JOST Werke SE (JST) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining JOST Werke Q3 2021 Conference Call. Throughout today's recorded presentation, [Operator Instructions] Our speakers today are Joachim Dürr, CEO of JOST Werke AG; and Christian Terlinde, CFO. I would now like to turn the conference over to Joachim Dürr. Please go ahead.

Thank you, Stuart, and a very warm welcome from Neu-Isenburg to our Q3 2021 Investor and Analyst Call. We had a third quarter with very strong demand worldwide power products and -- but also with very volatile supply chains and unprecedented material cost development. With our flexibility, we were able to deliver a quite strong Q3. The highlights were that we increased our sales by 28%, and we achieved a Q3 record of EUR 252 million in Q3 2021. Our adjusted EBIT grew by 20% to EUR 24 million, and the adjusted EBIT margin was 9.6%. The Chinese market downturn and the truck market disruptions due to the semiconductor shortages could be offset by our global presence and our worldwide customer base. The underlying demand and transport of agriculture continues to be very strong, with some demand shifting into 2021 due to the existing supply chain constraints. We have increased our outlook for 2021 and assuming there will be no shutdowns at our customers due to semiconductor or COVID incidents, we target for a sales volume of EUR 1 billion for 2021. So let's have a look at the market development in Q3. And this is a comparison between 2021 Q3 and 2020 Q3. And we can see that compared to last year's quarter 3, we have a strong development. However, if you remember the previous estimations, the development is much weaker than initially thought. And that's true, especially for trucks, where you see the supply chain issues and especially the semiconductor shortages, limiting the growth rates. So for Europe, we have had a Q3 growth of 4% in the truck market. Constrained, as I said, by the semiconductors. In trailer markets, we don't see these constraints as much, therefore, we had a growth of 31% compared to last year's Q3 and on the tractor market of 8%. JOST was able to increase the turnover at 25%. North America, here, the expectations have been much higher, but we still see good growth rates, 6% in trucks, 38% in trailers and about 10% in the agricultural tractor market. For JOST, we were able to increase our sales by 63%, which is substantially above the market, and it certainly also includes already some price effects that we were able to transfer to the market. Asia-Pacific-Africa, here, the consulting institutes have found a 48% reduction. China plays a lot of weight in this because we have seen China markets go down quite strongly, but we're able to compensate some of that with very strong Australia, South Africa and India performance. On trailer markets, the market has developed with a plus 12%. JOST overall, had only a minus 1% in that region compared to last year's quarter 3. So I think overall, we can be very satisfied with the JOST development in those market conditions, and Christian will lead you through more details about the regions. Christian?

Thank you very much, Joachim. Good morning, ladies and gentlemen, also from my side. Welcome to our conference call. And as usual, I would like to -- I have the pleasure to go with you through the different regions of JOST and then speak about some balance sheet-related items. So first of all, we start as always, with Europe, our strongest and biggest region in terms of sales, as you often pointed out. We have achieved a very high turnover of EUR 146 million in Q3, and that brings us already for the year-to-date figures to EUR 460 million in organic -- in sales that converts to an organic growth compared to the, obviously, pandemic-ridden year-to-date Q3 2020 of 30.4%. The strong sales growth in Q3 was achieved despite a significant reduction of the truck production volumes due to the -- as you probably all know, to the semiconductor shortages. And so they -- these -- that led to some very abrupt disruptions of the production in our plants because the truck OEMs were canceling or postponing call-offs at very short notice. So sometimes these notices came a week before the actual pickup would have been. The trailer demand remains very high as the chip shortages really affected more the truck OEMs. And the order intake continues to be rather strong in both transport and agriculture. Our result, our adjusted EBIT grew by 12% to EUR 10.4 million in the quarter. And year-to-date, we have achieved an 81% growth to EUR 41.3 million year-to-date, the 9 months of '21. As Joachim mentioned already, we have implemented price increases with all of our customers to compensate for the sharply rising material costs. With this, we specifically, at JOST, are talking about steel, this is our main ingredient for our product and our main component. And -- however, we all know that the development has not ended. So the prices continue to rise, and this will place also a burden on Q4. The -- on top of that, we are seeing supply chain constraints, especially with transports from Chinese or the Asia Pacific region in general to Northern Europe to Europe and especially also to North America, where there is a strong demand for all sorts of products, meaning containers to be put on ships and it makes it challenging to receive all the goods needed to fulfill the high demand that we're seeing. And so it's not only the disruptions in the supply chain, but obviously, the high demand goes hand-in-hand with extremely strong increases in transport costs. And this is especially for our agricultural business, a significant burden. But overall, I think a 81% growth compared to the year before and EBIT margin now at 9% for the region Europe, which please bear in mind, this region covers most of the headquarter costs, for us, it's a very positive development, and we're happy to see that. Now we would go to North America. You often pointed already out that with a growth of 60% in the 9-month or 63% in the month of -- or in the third quarter, we're quite happy to see that. We are benefiting in this region, certainly from our growing market position and that is supporting our development. And here, I think it's also necessary to point out once again, in most of our -- in a lot of discussions that we are having, everyone is talking about our truck market position. However, bear in mind that we have a very, very strong and we are the clear #1 in terms of landing legs in the U.S. And therefore, with a growing trailer market, we would benefit from that as well. So sales grew, as I said, 63% to EUR 67 million, and the strongest growth was achieved in the transport business again, and there are more trailer than truck because also in North America, the truck OEMs were suffering from material shortages. And therefore, the growth on the truck market was not as high as it was in the trailer market. The result grew by 152% to EUR 6.4 million and therefore, outpacing sales and the margin improved to 9.5%. Bear in mind that Q3 2020 was probably the quarter in North America that was mostly affected by the coronavirus, where we saw extended summer shutdowns with most truck OEMs. And therefore, you see this very, very high growth compared to prior year. The aftermarket portion in North America went slightly down compared to prior year, not unexpected because last year, most significant higher portion of our sales went into the aftermarket, close to 30%. Now we're about 27%, and that's also contributing to the very positive margin development. Last but not least, our region, Asia-Pacific-Africa, with basically a two-sided picture or we're talking about the Chinese market, we said already beginning of the year, we knew that with the new emissions regulation, China VI going into effect on July 1. We would expect -- first of all, we did expect and we did see significant prebuy efforts by our customers in the first 2 quarters, and that went hand-in-hand with a significant drop then in Q3, as you can see, where the truck market significantly went down compared not only to the second and first quarter, but obviously also compared to Q3 in 2020. And China 2020 with the exception of Q1 was a rather good year or a very good year, to be honest, because China was the first country affected by the coronavirus, but was also the first to come out of those restrictions. So Q2, Q3 and Q4 in 2020 were very, very strong in China. So our reported sales declined by 1% overall in the region, and that was specifically caused by counter or compensating measures -- or not measures but compensating higher sales in the other countries. All other countries, we saw sales growth with the exception of China. But the biggest contributions were coming from the larger countries like Australia, South Africa and India. So looking at the adjusted EBIT, the adjusted EBIT declined compared to the prior year by 19%. But year-to-date, we are still 71% higher than we were a year ago. And the margin is in line with the 9-month margin of the last year pretty much. So we were, last year at a -- or sorry, yes, with the margin somewhat with last year. So overall, it's the highest margin and -- that we have by region. And the main reason for that is that here, we are selling significantly higher portion of off-road and heavy-duty couplings, which are always coming with a higher margin than the standard on-road couplings. Let's look at the group. The group achieved now a year-to-date sales number of EUR 783 million. This is a record number for JOST, and Joachim will speak about the new guidance, but we are already more than -- we've already achieved more than EUR 0.75 billion in sales this year. So our outlook is quite positive. We have seen the typical summer seasonality for the group. And as I said, we have seen the very much expected downturn of the Chinese market. But overall, our sales grew by 26.5% and our result grew by 20% in the quarter. And overall, for the year, we are seeing year-to-date 82% EBIT growth, amounting now to 84% -- EUR 84 million. So as we said, we have implemented price increases to all of our customers. And -- but we need to bear in mind that since those price increases usually are implemented with a time lag, we will not see the full year effect before next year. So next year, we will certainly see the full year effect of those price increases. But on the other hand, we are still seeing continuously rising material prices. So this is really the picture on sales and profit. And now let's talk about some of those other bridges that you've known. So our development of net income, you see we have had, well, first of all, significantly higher income taxes, starting with a net income of EUR 34 million, which is much, much higher than EUR 5 million we achieved last year. We've had much higher income taxes, which are natural. Our finance result went down slightly from EUR 7 million to EUR 5 million. Main reason for that is, obviously, we're paying slightly lower interest rates because the leverage at year-end and also throughout the year was better than we had, had last year. The other thing is we are enjoying some unrealized foreign exchange rate gains, especially from the deterioration of the Swedish krona and the British pound. So that brings us to an EBITDA of EUR 46 million. Then you see the usual adjustments, depreciation and amortization of purchase price allocation-related results is pretty much the same as last year, EUR 21 million, then you've already seen that number, EUR 13 million of extraordinary expenses for the sale of our JOST U.K. business. And then we have only EUR 4 million left of other exceptions and this compares to about EUR 13 million of exceptions in the last year, which were related to the acquisition of Ålö. Overall, we achieved an adjusted EBIT of EUR 84 million, as already said. And then we do the normal walk, finance result is the same, EUR 5 million, then we have to apply a pro forma tax rate of 30%, which would convert to EUR 24 million. And therefore, our adjusted net income is EUR 55 million, and that is now 203% higher than last year. Look at some more financial KPIs, ROCE improved from 12.2% at year-end last year to 17.6% and the improvement versus Q3 2020 is even higher because there, we have achieved an 8% growth from 9.6% to 17.6%. It's also higher than in Q2 and therefore, a very positive development. The equity ratio that is always very -- the threshold is basically 30%, that something like a margin that most banks enjoy to see. So we're at 30.8%, and that's 3.5 percentage points higher than last year despite the fact that we paid a EUR 15 million dividend to our shareholders. The net debt development is also quite positive. We are below the 1.5x EBITDA threshold. So we're now at 1.47x. Overall net debt amounts to EUR 206 million. And so you are seeing that we are constantly deleveraging. So basically, our business model with very high cash flows, is still absolutely intact, although I need to speak about the cash flow on the next slide. But overall it's positive. Leverage improved significantly, and we're quite happy with this deleveraging, bearing in mind that only 1.5 years ago, we have taken on over EUR 200 million in additional debt for the acquisition of Ålö. And now we're already at a level of 1.47x net debt. So that's quite good for us. Our cash conversion is pretty much in line with the prior year and previous quarters. So we're at 85.3%. Last year, we were at 83%. So that is in line. Free cash flow, the positive thing, is free cash flow with EUR 18 million is a positive again last -- after Q2, we were basically breaking even only. And this is despite a very strong increase in working capital. And in working capital, what we're seeing there specifically is a very high increase in our inventories. And this goes hand-in-hand with what I've said before. When truck OEMs canceled at the very last minute, we will definitely see much higher finished goods inventory, and this is what we are seeing. So the planning is less possible and this goes at the expense of inventory. Another thing that goes at the expense of inventory increases is the fact that we have supply chain disruption. So sometimes we are missing some parts, and if we miss the parts, then the semi-finished product cannot be finalized. And therefore, we're also seeing a significant increase in semifinished parts. So this is the negative trend on the inventory, but I can assure you, we are working on this. And overall, with the EUR 18 million, we're happy to have the positive cash flow, but it's not what we would like to see in a normal year. But this is not a normal year that needs to be kept in mind. CapEx with EUR 4.6 million is absolutely in line with last year. So it's the exact same number, with the higher sales. Of course, the percentage of sales is going down. We're now at 1.8%. That CapEx is something that we don't -- we obviously have the goal and target to be below or at 2.5% of sales, but CapEx cannot be planned within a flip of the switch. So it takes some time, and we have a certain CapEx plan that we're sticking to. We are also assuming that we will probably not achieve the 2.5%, but this is not negative, but okay, we're saving the cash for next year. And the net working capital is now again below 19.4 -- below 20% mark at 19.4%. In Q2, we were at 20.3%. And I've already spoken about the development of inventories and basically net trade receivables and trade payables are increasing in absolute terms because of the growth in sales. But overall, it's still better than before. It's better than last year. And we are confirming our target to end up below 20% of sales for our net working capital. And with this, I would like to hand it back over to Joachim, who will speak about the outlook for the remainder of the year.

Thank you, Christian. So let's look at the market outlook for the full calendar year 2021 as compared to 2020, which as you all remember, had obviously a COVID impact included. We do see overall growing markets compared to last year, even though the growth rates that you see on this slide are a lot lower than what you saw 3 months ago, and that is because of the already mentioned restrictions that we see the global supply chains and especially in the semiconductor supply chain. But overall, we expect for the year in Europe truck market growing by 10% to 15%, then that's less than the trailer market due to the mentioned semiconductor shortages. On trailer, 20% to 25% and tractors, 5% to 10%, on agricultural tractors. North America, even higher growth rates. There used to be estimates of about 40% for the truck and trailer. Now, the estimates are between 25 -- 20% to 25% for truck and 25% to 30% for trailers. And 15% to 20%, quite significant, for agricultural tractor, which usually is a much more stable business. APA, for the market, the expectation is that the contract by 10% to 15% for truck and by 5% to more or less swap market in the trailer business. So with that market outlook and the performance that we've seen up to Q3, we would like to adjust our guidance and our outlook for the overall year 2021. As already mentioned, we expect sales to grow more than 25% year-over-year, and we are targeting that all -- if we don't see any shutdowns due to semiconductor or COVID issues with our bigger OEM customers, we are targeting the EUR 1 billion mark for this year, first time in our history. Our adjusted EBIT will grow more than sales, so that despite the material cost increases and the supply chain challenges, we expect to increase our adjusted EBIT margin over the 9.2% that we've had in 2020. CapEx will be around the 2.5% of sales, with the growing sales, maybe a little shy of that. So that's for the new guidance. And then I would like to come to the overall executive summary of this call. So we had a strong Q3 in 2021 despite the already expected market decline in China and the semiconductor shortages that have been affecting mainly the truck production volumes. The logistic disruptions and the sharply rising steel prices did affect us in Q3, but we were able to compensate that, partially offset it with the price increases that we forwarded to our customers. North America was our strongest region, repeating the benefits of the strong market share growth that we have had in the past. The net debt leverage and the equity ratio improved considerably, and I think that's a real good win, especially taking into account, as Christian said, that we've only closed the -- JOST's largest acquisition in January of last year and we are back to an asset leverage of below 1.5x and an equity ratio above 30%. So we are looking optimistically into the remaining fiscal year, despite the challenging environment and therefore, have raised the guidance for 2021. With that, I would like to thank you for your attention, and we are open for questions.

[Operator Instructions] First question is from the line of Jorge González Sadornil from Hauck & Aufhäuser Private Bankers AG.

I was wondering if you can give us some color on the normalized revenue for the APA division? As we have seen this year, there have been a lot of different effects because of China VI and also the supply chain issues and because we don't have a split of the weight of the different countries in that division. I think it will be interesting to know what you consider a normal year for this business? Also another question will be -- if you can give us also add some color about the implications of backlog that you have now, what it means in terms of price increases for next year compared to the current situation and what we are seeing now in the P&L. So we expect increases -- material increases of prices next year for the trucks and the trailer business?

Jorge, thank you for your question. Let me start with the first part, your question about a normalized revenue for Asia-Pacific-Africa. That's quite challenging to answer. Maybe because the region is very, very diverse and the economies do not -- within the different countries are not going hand-in-hand and in tandem. So it's very, very challenging to tell you what is a normalized revenue. What I can tell you from the past is that China, on average, over the last 4 or some years, made up roughly about 50% of the APA revenue. So the remaining were split between -- and the big countries have been traditionally the ones that I already mentioned during the call, and that is South Africa, Australia and also India. But we are always seeing -- and this -- but that is fluctuating. A good contribution also from our Southeast Asian business where -- which covers Indonesia, Thailand and Singapore. As I said, so once again, the Chinese market contracted this year. So there was a sharp drop in Q2 or after Q2. But overall, this year, China may not be 50% of the overall revenue, but going forward, I would expect China to come back next year. And I would also expect that China will probably make up about 50% of our APA's sales. That would be our normalized assumption for the APA region. We are hopeful and very optimistic about the development in the Pacific part, so that is New Zealand and Australia. They've recovered from rather weak sales in 2019, when there were a lot of bushfires and a lot of business interruption. Despite COVID, they have been doing quite well in 2020, but even better now in '21. And also South Africa has been very strong. And South Africa is, for us, that is where the sales are generated. However, we cover basically the whole Sub-Saharan area out of South Africa. So all the parts that are sold into other African countries, which are Sub-Sahara, those will be accounted for in South Africa, and that's -- so with the African continent also, with the growing demand there, it should potentially increase. I hope that gives you a good indication, but you know as good as -- or as well as we do, that the APA region is quite volatile, and there are lots of fluctuations in sales, and therefore, it's -- there is no real normalized revenue. With the question -- with the other question, I would like to hand it back over to Joachim.

Okay. Yes. Okay, your question concerning price increase. Maybe before I come to that, just adding to the China -- the expectation for China for next year right now is that it still will be below this year, and that's because we had a very strong first half year in 2021, which is -- which was about 4x the volume for trucks that we are seeing right now on a monthly basis. And so that is the current expectation. But the rest, for the normalized as Christian said the 50% of China, that's probably what we would normally calculate. Concerning the price adjustments to our customers, you asked for the impact on the backlog. The backlog is not really that relevant, because typically, we do not have fixed prices when we take the order, but we have fixed prices for when we take the order, but linked to a delivery date. So we don't have the cases, and I think that's what you may have been asking for, that we have frozen in the price until mid next year, when we are taking the order. The biggest impact anyhow are the OEMs, where we have material floaters agreed. There, we have the typical delay and Christian mentioned that in his presentation a little bit that we will be seeing also in Q4, still the fact that we have not totally forwarded the price increases because the adjustments are done over an average, anywhere between 6 weeks and 6 months. So that means the full price impact on material prices will only be transferred at beginning of next year. And in the fourth quarter, we will still have only partial price impacts transferred to our customers. And overall, as mentioned earlier, this will always be a partial impact only, even though we're doing I think a quite good job in negotiating in a very fair and open way with our customers. But we also have other impacts like inflationary impacts, especially freight costs, but also energy costs in the North America also labor cost that we cannot automatically transfer to the customers. That will be a longer period of price negotiations to bring that back to the normal levels or to bring the cost down if that happens earlier.

Please allow me a quick follow-up on the APA region revenue for next year. Is the rest of the business outside China -- well, has the rest of the business the same mix? So are the margins similar in the rest of countries for that region?

No, there -- Jorge, no. The margins are very, very different. We have different market price levels in all regions. And as I mentioned, for instance, the Southeast Asian business, that is predominantly heavy-duty and heavy-duty couplings come with a much, much higher margin than the standard on-road couplings, which we typically would sell in China. And also keep in mind that China itself, we have spoken about that last year a lot of times in China. We had another norm going into effect that would ban 3.5-inch couplings from being allowed to sell for on-road transportation. We are still selling 3.5-inch couplings in China and so we are still not certain if and when this will be totally banned. But obviously, the Chinese government is not enforcing that regulation. But also in South Africa and in -- especially in Australia, we are selling a lot of those heavy-duty couplings, and that means that the margins are quite favorable there compared to the strong on-road business in China. So there's also -- China is certainly not our highest-margin country. That needs to be said.

[Operator Instructions] The next question is from the line of Nicolai Kempf from Deutsche Bank.

So my question would be on the production disruptions. You've seen in the third quarter, we hear from OEMs that October is improving. And I just want to know if you can confirm this?

Your question is if it has been improving?

Yes.

That's a tough question. But I would say not really. I mean we are seeing less of the really short-term call-off changes. But we just recently, at least here in Europe, have received adjustments that will hit the next coming weeks. So there may be a slight improvement. But overall, the situation is still very volatile for our truck OEM customers, and they transfer that volatility into their supply chain, which we are part of.

Okay. Understood. And just one more on trailer side, which was quite strong in the third quarter. Do we expect the downturn here? Or do you think that they can continue to grow in line with higher truck sales next year?

Well, I think the trucks will probably have more opportunity to fill up what they have missed this year. But also the trailer markets and the feedback that we get from the trailer customers will continue strong for 2022. So right now, there's all signals from the trailer market in North America and Europe are continuous strong market throughout 2022.

Next telephone question is from Alexander Wahl from Stifel.

The first one is just a clarification on your third quarter results. Could you maybe elaborate a little bit on the different components adding to your top line growth, specifically volume versus pricing. So how big was the pricing tailwind is basically my question. And the second question relates to sort of getting reimbursement for higher cost, specifically when it comes to those costs that are not covered by price glide clauses. So my question to you is for which sort of or kind of reimbursement you're actually going for? Or how the mechanisms usually look like? So do you aim to get any immediate monetary reimbursement for costs such as higher logistics, LNG, et cetera? Or do you expect to receive compensation from OEMs in the form of better pricing conditions on future contracts that we might only see in 1 or 2 years' time?

Yes. The first question is a bit hard to estimate, but overall, rough estimate would be that the pricing impact or the benefit from higher prices, not volume dependent would be in the third quarter, around EUR 15 million. And mind you, in the first 2 quarters, that was only marginal. So this is more or less the same number that you would see for the first 9 months. As I said, the real price impact, part of it will be in Q4, but unfortunately also on the price side of the suppliers. And then the full transfer will only happen in 2021 -- '22, I'm sorry. Your Second question was?

If we're getting lump sum payment.

Yes. How we are able to transfer the rest of the cost increases. There, I think you have to distinguish between the OEMs. For the OEMs, where we have long-term contracts, the -- we're right now only able to adjust the material impact of the price impact that we're seeing. But that's on our OEM business, where we have dealer business, and that is around 30% and also on some of the smaller OEMs, we have annual negotiations in those annual negotiations, there, we will bring these price impacts in. So overall, I would guess that in 50% of our volume, we are right now only able to address the material impact. And in the remainder, we are addressing all impacts that we have in the negotiation, but that does not mean that we will be able to transfer the full impact to those customers.

Okay. Thank you, Alexander. And Joachim, I think we are now -- because we do not have any more phone questions, we will now move on to the webcast and see what questions we have there. The first question is coming from [ Pierre Castela ], and I think this would be for -- so his question is, are you seeing some of your competitors dropping out of the race on the back of all the issues, logistic, raw material prices that you talked about? It seems that your market share gains are accelerating, in particular, in the U.S.

Thanks for the question. No, we don't see our competitors dropping out of the race on these issues. I think we have a very good market position. And of course, we are benefiting from that, especially in times where you have limited ability to get the attention of your customers. It's hard enough to get it on all the price discussions that we have. But it's also -- it's probably hard for somebody else to attack us if the customer -- and that does not only mean OEMs, but also the end customers, the users of the trucks have other things to do. So they just take whatever they have and what they have good experiences with. So I think we are benefiting from a strong market position from our reliable products and also from a very good customer relationship. But I don't see anybody else dropping out at this point in time. So in the U.S., especially, I think, as I mentioned, the growth has a considerable amount already in price impact. So that's not -- a part is not volume growth, that is price growth, but there's also volume growth due to the market and probably also some market share gains and upselling, where we are selling higher value components than in the past.

And the second question is also coming from [ Pierre Castela ], who is asking regarding the lag that seems to be a worldwide issue of truck drivers, what are the short-term implications for the transport sector?

Yes. So that right now, there has not been as much of a discussion, but I'm sure that discussion will come very quickly, because in North America, we have already an issue with labor in general. And also in Europe, the older generation of truck drivers is retiring. So right now, with the lack of equipment that has not been so much of a discussion, but that discussion will come. And the implications will be that the drive for more comfort in the system and more preparation for autonomous systems will continue. And that's why it's so important that we have new products in the pipeline and that we have launched this new KKS system, which is the first factor in autonomous coupling. And the customers that are using those systems, they see next to the efficiency gains that they have, to see a big benefit because they are able to retain drivers that are older, that are not as capable, also female drivers that may not -- they do not like to get up and down and open the coupling, which is a very heavy task to do. And so we are -- from a technology standpoint, that will be driving technologies that can give more comfort and safety to the drivers.

Okay. Thank you very much, Joachim. And I believe there is a follow-up question on the call, so we can take that now.

Yes. So we have a follow-up telephone question from the line of Jorge González Sadornil from Hauck & Aufhäuser.

I was wondering if you can comment a little bit more on the exposure of your agriculture business in APA? Well, I understand that this is something that maybe you are going to tell us more during the Investor Day. But I was wondering if the percentage of exposure you have in revenue is still below 1%? Or if you have progress in this field? And also taking into account that you are reducing your net debt position strongly, and next year is potentially possible that you are at 1% -- onetime net debt to EBITDA or even below. Are you considering to make any acquisition to complement the agriculture business in Asia?

Okay. Yes, on agriculture Asia, it's currently not an active market for us when we started with our agricultural business or when we did the purchase of Ålö beginning in January of last year, they were only active in Europe and in North America, and that is still the case today. So we've been focusing on gaining market share there on -- with existing customers, but we have not entered the Asian market. So yes, we are still below 1% of sales in agriculture for our Asian markets. But we've always said that South America and Asia are target markets and that we are planning to enter in those markets. And that could be via an own activity or while -- or using an M&A opportunity. So these are still the -- both options that we are still considering to do that.

With regards to your question on the net debt development, obviously, we're hopeful that we can continue the deleveraging for the near future. And I mean it is part of our business model. So I don't see any reason why that wouldn't be the case. We have not yet discussed any dividend distribution, but I assume there will be another dividend next year. And therefore, we are generating cash. And like Joachim said, M&A is not out of the picture. We are constantly screening the market, but not only on the ag side, but there are also potential targets on the transport side. And we are actively looking into that, but I can assure you will be as prudent and as well, we're careful to make an acquisition, and we are not willing to pay every price. This has been the case with Ålö. We have made a good acquisition there. And we will exercise the same caution and prudence, and with the next acquisition that they may come. So this is what our plans are, and I believe we will continue to deleverage at least for the time being. And then we have another follow-up question also on the web. The question is, are there -- it's coming from Tristan Steinkamp. The question is, are there any other regions or countries that are considering regulation around trucks or trailers that would be beneficial for JOST?

Yes. So there's two answers to that. Regulations, we are waiting, but we are waiting for many years now in a change to -- or a change in regulations in India, where you can actually register truck and trailers separately. That would allow a big improvement in productivity when it comes to logistics, that today is not the case. But knowing the Indian government and the Indian processes, I'm not expecting that to happen this year or next year, to say it like that. But that would be one regulation that would really change the utilization of transport equipment in India. Other than that, I do see an overall trend that may or may not be reflected in regulations, but an overall trend to more safety and to more comfort, especially we've mentioned already, the drivers are getting older. And it's important to attract new groups as truck drivers, and therefore, comfort and safety will play a bigger role. So automated systems, remotely automated systems or even autonomous systems will gain market share. I don't know of any country who has a regulation change as far as legal regulations, but we do see it from companies themselves that chemical companies, for example, force their logistic providers to use sensor equipment when it comes to coupling to ensure that the vehicles are safely coupled when they enter or leave their premises or when they drive around their premises. So we see a lot of that on a local level, but not necessarily reflected in legislation.

Okay. Thank you very much. I believe there are no further questions, either on the web nor on the telephone? So...

That is correct. There are no further questions. And I would like to hand back to Joachim Dürr for any closing comments. Please go ahead.

Okay. No, nothing left, but to thank you for your attention. And we're looking forward to continue the story in Q4 and to complete the year as guided in this call. So thanks very much for your attention. Stay healthy. Thank you very much. Bye-bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.