Kendrion N.V. (KENDR) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to Kendrion's Q2 and First Half 2020 Results Presentation, which will take place entirely virtual. My name is Joep van Beurden, Kendrion's CEO. And with me here is Jeroen Hemmen, our CFO. First, this morning's agenda. I will give an update regarding the COVID situation at Kendrion and our actions to protect the health and well-being of Kendrion colleagues and their families. Then Jeroen will review the Q4 and full year 2020 results. I will then take over and give you an update of the progress we have made both strategically and operationally in the course of 2020. Next, I will discuss the outlook for 2021 and go to Q&A. [Operator Instructions] Before the COVID update, I would like to draw your attention to the following. Certain statements contained in this presentation constitute forward-looking statements. These forward-looking statements rely on several assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside the company's control, that could cause actual results to differ materially from such statements. Next, the COVID update. Our priority in dealing with the pandemic is the health and safety of our employees, their families, customers, suppliers and all other stakeholders, and to safeguard the group's continuity to ensure that we come out of this pandemic stronger than ever. All COVID prevention measures continue to be enforced. Our employees are working from home as much as is possible. In all our production facilities, we have strict separation between shifts with professional cleaning and disinfecting of relevant surfaces as the shifts change. Our canteens are closed, and we measure employees' temperature regularly. The use of face masks is mandatory for all. But of course, we have been affected by the pandemic, as we all have. The most recent update as of yesterday evening indicates we currently have 3 active cases, of which 1 is hospitalized. Sadly, last fall we lost one of our colleagues to the virus. Throughout the pandemic, we have been able to continue production in all our factories in a safe and responsible way, and we continue to deliver to our customers around the world. Next, I wanted to take a look at our illness rates. Health is always at the forefront at Kendrion, and with COVID-19 affecting the world even more than normal. This slide, however, is not about COVID. It indicates the overall illness rate at Kendrion, both in 2019 and in 2020 on a 12-month rolling basis. As you can see, despite the pandemic, our overall illness rate has gone down. And although we have not investigated the root cause, our hypothesis is that all the hygiene measures we have enforced protect not only from COVID but also from other illnesses like the common cold and the flu. Let's now go to the business review. Jeroen?

Okay. Thank you, Joep, and good morning, everybody. So I will present the business review for Q4 and the full year of 2020. In the fourth quarter, we saw a further recovery of our revenue in all 3 of our business units, with revenue of EUR 103.1 million. And the fourth quarter, which is traditionally our weakest quarter, was 5% higher than in the third quarter and 21% better than in the second quarter. Revenue is now almost back at pre-pandemic level with organic revenue decreasing 2% compared to the fourth quarter of 2019. Both Industrial units posted 15% growth. Automotive revenue ended 7% above Q3 but still 6% below last year, as we did experience ongoing weakness in the long-haul bus and U.S. truck markets during Q4. Organic revenue for the year decreased with 17%, as all units and regions were impacted by the COVID-19 crisis, especially in Q3 and Q2. Despite COVID-19, China realized 5% organic growth for the year as underlying growth in the 3 business units offset the impact of the pandemic. INTORQ China fully benefited from a surge in demand for wind power applications. And full revenue in China, including INTORQ, increased with more than 70% (sic) [ 60% ]. Also, profitability in the fourth quarter developed positively with normalized EBITDA increasing 58% in absolute terms and a 3.3% increase in EBITDA margin. The recovering revenue, EUR 2.3 million lower costs and a good contribution [Audio Gap] from the peak in Q2, reflecting the higher activity level. The savings from the short-time work in Q4 were limited to around EUR 1 million.

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So on the back of a strong fourth quarter, also our full year EBITDA and EBITDA margin ended above last year. Please note that the 2019 profit numbers are restated with the retroactive correction of profits on intragroup inventory transfers. The correction increased profit with [ restatement ]of EUR 400,000 in 2019. The improved profitability was driven by EUR 19.6 million lower organic costs and a 1% -- 1.1% increase in added value. This more than compensated for the revenue impacts of the pandemic. Besides temporary cost measures, the EUR 5 million structural cost savings we realized towards the end of last year were fully effective. In addition, we realized annualized EUR 1.6 million cost synergies in IAC and EUR 2.8 million cost synergies from the integration of INTORQ. Of the total EUR 4.4 million cost synergies, EUR 2 million were effective in 2020. We also incurred in total EUR 4.4 million operating costs in 2020 that were normalized in the results, of which EUR 2.4 million in the fourth quarter. Costs include acquisition costs related to INTORQ, restructuring costs and an impairment of capitalized R&D. The capitalized expenses related to an Automotive project that we won in 2018 and has now become obsolete due to more relaxed emission regulations in China. The total impairment charge was EUR 2 million, of which EUR 1.6 million was normalized in the results. Then we switch to our financial position and cash flow. So the next slide, please. Our normalized free cash flow before acquisitions was EUR 31.5 million, which is a record. A EUR 7.3 million organic reduction in working capital and the suspension of all nonessential investments contributed to the good cash conversion. At the same time, we continue to invest in our growth opportunities. R&D expenses increased both in absolute terms and as a percentage of revenue. And capital expenditure included production lines for suspension valves in China and Sibiu as well as an additional production hall for our Industrial activities in Romania. On the back of the positive EBITDA development in Q4, in combination with a significant reduction in net debt, our leverage ratio decreased from 2.9 in Q3 to 2.3, indeed substantially below our newly agreed covenant level of 4.7 and much better than in our COVID-19 scenarios prepared earlier in the year. Then moving to our proposed dividend. Next slide, please. In 2020, we canceled the announced EUR 0.25 per share dividend as a precaution against the potential impact of the pandemic as one of many measures that we took to protect Kendrion's liquidity and financial position. Now with the benefit of hindsight, we can say our financial position improved, and we were able to deleverage from the second and third quarter due to the positive EBITDA and cash flow development. Based on the good financial position and as a sign of confidence in our business fundamentals and outlook, Kendrion proposes a dividend at the high end of our policy. Dividend will be payable in cash or in shares at the option of the shareholder. The total dividend amounts to EUR 5.9 million, which translates to EUR 0.40 per share. And then finally, some words about the business units. Next slide, please. Firstly, Automotive. As mentioned, we saw a strong recovery in the passenger car segment in Q4. Our commercial vehicle businesses remained weak throughout the quarter. But also there, we saw a positive order development towards the end of the year. For the global year, car production declined 16% and production in Europe and the U.S. declined with respectively 21% and 20%. To reduce the impact of the pandemic on the bottom line, Automotive realized almost EUR 12 million cost reductions in 2020. This is 14% of the cost base. Automotive EBITDA (sic) [ normalized EBITDA ] dropped to 7.5%. And profitability in the second half year was affected by mix effects from the weak commercial vehicle segments as well as lower capitalization of costs. Investments in our growth opportunities continued both in development activities as well as in capital expenditure. The largest investments during 2020 included new production lines for suspension valves in China and Romania. Total investments were EUR 2.2 million below depreciation as we suspended nonurgent investment during the pandemic in order to secure a continuation of investments for future growth opportunities. Then over to Industrial. The next slide, please. Both IAC and IB returned to organic growth in the fourth quarter. Market circumstances improved as also indicated by a 20-month high in the German manufacturing PMI index at the end of December. For the year, organic revenue in the Industrial units ended 11% below last year with IAC slightly harder hit by the pandemic than Industrial Brakes. INTORQ performed well and contributed EUR 54 million in revenue. This was not far off their 2019 revenue under previous ownership, helped by a strong increase in demand for brakes for wind power turbines in China. Despite the revenue impacts of the pandemic, profitability improved sharply in 2020 to an EBITDA margin of 15.3%. Structural cost savings, cost synergies, strict cost control during the pandemic and the strong performance of INTORQ contributed to the margin. Also, organically, so excluding INTORQ, the Industrial activities were able to increase their EBITDA margin. Capital expenditure ended slightly below depreciation as we suspended nonessential investments. Major investments included a new production hall in Romania. And that concludes the business review, and I give the word back to Joep.

Thank you, Jeroen. I will now proceed with an update of the strategic and operational progress we have made in 2020. Jeroen just summarized the year. And I think that we have steered the Kendrion ship safely through the storm so far, although it's certainly not yet over. I'm proud of the Kendrion team. But what I'm possibly even more excited about is the progress we have made on our strategic agenda. Despite all the supply chain issues, the cost savings, the squeeze on investment, customer shutdowns, our inability to travel and on and on, we have made good progress with our long-term agenda. We integrated INTORQ. We created the business unit, Industrial Actuators and Controls. In Automotive, we added EUR 350 million in lifetime revenue to our long-term order book, which is a book-to-bill ratio of 1.7. And we have decided to build a 28,000-square meter manufacturing facility in Suzhou to accommodate our future growth there. We also made significant progress upgrading our IT infrastructure and worked hard to further implement our culture of global seamless cooperation that we call the Kendrion Way. If you can stay on this slide, then I'll go into a little bit more detail around the strategic house. You've seen this picture before, Kendrion's strategic house. The top of the building indicates our strategic intent. We aspire to continuously grow revenue and profitability in a sustainable way with a lean and focused organization, and to provide a top-quality work environment to our employees. Linked to this are our medium-term strategic objectives, such as our target to grow with at least 5% organically on average between 2019 and 2025. We underpinned this strategic goal with 3 pillars. The first is Automotive, representing around half of group revenue. In auto, we focus on growth and especially on the opportunity we see developing in actuators for autonomous, connected, electrified and shared mobility, the so-called ACES. The second pillar is Industrial Brakes, which is around 1/4 of group revenue. We offer a full range of brakes and see ample growth opportunity in robots, both industrial and collaborative, in wind power, in elevators and more. Here, too, we focus on growth. The third pillar is Industrial Actuators and Controls, the merged combination of ICS and IMS. And here, the focus is on profitability and cash generation. Internally, we refer to this new BU as our cash engine. We want this engine to keep generating cash and profits, focusing on selected industrial segments such as energy distribution, fluid controls, machinery and logistics and transportation applications. And then of course, we have a focus on China, active in all 3 domains with the same intent: growth in auto and brakes, profit in IAC. With INTORQ fully integrated and after several years of strong growth in China, the profile of Kendrion has changed. In the metaphor of the strategic house, this looks like a stronger and more balanced structure, not dependent on any one vertical, and geographically diverse. Let me now share some of the highlights of the past year, starting with auto. As we all know, the automotive market has been negatively affected by the pandemic. In this slide, IHS Markit illustrates by how much. Year-over-year, vehicle production was 16% lower than in 2019 at 74.5 million vehicles. This is relative to 2019, in itself around 6% lower than 2018. On the other hand, the disruption in especially passenger cars triggers enormous investment in new technology at all large OEMs and Tier 1s. And from our viewpoint, that has not changed in 2020. This opportunity for growth related to new actuators, designed to help drive the innovation in the automotive sector around the ACES, is intact and even accelerating. And that growth opportunity is illustrated by the next slide, looking at electrified vehicles. Here, we take a look at the number of battery electric vehicles and plug-in hybrid vehicles. As is clear, the growth of both classes of electrified vehicles has been and is projected to remain strong. In fact, these numbers represent an annual growth of over 40%. As a proportion of total vehicle production, the share of electrification is expected to rise from less than 3% in 2019 to over 11% in 2023. It is, therefore, not surprising that all major OEMs and Tier 1s are investing heavily in this. And we, too, have been investing relentlessly in our product road map and our commercial organization to make full use of this important trend. And it's yielding results. This slide presents the lifetime revenue in automotive nominations won in 2018, 2019 and 2020. We calculate this by assuming that projects for passenger cars have a lifetime of maximum 7 years after start of production. For commercial vehicles, we take a maximum of 10 years. We use the volumes and pricing agreed with our customer but do add our own judgment to that. We keep track of the nature of the nominations in 2 categories, related to the traditional combustion engine or ICE, or independent of the propulsion method, like smart damping or sound actuation. In 2019, we won a gratifying EUR 350 million worth of new business or a book-to-bill ratio of around 1.7. Of the 2020 nominations, 60% is independent and 40% directly related to the combustion engine. A major nomination driver was successful projects at key OEMs such as Volkswagen Group, Ford, Daimler Truck, Continental and ZF WABCO. More than 20% of the business wins will end up in pure electrical vehicle platforms of Volvo, Porsche and Ford, among others. In 2020, we did see some changes in the projects we have won in 2018 and 2019. And I want to look into this in a bit more detail. As I mentioned earlier, in 2020 the investment in products for the ACES at our major customers was not affected. However, we did notice a significant change in the R&D activity level for combustion engine-related products at our customers. And this had 2 effects. On the one hand, some projects we won got canceled, most notably a project we won in China for a so-called auto particle filter, as the Chinese government relaxed some of the strict emission rules for combustion engines in response to COVID. On the other hand, many combustion engine-related products that were scheduled to wind down are running for longer, in some cases a number of years. To balance the 2 is not an exact science. But our current best estimate is that the net effect of this is a reduction in our total pipeline with around EUR 100 million in lifetime revenue all combustion engine. Correcting for this means that over the past 3 years, we have won around EUR 910 million in new projects. Of this, around 60% or EUR 530 million is independent and 40% or EUR 380 million is combustion. All in all, we are pleased with our pipeline, and we expect to drive -- which we expect to drive organic growth over the coming years. For 2021, we continue our focus on expanding our pipeline, especially in dedicated electronics and innovative valves and actuators for the ACES. Talking of which, I would like to highlight one of our Lighthouse Projects that we are experience particular strong traction with. Autonomous driving, connected vehicles, electrification of the powertrain, shared mobility are mutually reinforcing developments in the automotive industry. Combined, they are disrupting the automotive value chain and are a significant driver of growth. Through our Lighthouse platform, we aspire to develop forward-looking products making use of this opportunity. And here you see one example, our new AVAS Sound PHANTONE product line. AVAS stands for acoustic vehicle alerting system, which is legally required in electrified vehicles. Our product offers both active sound in electrified cars for outside, compliant with AVAS regulation, and a comfortable, recognizable sound inside the cabin. PHANTONE is a full plug-and-play solution compatible with the OEM's electrical architecture. We have a design tool to help the OEM create its own branded acoustic design. And we have also brought up an ecosystem of partners to integrate loudspeakers and additional software, if needed. In 2020, several global OEMs selected PHANTONE. And the first production is scheduled for 2021 later this year. In summary, 2020 was a tough year for Automotive but with an important silver lining. Our pipeline expanded, and we are confident we will make use of all the disruption in the market over the coming years. Next, let's look at Industrial Brakes. First and foremost, we have integrated INTORQ fast and successfully. After we closed the transaction on January 8, 2020, we rolled out the global management structure of Industrial Brakes on April 1, 2020. The integration of the INTORQ team into the Kendrion family went smooth and included full alignment of all support functions. We achieved synergies of EUR 2.8 million on a run rate basis by the end of the year, well ahead of the original EUR 2.0 million. This included the successful relocation of IDS Aerzen into the much larger facility of INTORQ in Aerzen. All in all, a smooth and fast integration that helped our performance in 2020. In 2020, brakes were doing well and benefited especially from growth in the wind power segment in China, driven by government subsidies for clean energy. And this resulted in a strong performance. We officially opened our new production plant in Pune, India, and we strengthened global sales alignment, which is underpinned and supported by the manufacturing location closest to the customer. We have a global commercial pipeline based on our full line of electromagnetic brakes and clutches. And we further expanded our product offering with the launch of a new spring-applied brake family. And in 2020, it wasn't just wind power that grew. We also had a considerable expansion in intralogistics. We will continue with a clear focus on specific global growth markets' intralogistics: collaborative and industrial robots, industrial trucks and wind power, using our global presence -- Europe, the U.S., China and India. All in all, a strong year for IB and ample opportunity for growth in the coming years. Next, IAC. Just as in IB, we have integrated the former BUs, ICS and IMS, quickly and successfully, achieving synergy savings of EUR 1.6 million in the process. The combination has improved its market position in distinct verticals like energy distribution, fluid controls, machinery and logistics and transportation applications. Anticipating further growth in these verticals, we have expanded our production facility in Romania by 3,000 square meters. Like IB, IAC has had a good year. The impact of COVID on IAC was mixed. In some segments, like textile machinery and aviation, revenue declined. In others, like medical application and infrastructure, the market was better. On balance, this has resulted in a good financial performance. IAC is active in around 30 different product market combinations. And one of the tasks for IAC's management is to invest in those segments that offer potential for growth, while ensuring the other segments are optimized for profitability and cash flow. On this slide, you see some examples of areas where we think we can expand. For example, industrial locks for devices like PCS testers, freezers, centrifuges, et cetera. And we see opportunity in several medical products, like actuators for dialysis and anesthesia equipment. On the control side, we have launched a new drive controller for automated guided vehicles, and we provided samples for inductive heating for applications like paper coating and industrial ovens. In the U.S., we see growth potential in fluid control devices for both beverage dispensers and medical devices. So a good year for IAC. And before we move on to an update on our progress on corporate social responsibility, let's take a look at China. In China, we continued to grow during 2020. With the contribution of INTORQ Shanghai, revenue increased more than 70%. And organically, so without INTORQ, we grew by 5%. Here, too, we quickly integrated Kendrion China and INTORQ Shanghai, and have had one China IB management team covering both Suzhou and Shanghai from Q1 2020. Lifetime 2020 nominations across all business groups in China were significantly higher than our China-based revenue. We've decided to build a new factory on a 20,000-square meter building site with 30 years of land use rights agreed with the Suzhou government at favorable conditions. I will come back to that. But first, a look into our commercial traction. In 2020, we saw strong growth in brakes, mainly from wind power. This market has a positive market outlook, resulting from China's government's long-term green energy policy. The automotive market is recovering after COVID-19 and new nomination opportunities are increasing. In 2020, we explored several industrial applications for both IAC and IB, including railway, automatic doors for passenger cars and e-bus. In summary, we have a strong pipeline across the board in Automotive, Industrial Brakes and IAC. To accommodate that pipeline, we are building our own factory in Suzhou. Here, you get an impression of our plant facility located in Suzhou's Industrial Park, or SIP. SIP is recognized as the most high-tech area in Suzhou and is the premier location for technology and advanced manufacturing companies. In Phase 1, we plan to build close to 28,000 square meter with the possibility to later add another 12,000 square meter in Phase 2. For this project, we are receiving strong support from the Suzhou local government, who have granted us favorable conditions for 30 years of land use rights. And as you can see, we are planning photovoltaic cells on the roof and expect to generate 1.1 megawatt hour, which should cover up to 60% of our internal energy requirement. Which brings us to the progress we made on our CSR program. Corporate social responsibility is an integral part of the way we do business at Kendrion. We strive to make substantial improvements in all 3 pillars that comprise our CSR framework: natural capital, social and human capital and responsible business conduct. When it comes to the relative reduction of CO2 emissions and energy consumptions, we target a 15% reduction compared to 2018 by 2023. In 2020, we made progress on both fronts, reducing relative CO2 3.2% and relative energy with 1.3%, despite the pressure on revenue and added value. We also work hard on expanding our responsible product portfolio, aspiring to work on products to improve safety, health, or that help limit climate impact. We have more work to do but made a good step forward towards our 2023 sustainability targets. Next, let's go to the outlook. The overall sentiment regarding the global economic outlook remains uncertain for the coming period. But we do expect a gradually improving global economy in the course of 2021. As the short-term impact of the pandemic remains uncertain, we will continue to focus on our liquidity and cost levels. Our long-term outlook is unchanged and remains good for both the Automotive Group, our Industrial activities and China. Which brings me to our long-term targets as announced on our Capital Markets Day. Looking at 2020, I believe we have shown resilience, making full use of available cost savings and cash reserving instruments, while also progressing with our strategic agenda. Our financial position is strong and the covenant relief provides us with a significant additional buffer in case of a prolonged COVID pandemic or other foreseen (sic) [ unforeseen ] events. We remain confident about our business fundamentals, with our main objective to deliver sustainable profitable growth for the business in the medium to long term. We reiterate our medium-term targets of average organic growth of at least 5% per year from 2019 to 2025, and an EBITDA margin and return on invested capital of at least 25% by 2025. And as Jeroen mentioned, we propose a dividend payout of 50% of our underlying net profit of EUR 0.40 per share, at the higher end of the range to reflect both our financial position and our confidence in the future. Thank you for your attention, and let's now go to Q&A.

Our first question is from Frank.

Frank?

Can you hear me now?

Yes, Frank. We can hear you loud and clear.

That's good. This is Frank Claassen of Degroof Petercam. Three questions, please. First of all, could you update us what kind of restructuring charges you still anticipate in 2021? And what kind of savings are related to that? And what kind of savings can we still expect from the programs you have installed already? So that's the first question. Then secondly, maybe on your CapEx, could you guide us a little bit what we can expect in 2021? And what is the main project? Is it -- will that indeed be the Chinese plant you are building at the moment or are going to build? And then thirdly, a question on the raw materials. We've seen, of course, quite a bit of inflation in different raw materials. What is your view? Are you able to pass that on? Or do you anticipate some gross margin pressure because of that?

Yes. Thank you, Frank. Thank you for those questions. Let me start with the last one.

Hold on here.

Yes? Let me start -- can you hear me, Frank?

Yes, I can hear you. Yes.

Okay. Great. Let me start with the last one. And then question one and two, I'll hand over to Jeroen. So on the raw materials, actually what we see most of is in the supply chain, and this is not specific to Kendrion. You've probably seen that in the news, certain raw materials are in short supply. For instance, in the automotive sector, there's a shortage of semiconductors but also steel and even certain kinds of plastics. In industrial, it's a little bit less pronounced, but we see similar movement. So the focus that we have, because the underlying demand is there, is for our purchasing organization to source these materials. Now of course, with that type of pressure or these types of shortages, you do get some price pressure. Nothing untoward, I would say. We try to pass that on in some cases. And in other cases, we will absorb a little bit of that. But I don't think that is going to be a major problem. The focus is squarely on sourcing. Jeroen?

Yes. So on cost savings and restructuring charges, so as we mentioned, in total, in IAC and IB, we realized EUR 4.4 million in cost synergies, of which around about EUR 2 million were realized in 2020 or were effective in 2020. So that means another, yes, close to EUR 2.5 million in 2021. There are no charge -- no one-off charges related to debt anymore. Those are all taken in 2020. The big thing that we are currently working on is the closure of Eibiswald. That will bring approximately EUR 2 million long-term savings. But I do think that the majority of the one-off costs will be in 2022 actually, as we anticipate the full closure in 2022 at half year. So we are, as always, looking at cost savings. But I think the cost in 2021 will be maximum around EUR 2 million as we see it now. And then to the CapEx question, so obviously 2021 will be substantially higher than 2020, not only because of the building, where we anticipate a little bit, depending on the speed of the building, obviously, around about EUR 15 million. And on the regular CapEx, I anticipate something close to depreciation -- around depreciation for 2021.

And then will this building be fully built already in 2021? Yes, maybe the Chinese can do this, but -- so the EUR 15 million will fully be in 2021, or...

What we -- in terms of the planning, Frank, we expect to break ground in the second quarter of this year. And we hope to open the building in the first half of next. Now we do think that the lion's share of the investment is going to fall in this year, but we do not know exactly how it's going to be phased. So breaking ground Q2 and hopefully cutting a ribbon in the first half of 2022 so that we can ramp that production in the summer of 2022.

Okay. That's very clear.

And we now have a question from FB63JY.

It's Tijs Hollestelle from ING. That's my [ obri ] code at ING, I guess. Okay. Yes. I've got a first question about what I thought was a remarkable strong recovery of the operational margin in the Industrial division in the second half. Is this also a good proxy for us to -- going into, let's say, 2021, the first half of next year, to remain at these kind of margin levels? Or are there any exceptionals? That's the first question. Then a second one on the -- if I'm calculating the impact from China right, then now with INTORQ, there could be, let's say, an almost 2% positive impact on the growth in the first quarter of this year because of the very easy comparison base INTORQ also had in China. I imagine that China was quite weak in the first quarter of last year, so if you could comment on that. And then thirdly, the remarks you made about the impairment on the capitalized R&D. Where is that figure exactly being put in the cost base? And is it showing up in the cash flow as impairment on fixed assets, the EUR 2.4 million? Because I do see that the depreciation and amortization do match the P&L line item. So if you could explain that a bit, it would be helpful.

Okay, Tijs. Let me start with your second question and then hand it to Jeroen. So actually, last year, you correctly say that China was affected by the pandemic before the rest of the world. Now it's a bigger part of our revenue, but it's today around 12%, so say just over 10%. So still, 90% of that Q1 revenue last year was basically unaffected. And at the time, we had a reasonably strong quarter, so the comparables really will change in Q2. And of course, Europe and the U.S. were hit and China was actually climbing out. But having said that, the like-for-like comparisons, which we don't break out, as you know, in China, are indeed in Q1 going to be a little bit easier. But at the end of the day, Q1 last year was, with the exception of the last 2 weeks of March, when Europe started also to lock down -- you remember that Netherlands locked down, I think, March 16 -- the comparables are still -- yes, it's a reasonable comparison you can make. The impact of the pandemic wasn't that large yet.