JOST Werke SE (JST) Earnings Call Transcript & Summary

Yes. Very good morning from Neu-Isenburg, and a warm welcome to our investor and analyst call for the full year results 2023. 2023 has been a good year for JOST. And therefore, I'm happy to share with you some strategic insights and also some financial highlights. Let's start with the strategic highlights of last year. JOST was able to expand its product portfolio through M&A acquisitions as well as own R&D activities. We have expanded our geographical footprint through a greenfield investment in India, and M&As in Brazil and Finland, mainly in the area of our agricultural business. We've signed new OEM customer contracts in transport and in agriculture as well as in construction and that will enable us to boost mid-term growth. We further improved our carbon footprint reduction to support our customers' requests, but also to mitigate climate change, and we find that a very important topic also for our internal purposes, not only for the customer purposes. And we have group-wide gains in production efficiency paired with product portfolio adjustments, and they enhanced our profitability in all segments, which you will see in the financial numbers. But let's come to the product first. It has been an important year because we could also expand our product portfolio. And we've added products in our agricultural range, and these are the orange plus signs that you see. Those are the 3-point linkages, the coupling hooks and the pick-up hitches for the rear of the agricultural tractors but also counterweights and centerbooms for agricultural machines and construction machines. In the Transport segment, we've added the BusLink Systems, where we also have new contracts with OEMs. So last, not least, let's come to the financial highlights of 2023. Our sales at EUR 1.25 billion were more or less on last year's level with organic sales in Transport up by 9%, which could offset the decline that we've seen in agriculture of minus 25%. Our adjusted EBIT margin expanded significantly, 1.5 percentage points to 11.3% and adjusted EBIT reached a record level of EUR 141 million. Also, the free cash flow increased significantly to EUR 112 million, and the leverage could be improved below the 1.0 multiple of net debt versus adjusted EBITDA. Adjusted earnings per share, up 8% to EUR 6.24 per share, and therefore, we raised our dividend proposal 7% and propose EUR 1.50 per share as a dividend to the Annual General Meeting. So we could achieve all the financial targets in sales, EUR 1.25 million (sic) [ EUR 1.25 billion ], which is in line with previous year's level, as we've announced and planned. We said we would have a high single-digit growth in adjusted EBIT and increase our adjusted EBIT margin. Also there, I already mentioned 14% higher EBIT, 11.3% EBIT margin, checkpoints on both boxes. CapEx, we are in the range of 2.5%, which is our normal range for CapEx without M&A acquisitions. And leverage, we could dramatically improve much lower than previous year even below the 1.0 mark. The market has been supporting us last year. Just to give you a bit more insight in the market environment of last year, truck markets in Europe had a record high level, especially in the first quarter because of pent-up demand that we've seen from post-COVID and our customers struggling to get their operations back up after COVID and all the logistics problems that they've had. So plus 14% in the truck market in Europe, plus 4% in North America and 31% in Asia Pacific and Africa, mainly driven by the Chinese market. On trailers, year -- starting last year 2023 in Europe. But in the second half of 2023, we saw already some contraction in the market and weakening of the market. In North America, trailer demand was stable, actually slightly growing still. And also in Asia, we had a robust trailer market. Those strong transport markets helped us offset the weakness in the tractor markets. We've seen minus 4% tractor production in Europe and minus 9% in North America, where the compact tractors had a much bigger reduction than the high horsepower tractors, and we are very exposed to the compact tractors in North America. So for JOST, that meant minus 3% in Europe, more or less compensating the tractor weakness by a strong truck and trailer market. Minus 8% in North America, where we, as I mentioned, were exposed to the small and compact tractors but also could offset it with a stronger trailer market to a certain degree. And Asia, a big growth of 30% in Asia Pacific and Africa, with a slowly recovering Chinese market, but also all the other markets on a very good development last year. So that's the summary of last year. And with that, I will hand over to Oliver to give you some more details on our key financial figures. Oliver?

Yes. Thanks, Joachim, for the overview, and hello, and welcome from my side. Let's jump now into the details and a little bit different to our intra-year quarterly calls. Let's focus a little bit more on the yearly numbers, starting with Europe. Profitability has improved significantly despite the challenges we had in the agricultural segment. You see for Europe that sales with a reported decline of minus 1.1%, suffered from the agricultural business, but more or less, the strong demand that Joachim just mentioned for trucks could offset that weakness and also the weakness in trailer. And that effect was even more significant in the fourth quarter, whereas there, the consolidation of our 2 recent acquisitions, Crenlo do Brasil and LH Lift supported the denominal growth as well. On top, we had significant FX headwinds throughout the year, finally, resulting in minus 2 percent points sales decline just from that effect. If you look on the EBIT margin for Europe, as mentioned in the header, significantly improved from 6% to 6.7% for the total year, which is an absolute EBIT growth by 10.5% up to EUR 46.2 million. And this is done by a tremendous job in our transport team just, I mean, realizing the momentum within the truck market and all the scale effects that helped us here. But also on the other side, not despite the weaknesses in the agricultural segment, the plant manager there did a tremendous job in terms of cost control to safeguard our margin here. Overall, also, the ease up in the supply chain as well as a lower freight costs supported the margin development and the absolute EBIT development here as well. There are some specific effects in quarter 4. We were burdened by a negative product mix there and a much more strong seasonality than we anticipated. On the other side, as I mentioned before, to safeguard the operational efficiency in our agricultural plants, they took a little bit longer year-end breakout, which for sure supported the overall margin, but the absolute EBIT is affected by that. So that's in a nutshell, Europe. Let's go to North America. Another very successful story, a very strong profitability boost despite a sales decline. The robust demand went throughout the whole year with a slight decline only in the last quarter. We also had a North America FX headwinds a little -- even a little bit more than in Europe, it's minus 2.5 percent points. And we had a very sharp decline in the compact-loader market, as Joachim mentioned before, to deal with that. All in all, led to a sales decline reported wise by minus 10.6%, down to EUR 354 million organically. So adjusted for, especially here in North America, the FX effects, it's a minus 8.1% decline for the total year. And in quarter 4, the organic sales decline is minus 28.7 percent point, and that's because of the very strong decline of the agricultural market just in the fourth quarter. When we look for North America into the EBIT numbers, exceptional good result. Absolute EBIT went up to almost EUR 45 million. That's a growth of 25% and a full year margin of 12.6% versus 9.0% last year. And what you can also see are supported by a very strong year-end run where we had -- or where we could incorporate several effects where we worked out all the year like the portfolio cleanups, our negotiations with our customers and so on and so forth. And on top, we had a very strong aftermarket business in the last months of the year, ending up also in the fourth quarter with a record high EBIT number of EUR 15 million or 22.5%. But for sure, we have to mention you need to look more on the full year results as this number just for the fourth quarter is affected by that one-off effects as written down here as well. Let's go to our third segment, the Asia-Pacific-Africa region. There, overall, we had support from strong market demand in general. So sales went up from EUR 173 million to EUR 208 million. That's an organic growth of roughly 30% because also here, we had strong FX headwinds of roughly a bit more than 10 percent points. Overall, especially our markets in India, Australia, New Zealand and South Africa, where we have also very strong off-road business with higher margins supported that growth. But also, you see a step-by-step recovery in the Chinese truck market. Here, especially that's driven by the export market. So the export sales that Chinese producers OEMs into the world where we are also well positioned. And also here, our acquisition of LH Lift in China supported a little bit on that sales growth on top. EBIT-wise, also a record year for the region, almost the same number like America with EUR 43.2 million EBIT. It's a fantastic year, having grown by roughly 16% versus prior year and an overall full year margin of roughly 21%. That's fantastic. And as I said, the main drivers here are the strong profitability we have with our off-road business, but also the proportion of the agriculture business is increasing here as well. And all this includes also for the last month of the year, some ramp-up costs. We still have for our new plant in India because those costs are not adjusted after SOP of the plant. So that's the picture for the 3 regions. If we sum that up now, we have the full group picture. As we announced in the press release, it's a fantastic year for us. We believe our profitability has improved significantly despite the flat sales. You see here on the chart on the left side that the organic sales growth was more or less versus prior year, so 0.1%. There are 2 main effects in there. That's the FX headwinds. All in all, roughly EUR 42 million down. On the other side, we had support from the M&A by EUR 26 million but the very robust demand for the Transport sector, which is organically plus 9%, as Joachim pointed out, could then offset the decline in the agricultural market and then resulting in an absolute EBIT of EUR 141 million, which is an EBIT margin of 11.3%, both record numbers for JOST. And what we have seen before is we have a strong boost in profitability in all regions. And on top, compared with the efficiency measures, the strict cost control, especially in the agricultural segment and the strong aftermarket business that led to these fantastic results, we believe, for the full year 2023. And if you have to keep that in mind for a second, you also would see that we are now very balanced so that EUR 141 million EBIT is more or less equally split between all the regions so that underlines somehow the global presence of JOST and the high diversity of where we make the money. Finally, we make the money everywhere with relatively good margins now. If you now go to our adjusted net income bridge to derive earnings per share, you can see we started with a net income of EUR 52 million, then you have up -- have to add up the reported taxes and finance expenses, showing a reported EBIT of EUR 93 million. And then as usually, we adjust for our PPA expenses and some other exceptionals like M&A transaction costs or reorganization and relocation costs. There's one specific topic this year as well, which has been announced before. We settled the arbitration process for the final purchase price calculation with the former owner of Ålö. That has EBIT impact of EUR 12 million. That's going to be adjusted. Finally, it's part of the purchase price, so to speak. And for sure, we would have expected that this is a bit lower. But finally, it turned out to that number. And we are happy in some way with it because that underlines how successful the business of Ålö is. And finally, we have to pay for it. So we are fine with that, ending up with the reported EBIT number of EUR 141 million. And if you then adjust for the finance costs and our adjusted tax rate, you end up with a EUR 93 million adjusted net income or translated into earnings per share with an earnings per share of EUR 6.24 versus EUR 5.76 of last year. That's an increase of 8%. And as Joachim pointed out, we will propose a dividend of EUR 1.50 per share to our shareholders on this year's Annual General Meeting. So let's come to some other KPIs. So ROCE equity ratio and leverage some were already mentioned by Joachim. ROCE went up for the full year to 21%. I think that should be the highest number you just reported, at least since we are on the stock market. So it jumped by 15% or 2.8 percent points, showcasing our capability for value creation. Equity ratio increased up to 38%, for sure, driven by the net income and the leveraging we did over the year, and this in light, the effect that we also had in equity, some negative FX relations effect so that shows that we are really, really stable and have a strong balance sheet, which opens possibilities for the future as well for sure. And the same is with net debt number that we disclosed, already in February, and Joachim mentioned that before. Let's go to the next page. Some cash flow figures, free cash flow. Also that mentioned by Joachim, almost quadrupled, so 4x the number of prior year up to EUR 112 million. And that's not only because of strict inventory management, which we announced before. That's also pretty much driven by the excellent operating performance. And you have seen that in the results of the different regions. Basically, all the regions contributed to that strong free cash flow development. And finally, and that's happy to announce or happy to disclose. We end up with a conversion rate of 1.2, which is then since a couple of years now back to our target range of at least equal or more than 1.0. So we are quite happy to disclose that number here today. On CapEx, mentioned by Joachim as well, we stay at the 2.5%. So no surprises here, even including some of the greenfield investments we did in India. We stayed in that range. And for sure, that number is without the transaction cost of the 2 M&As we did. Net working capital improved also significantly. We now stay on an LTM basis at 18% versus sales, for sure, is a consequence of the strict working capital management. And on the other side, the trade payables development that here somehow is down to the reduction of the safety stock need, so to speak. So that's a little bit of a counter effect. But even including that safety stock reduction, we are down at 18%, as mentioned. Okay. Then last page, I believe, is also with regards to our ESG goals, we can disclose a very successful year. The overall energy consumption decreased by almost 3%, down to 105 million-kilowatt hours. And that in light the fact that we have acquired 2 companies. So I think that's a very good result as well. And you see that on the bottom chart, more specifically that we show our CO2 emissions in terms of tonnes and as well as per production hour, and you see there versus prior year, we have decreased the debt KPI from 4.2 down to 3.4, which is decreased by almost 20% and even better if you compare that to our base here, which is our ultimate target in 2022, we have now a reduction of almost 50%. So we are much faster here, and this is also driven by our teams, by our plant managers who really support the ESG idea and are looking every day for possibilities to invest intelligent-wise, so to speak, here in reduction because finally, we also see that in our P&L and that makes me even more happy. So I believe that's from the financials. So with that, I will hand over back to Joachim to give us some insights on the outlook for 2024.

Thank you, Oliver, and thanks for all the details on what I think is a very impressive financial performance, but also strategic setup in 2023. So it has been an exceptionally good year for JOST. And of course, the question is how will that continue. Let's start with the market view. We expect the markets to not give us the support that they've given us last year in the same amount. In Europe, the truck market, we expect a contraction of 5% to 10%, which you could call is a normalization of the demand compared to the very high pent-up demand driven levels that we've had last year. On traders, more or less, we expect the second half year of last year to continue. And with that, in the over -- in the full year, we will expect a 5% to 10% reduction in the trailer markets in Europe. And the same reduction we expect for the agricultural tractors also 5% to 10%. North America for the reduction expected on the truck market is 15% to 20%. The year has started a little better than that. So the hope is that we will be more around 15% at the end of the year. Trailers is expected 20% to 25% reduction versus the record levels of last year. And also, in agricultural tractors and a market reduction of 10% to 15% is expected. It will not hit JOST in the same way, especially in the agricultural tractor segment because we are very strong in the compact loaders. And there, we don't expect the same contraction to continue. So I think last year, we've been penalized a little bit by a mix effect. We expect that this year, the mix effect will play into our favor in the North American agricultural market. Asia Pacific. The Chinese market is coming back, and we see the other markets more or less stable. And with that, we expect an increase of 5% to 10% in the market demand in Asia-Pacific-Africa region. Same is true for traders and on agricultural tractors, we see more or less a stable market in the minus 5% to 0% development over the year 2023. Here, it says 2022. Sorry for the typo. It should be 2023. Let's go to the next slide. What does that mean for JOST? For our expectation? We expect sales to decline year-over-year in the single-digit percentage range. So 1-digit decline in sales, more or less in line will be the adjusted EBIT. Of course, there will be some negative effects, some negative volume effects. Therefore, the margin will also decline slightly, but it will remain in our strategic corridor between 10% and 11.5%. And on a personal note, I expect that to be in the upper half of that range for 2024. CapEx, our usual 2.5%, maybe a bit higher because of lower sales and some trailing investments that we have but very well within the healthy range that we consider healthy between 2.5% and 3%. And working capital targets, again, below 19% of sales. Last year, as Oliver just pointed out, we've been at 18%. So those in a nutshell, the expectations for the outlook. Let's come to the strategic targets for 2024. In agriculture, I've showed you our extended portfolio. And of course, we want to generate new global cross-selling opportunities from these new agricultural products and also from the global setup that we now have with the plant in India and the plant in Brazil, and of course, we have the target to acquire new OEM contracts. There's a lot of interest of the OEMs looking for Tier 1 supply base that can follow them globally, and we are now very well positioned with the factories that we have in North America, Europe, Brazil, India and also China. In Transport, where the target is to increase our revenue per customer by upselling new products. We have some products, also some intelligent products launched in the last 2 years, and they will be in the focus to bring these products to the market and, therefore, increased revenue per customer, and it will also strengthen our market position in all regions. In operations, the target is to localize our production loader designs in Brazil. Today in Brazil, we have cabins and existing loaders, but we want our global load of designs to be located in Brazil. And that's one of the main activities in operations and also to combine the 2 plants that we have in Ningbo, China, one from the acquisition and one that we had with the loader business already for 4 years, and we are planning to consolidate those 2 plants to gain synergy effects. In ESG, we will continue to identify and implement further measures to reduce our CO2 emissions. We are on a very strong path on the Scope 1 and Scope 2 emissions that we have in our own production footprint, and we will also start in 2024 to measure the Scope 3 to get a grip on the emissions across the supply chain. And in finance, of course, our target to defend the high profitability levels that we've had in the last years by using our flexibility to sharpen the cost focus further, to improve working capital and identify potential for additional efficiency gains that we will need in the future. That's the strategic focus. And then let me give you the quick summary of this year. We have set up to achieve a growing strong and profitable mid-term growth by leveraging our excellent market positioning that we have and to grow the global business further in transport, but especially in the agricultural business, where we are now a global Tier 1 for our global -- existing global tractor OEMs. Our high flexibility and our continued efficiency gains supported a major increase in the profitability in last year despite the flat sales and development that we've had in 2023 overall, the improvement in working capital and operational excellence boosted the free cash flow and accelerated the deleveraging below the 1x mark, therefore, very strong balance sheet as a result of the strong years that we've had in the past and the strong year that we will have in 2024. So despite the cyclical slowdown in 2024, we will defend this high profitability and keep our adjusted EBIT margin within the strategic target corridor, and I already added the personal note on the last slide. We see the current market environment as a window of opportunity and see us in a very good position to further invest in our strategic organic and our inorganic growth. Next slide. So with that summary, as I mentioned, we are very happy with the 2023 results. We feel we are well positioned for 2024, and we're looking forward to the Q&A session. Thank you for your attention.

[Operator Instructions] First question comes from the line of Jorge González Sadornil, Hauck Aufhäuser.

Can you hear me?

Perfect.

So I have some questions. Please allow me call with a top one. First -- so my first question is around LH Lift and Crenlo do Brasil. Can you please give us the final number of sales and maybe contribution in adjusted EBIT for both of the companies in '23?

I'll take that question for sure. So both together are now contributed for the full year [ order ] EUR 26 million in sales. So I mentioned that M&A effect of EUR 26 million, that's exactly that. And regarding the EBIT margin, they are a bit dilutive than ours, but had also a strong year.

Amazing. Then also regarding the bookkeeping...

That's a good point for me, Jorge. So that EUR 26 million is only for the 4 months from September to December. Now they are only consolidated in that 4 months. So it's 1/3, so to speak, of the organic. Yes.

Of course, then regarding the interest expenses for the year, I see the final number of interest expense is around 25. And it looks high enough for the average debt, but I think was around EUR 300 million. The gross debt, not the net debt. And so I was wondering if you can guide us a little bit for '24, which is, I don't know, average interest rate that you are expecting for the year? Or in which range do you think [indiscernible]...

You can have a call with me afterwards also to get a bit more guidance is you need to adjust for the interest that we had to pay for that arbitration case that's included in the financial. So to come more to a normalized 2023 run rate. If you compare then these 2023 run rate to our projections for 2024, it's more or less the same level. We don't expect too much EURIBOR decrease. The big effect here would be a EURIBOR decrease for us in 2024. And that I mean that might happen starting mid of the year should have a little bit of an impact, but not too much. So for you, it's more important to have a [ quick call with only ] just for that. And it's also disclosed in our annual report.

And final question and obviously, regarding the outlook, Joachim. So I was wondering how we understand this outlook in relation to the market expectations you presented to us a few minutes ago. So for instance, you already mentioned that in agriculture, you are not expecting to have the same development of the market because, obviously, you have different stocks, maybe than the machinery for the agriculture. But doing a quick number for me, you are basically saying that you are expecting an organic decrease of around 10% or 10% to 11%. And the beginning of the year in some regions like in North America, it's not looking that bad. If we look into the order intake, we are seeing in the first 2 months of the year. So I'm wondering if you consider this single-digit decrease, let's say, 5% decrease conservative, just trying to mirror what the market is solving to us or if you have already implemented there some more optimistic view on the market? How we should read this guidance?

Well, the guidance is compiled from the consultants information that we have, but this is not very updated. So they will update it on a bimonthly basis. So there's still a bit more conservative for North America than I will be today. And therefore, we've added some insights of the call-offs that we have from our suppliers. So North America has started stronger than initially projected by these outside consultants. The -- in Europe. It depends very much on the customers. So some customers are more conservative. Others are quite optimistic for the outcome of the year. So there, we will see how this leverage. You always have to keep in mind that these numbers is only more or less the OEM markets for trucks and trailers and agricultural tractors. There's a number of overlaying effects. One is that we have a strong aftermarket, if the trucks and trailers are running, the aftermarkets will just continue. And therefore -- if you can go on mute, Jorge, because you have some background noise, then maybe switch on again when you have an additional question. Thanks. So it's overlaid by an aftermarket, but a very strong aftermarket position that we have. And those prices and those turnovers, they will just continue. So that's -- that will help us getting away or decouple us a little bit from the market effect. There's other effects in agriculture that are also positive for us. I already mentioned that we are very exposed in North America to the compact loaders. They had a very strong 2022 because everybody after COVID wanted one of these small tractors with these loaders. Last year, they fell down because there was a high dealer stock, and the market was not as strong because everybody had just bought a new product. Now the dealer stocks are reduced, and we see that not to go further down anymore and maybe even give us a little help. So that's the one thing that the exposure on compact and the dealer stocks on those compact loaders plays a role. The other effect that we have is that a lot of the tractors, some of the tractors get their orders at the factory, others get them at the dealer, and the dealer will only buy it when he has sold the tractor. And since deal stock in Europe mainly has been going up last year because production of tractors has continued, but the sale has already come down somewhat, some of those don't have a loader yet. So when the market comes back, we will notice that earlier than you will notice it in the tractor production. So that's a benefit that we will have. That's why we expect the tractor -- our agricultural numbers to actually be quite stable, maybe even a positive for this year. And the other effect, of course, as I mentioned, is that we have new contracts with OEMs. We have a plant in India that creates a lot of interest with our OEM customers. We have a plant in Brazil that creates a lot of interest and a lot of the OEMs are coming to us and say, can we localize this product in Brazil? And can we get products out of your Indian factory? And that will not all kick in, in 2024, but also that will help stabilize the relative conservative market numbers. So that was a long answer on your question. I hope it was satisfactory.

Yes, no, it's really interesting. So then just to make it this easier, so the midpoint, let's say, a 5% decline, we talk about single digit is in your view just a conservative maybe number, and you are more inclined with a low single digit or it's not something that you want to...

No, no. I would say from today's point of view, it's a very realistic number, the single digit. And all I'm trying to explain is why the market numbers look much worse than what we expect in our sales. And that's because of the positive effects that we have with the aftermarket and with the effects that I just mentioned. That's why you don't see a minus 15 in our numbers, but you see a positive or you see a more positive number. But I would say the single-digit decline for today's projection is a very realistic scenario.

Okay. Because I was not sure if this organic, let's say, 10% decrease if we consider the contribution still new contribution from Crenlo do Brasil and LH Lift was also something to wait in agriculture? Or is it just because you are expecting more like 15% decrease in transport with the market you see this today and not as bad development of agricultural. I imagine that in general, agriculture should do better in terms of volume than transport with your view today, isn't it?

Exactly. Thank you, Jorge.

[Operator Instructions] Our next question comes from the line of Nicolai Kempf, Deutsche Bank.

Nicolai Kempf speaking, Deutsche Bank. A couple of questions. I'll probably take them one by one. My first one would be on, let's maybe talk about end markets in Europe, we have heard some OMs already adjusting capacity on the truck side is something you would also look into in the next weeks or months, maybe just take a bit of temporary workers in the plants.

Yes. I mean we have a very flexible setup when it comes to production. And you've seen that and you have followed us through the COVID times, we have -- with our light asset model, we have a very high flexibility. And we are using that flexibility already today. And we will be able to use it to balance that out. And of course, in Germany, we don't have the [ cold carbides ] yet. But of course, that is an option that we have. Right now, with the normal 30% that we see as a flexibility, we are able to balance it so that we don't need any structural measures. And we have flexibility left to adjust between the plants that we have and within the plant for that level. So that to us is really not a big concern because of our asset-light business model. And you've also seen that we've been able to build a plant in Chennai within the 2.5% investment range. That's just another example of how asset-light our model is. That comes with a high flexibility. And outside of Germany, that flexibility is higher anyhow. And within Germany, we are prepared for any measures, but we have not been able to -- not been obliged to use them yet.

Okay. Understood. And I was talking about input prices. I think -- I mean they have already normalized last year. This year, I think rates could be a headwind. Do you expect to, [ in contrast ], raise price to your customers to pay kind of pass on the high level costs? Or you think that you've by now kind of maxed out or the deleverage you have on the pricing side?

I think you have a good question. You have to differentiate a little bit between the aftermarket and the OEM contracts that we have. On aftermarket, we have been able to bring the prices to the necessary level, and we've been able to transfer all the cost impacts that we've had to our customers. Of course, with higher availability of parts. There will also be a bit more competition. But here, in general, everybody is exposed to these inflationary cost increases, be it material energy or labor, and they are more or less everybody, us and our competitors are able to transfer that to the market. On the OEM customer, it's a bit tougher, but we've had good success, and you see that as a result in our numbers, obviously, to transfer higher input costs on all levels to our customers. And sometimes, it is the line item that has to do with inflation. Sometimes it's the line item that has to do with energy. And we have flexible pricing agreements where we have trailing components depending on the input level. So it could be material cost indexes. It could be energy indexes. It could be transport indexes that we have agreed. So it's -- the inflation in terms of labor is the toughest one to agree on with our OEM customers. But in general, we have been able to bring the prices up. And as you can see in our results in the last year, and those price components will carry us through the year. We expect that we will maintain with that healthy pricing set up throughout the year, but that we will have to adjust the components that we have agreed to adjust.

Understood. You have done very well last year. One final one. I mean you did touch on the U.S. trailer market one of the -- one of your close peers kind of said that the standard trailer market came to a standstill in the first months of this year. That is confirmed by data we got from ACT for January and February. Do you see that this kind of stabilizing in March or that could change going forward?

It's -- I wouldn't say it came to a standstill. I would say we have -- the trader market has a lot of different segments. There's container [ chassis disk ], dry vans, there's specialty traders, and it's very specific. There's coolers. And of course, some segments really had a very rough start into the year also because there has been very high production last year. But I would be far from saying that we are seeing a standstill. We are in the range of the numbers that we've seen in the market chart overall, but of course, there are segments that are worse, and there are other segments that continue at a fairly good level. So the year in traders will be lower in North America, but I don't see it as dramatic as I would say, there's a standstill. Our projection that we've seen in the market with the minus 20% to minus 25% is still a very realistic projection. There may be segments in that market that are worse and others that are better.

Would agree with that. Yes, again, congrats.

There are no further questions at this time. I hand back to Joachim Durr for closing comments.

Okay. Yes, nothing else to add. We're very happy with 2023. We are looking forward to an interesting 2024. I'm sure we will be -- we will have to, but we will also be able to adjust to the new environment as far as markets. You followed us through COVID, and we had a quite, I would say, impressive ability to bring the cost down. And so we will use that in the months where we see the lower market. But we also have a lot of opportunities in 2024. We have a very good strategic setup. We have a very strong balance sheet. We have a lot of interest from customers to grow. And therefore, it will be an interesting year for us. Very happy with what we achieved in 2023, not only on the financial side, also from a strategic setup, and we're eager and looking forward to take advantage of that in this year 2024. Thank you very much for your interest, and see you soon. Buh-bye.

Buh-bye.