Huber+Suhner AG (HUBN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the 2024 Half Year Business Results Presentation of HUBER+SUHNER Group Conference Call and Live Webcast. I am Alice, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions]. Webcast viewers may submit their questions in writing via the relative field. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Urs Ryffel, CEO. Please go ahead, sir.

Good morning, ladies and gentlemen. I would like to welcome you to the presentation of HUBER+SUHNER's first semester results 2024. As in the past, we will have 3 sessions followed by Q&A. I will introduce you in the first part of our presentation to the figure and give you an overview. Then our CFO, Ivo Wechsler, will take over from me, and he will do a deep dive into the financial result after the first 6 months. And I will conclude the presentation with an outlook and more details on how we see the markets developing and also how we see the business performing at the end of this year. When we have a look at the figures overall, what sticks out is certainly that we have a strong upturn in demand and an order intake which grows versus last year by 14.9%. Consequently, we have a book-to-bill rate, which is clearly above 1, and we have been able to add over CHF 80 million of backlog in the first 6 months of this year. In order to understand the sales, I think it's important that we also highlight where we come from. And we have a closer look at how the last year has developed. We have had, in the first 6 months, still a decent business environment, particularly in the first quarter. And then we have seen more difficult environments approaching in the second quarter. But overall, the comparable basis from '23 from the first semester is actually still a very strong performance as far as net sales is concerned. Consequently, the CHF 430.6 million sales that we have achieved in the first 6 months this year compares not very well with the first semester last year. We have been reporting 9.8% less sales. And if you just take the organic development, then we are down by 7.3%. So we lose about 2.5% due to copper and currency impacts. But when we look at the last year, the second half, we have seen a completely different pattern. And when we compare now the first semester of this year with the second half of last year, then the picture look much better. And here, we can see that sales has been growing by 15.2% compared to the second semester last year, which we consider a turnaround situation. The profitability, consequently, has suffered a little bit from the lower sales in absolute terms, but just slightly, as percent of net sales. While a year ago, we were at 9.8% and at full year at 9.1%, we could close the first semester at 9.6% on operating profit. The net income even in percentage was a bit higher than last year at 8.1%. And overall, we consider the profitability very well within our midterm EBIT target range. The profitability in the different segment has developed differently. We will come to that in the following slides. The Industry segment still showing good profitability. And we believe, in the Industry segment, we have now reached the bottom and that can be underlined by an order intake growth of 11.5% even versus the first semester of 2023. So overall, the order intake turned positive in the first 6 months '24. The demand was driven mainly by 3 submarkets or market verticals, which account for 75% of the Industry segment. In first place, I would like to mention the aerospace and defense business, which has been at the forefront of growth in the Industry segment. And as expected, could confirm the positive trend from '23 but also the second largest market vertical in the Industry segment, the test and measurement market vertical has reported order growth. And also in the high-power charging area, we could return to order growth in the first semester '24. Net sales, on the other hand, was impacted by the lower order intake towards the end of last year and has declined by 15.5%. Consequently, also the operating profit has suffered a little bit and that came down to 17.0%. Overall, we consider that level of profitability still solid. In the Communications segment, we see the most dramatic change versus last year that can be seen from the order intake, which climbed by 45.1% versus last year. In the Communications segment, we still had good sales in the first 6 months, but we have seen a real collapse of the North American business in the first semester last year. And consequently, the order intake only reached a year ago, CHF 148 million. Versus that figure, we could add the 45%, which gives us now a tailwind for the months to come. Net sales, as I said, was still okay a year ago, and we are on the way to recover versus last year. But we were not quite there, and we fall short by 8.2% versus last year. We have also seen an impact on the operating profit, thanks to the cost measures which we have initiated in the second half and also slightly better gross margin, less write-offs on the inventory and adjusted capacities. We have seen a turnaround, and the operating margin climbed to 6.7% versus 3.7% a year ago, which is almost doubling. At the forefront of the turnaround, we see the data center growth and also, in orders, a strong upward trend in Asia Pacific, namely in India in the mobile communication area, where we have been able to capture a large project with an Indian operator, and that was the reason why the order intake was so high in the first 6 months. And with that project, we could also compensate partly for the downturn in other parts of the world in the large mobile communication infrastructure market for HUBER+SUHNER. In the Transportation segment, we still report solid profitability at slightly lower volumes. You may remember that Transportation was a strong pillar last year. We could report a real turnaround situation. Transportation was coming out of a phase with lower profitability and reported 10.5% EBIT margin a year ago. We were not quite able to keep that level of profitability, but we consider the 8.9% EBIT margin still solid. We have seen different patterns in the 2 main markets that we address with the Transportation segment. In railway, we have seen slightly lower order intakes and slightly higher sales, so there we are on track. And the recovery, which took place in the last year on -- in the railway sector has at least prevailed. On the other side, our automotive business suffered in the first 6 months, we see that on -- particularly on the EV side, where HUBER+SUHNER focuses very much, and in particular on the commercial EV side, we see a delayed pickup of the market. We have all major OEMs that have platforms ready, but we see a delay in the volume pickup as customers don't accept the new technology so quickly as originally planned. And the same effect applies also for our ADAS growth initiative. There, we also see a delay of the pickup. Here we address the trend of autonomous driving. And in this area, there is also a delay in the pickup of volumes with our sensor technology. When we have a look at the 3 market segments, you can see that the year-on-year decline is equally spread. We have the Industry segment falling short with the 15.5% that we have already reported, but also Communication and Transportation, so that the distribution of business remains well balanced and we remain a diversified company with a portfolio of 3 equal segments. When we have a look at the regions, we see a little shift between the regions. Also here, the decline of net sales of 10% is almost equally spread. Europe still accounts for 55% of our business, while the Asia Pacific accounts for 27% and the Americas for 18%. This is on net sales basis. And with this very brief overview, I would like to hand over to our CFO, Ivo Wechsler, who will go together with you into the details of our first semester figures.

Thank you, Urs. Also a very warm welcome from my side. This time, I actually start with an overview slide with respect to the last 5 semesters, which is the most important of the KPIs, order intake, net sales and the EBIT margin. And you remember, I think 2022 was the most successful financial year of HUBER+SUHNER. And then we had still the very good first half year 2023, as already explained by Urs. And then second half of '23 was really much lower volumes and, consequently, also, a lower EBIT margin. But you can see here that now we have, let's say, achieved the turnaround, and we see a clear upward trend compared to the second half of last year. Notably, most important, I think, is the order intake level with CHF 521 million, which is the highest number for 1 semester in the HUBER+SUHNER industry. So now let's go into the details. This CHF 521 million means 15% growth. Out of that is actually 18% organic growth and 3% decline for the things currency, portfolio and copper, where they predominantly coming from the currency impact. On the positive order improvement, we have 2 segments with a double-digit growth, 13% in Industry, mainly driven by A&D business; and then 50% in the Communication market segment. And there, the lion's share is this Indian project is 4G rollout, where we have an Indian so it's by far the largest project in the first half of 2024. Transportation, we've had a certain decline in order intake level, mainly driven by the weak automotive environment. On the net sales side, minus 10%. Whereas 3 quarters coming from organic decline and 1 quarter from currency, portfolio and copper. There, all 3 market segments have a decline versus last year also organically with a double-digit decline in Industry. We've had there the major reason was actually the HPC business, where we had very low orders. And in general, the weak order intake in the second half of '23 led to this situation. The positive development we have on the gross margin. We have a gradual improvement to 36.2%. I think the reasons were manyfold. First of all, last year, we reduced our production cost base due to -- let's say, due to the lower volume. So now we can benefit from that. Secondly, we now also have -- due to a normalization in the supply chain, we can benefit from lower material prices. And also, let's say, the overstocking overall came, I think to a large extent, to an end. And that's why this year, we had lower inventory adjustment. And finally, also the contribution from the higher-margin growth initiatives were slightly more than 12 months ago. And this all led to a quite good gross margin of 36.2%. On the cost side, there was a reduction year-over-year of CHF 6 million from CHF 121 million to CHF 115 million. The major reason was lower G&A or so-called administration costs, whereas the sales and marketing was unchanged and also R&D was only slightly lower. So that's why we have also invested into the future and continue to invest in high R&D expenses. On the EBIT development in the 3 market segments, we have seen it before, here a short summary. I think Industry still good with 17%, lower compared to last year, but significantly higher compared to the second half of last year. So 17%, very good. Communication almost doubled to 6.7%, which hopefully some further upside potential when they get more volume. And Transportation, down from the very high level of last year, 10.5% to 8.9%. There, we really also see slightly lower volumes, but also the price pressure we have seen in particular in this segment. Overall, the EBIT margin is 9.6%, almost on the same level as last year and well within the midterm target range. For those who have already peeked into the financial report have probably seen that if you would report EBITDA margin more prominently, there was even an increase on the EBITDA margin compared to last year. Then on the currency situation, we have a differentiated picture, as you can also see here. If we compare to the beginning of this year, there we see that there was a depreciation of the Swiss franc. These are the brown columns. There, all currency gets stronger versus the Swiss franc, when we compare. But half year average rates on those 2 semesters, you can see that most of the currencies were still, let's say, weaker. And this is actually the relevant FX exchange rate for the P&L. However, unfortunately, I think also there's CHF [indiscernible] a little bit over. You have experienced also the beginning of August as soon as there is a political instability, also nervousness in the financial markets, we see a strengthening of the Swiss francs again. And I think that happened early August. So I think we can't expect that this positive development from the first half year will continue until the end of the year. On the net financial result, there was an improvement compared to last year. On one side, we could get higher interest income from our net liquidity, in particular, here in Switzerland. And on the other side, we had slightly lower FX loss is also due to lower hedging costs. So overall, an improvement compared to last year. Our group tax rate is still on a low level. A significant reduction with respect to the expected tax rate. So there, the reason is that we have actually higher profits in low tax countries. But also the effective tax rate is lower than last year only slightly, because on both years, we actually benefited from R&D deductions in Switzerland, but also China, but also from other tax benefits, for example, in the U.S. As already mentioned in March at the press conference, HUBER+SUHNER will be impacted by the minimum taxation in 2024. This 15% minimum taxation, I think we have the advantage that there is also a substant carve-out. This means that if you have a lot of fixed asset and a lot of personnel in Switzerland, you get a certain benefit or a certain discount. Nevertheless, in Switzerland, we will be impacted, and that was already factored in this tax rate. But at the end, we will see at the end of the year how much it will be. On the balance sheet side, I think there was an increase on our net liquidity with CHF 40 million compared to last year. And in general, an increase on our net working capital position both on the asset, but also on the liability side. I think the major driver was also the Indian business where we have longer payment terms on our trade receivables but also on our trade payables. And that's why there was a double-digit increase in those 2 positions. On the cash flow, overall, a doubling of the free operating cash flow to almost CHF 20 million, supported by a slightly better cash conversion on the operating side and slightly lower investments. Nevertheless, we will be continue to invest significantly. So it will be not -- which often is also depending on the project, if it goes in this period or into the next one. You have seen a slightly lower dividend. And last year, we completed the share buyback program, which we have actually canceled this year after the Annual General Meeting, which you can see in our equity statement. Overall, the free cash flow, minus CHF 13 million compared to minus CHF 38 million year-over-year. By that, I'm already at the conclusion side. I think overall, we have seen a strong operational performance with a lot of good development, very strong order intake growth, the EBIT margin baked in our midterm target range, low taxes and also a decent cash flow, I would say. We have still, thanks to -- due to a low order intake in the second half of last year, still organic sales decline. But with the order backlog, we are convinced that we can change this picture also in the second half of this year. With that, I hand over back to Urs for the outlook.

Thank you, Ivo. And in the following session, I will share with you how we see the markets. I will share with you some of the important market trends, and I start again with our Industry segment. Overall, I think it's fair to say that Industry, in general, is in a difficult situation. However, we have some of our market verticals which are beating that negative trend. And we believe that this is a sustainable situation. So when we have this relatively diverse portfolio of different applications that we address under the industry segment, we can say that we have some that do really well and others that are also affected by the general mood in the industry. But overall, we believe that the trend that points upwards in the industry is sustainable. First of all, and also we have heard it from Ivo Wechsler, the overstocking seems to come to an end. Overstocking was the word of last year and every industrial company has used it to explain why the business is affected and going down. And we believe that in most markets, this effect seems to be now over, an effect which came as a result of the reduced capacities post COVID and high demand, so a catch-up effect. And under these situations, the market was reacting that the suppliers have much longer lead times. And consequently, customers were consuming what they could and were overstocking to prevent stock-outs in their business. The test and measurement business, I mentioned in the beginning, has also seen modest growth on the order side. We believe that we have the market now more stable at a lower level. There is potential for an upturn, but this upturn will depend in the test and measurement business of HUBER+SUHNER largely on the development of the electronics and telecom market. On top of that and what may help HUBER+SUHNER to beat the trend here even more is that we are also moving towards complete solution in a very specific application in test and measurement, which we call lab automation. So we are moving towards solution business here, which not only consists of simple connections but complete systems that address the trend in labs and in production to do remote testing and to do that in an efficient way. The aerospace and defense market has performed very well last year and again in the first 6 months this year, and we believe that will continue. This is a long cyclical business, and trends there don't change so much. We were all surprised that in '22, the business did not pick up immediately, but it took a while before these budget increases of the governments, these defense budget increases arrived in the value chain or in the supply chain at the level where HUBER+SUHNER plays. But now we see, as expected, good demand. And further to that, we also see great potential in the cross technology solutions. Traditionally, HUBER+SUHNER has been an RF supplier into defense and space applications. And we are also expanding our scope also with the acquisition we have done in the U.K. 2 years ago into cross technology solutions, which consists also of the other 2 technologies, FO and LF. We see in aerospace and defense the business growing not just in defense application, but also in space application. Last word about the high-power charging market. We have still had good sales out of the backlog last year, but orders collapsed due to the fact that there was a debate over the connector standard in the U.S. There were also uncertainties about who can apply for subsidies under the Navy program of the Biden administration. Both things have been now cleared. We have heard from the OEMs that they will move towards the Tesla interface for the North American market, moving away from the CCS one standard, which is not a very good standard, and it took a while for the industry to figure out what it means. Also, HUBER+SUHNER had to do its homework and had to develop a Tesla connector, which is now available. I hope that we will be very successful with this interface as we believe that we have not just copied a Tesla connector, but also improved it. We can say that the European market, which has been lagging a bit behind is now also waking up, and we see projects in several countries and also demand picking up slowly, step by step, which we consider to be a good development. Further to that, we are also trying to get a share of the Chinese and the Indian market. But on that market, I will not bet my pension on as we don't know which way the customers will decide when it comes to price versus quality. And as a high-quality Western supplier, HUBER+SUHNER, obviously, depends on customers which appreciate quality over price. Last point here on this megawatt charging, relates to the -- on this high-power charging relates to the megawatt charging. As the word says so here, we transmit current and power above a megawatt. And we are now ready with our products, and we have first charging points in this power range already in operation with HUBER+SUHNER megawatt charging technology. So all in all, in the Industry, the trend has been positive in the first 6 months. And here, we are cautiously optimistic that the trends will continue in our most important market verticals within the Industry segment. In the Communication market, we have still a very difficult market environment. And it's not just the U.S. market, which has seen a significant downturn in the last 2 years from the peak in '22. But also in other parts of the world, operators tend to hold back large investments. This is also visible when we look at long-term forecast of the industry, and it seems that this pattern will not change so quickly. So why was HUBER+SUHNER so successful in this Communication environment? We have to clearly point out that we were able to win individual projects and large projects. We have mentioned this Indian business, which is not a business that is sustainable very long term, but definitely, it has helped us to turn around the Communication market. More sustainable is the upturn in the data center market. Here, the main driver is the different requirement coming from AI in data center, which opens a great opportunity for HUBER+SUHNER technologies. At the forefront here, I would like to mention our optical switch technology, a company that we have acquired in 2016, where we always believe in the potential of this optical switch technology also in data center and telecom network markets and applications. And it seems that under these AI requirements, this piece of equipment can play a massive role in improving the performance of those data centers at relatively low CapEx. And so here, we believe that the positive trend that we noticed in the first 6 months will continue. Anyway, I think the Communication market, despite the fact that we have a bit weak forecast the outlook overall, we believe that the overriding trends, which are densification, higher capacity and also shorter latency, will sooner or later drive CapEx, capital expenditures up again. And here, we are definitely very well positioned to benefit when that is going to happen. In general, we can say in Communication, we have had this single project success. And for next year, the challenge will be that we compensate the decline of that single project. We are confident that we are more or less able to offset the decline in that individual project from the mobile market with the growth in the data center environment. So overall, our ambition will be to show stability in the Communications segment after the difficult period a year ago. In Transportation, in general, we can say the progress on ecological mobility is there, but it's slower than planned. We see different patterns. Railway has had a tough time during COVID as the use of public transportation basically went to zero, and also related investments were cut back. Now we see that those investments are coming back. And in railway, we have the -- we are of the opinion that the market will provide a lot of stability to HUBER+SUHNER. Growth in the railway market will come from the communication solution where we play a major role and where we play market leadership. We have just reported a large project win with Deutsche Bahn this spring, which marks a clear milestone in the development from being a component supplier, mainly on the antenna side, towards a complete solution provider for railway communication applications. A completely different pattern, we can see in the automotive industry. We see that all OEMs are ready, all truck and bus OEMs are ready with EV platforms. And I have to share that we are extremely well positioned in those platforms, with a lot of nominations and design wins with basically all Western key OEMs that are active in the commercial EV market. That doesn't help if they are not selling those trucks and buses. And as we see, relatively good pickup rates on the buses, which is the smaller part of that market. On the EV side, we see a clear delay. And on the other side, we are absolutely convinced that sooner or later, those EV trucks, they will find customers and will find their market. In the first instance, 2, 3 years ago, the truck manufacturers, they have experimented, the platforms were not very sophisticated, not very mature. I can say that now they are mature, and it's just a matter of time that the market also seize that and jumps on to that technology. But it doesn't help, at the moment, I have to address it clearly is that the battery technology still has a very steep improvement curve. And everybody that has to decide upon an investment in EV, figures probably out that in 2, 3 years, he or she may get a much better battery with a purchased car or truck or bus. So hence, the incentive is relatively high to let others now drive that market and wait a little bit, and jump onto the trend when the technology is even more mature. Anyway, for a real change in the Transportation segment, we can say that we need to see a pickup in the automotive business on the EV side as well as on the ADAS side. I mentioned also ADAS is affected, although in the higher-end platforms of passenger cars, Level 3 autonomous driving is the standard. In many cases, the Tier 1s are trying to save cost, and they are trying to achieve that Level 3 autonomous driving with all the technologies. That will take a bit more time than we hoped, but we are still convinced that in the Transportation market, railway cabling is the stable pillar. Rail Comm is offering very attractive growth. And if the market changes in automotive, we will be back in the growth mode. When that is going to happen? It's difficult to predict. We don't see that happening in the next 6 months. Whether it's going to happen early next year or not is currently a debate in the market. That brings me to the outlook, and I can say that the strategy of balanced diversification once more has proven to be a very successful strategy in turbulent times, and it has provided the company with quite significant resilience in this difficult economic environment. The strong order intake and the increased backlog will give us tailwind for the next 6 months. And we forecast slightly higher sales in the second half of the year than the CHF 430 million which we reported for the first 6 months. The mid- to long-term outlook, in our opinion, contain certain uncertainties. However, we see still a lot of activity on the commercial side, quotation and also customer interest, so that we believe that mid- to long term, the growth opportunities are more than intact in all our submarkets. That opinion is also backed up by the fact that our main drivers that we focus our business around -- personal security, seamless communication and the environmentally friendly mobility are still remaining as key growth drivers. And with our focus around those applications, we believe that -- and I just can mention some of them, again, like the increased government defense budget, the rapid development of AI that we address through the data center, the increasing electrification of rail and road transportation that we address with several initiatives, those are just examples which underline that we are extremely well positioned going forward. As far as the guidance for the full year is concerned, there are no changes. And I think that is, in these days, good news. So from today's perspective, the company can confirm the year-end guidance, which we communicated in March for the full year, which means organic growth in net sales compared to the full year '23, as well as an operating margin within the lower half of our mid-term EBIT guidance. And as always, the disclaimer, the guidance is based on the assumption that key influencing factors, such as inflation, exchange rates and economic and political effects are not excessively negative on HUBER+SUHNER's business. And with those words, I would like to close the official part of our presentation, and I would like to ask Ivo on stage, and we will try, in the following session, to answer together your questions.

[Operator Instructions] Our first question from the telephone comes from the line of Charlie Fehrenbach, awp.

So regarding your guidance for sales growth in H2 over H1 '24, slight sales growth. Is the assumption correct that if we assume 1% to 2%, we've come to a sales of around CHF 440 million, which would be a growth compared to H2 '23 of 17% to 18%. Is this correct? And also then the assumption would be that the growth -- organic growth in full year would be in the low to maximum middle single digit range?

So thank you, Mr. Fehrenbach. The assumption is not quite right. We compare the first half with the second half, and if we say a slight growth in the second half versus the first half, it means that we expect sales above the CHF 430 million, which we report now.

Okay. And can you may give 2 more or 3 words more where you take confidence from? Is it just the order intake or the order intake -- or maybe you have other aspects you want to mention?

Yes, I think the main driver is our significant increased order backlog. And in particular, also the Indian project, we have said this will continue now in the next months as it is a certain time frame. So I think that's where the confidence is coming from.

The next question from telephone comes from the line of Reto Huber, Research Partners.

Congratulations on the very good results and outlook. I have a few questions. The first one is about aerospace and defense. I'm not quite sure that subsegment increased the share in the overall revenues already in the first half. And then with respect to Communication, the Indian order already shows some revenues already in the first half or is everything you were talking about this business is all relating to the second -- to the order intake basically? And then also with respect to Communications, do you expect overall sales volumes in the second half to be higher than in the first half already? And then the last question from me, you have quite a substantial reduction in the OpEx, mainly in SGA. I was wondering how sustainable that kind of new level is.

So A&D accounts for a bit over 10% of our sales. We have shared that. And the growth rate of A&D is above the company average. So the share of A&D over time is increasing with each and every successful year. The Communication question related to the Indian project, we have already reported sales of this Indian project, but we have backlog which comes from the higher booking versus the lower sales. And that is where we get confidence that we will continue to grow in the second half, particularly in Comm. But the guidance which you have received from us is that we plan to have a net sales growth year-on-year, which means that we will also grow versus the first half and the second half. And there was the cost one.

On the cost side, I think you -- in the cost, the operation cost, you have always certain areas where they are rather fixed, at least short term, and then you have variable costs. And you have seen, I think it was in the past, I think R&D is rather, let's say, fixed. So we continue to invest on this level. So that's sustainable. Then sales and marketing is often also partly driven by the sales volume, because there, you have also Transportation costs. In percentage Transportation cost came down, but they are sometimes in some projects, we have commissioned which are variable and some not. So there are different factors. And the admin costs came down. Traditionally, we have higher costs in the first half year, the second -- compared to the second half year. So overall, it's sustainable. But we will also see then higher IT costs probably going forward into the next year. So this will be an increase in the admin cost. So I think it's a mixed picture. But as also in the past, we'll have to adapt our cost structure also to the volume and not avoiding investments in the future, but still be cost consciousness when the volume comes down.

[Operator Instructions] There are no more questions on the telephone. I would now like to turn the conference over to Christiane Jelinek, Head of Corporate Communications for the written questions. Please go ahead.

Thank you. We have quite a few questions in the chat. So the first one is from [ Bart Kaiser ] Winvest Asset Management. In the Communication division, you experienced a recovery in data centers. When will you see a pickup in the network business?

So okay, so we have a pick up -- I mean, we have to distinguish between orders and sales. So on the order side, the pickup comes from mobile network. And here, we mentioned the Indian project, and it comes from data center. But in -- on order level, we have seen also in the communication equipment market, an uptick, as well as in the fixed access network market. So Communication, all our 4 market vertical show a positive trend in orders. In sales, we are still comparing the largest vertical, the mobile comm with last year. And here, we have a decline on year-on-year versus on the mobile comm. So obviously, in the second half, that will change as we have seen the decline in sales happening in comm quite dramatically last year. And if we will compare then full year, we expect the Communications segment to be back to growth overall.

The second question is also from Mr. Kaiser. He asks if there's any update on the succession in the CFO role?

That's a good question. Yes, there is news, which I am not allowed to share with you at this stage. We are in discussion with the current employer of Ivo Wechsler's successor. And we align that communication, and most likely will get news towards the end of September. But the candidate is identified.

Thank you. The next question is from Andreas Meier, Finanz und Wirtschaft. In the last cycle, orders for countries like India for upgrading mobile antennas to a higher standard where usually a low-margin business, is this also the case this time?

So India is lower margin than the U.S., but we also pay less commission into our sales channels, and we have also lower SG&R in India. It is true that the Samsung project, which gave us a lot of tailwind in 2017 and 2018, at the end, very low margins. We are still slightly above that level. So we are -- at the moment, we are okay with the Indian margins overall, and that is also visible in the margin after 6 months, which already contains a significant share of the Indian project.

Related to India also from [ Yolanda Stadelman ] [indiscernible] Capital. How long will it take to complete the telecom project in India? And again, how attractive are the margins?

So the margins, I just commented. And the project will last a little bit into next year. How much depends on the delivery speed, the customer request from us. There are still discussions on speeding up the deliveries, which could give a bit more sales this year and a bit less next year. But it's a major project in '24, and it's for sure that there will be a share falling into next year. How much is difficult to say at this stage.

Barbora Blaha from UBS is asking, which are the 3 main industry subsegments have the best margins? And the second question, you mentioned that your connector has an advantage versus the Tesla connector, can you give some color on this? What kind of advantage?

So we don't disclose the margin on market vertical level, but I can assure you that all our market verticals in the industry have good margins. That's the nature of that business. Small, but beautiful. And that applies for A&D, for test and measurement, for HPC, for every other application that we addressed. The Tesla connector is not a standard. So actually, we had to do a reverse design. Tesla is using a cooled cable. Otherwise, they could not transmit the 270-kilowatt through the cable. We would like to have a 400 to 500-kilowatt rated cable. For that, we need to cool the connector. Now the Tesla design is a very compact design, and cooling the contacts of the connector in this compact design was a challenge, but we managed to do it. And we believe that we have a little advantage through that in a way of this design.

The next question is from Michael Schulz, JMS Invest AG. Could you please elaborate on the margin outlook in Communications based on the strong order book, which is probably a mix of higher-margin data center business and lower margins from the Indian mobile?

That gives me already the answer, we believe that we can defend the margin level the next 6 to 18 months.

And I think that's the final question for now, [indiscernible] Asset Management, what is the percentage of group consolidated sales represented by the data center business?

So the data center is in the range of 5% to 10% of group sales at this point. It seems that we have answered all the questions. So let me just highlight a few dates to close this session. Here is the financial calendar that we would like to share with you. And in particular, I would like to highlight the first event, which is Capital Market Day in Herisau. Please if you have not reserve that date, we would like to invite you again after 2 years to Herisau on the 20th of September. We will start in the morning and finish shortly after lunch. And we will share really a deep dive into our applications and technologies, and try to convey where we see the upside and why we believe that the future for HUBER+SUHNER is bright. And with that, I would like to close the session. Thank you very much for joining again, and I hope to see many or almost all of you on the 20th of September in Herisau. Thank you very much.

Thank you.

Have a good day.