrics in this overview. Sales were down by around about EUR 140 million or almost 6%, basically exclusively due to the decline of last quarter. EBITDA margin, excluding the effect of restructuring was negatively impacted by a significantly lower-than-expected sales volume. The shortfall in contribution margins as well as a product mix that was less favorable. And the negative impact to -- that was caused by inventory write-offs and the EBITDA margin reached to just 4.3%. Basically, last year, it was 7.2%. I will look at this again in more detail later on. EBIT, excluding the restructuring effects, was only slightly positive as compared to previous year, where it was like EUR 100 million. Restructuring result of minus EUR 275 million is caused by the pre-announced expenses associated with the realignment action package. And we estimated, as you know, total cost of EUR 300 million, most of which actually we were able to account for in the past financial year. However, there will be some expensive -- expenses that will be coming in this financial year, the new financial year mostly caused by restructuring for a job cuts up road. With 1/3 of the EUR 300 million actually is basically noncash depreciation, amortization and valuation adjustments, while the remaining portion of 2/3 was set aside for recognizing the planned job costs and discontinuation of 2 product class. As we expected earnings before and after taxes were well into the negative territory, in line with this high expense item, but actually due to -- and also due to the slump in sales in the final quarter. Free cash flow developed very positively as a result of the return transfer of liquidity reserve from trust assets to the company already communicated. Excluding this extraordinary cash inflow of around EUR 325 million, there would be a negative cash flow of around EUR 100 million for the full year. The projected outflow for the year was just half of this amount. But here again, to the lower sales recorded in the last quarter, that basically resulted in a lower cash inflow, and that led to a sharp deterioration of that figure. The good news is that the inflow of funds significantly reduced the leverage ratio, which now is at the level of 0.4. This is a solid figure that gives us room to maneuver, especially in these economically uncertain times. I'd like to briefly return to the development of our operating profit measured by EBITDA and talk about the most significant effects behind the sharp decline. Lower volumes, without doubt, had the greatest impact, leading to a shortfall in contribution margins and also to capacity underutilization. As part of our portfolio streamlining, we decided to discontinue the Primefire and large-format product lines, which generated substantial losses in recent years. That led obviously to a write-down in inventories. Due to the uncertainty caused by COVID-19, we have also increased our risk provisioning. Other effects such as wage increases and the lower level of relief from capitalized development costs, likewise, had a negative impact on profitability. In addition to a balance sheet effect from the first-time application of IFRS 16, the exceptional income from the sale of high-tech coatings of around EUR 25 million had a positive impact. In total, these effects reduced EBITDA from EUR 180 million to round about EUR 102 million. If we now turn to the balance sheet. On the asset side, we can see a significant increase in noncurrent assets. That is primarily attributable to the initial application of the new revaluation method for properties accounted for under IFRS 16, which is around about EUR 170 million. And the initial application of IFRS 16, which accounts for EUR 50 million. As expected, equity decreased despite application of the revaluation method to fixed assets by around EUR 130 million compared with March 31, 2019, reporting to date to approximately EUR 200 million. This is due to both the planned restructuring expenses and the reduced discount rate of 1.8% for German pension as of the reporting date. Equity ratio is around about 8%. Pension provision increased sharply to EUR 986 million since offsetting against trust assets of the pension fund was no longer possible. This has led to an increase in total assets and liabilities because the corresponding item of the asset side prevents the higher liquidity position. Obligation to retirees and employees have not changed in substance. As a result of the inflow of capital from trust assets, net debt decreased significantly to a current level of around about EUR 43 million. A few more details on this very shortly. If we look now at the cash flow statement, cash used in operating activities was around about EUR 54 million minus at the reporting date. Prior year, it was like minus EUR 11 million after adjusting the result after taxes for noncash items, such as impairments, depreciation, amortization and provision. Delivery delays due to COVID-19 pandemic led to an increase in inventories. However, this effect is more than offset by write-offs resulting from the portfolio streamlining. In total, there was, therefore, a net cash inflow from net working capital. I have already talked about the capital inflow from trust assets. This was recorded under investments. Overall, this has led to a positive free cash flow, which considerably strengthens our liquidity provision and is helpful to us in the current global crisis. If we look now at net debt in detail, you can see that it traditionally rises during the course of the year and declines at the end of the year. Basically, this reflects our traditional sales trend during the financial year. Beginning of the year, we do the preliminary work and produce the machines in the second half of the year, sales and earnings increased significantly. The past year, the general debt level was up on the previous year due to the higher net working capital and the first-time application of IFRS 16 accounting standard. Previous year's figures have not been adjusted, so they are not entirely comparable. The higher net working capital, the impact of IFRS 16, the slump in sales in the fourth quarter, nonetheless, in debt would significantly be higher than in the previous year. However, net financial debt was reduced to a lower level as a result of the capital inflow. At times of crisis, it's crucial to have a stable and sufficiently large financing framework, with well diversified instruments of maturities. We have achieved this. The total financing volume of round about EUR 590 million combined with low net debt, gives us a solid foundation for getting through this crisis. At the same time, we're using the available liquidity to further optimize our business still planning to redeem the high yield bond ahead of schedule probably before the end of the current financial year, step-by-step or in the whole. The revolving credit facility, which is only around 1/3 drawn in cash has been reduced from EUR 320 million to EUR 270 million. This sales commitment fees. As expected, the majority of investors exercised the put option for the convertible bond at the end of March with around EUR 70 million on -- of the bond to remain in place until final maturity. And with that, I'd like to give it back to Rainer.

Thank you, Marcus. We'll now turn our attention to the future. Although we are currently still in the midst of the pandemic, signs of several interesting trends are already becoming apparent from what is happening in different markets and sectors. Let's first look at the packaging printing. This segment has remained relatively stable throughout the crisis and may even record year-on-year growth. Look, at how the road map is shaded on slide. This shows productivity levels in the packaging printing sector in week 12 of this year, the very week in which the crisis peaked. We can see that corona actually boosted business there. This is certainly due to the fact that this segment is highly important during times of crisis. Printing packaging for goods, for food, for medicines, for instance, helped to keep the whole system going. This looks a little different in the commercial printing segment. Even more was printed in the segment at the beginning of the year than in the previous year. The spread of the pandemic and global lockdown measures have led to a significant slump in the segment's business compared with the previous year. At the height of the pandemic, commercial printing volumes declined by almost 40%. Although we have since seen a slight recovery, we are still a long way from the precrisis level. Fortunately, the recovery in this market segment is continuing. However, we've seen a growth recovery across our business in all segments in China. The market there was hit by the pandemic at the very early stage. This market shows that demand for print products is picking up again. As the infection rate declines, economy starts up again. In China, we can see that production volumes in both the commercial and packaging printer segments are now higher than in the prior year. While this market is certainly not representative of all other markets, the indicators give us and our customers cause to be cautiously optimistic for the months ahead. The economic impact of global COVID-19 pandemic has made itself clearly felt in the first calendar quarter. GDP data for Q1 have already revealed substantial economic downturns in some countries. This negative Q1 data are first indications of the decline to be expected in the current financial year. Despite first steps to ease the lockdown in many countries, coupled with extensive monetary and fiscal policy measures, the global economy is likely to shrink by more than 4% this year. The pandemic also impacted machine engineering in the first calendar quarter of 2020. Germany's machine and plant engineering sector saw orders intake decline by 31%, the sharpest drop since the financial crisis. We also expect a decline in our revenue in the first quarter of the financial year of this magnitude. We then expect an improvement already in the following quarter. But the sales volume in the first half of our fiscal year will nevertheless be significantly lower than last year. We are currently reducing cost-related burdens, mainly through massive short time work across all areas. We are also working on accounting effects. And I will now hand over to Marcus, who will present you the outlook for the new financial year in numbers.

Thanks, Rainer. In the current operating environment dominated by the corona pandemic, it's not yet possible to be more precise as to onward markets in the industry. There are, however, a number of positive signs, as I mentioned, unique digital connectivity of its installed machine base gives Heidelberg excellent stability with regard to printers' capacity utilization as a reliable indicator of economic activity in each market. And thus, these data clearly show business in China, Heidelberg's biggest single market, is picking up again and has already surpassed the prior year level. Other markets are likewise already showing initial signs of recovery in print volumes, thus giving cause for cautious optimism looking ahead to the second half of the financial year. There nevertheless remains considerable uncertainty with regard to the economic environment. All in all, on the basis of a difficult first half-year, we expect sales to be significantly down from prior year. Anticipated fall in sales due to the COVID-19 pandemic will also have a market negative impact on the EBITDA margin due to lower volume. However, we expect earnings to be improved by savings by the action package, accounting measures and temporary relief from more flexible working hours and short term working. The overall target is to deliver an EBITDA margin, excluding the effects of restructuring, that is at least on a level with prior year despite the lower sales. Based on the sales forecast, Heidelberg expects the net result after taxes for financial year 2020, 2021 to be significantly improved on the prior year but still well into the negative range. In the medium to long term, Heidelberg believes that the comprehensive action package will help sustainably improve the company's profitability and financing capability for future growth. And this brings me to the implementation status of the package of measures. COVID-19 pandemic once again highlights the need for our stability program. We're working consistently step by step to implement the realignment announced in March. Our goal is to safeguard our technological leadership and expanded by way of a clear digitization drive. At the same time, we place profitability at the heart of our activities, consistently and across all levels and segments of the company. This will ultimately help us to build financial resilience. To this end, we have defined 3 key points: one, to achieve significant financial stability, focus on our core business and systematically implement the measures that have been decided. Where do we stand in respect to the targets that we set for ourselves? During the financial year that just ended, Heidelberg significantly reduced net debt with an approximately EUR 380 million return transferred to the company from assets of the Heidelberg Pension-Trust. At the end of 2019, 2020 financial year, net debt stood at EUR 43 million leverage. The ratio of net debt to EBITDA, excluding the effects of restructuring, it was also low at 0.4. Heidelberg has thus stabilized financially to a major degree despite the historic challenges in the economic environment. Heidelberg also continues to press ahead with what is the most comprehensive restructuring in its recent history. Working in close cooperation with the Workers Council, the company has already agreed on a comprehensive and mostly socially acceptable solution for implementing the necessary restructuring, and the related reduction in force by around about 1,600 jobs worldwide. We have said that we are reviewing all levels of the company, and we consistently adapt our structures to meet the needs of the business. Of course, this also applies to the management part. In the past financial year. However, we not only reduced the size of the management board, but also flattened the management hierarchy and streamlined processes. This makes us more agile, more efficient and more responsive now and in the future. We developed a new customer-oriented operating model in a very short time and launched at June 1. Looking ahead, Heidelberg will focus consistently on its profitable core business. To defend, the decision was taken to close loss-making activities. This decision will be implemented by the end of the year. In total, we aim to improve profitability by some EUR 100 million. We have also pushed ahead with the restructuring of a production network, that will enhance our competitiveness. We have already initiated some measures. We reallocated our protection activities from our subsidiary Gallus in Switzerland to Germany. We will develop Wiesloch into a major future location for high-end products. In the future, we intend to produce standard models more in China. We will soon establish the planned joint venture with MK Masterworks for past production in China. And last but not least, we will continue to focus on growth technology. In Wiesloch, we are working to start mass production of printed organic electronics. We feel the electronics we developed and produce custom-made control in power electronics. In the field of electromobility, Heidelberg is now one of the major suppliers in this area with over 150,000 supply charging cables and more than 30,000 manufactured OEM wallboxes. Since June 2018, we have also been offering our own Wallbox Home Eco, which has already been delivered 5,000x to private customers. In line with our focus, we are planning to spin off this area in order to be able to develop it further independently. Let's now take a look at the financial impact of measures we have adopted. The logical consequence of Heidelberg's realignment was to exit on profitable activities Primefire 106 and the large-format products. Both product lines were unable to cover the capital expenditures and simply did not earn enough money. However, the exit from an unprofitable business is just one step along path to profitability. In order to avoid losses in the long run, we have also made sustainable adjustments to our production cost and structural cost as part of our realignment program. Reduction in force was in -- was very important in this context. While it was a difficult decision for us to make, it is necessary if we are to put our company back into the path of success. We expect that eliminating losses from our unprofitable products will improve earnings by around EUR 50 million, with structural cost reductions contributing a further EUR 50 million. This would result in an EBITDA improvement of around EUR 100 million. And with that, I'd like to hand it back to Rainer.

Thank you, Marcus. Despite all the restructuring activities, one thing remains clear, we continue to generate significant added value for our customers. We see this as both a duty and an obligation. Printing remains our core business. We support our customers in packaging and label printing as well as in the commercial segment at every link in the process chain from quotation to invoice. This means the entire value chain of our customers. Quotations are tailored to meet each customer's individual needs. There are basically 2 different models. Heidelberg's transaction is used for customized individual solutions, while Heidelberg subscription covers all stages of production on a volume basis in the form of a production system. Whereas in the past it was perhaps enough to optimize the mechanics of the printing process, today, printing must be able to do more. Just as you focus on gadgets' connectivity and latest assistance systems as well as horsepower and fuel consumption in the car, our customers are interested in additional digital offerings for the printing process today. Printing has to be smart, and Heidelberg offers exactly that. We are digitizing printing with our Smart Print Shop. This product thus forms the backbone of our digital solutions. Smart Print Shops -- Smart Print Shop represents the continued digitization of all processes with a clear focus on an operator independent performance. With this product, we are closing automation gaps, offering intelligent assistance, exploiting the potential of artificial intelligence and enabling our customers to learn from digital data. One thing is clear, the digitization of processes will be consistently continue with a focus on operated independent performance, closing automation gaps, developing intelligent assistance, digital process integration and use of digital data and last but not least, utilization of the potential of artificial intelligence. We know that our customers naturally have very different needs. In response, we offer 4 different packages to give our customers a range of coordinated products and services from a single source. Both our Lifecycle offerings, where payment is based on a monthly service utilization and our subscription model where payment is made per printed sheet, let our customers choose between 2 equipment lines, Smart and Plus. Our smallest package Lifecycle Smart comprises services and consumables tailored specifically to each customer needs. Adding our Prinect integrated print and media workflow results in the Lifecycle Plus contract. Prinect links all areas of the print shop into one intelligent production unit. This automates workflows and make steps more transparent, ultimately optimizing the printing processes. In addition to the Lifecycle agreements, the subscription smart package includes consulting and training. These are tailored to meet each customer's individual needs. In these models, the press is not part of the contract. The customer buys the press separately or concludes the contract to cover an existing press. In addition to all the benefits already mentioned, the subscription Plus model provides the customers with the press, the cost of which is included in the price per sheet. These contract months let us tailor our offers precisely to the customers' varying needs, thus fostering long-term business relationship with them. The goal is to continuously increase the share of the contract business in total sales and thus stabilize sales and minimize the volatility of the machinery business. It is probably no secret that today's major growth markets are no longer in Europe. Instead, another region is becoming increasingly important, Asia with a focus on China, in particular. Despite the impact of the coronavirus pandemic that reached China before it did us, we increased order intake in the Asia Pacific region to EUR 683 million. This is quite remarkable in the period of global crisis. Orders from China were the main drivers of this development, and Heidelberg is strongly positioned there. We already have around 850 employees in sales, service and production at our Chinese location, and we enjoy a market share of more than 50% in China. In the future, we will expand the team in China to more than 1,000 employees and certainly grow our market share even beyond those 50%. At the same time, we will, of course, align the product portfolio we manufacture there with the requirements of the Asian market. Our focus is primarily on packaging printing, which will also continue to gain relevance in China and Asia. And it is no coincidence that the packaging printing sector is becoming increasingly important. The packaging market is an essential service for key industries, such as food and health, particularly in these times of COVID-19. Plus, we only need to look at our own consumer behavior at this time. Most of us have been ordering more online because of the lockdown. Here, too, packaging is playing an increasingly important role. Heidelberg is already the largest supplier to packaging printers. In the '19/'20 financial year, half of our sheet fed offset presses. Sales were generated at this segment. We sell as many presses just for the packaging market as our largest competitor sell presses of our kind in total. We also entered into a long-term partnership with strong partners. With MK Masterwork, for example, we supplement our range of products in packaging printing with highly attractive and competitive processing -- post-processing machines. One thing is absolutely clear, we cannot and will not rest on our laurels in the packaging, printing segment and our successes in China. We are serious about our realignment, even though it is certainly painful in some areas. The times where Heidelberg size was the advantage are gone. Our primary goal is to become faster and more agile. That's why we are transforming from a corporate group into a large company with middle stand behavior. We do not see this as a backward step, just the opposite. It's a step towards achieving flexibility and agility, which will ultimately benefit our customers and with that ourselves. To this end, we are streamlining ourselves at all levels and systematically gearing our structures and processes related to the needs of our customers. A comprehensive internal change project is already in full swing. And this affects all of us, including the management board, which we have already reduced in size as part of this process. Being streamlined, we will achieve our goals step by step. And that means, first and foremost, that we are not seeking to achieve size and growth at any price, but a clear focus on profitability. We are thus paving the way to benefiting from a market recovery throughout realignment. At the same time, we'll also do everything we can to restore the trust lost on the capital markets and in the public eye. Our goal is clear. By implementing the realignment, we will be making Heidelberg weather proof and consistently increasing our profitability. The supervisory board, the financing banks, the works council and the trade union fully support the course. And they are convinced that it will be successful. Our management team is driving the program forward with determination. At Heidelberg, a sense of new beginnings can be felt at many points, and that has not always been the case in the past. All those involved are united by one insight. Heidelberg does the right things without taboos. Based on a strong core business, Heidelberg is setting itself up for sustained profitability and has a bright future. We are doing our business solidly and prudently and will focus on what makes our customers strong and what we can earn good money with. And as a full service provider, we are and will remain a strong partner at our customers' side. The financial stability we have achieved by largely eliminating our net debt puts us in a good position even in the current crisis to take advantage of any future upturn. And I said it, the Chinese market gives us reasons to be optimistic that this is going to happen soon. We are confident that the positive signs in our most important single markets are an indicator of future developments for our company. We are making every effort to benefit from the growth dynamic in China and the Asian region. But at the same time, we are also doing everything in our power to expand Germany increasingly as a production location for high-end solutions. To put it clearly, we stand by Germany as a business location and above all by our headquarters. We stand for good jobs here, which you want to secure in the long term, even if we now have to reduce staff as agreed with the Workers Council. Heidelberg does not stand on our machines without a reason because this is where the power lies for innovation and productivity of the entire printing industry. Ladies and gentlemen, thank you for listening. We now look forward to your questions.

We will now take our first question.

Sebastian Kaufmann from Tresidor. Two questions from my side. One is, can you give us an idea where current cash balances and liquidity stance, maybe by the end of May, what you have seen so far? And then the second question with regards to your repaying the bond. I think in the call in March, you mentioned that you would -- that you think you will repay them by the end of the calendar year. Now you have -- now you said by the end of the financial year and you used the word probably. Can you give us some idea of what determines the timing? And how you're thinking about this in general?

So first of all, basically, we have just utilized 1/3 of the credit line. So that -- to your first question. Secondly, when it comes to the high yield. Yes, you're right. Basically, we thought about the calendar year, now we're thinking it's the financial year because we have to manage the crisis first. So we're concentrating on that firstly. And then we think about how we -- how the procedure will be for repaying the bond. The target still remains that we're going to pay the bond back in this financial year, and we'll see how we do that. But right now, we have to manage the crisis, and that's more important to us.

Understood. And if I just -- a quick follow-up on the first question. Yes, you mentioned you only use 1/3 of the credit lines. Just -- is there some opportunity for you to tell us where the cash balances are now into the new fiscal year?

So basically, you're referring to some sort of cash burn. Well, I wish I could tell you, basically, what we see right now is we have months that basically burn some cash. Actually, we have a month last month that we generated cash on. So it's going up and down. Right now, basically, we have like EUR 300 million free cash available to us. And as I said, we made some cash in May, lost some cash in April. So it's going back and forth. So I would just not say that's consistent cash burn.

[Operator Instructions] We will now take our next question.

I have a question. Okay. Eggert Kuls from Warburg Research. So I have a question regarding your earnings guidance. So this 4.3% adjusted EBITDA margin. So I guess, when assuming that you will at least in the first half of the year, see a significant decline in the top line, it's hard to believe that this 4.3% margin is certainly due to the organic business. So my question is, is in this figure already included some positive onetime impact from asset management or from other things? And if yes, in which amount?

I'm a bit uncertain whether I got you right. So maybe you need to help me out again. And I think, basically, what will happen in quarter 1 will we -- we'll see a decline in revenues of around about 30%. That's the first thing. We have no idea how this continues. We see some uplift in China. We have some moderate optimism when it comes to Europe and the U.S.A., but still, it's much too early to say how sales sort of will develop. So that will lead to a negative result in the current year. When it comes to the last year, basically, you referred, I think, to the 4.3% in EBITDA, which was basically the actual figure. And that basically was driven by -- that was driven by a lot of things, basically -- mostly, actually, it was driven by the sale of the coating activity, which was some EUR 25 million. And then we actually had some effects by the accounting for pensions. But basically, that went into the wrong direction, gave us a small hit of, I think, around about EUR 30 million. There was not a lot of basic, how can I say, engineering that was going on there. So...

But I refer to your outlook for the current year, so...

Yes, that was basically what I was getting at. So if you're referring to the outlook, then I would say there that -- within a 3-year period, we're looking into savings of EUR 100 million, 1/3 of which I hope to see -- or we hope to see in the financial year of '21. And obviously, there will be elements of short-term work. There will be some asset yields. Yes, mostly property in possibly Switzerland around Wiesloch, but too early to look into that, and then we're negotiating the increase of pensions here, mostly in Germany. And again, there will be an effect from that, but it's too early to say when we're finished with that. Hopefully, by this quarter, but it's too early to say because we're still in negotiation. That will be the main drivers actually to sort of stabilize the EBITDA margin.

Okay. So I can understand that you cannot look above the first quarter in terms of sales. But I was a little bit surprised to see that you are so precise with regard to the EBITDA margin for the full year. So anyway, maybe you can also comment a little bit what you expect for the free cash flow for the current year. So you have a significant cash out from restructuring this year. So when excluding that, what do you expect for the operating business? Do you think you will again have a significant positive impact from working capital reduction? Or what is your expectation here?

So I would say if everything goes sort of how we anticipate things to develop, then I would say, up to EUR 50 million minus. But then again, it depends on a lot of measures, as you say, net working capital, asset yields and restructuring. But on the other hand, as well on revenue. So it's a bit difficult to answer all those questions, not knowing where your revenue line is sort of developing. But actually, if things move according to plan, I would say we're around that ballpark figure, thinking that maybe the first half year will be hit, and then we will go slowly into recovery.

And this up to minus EUR 50 million is already including cash out from restructuring?

Yes.

Okay. So adjusted for restructuring, you are expecting a clearly positive free cash flow, yes?

Because of asset deals, you know. So therefore, they're leaving maybe a positive signal, but let's be careful. Let's be careful about it. It depends on when this amount comes. The M&A market right now is not really booming, I would say. So therefore, we have to be careful on what we expect. But I'd say, including restructuring, it's going to be the EUR 50 million, excluding restructuring, it might be slightly positive.

So when you say you're expecting up to minus EUR 50 million in free cash flow. So this is including the cash out from restructuring, but it's also including expected cash inflow from asset management things and so on? And yes, can you give us a feeling about the amount? Is it -- the restructuring cash out, is that in the same amount than the asset management inflow? Or what do you calculate here?

There are elements of net working capital management, elements of divestments, so it's pretty hard to say. I would think it would be difficult to give you all the elements here. So basically, I'd say, let's stick to the minus EUR 50 million and just wait. It's really, really too complex.

We will now take our next question. Please go ahead.

Sorry, we can't hear any questions.

Hello, please go ahead.

Sorry. Do you hear me now?

Yes.

Yes.

Yes, got it. Richard Schramm speaking from HSBC. I'm just following up on the question from my colleague on the operating leverage in the current year. I mean if we take your guidance of a significant decline in sales, which I would assume is then for the full year a pretty good double-digit number we should expect here, and you aim at the same time at a fairly stable or at least stable adjusted EBITDA margin. This would suggest that you do not at all have a negative operating leverage here, which I think is a pretty wonder in these times because usually, companies do have clearly a negative operating leverage when sales go down. So how you think you can really withstand this even -- especially as you said that only 1/3 of the cost savings of the EUR 100 million will be realized in the current year, which is not of such a big help here, I think.

Well, again, we think like we will benefit from 1/3 of the savings. That's one effect. Secondly, there is a huge potential from divestments that we see. And the operating leverage will be round about 30%. So therefore, we feel like that with short-term work will sort of -- yes, short-term work will be sort of, how can I put this, compensate for those effects. And this is what we see right now.

So you would assume that you get a full compensation if for short time work you do not add to the minimum of 60%, which is coming from government. Or do you give an additional amount to this to add it up to 70% or 80% net [ from what I'm seeing ]?

It used to be 60% and then we sort of increased it to 80%, but now it's 80% anyways from the government. So right now, that's not giving us a big hit.

Okay. Then second question I have concerning the product mix. You mentioned I see the point that by sorting out products, which are loss-making anyhow that you can improve it. On the other hand, you said that China is a very important market and might become even more important for you. But we know that China is also markets where not the highest margins machines are sold, put it that way, but that the customers there looks more for the more expensive and lower tech machines. How can you fight this trend here that your product mix will really improve from this side and that you are not hit by negative effects from this?

Mr. Schramm, Rainer Hundsdorfer. We are increasing the share of sales in China with machines made in China, in Qingpu, and that's a very profitable business because we also have significantly lower costs in those machines. We are expanding the portfolio in China since quite some time and increasing it right now to even more complex packaging machines, which help us to overall increase the profitability of the Chinese business. So we are already reaching a level of round about 80% what we sell in equipment in China, made in China, and this is probably even growing beyond that because we are able to offer more and more out of Chinese production for the Chinese needs. And that has led, first of all, to this, I think, incredible market share of more than 50%, with the potential to grow even beyond 50%. And second, it's step-by-step increasing also the profitability of that business.

Okay. And my last question would be on the other markets. I mean China, of course, is of help at the moment. But at the end of the day, your core market is still Europe and I think the situation is still pretty poor. What's your assessment here of the current environment in the European markets? Are there any signs of at least a stabilization or is it still on the downturn?

I think we hit the bottom already. We see some recovery. We see some light at the end of the tunnel. So we have started receiving some orders already in Europe, in North America. And that's, of course, also driven by the fact that packaging is not really hit as badly, just the opposite during the peak of the virus pandemic. Some of our even European packaging customers even had a boom very much driven that if all the restaurants and canteens are closed, noodles, for example, need to be packed in household dimensions, not in large 10-kilo or 20-kilo packaging for the commercial consumption, but for the household consumption. So the noodles are packed from a company like Barilla or whatever, in 250-gram packages, and these are carton -- fold carton boxes made by our customers. Same applies for the pharma industry and other areas where we see -- where we have seen some growing demand, and there, we even have received some orders out of those markets. Even during the peak of corona, there is some business to be made. For commercial printing, I guess it will take a bit longer because they're still below -- significantly below today's -- the pre-corona level. But there is some business coming back and you see that all over the place. Now Asia, outside of China is also doing better than most parts of it. So if you look, Japan or Korea wasn't as badly affected in the business. They didn't have really lockdown. And even the governments, they are also pushing for some subsidies, which will also push some business. So we see some slight recovery already, driven by packaging and label. And I also think here and there, we'll see also the commercial business coming back. And I'd like to remind that a significant part of our business is packaging and that Heidelberg, even it's sometimes commented different, is the largest supplier of printing package to the packaging industry. And I said it in my presentation, most people don't know. We sell -- Heidelberg sells more printing units into packaging than any other company in total printing units. So that shows a little bit where the business might come from in the next weeks and months.

We will now take our next question.

Peter Rothenaicher from Baader Bank. Firstly, on impact of, let's say, different aspect on your EBITDA margin guidance. You also mentioned accounting changes as a margin driver. Could you explain what you mean with it?

I wouldn't call it actually accounting changes. I would just say that basically, we're negotiating a tariff with the unions that sort of changes the interest rate for the pension fund and that will be the main effect. And the rest will be managing asset structures, such as property here and other related noncore items that sort of help us through the crisis. And that's not a change in policy.

So -- but is it a one-off effect? Or will it help you also in the upcoming years?

It will help us in upcoming years as well. But basically, the big effect will sort of hit the P&L and then sort of stabilize our earnings. But then sort of -- it's helping us to sort of manage cost in a better way because expenses for provisions and pensions will be lower there for the future as well.

Then the next point you mentioned, we have to expect additional restructuring costs of around EUR 50 million to EUR 60 million in the current year. As I understood, it's mainly referring to foreign countries. But could you give us here an explanation of what you plan to do?

Basically -- and again, this is like not affected by any corona measures or COVID measures. We're releasing sort of 250 jobs in abroad, that is basically U.S. and other countries. And that was something we could not sort of account for properly in last financial year, and that's the main driver. There is some consulting cost effect as well, but that's the minor part of it.

It is mainly driven by all the restructuring of our sales and service organization, where we also take out administrative structures and make it more lean and more agile and eliminate double structures and reduce the workforce. That doesn't mean that we'll have less service technicians serving our customers, but also reducing management levels and pretty much along the lines what we do in Germany as well. So it's increasing efficiency. And as I mentioned, step-by-step to get a more middle stand like structure with less administration with a simpler organization, less interfaces, less matrix and more, if you will, practical and agile.

And are these savings, would you expect from -- are already included in your EUR 100 million saving targets?

Yes.

Yes, they are.

Okay. And is this then the total amount of major restructuring costs we have to expect? Or do you think that also will come something on top in 2021, '22?

So let's say it this way. This is basically what we have concluded. This is basically what we have negotiated, and this is basically what we accounted for in the last financial year and basically will be accounting for in this year. This, however, is, of course, not related to COVID costs that might occur or any further adjustments that we would be forced to do if sort of the rebounding of the economy that Rainer just mentioned is not coming. So basically, what we said is that we will review those numbers, obviously, when the crisis gets bigger or it does sort of changes course in a way that we didn't anticipate. But from the normal restructuring cost, I would say that's it. This is how we sort of plan things, and we're following through on this. And since -- or let me say it this way. If actually we can handle the crisis in a way that we anticipate, which will be sort of the market is coming back around about summertime, then I don't think there will be additional layoffs and then we have to counterbalance everything.

Okay. Then next point on your financial results. So it was now approximately minus EUR 52 million. In the annual report, it's written that you expect some improvement in the current year. What is your target for that? And was that included, there was EUR 11 million charges from the interest for pension provisions. What is the expectation now with the changed pension treatment in 2000 -- or in the current year?

Again, I'm not quite sure that I've followed you completely. Let's sort of take it step by step. So...

So financial results overall was minus EUR 52 million last year. What is then your expectation for the current year?

Peter, it's highly dependent on the timing of the repurchase of the bond. So therefore, it's a little bit too early to judge where the financial results will end. For sure, clear is that 2/3 of the convergent bond is -- has been put in the last year. So we see a relief from that. And we see a slight relief from lower financial debt in the revolving credit facility, but the major component in the financial result is the high-yield bond. And here, it's still open when we will conclude towards the repurchase of the bond.

And then the point...

From today's perspective, without the repurchase of the bonds, it will be slightly relief in the financial result, it can be higher, depends on the timing.

And this depends what the crisis is going to look like in the next years. If you tell me when corona is going? Is there going to be a second wave or not? We want to be on the safe side, and that's why we, at the moment, wait and see.

Okay. And within the financial results, there is then the interest for the pension provisions, which was minus EUR 11 million last year. And with the structure, do you have also already an assumption what this will be in the current year?

Also here, there is a certain wash between the savings -- interest savings when we repurchase the bonds and the additional effect from not having the plant assets anymore. But this is not too much. This is a mid-single-digit million euro amount. So this is not really moving the needle.

Okay. Then perhaps could you comment on the progress of your Subscription business? So overall, the new machine business in the fourth quarter was, as we know, relatively weak. But how is, in general, your subscription business progressing? And is there any news regarding the taking of these machines from your balance sheet?

Now this is still a major part of our forward strategy to get more and more in contracts to get reoccurring revenue. We achieved so far 75 contracts. Of course, with the limitation of our balance sheet to take on more, we are pushing more today the smart contracts without machines, but the strategy is still the same, and it's received quite successful by our customers. So we are moving on. And I can say it is success. Hopefully, in the near future, we'll be able to find solutions to finance those machines off balance sheet. Then we can push also the Plus program, so the subscription, including the machine in future in a stronger way. So far, as I said, we are pushing the smart version of it. That's all and everything, but without the financing of the machine included.

And my last question is, could you give us an indication where approximately your breakeven sales volume would be on a, let's say, pretax profit level?

Round about EUR 2 billion, EUR 2.1 billion.

So on EBT (sic) [ EBIT ]?

Yes.

Yes. EBIT.

We will now take our next question.

First, I'd like to go back to the actual restructuring costs. What's the exact amount, EUR 275 million in total, including the EUR 50 million to EUR 60 million or is it EUR 275 million plus another EUR 50 million?

EUR 275 million plus EUR 50 million.

And how much of that EUR 325 million or EUR 335 million has been spent within the last financial year? And how much is going to be spent this year? This year, you said, it's EUR 50 million. Is that correct?

Again, that depends on how we sort of continue with the laying off of people, how the negotiation sort of moves. So let me just look it up, we expect basically...

I mean the existing -- the last financial year, you'll know the number, right, because it's in the accounts so.

For the last financial year, basically, we have adjusted the provision and sort of the write-offs that are typically, that is the provision. So additionally, we think that there will be a cash out of EUR 200 million in the financial year of, yes, '21 to '23. And so that how it spreads depends on how we move the -- as we said, we're trying to move our people in a socially responsible way that is negotiation, and that sort of determines how the cash effects will be. The faster we are, obviously, the more cash out flow we have in this financial year or the following one. If we are much slower, then basically, it's a bit back loaded. So that is something that we're still working on. It's a negotiation. So it's very difficult foresee.

And is the EUR 200 million is the minimum? And what do you think could be the range? Is it another EUR 50 million swing or...

No, I mean, it's basically -- that is what we foresee for the next basically 3 years. And as I said, it's very difficult to sort of predict.

Okay. But then when I follow that correctly, you said you got the result, including restructuring costs for this present financial year now of negative EUR 50 million on free cash flow before debt service. So stripping out the EUR 200 million, it should be positive EUR 150 million. Is that correct?

No.

And if so can you -- so how do you reconcile?

See the EUR 50 million is related to additional layoffs that basically we conducted broad, mostly. And the EUR 275 million that we basically provisioned for, something that is driven by inventory write-offs by sort of taking back machines from the customer. It's basically what we do in Germany, and we have accounted for that already. And that is not to be confused with the free cash flow that we can see, which is, again, a negative minus EUR 50 million. But that is basically a figure that sort of takes in a lot of restructuring measures, divestment measures, net working capital measurements, which is, again, as I said, rather complex. And again, based on the model, how we expect the COVID crisis to sort of develop. And we said that basically, this has driven again by 30% of revenue decline in the first quarter, but then slowly steadily picking up again.

Can you just give us a rough idea on what your cash tax is going to be in the financial year now and what your CapEx guidance would be?

I would expect the -- sorry, the CapEx would be around about EUR 50 million. According to our planning when it comes to tax cash, it would be around about EUR 25 million.

Okay. And then on the guidance with the EBITDA margin. Is the correct way to look at this that you say you want to achieve at least an adjusted EBITDA margin of, was it 4.3% or EUR 102 million divided by EUR 2.349 billion of sales, and that's your base level? Or should I be factoring in the sort of the savings that you mentioned, which is around EUR 50 million, so that the reference margin is actually EUR 102 million plus EUR 50 million pro forma divided by EUR 2.349 billion, which is...

I appreciate you trying. But right now, we're not -- see, I appreciate you trying. But basically, we're not giving any specific number because it's just too volatile. And I think honestly, nobody does that right now.

But the correct reference point because you said the margin is...

Yes, relatively, relatively. But let's not go to absolute numbers.

Okay. That's fine. I'm just saying the relative margin is the same adjusted EBITDA margin that you had in the past financial year, right?

Yes.

Without account for pro forma effect. Okay. That's clear. And then lastly, just to -- need to check, you mentioned earlier that you may probably repay the bonds as a whole or step by step in the course of the financial year. That's somehow different to what the previous tagline was, which was within this financial year. Can you elaborate now where you are in terms of thinking around the bonds? And what's driving the decision, whether to do it now or in 6 months' time? Could find out once they're pretty much traded off?

Listen, I think we're seeing the biggest crisis in economics for a very long time, at least around about 100 years. And this is something we have to manage right now. And then let us think about the bond and its repayment. Right now, we have not decided on any procedure. The only thing that we're really sticking to is to repay it during the course of this financial year. And again, we're not committed to any procedure. We will let you know once we have decided upon this right now. Honestly, neither Rainer nor myself are thinking about this big deal. We stick to our promise but right now we have a crisis to manage, and that's keeping all our attention.

We will decide...

Within the financial year, so.

Yes.

We will decide on that as soon as we have a clearer picture how the crisis is going to develop. If there is as we expect a good recovery through the course of the year, then we can decide how to proceed. Right now, it would be -- let me say it bluntly stupid to repay it in the current situation. We plan to do it within the fiscal year definitely. And we'll know in a few months probably how the procedure is going to be.

Anyways, the money that we have sort of gotten from the pension trust, we have earmarked for that, money is there. But right now, we have other things on our mind.

Got it. And lastly, on your cap structure again, with respect to your pension liabilities. What's the plan or assuming that you are repaying those bonds, what is the plan with respect to your equity capitalization?

Again, first of all, what you've seen basically is just sort of increased liquidity and therefore, increased liability when it comes to pensions. Sort of when it comes to interest, basically, there's a bond share as Rainer just explained. So that is not what we worry about. So how we manage pensions in the future, that is driven by, a, what we're negotiating right now when it comes to sort of the interest rates that we're calculating with. Secondly, obviously, we're looking into how to sort of deal with pensions completely in a different way, but that again is something that we will come up with in the future. There's nothing that is, again, honestly, now on my mind, or on the mind of the unions that are mostly the ones that we're negotiating with. That will be something we will deal within the next few years.

But potential liability...

Sorry.

Sorry, but the potential liability sit at the level of DAG? Or is it elsewhere in the group? And if so where?

I'm not sure I got you. I mean obviously, what you see in group is driven by international obligations that are mostly covered then again with their own trusts or their own systems. The biggest driver for that is obviously in AG. And therefore, it has to be solved and handled in Germany. And therefore, whatever we do is something that has to be negotiated with the unions. And so that is something we will look into after the crisis. But right now, again, we'll manage it step by step.

Got it. Is the pension to equity swap something that is even possible or could be contemplated as part of the mix?

Might be...

Instead of having a liability...

I have not any thought about it right now. Right now, there's a crisis, we have a crisis to manage. We have to sort of fix things step by step. There's a massive restructuring going on. After we have achieved this, I will looking at pension trust.

We will now take our next question.

Malte Schulz from Commerzbank. I just want to ask about your profitability or EBITDA margin before special items that you showed in your Lifecycle division for this year. Because if I see sales came down by roughly 1.5 percentage points, but the EBITDA before special items. So if I strip out the positive effects, so coming from the sale of high-tech coatings business from this spend, from the positive effect from the IFRS 16 adoption, I arrive at an 8.6% margin on EBITDA before restructuring results. So I would like to know a little bit more color on that, what has brought down the margin? So for instance, is it coming from a less favorable margin in your consumables business only? Or have you seen any significant signs of price pressure here in some sub verticals that you operate here within the Lifecycle Solutions? I would like to have a little bit more color on how I should view this going forward into this -- into the next year and going forward because it's a quite significant impacts, quite significant slowdown of your profitability in this segment here?

I think there are 2 effects that sort of you have to look at additionally. One is basically that due to the COVID crisis, we have basically looked into receivables and additionally provided for those not coming in. As you know, the market is in a bit of turmoil and that gave a hit of EUR 15 million, basically. And then obviously, as we mentioned, there is an impairment -- not an impairment but a write-off of inventories. And that is basically the other thing you're missing, and that is driving the EBITDA margin this year.

Okay. And how big was...

And there is impact from volume as margin that you got basically and then I would say, really important is that additionally to some transformation items, there is obviously and that is around EUR 18 million, which is basically, again, what I just mentioned. When it comes to inventories, then the biggest hit is basically driven by sort of our anticipation of any market risk when it comes to receivables, and that's around EUR 15 million, okay?

Okay. This means if I adjust for these 2 effects for the write-down and for the receivables I pay, because I got 12.1%. Okay. So it's like quite comparable with the last year's figure. Okay. Okay. Makes sense. Then just coming back to your CapEx guidance. You said around -- you would expect EUR 50 million in CapEx, as I bear it in mind correctly. So I just want to ask whether this is -- this could little bit be higher at the end of the next year because if I remember correctly, you spoke about it. You want to develop your main facility in this last year, want to ramp up. You want to ramp up a higher end production network here. You want to relocate your production from Switzerland, want to focus more on printed electronics, aim to enter the mobility market with your home charging boxes. So I mean in a nutshell, what would you see for the next 3 years going forward as I would say as a normalized run rate for CapEx spending, yes?

Basically, what we see for the next 3 years is a number around about EUR 50 million. And again, sort of, we have to manage our cash very efficiently, which is why, as Rainer explained we're looking for partnerships and sort of utilizing a joint venture in China to sort of go into production, mass production. After that, I would reckon that the number will be back to what you have already seen. So basically, a number in the ballpark of EUR 79 million to EUR 80 million in additional -- in new CapEx. So that would be the numbers we are thinking of. Anything else would be, I think, not something we would go for. And then it's again on how we spend CapEx much more actually as compared to sort of what absolute number it is. And I think this is basically what Rainer mentioned as we're sort of looking into things in a different way, basically coming from profitability sort of invest in things that really drive this company forward rather than sort of do a little bit here, do a little bit there as we used to maybe in the past. So that is, I think, much more sort of what we're looking into allocation much more than the absolute spend. There is new room for us to sort of do additional spending other than this EUR 50 million I just mentioned.

We will now take our next question.

I'm Andreas Jaufer coming from Robus Capital. Just 2 more follow-up questions. On the Kurzarbeit, you mentioned earlier, which you're using, I suppose, mainly in Germany. What's the number of employees or FTEs that are under Kurzarbeit currently?

We're managing this actually point by point. I would say it depends on what you're looking at. It could be, for example, it might be 80% and maybe even 90% in Kurzarbeit. So I would say the number is around about 80%.

80%, okay, for Q1 of the current financial year. And then you manage that as you go into Q2, depending on the recovery...

Exactly.

Projections you're seeing what?

I think that everybody does that. So we're looking into this month by month almost week by week.

We managed it very strictly in order to control costs and we adapt that. Of course, we are very careful and will not risk any business. So when there is business to make and turnover and margin, we certainly will get people in.

Okay. And in terms of the duration of -- during which you can use Kurzarbeit, the German government extended it for up to 24 months. Is it fair to assume that you will continue to use that throughout the current financial year. So also Q3, Q4, depending on utilization levels in the plants?

If necessary, yes, of course. And how much it's going to be, if you tell me how the crisis turns out, then I can probably tell you what the utilization of our product is going to be. So no, it's -- that's a very good thing about this instrument. It's very flexible. We basically can mention almost on a daily basis, and we certainly will do.

Got it. And then on another point on covenants, I think with the last announcement or preliminary numbers you announced also that the banks have essentially raised, I think, there was a minimum EBITDA and a minimum liquidity covenant. Could you just remind me here what those covenants are and whether the minimum equity covenant is actually accounting for the additional impact of corona or whether the covenant needs to be reset? Or you've already reset that?

Basically, there's a policy not to comment on covenants, first of all. But secondly, according to our planning, we're absolutely fine. And we do have some sort of corona or covenant planning that sort of shows that we're not hitting any covenants. So it should be okay.

It appears there are no further questions. I'd like to hand it back to the host for any further comments or closing remarks.

Yes. Thank you very much. Ladies and gentlemen, thank you for your interest in Heidelberg. We have quite a challenge in front of us with the crisis, on the one hand. On the other hand, we are well underway to do this massive restructuring where Heidelberg will be in a good shape in near future. Our financial stability, and I think that's important to understand is better than it has been in a long time before. So we are very certain that we will get through the crisis and recover after the crisis, as the market comes back stronger than we have been before. Looking forward to talk to you in 3 months when we talk about the Q2 numbers. Thank you very much.