JOST Werke SE (JST) Earnings Call Transcript & Summary

Thank you very much. Very good morning and a very warm welcome from Isenburg to all of you. It's my pleasure -- our pleasure to present to you how JOST has performed in 2020. As we all know, 2020 has been a very challenging year from a business environment. So we are very happy to report that we were able to deliver on our financial targets, and the results will be explained in more detail later by Christian Terlinde. In addition to that, we were able to successfully integrate the Ålö Group, the largest M&A that the JOST Group has ever done. We completed a post-merger integration project that was focused on process integration and on synergies. And we are happy to report that Ålö was able to support our growth and our profitability already in the first year. The year was also a proof of our high operational flexibility in an extremely volatile market, and that is true for all regions in which we operate. So all regions were able to extremely -- to be extremely able to adapt to the volatile markets, and you will also see that in the regional results. The strong cash generation and the swift deleveraging another success factor. After the acquisition, our target was to bring our leverage down. And also there, I think we've made considerable progress already in the first year. Our shareholders have supported us in this difficult year by waving their right for dividend in 2020, for the 2019 year, and we want to say thanks, and therefore, we propose a dividend payment of EUR 1 per share for 2020. Not only have we managed the COVID, business environment and integrated Ålö, we've also managed to complete important developments in R&D for our new product portfolio. We have increased our R&D spending and our R&D investments to EUR 4 million. And we have brought products into the markets that increase efficiency, automation and digitalization for our customers. 4 of the highlights I would like to present to you in a bit more detail. One is the KKS. It's a complete automation of manual coupling process for semi-trailers. It improves the efficiency in logistics and the safety for the drivers. This is a door opener for autonomous docking and autonomous driving. Second, highlight the Quicke Control System. It increases the material handling efficiency by automating and digitalization of repetitive loader tasks. So they can be automated and programmed so that the loader will automatically go to the right height and the right angles and repeat these tasks automatically. Another highlight is the Drawbar Finder. It's a towing hitch with an integrated camera system, combined with an overlay software so that you can identify and locate the drawbar of the trailer for safe coupling of normal trucks and trailers. And last not least, our force steering axles, that increase the maneuverability and lowers the vehicle's energy consumption and tire wear. We also have, in the annual report, the QR code that you can use. So if you're interested in the technology, you can just scan the QR code and get more information. Or if you need it for your personal truck, you're welcome to do the same. How did the year from a market perspective, develop? And you can see here in the blue numbers, that is our organic market environment. And in orange, we've added the new acquisition with the Tractor segment. So if you compare the blue numbers, then you will see how we performed in the market environment. Let's start with Europe. We had a cyclical downturn that was affected by a severe pandemic impact. In Q2, we had virtually almost no production with our European OEMs and the same happened a bit later in North America. But in Europe, on trucks, we had minus 26% over the year; on the trailer market, minus 28% over the year. Our performance in that market with minus 17% is quite solid, quite good, I would say, supported, obviously, by an aftermarket business that has more or less continued at the same level, and an OEM business that went down a bit more than that. But I believe, overall, 17% organic loss versus the market that is around 25% to 30% down. It's quite a good achievement and supports our market position. Overall, including our new acquisition, we have had in Europe, a 12% increase in turnover. Let's look at the North American market. There, the hit was severe. We all had expected a cyclical downturn in 2020. And of course, that was accelerated by the COVID pandemic, minus 39% on trucks, minus 42% on trailers and that led to an organic development of minus 22%. So also here, we've benefited from our strong aftermarket position, but also we're able to generate additional market shares in our products. The tractor market was actually improving in North America, mainly on smaller tractors, and our reported numbers are at a plus 7% in North America. In Asia Pacific, Africa, the picture is a bit more difficult to explain. We've had overall plus 30 -- 23%, sorry, in APA on trucks, mainly driven by China, which had variable first quarter with the situation of the COVID pandemic, especially in Wuhan. But then recovered over the last 3 quarters and had extreme high volumes in the truck market for the remainder of the year. So that has driven a lot of that market growth, but it's mainly a Chinese effects. The other markets in those regions were either stable or lower. And the trailer market at minus 11%. Our organic development is around 0%. That is because we have a lot more expensive products outside of China, where we had the markets going down, be it Far East, Indonesia or South Africa and even Australia. So that's the development, 0% in organic development and minus 2% in the overall numbers for APA. With that, I would like to hand over to Christian to go into more details on the key financials. Christian?

Thank you very much, Joachim, and welcome also from my side. Ladies and gentlemen, thank you very much for listening to our investors and analyst call. Yes, talking about the year 2020, Joachim mentioned it already. I'm very, very pleased to report that we have achieved all of our financial targets that were presented to you in our guidance. So from a sales perspective, we anticipated a single-digit percent growth. That is something we did achieve with plus 7.9%. Obviously, this growth is driven by acquisition effects. The acquisition of the Ålö Group contributed significantly. And as Joachim already explained, the sales for the truck and trailer and our transport business have actually declined slightly. The adjusted EBITDA margin, we said we would like to achieve a higher than 12% margin. We did achieve a 12.9% margin and a similar, even slightly better development can be seen for the adjusted EBIT margin where we were targeting higher than 8.5% and actually achieved a 9.2% growth -- margin. Also in regards to capital expenditures, we remained within our long-term target of 2.5% of sales, and this has been our range now for very many years. So we are very convinced that this is nothing unusual, and we will be able to sustain our business on this 2.5% capital expenditure level also in the future. Now let's go into the different regions. You know this presentation format. So Q4 was a very unusual Q4 for us, especially in Europe. Usually, we see a downturn -- not a downturn, but definitely, it's lower demand in Q4 in Europe and some -- in most of the other regions. And this was actually not the case anymore in 2020. We had come from a very soft start due to the COVID and also due to a cyclical downturn. But ever since Q3, we saw a tremendous uptake of the economies globally in our different business fields. And this is also true for Europe at JOST. So you see there that our sales grew not only reported by acquisition effects by 56%, but also organically by 12%. So that is a very, very satisfying result from EUR 89 million to EUR 138 million in Q4 2020. So overall, we're seeing -- for the full year in Europe, we're seeing a growth of almost 12%; organically, a slight decline of 16%. But this is very, very -- I believe it's a good result because what we saw, especially in Q2 in Europe was not too promising, to be honest, but then the market recovered, and we saw very good results in Q3 and Q4. The EBIT development is as expected with much higher utilization rates in Q4. You can see an increase of profitability from 3% EBIT to 10.4% EBIT in Europe. And this is certainly driven by good fixed cost absorption. Very, very low expenses because of the COVID, we had carried out several expense reduction measures already in H1, and they allowed us really to capitalize because they carried on through Q3 and 4. And last but not least, also our latest acquisition, Ålö, performed very, very strongly in Europe and further boost margins in Europe. So we were able to generate an EBIT of EUR 14.4 million in Europe in Q4, and that translates now to an overall adjusted EBIT for the full year of EUR 37 million or 7.7%. North America was probably one of the biggest rollercoaster rides that we've seen. You saw that the market declined by about 40% and -- for the full year, and I'm very happy to report that our organic development was only 21.5% negatively. And I think this is, again, testament to the fact that not only have we been able to gain market shares in the past, but we have also gained market shares in 2020 despite all the difficulties that we saw. And last but not least, in any case, having market share gains means additional aftermarket sales in the years to come, and that is certainly something that we saw in the full year of 2020. So speaking about Q4. Also there, we saw, again, a growth of 5% organically or 51% reported. And this is really marking the shortest cycle in North America in our industry that we've ever seen. So overall, I believe we can say the downturn was less than 15 months. That was very unusual, but we're, of course, happy about that development and are looking forward to the future in North America very much so. Unfortunately, our EBIT margin declined from 10.3% in Q4, which was one of the stronger quarters in 2019 still and to 8.2%. And there are certain effects included when -- due to the relocation of the plant of Ålö from Tennessee to South Carolina, but overall, we still reported a 21% growth in adjusted EBIT from EUR 3.3 million to EUR 4.1 million. Asia Pacific, as Joachim mentioned, our sales in that region, reportedly, for the full year were flat from basically EUR 143 million to EUR 140 million. That is short decline, but those are more or less foreign exchange rate effects. In the last quarter, we saw a very promising development of 17% increase in Asia Pacific in terms of sales from EUR 36 million into EUR 43 million. And this is -- those positive impulses came not only from China, but also the other parts of the Asia Pacific, Africa region performed quite nicely. So it was also in Australia, in South Africa, but even in India, which was a very, very weak country for JOST over the past 2 years. There, we saw promising signs in the market and also boosting our sales in Q4. The EBIT increased significantly from EUR 4.5 million in 2019 to EUR 7.8 million in 2020 for the Q4 results and the margin achieved a record high number of 18% in Asia Pacific. And again, it's a similar story. As you've heard from me before, a very high fixed cost absorption, favorable product mix compared to the previous year, and overall a very favorable market environment in the Asia Pacific region led to such significant improvements in our profitability. So what does it mean for us as a group? As a group, it means we achieved a 12% organic growth in sales in Q4 and reportedly, even getting close to 50%. From a profitability standpoint, this was, by far, the best Q4 that we've seen in many, many years. As I alluded to already before, the Q4 in previous years was usually slower because of the holiday seasons that didn't take place. I mean the holidays took place, obviously, but the markets kind of neglected that, and we saw a very positive development and profitability peaking at 11.7%. So a very, very good development for Q4. And obviously, this improved also our full year results, getting now to 9.2%, and this was not yet visible at the end of Q3. Now a few more details on the financials. We have corrected exceptional items of roughly EUR 48 million. The vast majority of those exceptionals are noncash items. And if you look at the bar on the right, you see the different items. So EUR 29.1 million are purchase price allocation effects. They will continue and carry on for the following years. 9.6% additionally are -- is also attribute to the -- to a purchase price allocation, but it's not an amortization but a use of inventories. This effect will go away in the future and the remainder of exceptionals is quite low. And these are normal optimization or improvement projects that are typical for a group of ours. So nothing unusual except for the acquisition-related effects of 21 -- EUR 20.1 million. So overall, a normal exceptional picture that we are experiencing also in the future, maybe with the exception of the EUR 9.6 million that you're seeing here. The development of net income to adjusted net income is also a very nice one for us. As you can see here, the net income amounted to EUR 19 million in the year 2020. Yes, we did pay taxes, even though you see here a 0 for taxes, but there are -- the actual cash taxes are offset by positive effects on deferred taxes so that we -- with a finance result of EUR 6 million negative, we come to an EBIT -- an unadjusted EBIT of EUR 25 million. Then we add back the already before mentioned EUR 29 million of purchase price allocations, the other exceptionals, and we arrive at the reported adjusted EBIT of EUR 73 million. And if you then go down the bridge again, the finance result of minus EUR 6 million. The -- our pro forma taxes of 30% with EUR 20 million, and we're at an adjusted net income, that is, despite a corona year, in the range of the year 2019. So adjusted net income 2020 amounts to EUR 47 million and the adjusted net income in 2019 was EUR 51 million. So a lot of that obviously has an impact on some of the balance sheet KPIs. Our ROCE declined by -- from 18.4% to 12.2%, and that is pretty much entirely driven by acquisition effects. As you recall, we financed the acquisition 100% with debt. And therefore, we have an increase in liabilities, and that led to a decline of ROCE. Similar picture on the equity ratio, going down from 41% in 2019 to 28% in 2020. But again, this is -- those are the acquisition effects and nothing unusual. So we did expect that before and are not surprised at all. What I'd like to highlight positively is the development of our net debt and accordingly, of the leverage. Leverage declined from a peak in -- at the end of Q2 with 2.84x EBITDA all the way down to 1.99x EBITDA. And this is something that we said when we announced the acquisition. We've always said that we would like to bring EBIT -- the net debt level or leverage into a range of below 2% over the next 2 to 3 years after the acquisition. We are very happy to report that we have been able with the strong recovery of the markets, a very good cash management with the support of all functions in our group. We have been able to reduce it to 1.99% already in year 1. And I think that's a quite a testament also again to the cash-generating ability of our business model. Even though there may have been a crisis, a pandemic and a cyclical downturn all in 1 year, we have been able to bring our leverage down. And that brings me really to our cash flow profile, and you see it here compared to EUR 60 million in a non-corona year, obviously without the acquisition of Ålö, we have now been able to achieve free cash flow of EUR 98 million. This is very positive and helps us to maintain a very healthy financial profile also going forward. CapEx, as I said before, in the range of 2.5%. So here, you see the EUR 20.9 million that we spent and very happy also that significant portion of those investments went into R&D activities. So this is our future. And Joachim already mentioned that a lot of the R&D activities really present a unique opportunity for the future, and we are definitely at the forefront of our industry to develop parts and products that will support also the autonomous driving process of trucks and trailers. Net working capital at a very low rate of 90 -- at 16.4%. There have been some extraordinary effects included, especially a prepayment of some of our customers at the end of the year, but very glad to say -- see it, again, below the 20% range. That is always our target. Also, bear in mind, we are currently not doing any kind of factoring. So that leaves me for -- with the outlook for the next year, and I would like to hand it back over to Joachim, who will tell you more about 2021.

Yes. Thanks, Christian. Okay. What's the market environment for 2021 that we expect? These are the numbers that we consolidated from the prognosis institutes and you can see that the errors are going up more or less all over the world. On trucks and trailers in Europe, the expectation is a 10% to 15% increase for trucks and 20% to 25% increase on trailers. On agricultural tractors, we expect a slight increase between 0% and 5%. North America, a very strong recovery expected, 35% to 40% on trucks; 15% to 20% on trailers; and 5% to 10% on agricultural tractors. Asia, we expect a decline. That's mainly driven by China. I must also say that we have not seen that so far. And we've been expecting the Chinese market to cool off somewhat for the last half year or the prognosis institutes have been expecting that. But we have seen China continue very strong up to today. But for the overall year, that's what the institutes or prognosis institutes expect, minus 10% to minus 15% on trucks and plus 5% to plus 10% on trailers. I should also add that the numbers that we see from our customers, from our OEMs, mainly right now, they considerably increase this or exceed the level that you see here. But we also know that there is some strain in the supply chain. We've seen some of the customers take out production because they have supply chain issues on electronics, some suppliers have issues with COVID pandemic in their plants. So the supply chain is still somewhat under stress, under strain. And -- but what we see from our customers, as I said, in the virtual call-offs, they are higher than what we see in this market. But prudency prevails because there is a lot of strains, not only ships that are stuck in the Suez Canal, but also electronics and other things that may interrupt the supply chain. So we will may be able to prove again our operational flexibility in this year. What's the strategic focus that we have for 2021? I think we have a very solid basis. And that's not only true for the numbers, but also for the overall business model. And we want to capitalize on the innovations and the positive market cycles that I've shown to you on the previous slides and use that to further strengthen our position in the transport business. And of course, we would like to grow our agricultural business that we've acquired, and there we see the biggest opportunities in Asia and Latin America, where we can, based on the organization that we have already in place also at the agricultural business to those regions. We will implement our strategy to reduce our CO2 emissions per production hour by 50% until 2023. That's the commitment and the target that we've given to ourselves and to our customers, and we would like to support, especially our OEM customers in achieving their goals by contributing with our reduction, as I said, 50% CO2 per production hour until 2023. We will continue to deleverage and to further strengthen our financial position. Even though we had made even better progress than we expected, we will continue to progress here. And we will continue to ensure our JOST flexibility to accelerate digitalization in our operations, in our administration and we will continue to maintain our cost and cash focus and to further optimize our performance. This is a continuous fitness program that we are running throughout the year. We have run it last year, and we continue to run it this year. So what does that mean for the guidance for 2021? What are our expectations in sales? We expect a low double-digit percentage growth year-over-year. As you remember, for 2020, we've just reported EUR 794 million. So you should expect a low double-digit percent growth on that. The same on the adjusted EBIT. And that means that the adjusted EBIT margin will actually increase versus today. So EBIT will grow a bit quicker than sales. And therefore, the adjusted EBIT margin will be higher than what we've reported this year. On CapEx, we -- even though we are planning investments, we can continue to expect that we will be around the 2.5% of sales. To summarize the year 2020, it was overall a successful financial year for JOST. Despite the worldwide disruptions that were caused by the pandemic and cyclical downturns that we've had, mainly in Europe and in North America, we could prove our high operational flexibility, the local-for-local strategy and the broad global footprint were key success elements for us to manage this crisis. The acquisition and successful integration of Ålö was margin accretive already in the first year, and it's opening up chances for further growth. JOST achieved an important development or important development milestones on various products in the transport and agricultural sector and it will strengthen our position in the market as an innovation leader. We will capitalize on the good market sentiment that we have on the positive cycles and accelerate the growth in transport and agriculture worldwide. In summary, I think we've learned from this year that the fundamentals of our business are maybe even stronger than they've been before the COVID pandemic, the fundamentals of the transport business and the ag business are intact, and as I said, probably even stronger than before the pandemic. Our business model has proven its flexibility, its profitability and its cash generation. And that's why JOST prepared for future growth. So with that, I would like to complete the presentation, and I'm looking forward -- or we are looking forward to your questions. Thanks for listening.

[Operator Instructions] The first question comes from the line of Frederik Bitter with Hauck & Aufhäuser.

It's nice to see you, at least on the video stream. You're looking good and healthier than after successful 2020, which you managed very well, I think. That's great to see. If I can kick it off, if you could provide an update, obviously, you expected this question now, a trading update on Q1. How did you start into the year? What you see in the regions, what you see in the end bucket? And obviously, we talked to -- with our competitor who closed by earlier this morning, and they were talked about record order intake in Q1, even beating past peak cycle numbers of 2018 and even 2008? Is that something you see as well? Or what's your -- what's the [indiscernible]

Yes, Frederik. Well, first of all, thanks for the question and the compliment. Yes, we can confirm that. We've had a very good start in Q1, and we are running in all regions at a very high capacity, and we see record order intake. As I said, I believe that some of that is really demand that is needed. And some of that is just caution because everybody is expecting stress in the supply chain. But overall, we believe that the underlying demand exceeds what I've been just showing you, and that's the reason why we have very strong call-offs in North America from our customers, in Europe and even in China, where we are all expecting that the market will cool off during the course of the year. But right now, we still -- we see very high levels in all regions, and they do exceed the levels that we've seen in '19 by far.

Okay. That's good to know. Do you have idea how much perhaps like excess orders or like additional order systems just to secure supply basically from your side could amount to? Do you have any idea how much this, and like maybe based on your customer discussions or what you said people are telling you, as a gut feeling for -- I mean it's really strong Q1, but -- so we need to keep in mind that there might be a bit of an excess in the [indiscernible] -- secure supply and then order more than they actually need?

Yes, that would all be speculation to come up with a number. I think there is a demand that goes beyond the previous years, and a lot of that comes just from the fact that the transport is going on. And actually, if you look at the kilometers that are being run on German auto brands, for example, that is higher than we've had before the pandemic. And then you have to keep in mind that we've probably lost about 6 weeks of production over the course of last year. So all that demand is pent up, and that is real demand that needs to go in, and it's actually a bit beyond that. So these are certainly not excess orders. That's a real demand that's coming from the daily operations from running the trucks and trailers on the streets every day at a higher level, as I said, on a level that's even pre-pandemic. And therefore, that is not excess to secure supply chain. There may be something on top of that, but our customers will never tell us. They will always say that this is all they need. And it really doesn't matter because I believe that the overall demand is right now so high because we need to make up these 6 weeks of lost production because that's just what the market needs. And therefore, we have -- we are firing from all areas to get the products out and to bring it to our customers. And so far, we are fulfilling the customer demands, but we are running very high capacity right now in our plants.

Yes, absolutely understood. That's very clear. And then maybe alongside that as well, the -- obviously, the supply chain constraints a lot of companies, OEMs and suppliers are facing at the moment and likely faced at least in Q2, Q3, perhaps. And then we saw Volvo on the truck side saying that they will reduce -- or stop production for up to 2 to 4 weeks in Q2 because of semiconductor shortages. And I was wondering how much are you impacted by generally supply chain constraints? Maybe effectively now, what is your expectations for the next few quarters and how that compares to your OEM customers? Are you much impacted there? And then, maybe in reference also to Volvo?

Yes. I'll start with our supply chain. We don't have any issues with our supply chain right now to get the products into our production. We also don't have any container on that vessel that got stuck in the Suez Canal. But of course, the traffic jam that is being generated on the water may have an impact on some areas. But we don't have any impact there and our customers, however, the OEMs, because they use much more electronic components than we have, and that is the bottleneck at the moment. There, we see the impact. And as you rightly say, Volvo has just announced that they will take out 2 weeks of production next month. And that will impact us, but it will not impact us a lot. Volvo, for example, is around 10% to 15% of our production volume. And we have the flexibility, and we've proven that over the last year to adjust our production to that. And actually, there will be other channels in aftermarkets that will be happy to fill up their stocks. So I don't see a big impact on these 2 weeks now. Now if that becomes an issue that hits every OEM, then, of course, it will impact our sales. But as I said, operationally, we've proven that we can very flexibly adapt to that. And what we see today and what we expect today is well in the range of our flexibility.

Okay. Just good to know. Just a clarification on this one, the 10% to 15% of production volumes. Is that only the truck OE business? Or is that overall group production volumes versus truck OE?

That's only trust -- that's of our truck OEs.

Yes. Got it. Okay, that makes sense. Yes. Perfect. And then...

And actually, that's only Europe, if you think of it that way, because they have not announced any shutdowns for their North American plants.

Yes. In fact, that's correct. Yes, absolutely.

So there are 7 brands of trucks in the market. And if you -- which is not true, but if you just assume everybody has the same market share, then that's 14% for one brand if they close down for a day or for a week. So that's 14% of the daily rate.

Okay. That's helpful, [indiscernible] narrative there as well. And then just that I know, I mean, I repeated [indiscernible] because I think it's a very exciting asset you've got and the integration has been very successful so far. If you could just give an update maybe in terms of percentage from 0% to 100%, where you stand in terms of integration, also optimization of this asset? And obviously, these, I guess, consolidation will be concluded now -- which has been concluded now in the first quarter. Just tell us where you stand and what your ideas are, and maybe future potential you might have detected now?

Well, the integration for us is completed, I would say, 95%. Because in the integration, we've aligned our processes. We've defined how we collaborate. We've defined how we set up the organization so that we prepare the best organization for future growth. And that is all completed. There's a few minor things that we have to carry over and are now being done through the course of the year. But there, I would say, we have a 95% completion of the actual integration task. And that's why we now focus on future growth and use the bases that we have built with the integration with the new organization, with our regional footprint that we already have to focus on growth potential in the ag business. And as I mentioned, we see South America and Asia as the biggest potentials right now.

That's perfect. And in terms of optimization potential, can we conclude from that, that obviously, you're looking at growth now and obviously expanding geographically, that some of the optimizations, everything basically on the cost side, efficiency side, that's all pretty much done now. Is that also included in the integration of the 95% you reached now?

It's included for -- if you refer to synergies, we did identify synergies. This has never been a synergy case because, this acquisition. This has always been a growth story and to help us get into a new market segment. But of course, when you bring things together, there's always synergies and we've identified synergies. They are not all implemented, but we have all the projects in place, and that was part of the post-merger integration program. And now it's the daily work. We added to our daily potential lists in our fitness programs that we have, be it in purchasing, be it in quality and in all areas. So that's now part of the daily operations, and it will bear fruit in the next 2 to 3 years.

Understood. Great. And then the last one, sorry, so many questions, but there are so many exciting things to talk about how unfortunately or fortunately, in your case, for sure. Just in terms of [indiscernible] growth, Ålö related, but also in terms of the M&A strategy and priorities, perhaps. I mean, your leverage is now at the target rate again. You still talk about being careful and being cash conscious. But still, how much will M&A play a role in the promotion growth for Ålö and perhaps for the group going forward, particularly noting that Ålö has been -- so far been quite successful? And integration has been done very well, deleveraging has happened very quickly, quicker than expected. Just thoughts around that would be very nice to hear.

Yes. We don't exclude the opportunity or the possibility of M&A. But it's not that we're out there and look for M&A targets. We look for strategies, for growth strategies, and then we consider what is the best way to do that. And M&A can be one way, and we are not excluding that at this point in time. But we also don't want to become crazy and do an M&A acquisition every year or every other year of that size. It has to fit into the overall strategy. And if it does fit, then we will consider it with ourselves or use M&A. And that will then be a case-by-case decision. So we don't exclude it at all, but it's also not that we have anything on the table where we say, this is what we're going for right now.

[Operator Instructions] The next question is from the line of Philippe Lorrain with Berenberg.

A quick question from my side a bit on Ålö. The performance was great. I was just wondering how much of that might be also cyclical because I have the impression that the situation in North America was actually quite sound? And also perhaps you could give us an indication how you see the profitability of this segment going forward?

Yes. Thanks for the question, Philippe. I don't think there's a cyclical aspect in that. As I said, we expect agricultural tractors to continue to grow even this year. We've had maybe some growth in the lighter tractors, especially North America. Because these, what we call moonshine farmers, these are not the professional large farms. These are the smaller farms. They were more at home, I would say, and then maybe were using more equipment or buying more equipment. But we see that overall to be a trend. And as I said, we don't expect that market to go down at all, quite the opposite. All the indications that we have is that it will remain or even grow. So no, we don't see an onetime cyclical effect in the results that we've seen with Ålö.

So that means that basically the kind of profitability levels we see now are kind of sustainable?

Yes. We've always said that our agricultural business should be slightly more profitable than our transport business, that's just the cause of the business. And Ålö has confirmed that in the first year, and we expect that to continue in that way.

Okay. That's helpful. And then the second question is just, I think that in this annual report here, you don't disclose the amount of sales that you do in the trade channel anymore. Are you going to give more indication about that perhaps during conference calls or the presentation here I found that was quite helpful to understand as well how residential businesses and especially in years such as 2020 to appreciate as well the underlying performance?

Yes. Let me take that question, Philippe. So very clearly, we actually do disclose the aftermarket or trading business, how we call it in our reports. And I can assure you, especially in the transport side, where we saw the cyclical and pandemic affected market downturn, our overall trading business or aftermarket business was really a stronghold for us. So from a traditional, I would say, 25%, 26%, 24% range of overall sales, we were benefiting from much higher trading sales in 2020, that amounted to over 30% of our overall sales. So -- and by the way, for Ålö, it's a very similar development. So overall, I would say we've achieved about 30% of our sales in the trading side and the rest is OEM first-fit business.

Yes, yes, yes. Now that you think about the share. Actually, I see the share is just a number [indiscernible] I wasn't in could you just say whether the share of aftermarket is actually really similar at Ålö because you speak about the performance, but not really the share. So is it something comparable?

So did I understand your question correctly that you're asking if they perform or if the profitability increased on the aftermarket?

No. No, sorry. I was wondering whether the share of aftermarket, the typical one, perhaps not like exactly like in 2020, but let's say, if we take a year like 2019, which is more normalized, is the share of aftermarket sales similar in the ag business versus the truck business?

Yes. It's -- that's what I was trying to say. Ag -- our ag business is very comparable to our transport business when it comes to the share of aftermarket sales.

Okay. And I guess as well in terms of the difference in profitability that should be similar as well, no?

Absolutely.

Yes.

The next question comes from the line of Nicolai Kempf with Deutsche Bank.

Can you hear me, Joachim?

Yes, perfectly.

Okay, perfect. My first one would be on the strong Q4 numbers. And here, I was just interested if they have been supported by any one-off like a short-term work, which could face this year?

Yes. Up -- as we've already said in Q2 and Q3, we've gone out of our way to improve the profitability of the company that was significantly impacted -- negatively impacted by the pandemic, by the overall cyclical downturn. But yes, we did have certain short-term work effects, but I think in Q4, we were already at a level of work that short-term work did not really play a major role. But yes, there were other one-offs like renegotiated rates with suppliers, with the consultants and so on. And so yes, we also did have certain, I would say, corona -- positive corona effects that are included in our results, but they were not as significant as you may think, I would say they were in the 1-digit million range for the full year, not for Q4. so we've tried everything we could, but this did not really impact our Q4 results significantly.

Okay. Understood. And my second one would be just on China, which has been a great support last year. And I mean, you mentioned a downturn in the Chinese market or the market data forecast mentioned this. But I think so far, you are a bit more optimistic on the market. It just maybe because also the articulated trucks are running better compared to the overall market?

Yes, I think that's one effect. But I must say, even the overall market has been a surprise to everybody in the last half year. The downturn was expected and from the institutes also announced. And we all expect it with the transition from 3.5-inch kingpins to 2-inch kingpins that there would have been a pull-ahead effect. We've not seen that. And the market continues very strong. And of course, everybody is kind of waiting for the market to break somewhat, but right now, we still don't see it. And that has helped us in the overall performance. And if you ask me now if -- when I expect the downturn. It's kind of everybody is looking at it and says, okay, let's ride the wave as long as it's there. We don't expect it to fall, and they will -- it will not be a drop, but it was more expected that we would see somewhat of a cool-off. But so far, China, and not only in transport industry, all Chinese industries have outperformed to the prognosis that were done. And it's still running very stable as we speak, and that will continue well in the second quarter because we have orders in until the end of May from our customers. So we don't see it stop. We will see what comes after May. But right now, the levels are extremely high, and we will continue to deliver at these high levels as long as the demand is there.

[Operator Instructions] We have a follow-up question from the line of Philippe Lorrain with Berenberg.

It's just like based on what Nicolai was asking about the Chinese truck market. Would you share the view that probably the comps are a little bit tougher going into H2 than in H1 because we had the COVID crisis last year, of course, hitting the stats? It did concern what I hear from [indiscernible] So would you share that you that probably if the cool down comes, that's towards your end?

Yes. Yes. Yes, we share that view. And also the Q2 of 2020 has been extremely high. So if you compare to that, we will probably see the market a bit cooler than that.

At this time, there are no further questions. I hand back to Joachim Dürr for closing comments.

Okay. Well, thank you very much for all your interest. I think we've said everything that you need to know. We have a very solid business model. We've just discussed it that ag business and transport business, in my view, have a very bright future and even at levels that are tad higher than what we've seen pre-COVID. Our business model works well, and we are looking forward to a strong year 2021, where we can capitalize on that solid basis. So we would like to thank you all for your interest. Stay healthy, and we're looking forward to hear from you or see you in-person, hopefully, soon. Bye-bye.