Koenig & Bauer AG (SKB) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining Koenig & Bauer conference call on the publication of full year results for 2020. [Operator Instructions] I would now like to turn the conference over to Dr. Andreas Plebke, CEO. Please go ahead.

Good afternoon. I see on the screen that we have both analysts and shareholders on board. Welcome to all of you. Just for those who haven't been participating in the last call, which we had when we publish our preliminary results, a few words to introduce myself. As you know, I am the new CEO of Koenig & Bauer. I'm the successor of Claus Bolza-Schünemann. I've been with the company now for nearly, precisely 7 years in all sorts of different functions. And I have the opportunity to present the more important matters to you. With regard to the financial data, I will then hand over to Stephen Kimmich, our CFO. Let's start with the presentation. I'm now on Page 2, Koenig & Bauer at a glance. The key issues, business performance. The business performance in 2020 was for an extremely difficult year, in a way, quite satisfying because starting with a very bad first quarter, we improved continuously until at Q4. And at the end, the order intake was better than the industry average. However, we still felt a large impact on travel restrictions, especially on large projects which we had in countries, which are difficult to travel to. Some of you may know that we have a large installation in Egypt. That was especially one where we had, obviously, problems to get the progress that we wish to have. The full year figures are closing with a turnover of EUR 1.029 billion and an EBIT before special effects of minus EUR 19 million. That is better than what we had foreseen. We have installed a new revenue recognition policy. The technicalities will be explained by Stephen Kimmich. The new policy has several effects. It has a onetime effect on the year 2020 because it's prospective and retrospective, but more important, in the future, it will balance the quarters better, and it enables better comparability and better planning for us and also for U.S. as our analysts and shareholders. The big, big, big topic this year is the efficiency program, P24x. Whenever I speak to somebody, which I do quite often because I'm also the speaker of the Board, after I say hello, I usually say P24x. That's the most important thing, which we are pushing through this year. The program is essentially on track. That is definitely the good news. For those of you who have not deep dive into it, it is a mixture of what we had started at the end of 2019, which was called performance P24, which, in essence, was a program to get the cost of new machines, the production cost of new machines under better control. The x came to it in the middle of 2020, that is the reaction to COVID crisis and a rescaling of the size of the whole group. Market outlook and forecast. That's the other thing I keep repeating when I make any speeches that let's not only -- let's not look at Koenig & Bauer as somebody who makes printing machines, let's look at the end markets that Koenig & Bauer is playing to, even if the end markets are not our customers. And a large -- very large portion of what Koenig & Bauer does is in the end market of food, beverages and pharmaceuticals, that's all the packaging. That is the vast majority of our turnover. Not to forget, of course, banknote printing and also commercial printing and a very, very small amount still newspaper printing. But if we push something on the front row, then we say, we are in the stable world of packaging. That's our end markets. They are intact. They are obviously beaten by COVID crisis, but we have, let's say, not only a good belief, but a good understanding that these markets will return because they are fundamentally okay. If we turn to Page 3, please. The EBIT were in Q3, almost breakeven, and in Q4, slightly positive. That's what I also mentioned at the highlights. The COVID pandemic is still a problem. We are talking about 2020 and not '21, but it is still a problem. We have, to a certain extent, managed to deal with it, but we have always very difficult situations. Just to give you a bit of an example, a few weeks ago, one of our technicians in Egypt had corona -- was corona positive, and we don't know if we can judge the hospitals in Egypt as highly as we do in Germany. And this -- [ bring his family ], and we are concerned with them. So we had to bring him back, which is a major effort because no airline will transport him. He cannot cross borders. And it's obviously not possible to do it by car. So in this case, we have to send in a special medevac aircraft and fly him out. So this is daily business that we are dealing with, and that is still ongoing. The good thing about it is that in many countries, we have a local organization with local people. If we didn't have that, it would be much worse. But in Egypt, we do not have a big own team, but in Asia and in U.S., we do. That's the reason why we have there still the possibility to install and also a big possibility for our service world. The interest in our innovative printing and finishing and postpress solutions is high, but we could also see in 2020 that our customers did what many people did. They were interested. They even had made decisions to buy new equipment, but due to the uncertainty of COVID, they delayed it and pushed it forward, which for a company, for us, means it's lost turnover, which cannot be gained again. At the end, the turnover was EUR 1,028.6 billion (sic) [ EUR 1,028.6 million ]. The EBIT was minus EUR 68 million. What that includes will be explained by Mr. Kimmich. The EBIT before special effects was minus EUR 19 million. The turnover exceeded the guidance, which was EUR 900 million to EUR 950 million. And also the EBIT exceeded the guidance, but that was partly because we were performing better, but partly, it was also due to our new guidelines that we have for accounting. The 970 -- Page 4. At EUR 974.7 million, our order intake for 2020 was 14.5% down to the prior year figure, but it was better than the minus 21.9%, which is the average for printing presses, which was published by VDMA. The world is small so that means it was quite satisfactory for us. The order intake in the Sheetfed segment developed very positively, both in the medium and also in the large-format sheetfed machines and as well as in folding carton gluer segments. Especially in the last months of last year, it -- I would say, yes, the market was strongly coming back. So therefore, the decline in Sheetfed of minus 5.5% was significantly better than the industry average. Digital & Web. The order intake was still burdened by lower orders in both offset work presses and in flexible package printing. But we had some very good sales successes for RotaJET and the HP machines. In the Special segment, which is the segment which continue to be responsible for as the head of the segment. Security and glass printing was all a bit slower. Metal decorating, on the other hand, increased slightly, but to be open from a very bad 2019. So all in all, it was not as good as the order intake in Sheetfed. The service business is around and roughly 30% of the group and has remained stable. The main reason why this remains stable is that the transportation of spare parts is not so much COVID affected and the installation and service functions at our customers, especially if it is not extremely complicated service can mostly be done by local teams, which we have in all major regions of the world. So therefore, travel restrictions did not affect that so much. That was an overview. I will now hand over to Stephen Kimmich to explain the full year figures in more detail.

So thank you very much, and also, and good afternoon and good morning from my side. On Page 5, you see the high-level figures for -- in order intake, revenue and order backlog. As already mentioned in the introduction, we did see an order intake reduction of minus 14.6% compared to 2019, but this was significantly better than the overall market average of 21.9%, published by VDMA. Similar picture for revenue. Yes, down 17.4% compared to prior year, but here also less pronounced than the 24% drop in sales for the overall industry. Order backlog, on the other hand, down only negative 7.9%. Here, also directly related to what Andreas Plebke mentioned with the travel restrictions and inability to execute some of our orders that are in our books. We see that the order backlog itself was quite strong at the end of 2020 and gives us a solid basis for starting now 2021. On Page 6, you see also the EBIT figures, which were confirmed in our final year-end closing at the levels disclosed in the preliminary figures, a negative EUR 67.9 million EBIT, driven by EUR 19 million operating losses and EUR 49 million of special effects. Those special items dominated by the EUR 58 million restructuring accrual for P24x, partially offset by a one-off positive effect in a legal dispute and a one-off income from the sale of real estate in Frankenthal. So overall, of course, a very difficult year, a difficult operating results, but also to repeat the trend we saw after a very poor Q1 and Q2. We did see recovery in Q3 and further improvement in Q4, but ended the year at negative EUR 19 million. On Page 7, moving into more details. Of course, these figures were not published in the preliminary results, but are now available in our annual report online. From the P&L side, revenue, EUR 1.029 billion, a gross profit level of 19.5% or EUR 200.9 million. I would like to point out that in these costs of sales are also included the largest portion of the restructuring accruals or roughly EUR 51 million of P24x accruals are in gross profit. So in an apple-to-apple comparison, we see gross profit around 25% of sales. So we were able with our short-term cost-cutting measures and short-time work, et cetera, to -- despite a drop in sales of EUR 217 million to roughly maintain our gross profit percentages. R&D costs at 3.8% of sales or EUR 39.1 million, roughly in line with the prior year from a P&L perspective. But I'd point out the comment on the right side that in addition, we significantly reduced the amount of capitalized development costs. So in 2020, EUR 11.8 million were capitalized compared to prior year of EUR 21.7 million. So on a pure primary cost comparison also in R&D, we were able to reduce costs as a reaction to COVID, but still hit our rough target of around 4% in investment in R&D for the year. Distribution costs also down EUR 21.6 million year-on-year. Here, of course, positive effects from reduced outbound freight, reduced provisions, but also here, cost-cutting measures, travel costs and short-time work in all parts of the globe. Administrative expenses, a similar picture. We were able to decrease full year EUR 8.7 million compared to 2019. Here, also EUR 3.4 million of the restructuring accruals are built into administrative expenses for measures in those areas. So that on a primary cost comparison here also significant cost reductions that were managed throughout the year. Other income and expenses, negative EUR 6.9 million. Here, I would only point out that the 2019 figure was strongly supported by the sale of real estate in Lausanne in the prior year. Otherwise, the 2 figures are roughly comparable. On interest results, EUR 5.6 million, bringing us to an earnings before tax of negative EUR 73.5 million. Income tax, negative EUR 29.6 million. We had here a onetime negative impact in 2020 by reducing our deferred tax assets. So the full amount that was capitalized in 2019 was reduced in 2020, a negative impact of roughly EUR 25 million. Otherwise, here, also, the results are roughly comparable. That being said, we, of course, ended with a bottom line net profit -- or net loss of negative EUR 103 million after all of these effects were included. On Page 8, on a cash flow perspective, we see a mixed picture, of course, with our operating losses of negative EUR 19 million and earnings before taxes of negative EUR 73.5 million, a difficult starting position. But overall, I would like to positively point out the cash flows from operating activities was able to end the year positive at plus EUR 12.2 million. We had very strong net working capital management in all areas of the business. So changes in inventories, receivables and other assets, positive EUR 48.6 million. The changes in provisions here, of course, because P24x was only an accrual cash outs in the future. But I think it was a good success of the company to generate positive cash flow from operations in 2020. Investment activities at negative EUR 36.3 million, roughly in line with our depreciation. Otherwise, on financing, we were able to reduce our drawn lines in our credit facilities at year-end so that overall, this is just movement between -- within our revolving credit facility based on the amount drawn on -- at the end of 2020. So that overall, I think operating cash flow is heading also in the right direction, but here also, free cash flow negative EUR 24.1 million under the current circumstances, also a difficult year. On Page 9. On a balance sheet perspective, I would start at the top right on the equity side. Of course, we had a large reduction of equity from EUR 432.8 million in 2019 to EUR 342.2 million. This was expected, and we ended the year slightly better than we had anticipated at -- and are able to maintain a very healthy equity ratio of 25%, despite having to make these large restructuring accruals, despite our operating losses, and of course, the deferred tax assets reduction here also hitting equity, still [ turning up our remains ] from a balance sheet perspective, a healthy and strong company. Otherwise, on balance sheet, you see on the asset side, the inventory reduction from EUR 408 million in 2019 to EUR 357.6 million, also here heading in the right direction. Trade receivables, of course, reduced due to the reduction in sales. Cash and cash equivalents with EUR 137 million on our accounts at the end of the year, also quite healthy. Otherwise, in -- on the balance sheet, I think no major items to highlight. And I would move on to Page 10, where we talk a little bit about the segments. So here also some of the items have already been discussed today. Sheetfed, within our 3 segments, Sheetfed had the strongest performance. Order intake only down by minus 5.5%, EUR 595 million in 2020. Revenue down by 13% so that overall, we can clearly say that Sheetfed had a significantly better performance in both areas compared to the overall market and compared to VDMA. We saw a very strong Q4 in the Sheetfed order intake, and we can openly discuss a positive trend that we saw in the last month. That being said, EBIT, of course, negative at -- negative EUR 27.8 million, but the last bullet point on the right side of the slide shows, if we adjust that for the P24x provisions in this segment, the operating result of negative EUR 5.2 million. So nearly breakeven, despite the drop in sales and despite the very difficult year. So also here, Sheetfed heading in the right direction. Digital & Web, on Page 11, had a difficult year on order intake. Mr. Plebke already mentioned the difficulties that we saw with some customers hesitance to place new orders on some of our innovative equipment, but we were able to book new orders for RotaJET and for HP presses but still saw a 24.6% drop in order intake for the full year. Revenue EUR 128.9 million, down 19% compared to the prior year. Overall, negative EUR 18.6 million adjusted EBIT result so nearly in line with prior year. So we were able to cut costs and react to the drop in sales as much as possible, but still remains our loss-making segment from an operating standpoint. But to remind you, this is, of course, the segment with the most innovative and new products that are being -- that have been launched [indiscernible]. On Page #12, you see the highlights for the special segment. Here also on an order intake, a difficult year, down negative 24.9%, EUR 306.1 million. This is mainly due to fewer orders from Banknote Solutions division, but I think we mentioned last time, and I mentioned again, the overall pipeline for Banknote Solutions remains quite healthy. This is for the year 2020, a down year, but this is typical -- cyclical order intake for this segment so that we see in 2021 still a healthy order intake pipeline. In the other segments, as already mentioned, for coating and for direct glass printing, also slightly down; metal decorating increased year-on-year from a very low 2019. Revenue in the segment down 23.7% at EUR 377 million. And here, EBIT after special effects -- or before special effects of negative EUR 10.4 million. So a difficult year in Special segments, but from our perspective, no fundamental structural concerns in this segment going forward into 2021. And finally on Page 13 to remind the impact of the new revenue recognition policy. This was an accounting change that we made with the target to reduce the volatility in our revenue recognition from the quarter-to-quarter and to enable more balanced planning. You see on this page, on the left side, under our old revenue recognition policy, we would have posted EUR 978 million of turnover compared to EUR 1,219 million in the prior year in order to allow a direct and clear transparent comparison. We made the decision to retrospectively apply the new regulation. So in the middle, you see 2020 as our published figures, EUR 1.029 billion compared to a restated prior year of EUR 1,246 million. Same for EBIT. And on the right side, you can clearly see that under the new accounting policy in blue and the old -- sorry, the new in red and the old in blue that are targets to flatten the sales distribution across the quarters was clearly achieved. I would point out, Q1 was unusually strong in comparison to Q4 because the COVID effect did not fully hit until Q2. But still, you can see that these targets were achieved, and going forward, we will only be reporting under the new policy. So when we move to Q1 results, you will see Q1 compared to 2019 apples-to-apples. That being said, I would hand back over to Andreas Plebke for P24x.

Yes. Thank you. I've already summarized P24x and where we come from. We want to introduce to you some numbers. The whole cost savings, which we aim for and which will be effective by 2024, exceed EUR 100 million. In the box, on the right-hand side, you see the distribution of the measures when they will be installed and when they will be effective. If 60% of the measures, I think, precisely is EUR 50-something million or EUR 58 million will be installed in 2021. The full year effect of those measures will be in '22. 30% of the measures will be installed in '22, and the full year effect will be in the '23. That means, in essence, that '21 and to a lower extent, '22, that will be the decisive year to install all these measures. The effect will then come over the years in a way that we have described it here. The reason why the effects come with a certain amount of delay and not immediately after the measures are installed is that this is not your classical restructuring program. The restructuring program is the expert and the restructuring program obviously leads, if you resize the company and lay off personnel, you have year one in which you have a cash out for the layoffs. And in year 2, the personnel costs are reduced. So the effect comes in year 2. But many of the P24 measures like machine platform strategy or new design, they take 1 or 2 years to install. That means to invent, to implement, to build prototypes to get it on the road, and then they will slowly mix into the design or the old machines where they run out and the new machines will run in. So there is an overlay, and that's the reason why it takes several years because some of the measures are performance orientated and some are restructuring orientated. 700 to 900 jobs will be affected in the strong and short and medium term. The negotiations in all countries have started with whoever we negotiate with. In some countries, there is only the employee to talk about, to talk to. In some countries, it's the unions. In Germany, it's the work councils. So all of these negotiations have started. We have had voluntary programs, which are partly finished and which so far were successful. And we have also started the measures as you -- I think, you're -- mostly you're German, so you know what [Foreign Language] means. So we have started all these negotiations. They are generally in line with what we plan. It's a bit of a mixture like we have many different business models. We have different works councils. With some of them, it is very smooth. And with some of them, the road is a bit more bumpy, but we have anticipated that in our plan. So the whole thing is on plan. The measures from Q4 2020 already have 10% of the saving effects. That is partly due to productivity increases. Also, in the last year, we have renegotiated purchasing contracts. So when we now order under the new pricing, we see an effect which -- month by month, which helps. And R&D and service, the back offices of R&D and the back offices in service in [indiscernible], we have merged between Digital & Web and Banknote systems with a, let's say, with an efficiency effect and synergies. That means we have a better presence of personnel, and we can get the job done with a lower workforce because we merge the back offices. That has already been in place. So all in all, P24x, which has -- with the x officially started last year in September is in plan. Stephen, market outlook.

Thank you very much. On Page 15, you see our market outlook and forecast for the calendar year '21, as well as our mid-term targets. We have -- for 2021, announced a revenue target of EUR 1.070 billion and a targeted balance EBIT for the year. This is in line with the VDMA guidance for production in mechanical and plant engineering of plus 4%. And again, we see that our order book from 2020 -- from the end of 2020 of EUR 632 million is a strong basis for supporting this 4% growth in the year. We've announced also a cash flow target in negative double-digit million euro range as we, of course, have to execute P24x and have the associated cash outs with that program. Mid-term targets remain unchanged. We confirm what we announced in the fall of last year. We see a mid-term growth in a post-P24x world to EUR 1.3 billion and confirm a mid-term target on the EBIT level of minimum 7%. So all in all, of course, we still see in Q1 of this year that travel restrictions remain that the emergence of COVID-19 virus mutations continue to weigh on first quarter of 2021. But today, again, confirm this guidance for the calendar year of EUR 1.070 billion. And that being said, I will hand over again to Andreas Plebke.

Key investment highlights. The company has a new shareholder, and that's me. I invested some of my funds, which are obviously slightly smaller than the money than you're distributing. And why did I do that? I did that because of the following 4 reasons: First of all, as I have pointed out, we are working in fundamentally intact end markets, especially the market for packaging is growing, and eventually, COVID will be over; secondly, in some areas, COVID even work as an accelerator of trends, especially in the packaging market, e-commerce and the rise of household packaging is growing; thirdly, we believe we are financially well positioned. We have an equity ratio of 25% and more than EUR 250 million cash and cash equivalents available. And the net working capital management, I think, is working quite well in this company. And lastly, the very important point, P24x is on track, with a focus on increased operating profitability. That means if we have rescaled the company and went through the COVID bump, at the end, P24 should enable us to severely cut the production cost of new machine equipment and make the company also in that part more profitable in the future. That's the key investment highlights. There were also the key investment highlights for me. And I think now we are open for questions from your side. That was our presentation. Thank you.

[Operator Instructions] The first question comes from the line of Stefan Augustin with Warburg Research.

Actually more or less just 3 of them. The first one is a bit on the net working capital and the free cash flow guidance for next year. So obviously, the change in the revenue recognition has shuffled around a little bit, the balance sheet amount of the working capital contributions. Can you outline a little bit how much you would like to reduce the net working capital? Or do you think you can reduce the net working capital to sales ratio into 2021? And outline a little bit on why and how one or the other thing happens? And the next one would be to come to the free cash flow, what kind of investments you're looking for? That will be my first question. And I will place the second one a little later after your answer.

So thank you. From cash flow forecasting, I think it's quite simple to answer. We're also thinking quite simply about it. So we see a balanced EBIT and starting from a balance EBIT, of course, we will have our regular interest payments and our regular tax payments. As in prior years that are -- I think, are quite easy to simulate. We, of course, have the large cash out from P24x in our cash flow planning. And just this simple EBIT minus interest minus tax minus P24x brings you to this corridor of double-digit million euro negative cash flow. From a working capital perspective, basic assumption, as you can see from the simple equation is that it remains at most flat. From a percent of sales, we, of course, are predicting an increase in turnover from EUR 1.028 billion to EUR 1.070 billion, and we're assuming that we'll be able to compensate that increase in sales with reductions in working capital as a percent of sales. So that's a simple answer. And again, because we -- COVID is still here, it's still uncertain, inventory management is difficult to plan. It remains one of our major operating challenges in working capital management because of the uncertainty in delivery dates, uncertainty in travel, uncertainty in installation. Therefore, we took, again, a simple approach in our forecasting.

Okay. So for this, let's say, for the time being, you would still run a little bit with higher stocks than, let's say, you might envision for when looking into a post-COVID environment. Is that right? So I could, let's say, come to the conclusion that for 2022, I see a slight decrease then in the inventory levels.

Correct. So we still stand by our mid-term targets to reduce to a maximum of 25% of turnover in our net working capital levels, so that target remains. But I think I mentioned in the past that it's simply the operating facts on the ground that inventory reduction remains difficult in these times of uncertainty, simply because we don't have a normal operating process with -- so the short answer is, yes, you can make that assumption that we're not counting on major reductions in inventory in this year. Of course, we are working on it.

The second one would be on the issue of deferred taxes. You mentioned that your new planning, let's say, was not able to act -- keep you activated -- keep you activated all the deferred tax assets. So is this broad across all regions and all product lines also, is there something special you might wish to share on that issue?

No. So there were no special reasons for it. So this is across the company, across all segments, across all business units. And it's -- quite frankly, this is directly COVID related. So the deferred tax assets last year were built off of the business plan starting at our 2019 levels and rising based on our old mid-term guidance to above EUR 1.5 billion in turnover. So the 5-year cash generation in the old business plan compared to the new business plan, it's starting in a 2020 COVID world and rising to a EUR 1.3 billion turnover in 5 years. That reduction in the business plan, which is simply inherent in COVID, drives this reduction in deferred taxes. It's that simple. And it was a reduction that I think it was anticipated, and it was clear that this has to happen.

Okay. And lastly, a little bit on the current, let's say, start of the year and the demand approach not so much on segments, but rather a little bit. How do you see the regions? Is it the strongest, let's say, demand increase coming from Asia at this point in time? Or is it already the states with there, obviously, a little bit quicker vaccination? And where can you make out some, let's say, different speeds inside Europe when it comes to demand?

If I may answer that very broadly, I think the trend which we've been seeing in the last quarter of last year presently continues. Already in the last quarter of last year, those countries, which were, let's say, most successful in fighting COVID, like China, were coming back quicker than other countries. In the U.S., which are doing quite well in COVID fighting, but we still have very severe travel restrictions. We cannot travel in and out except for -- in very special situations. We can, for example, in banknote printing because it's a government matter, but otherwise, it's still difficult. In the 3 segments that we have, it's the mix, which you have seen in the last quarter. Sheetfed is -- has a situation in an end market which is continuing to look like the last quarter and the other 2 segments are, let's say, a little bit behind sheetfed.

[Operator Instructions] The next question comes from the line of Michael Junghans with Commerzbank.

So the first question I have regards to -- with respect to securities printing business. So I mean how would you describe overall the development so far with respect to volume and with respect to the margin quality of the current order backlog for your banknote printing business, especially since the start with respect of Q1, for instance?

Let's -- okay. The order pipeline is very solid. So there is nothing on the horizon which we see, which lets us doubt on our business planning and business model. The solid pipeline is -- the pipeline is solid. Secondly, it is, was and will be the government business. That means decision-making is not always in the same way foreseeable the logic as it is with a -- like with a Sheetfed world. And thirdly, the margin quality is above average as I think we've pointed out in the past, it is above average.

Okay. Yes. Because I was asking because in the financial statement, you are putting much effort to -- just to make the statement about seeing that the -- especially the packaging printing markets are clearly fundamentally perspective intact, yes. However, I cannot find a statement made for the banknote printing market. So I mean, in general, would you also make, I would say, a soft statement about you regard this end market also has fundamentally intact. Maybe if you also could help us -- helpful if you could shed a little bit light on this statement.

I can clearly do that. Well, first of all, the -- our whole year-end accounts is also a bit of a -- well, I wouldn't call it a marketing exercise, but we try to give the company an image. And we address the capital markets, but also, we address other markets with these presentations. And therefore, what we tried to highlight is, think -- please think of Koenig & Bauer as a company which is mostly in the end market of packaging and that in food, beverages and pharmaceuticals. That is a thought process which we want to install there that we are not a machine builder bumps, but we are in a certain world which is developing well. Why do we put packaging in front because that with the -- it is the vast amount -- the biggest amount of what our turnover is, and it gives the company a clearly very simple step on what we stand for and what we are. Now on banknote printing, the marketing efforts is slightly reduced because there are something like 67 banknote printers in the world, and we have roughly 67 customers, and they all have machines from us. They will not be 68 next year and probably not 66. So our -- addressing this market is, let's say, slightly reduced as to the other one, and we didn't want to kind of water down the message. But if you ask me, I can also say that banknote is fundamentally intact. The -- I think in the part where I talk about the strategy, you will also see that I'm not only talking about packages, but in the second paragraph, I'm talking about also the commercial printers, which are also not packaging. And I also think -- I even talk a little bit about the newspaper printing, which is a very, very, very small part of our business. I think you can't even measure it in percentage any longer, but we're still the market leader. So I talk about these things, but the -- if you want to give the thing one name and one stamp on the face, then our strategy means packaging. Open brackets, of course, it means banknote, but we don't need that amount of marketing in that as we do in the rest -- close brackets.

Okay. Good. Understood. Yes. The last question by now is on the side of other income and expenses. So if I take a look into the notes and then under the sundry other operating results, it came out at a negative EUR 14 million compared with a positive EUR 13 million in 2019. Can you add a bit more color here? What was this driven by? Because in the notes, you mentioned that in this sundry other OpEx item, there were some warranty claims and provisions for legal and sales risks booked here.

This is the operator. Maybe the speaker line is muted.

Apologies. Yes. Apologies, we were stuck on mute. So to summarize, there were no major one-off items to point out in other comprehensive income -- sorry, in other income in that area. There were -- in 2019, as mentioned, there were some other effects. Otherwise, this is a typical operating business. So nothing special to point out.

[Operator Instructions] At this time, there are no further questions. I'll hand back to Dr. Andreas Plebke, CEO, for closing comments. Please go ahead.

Thanks. Stay with us, bear with us, invest in the share as I did. And I think we'll speak very soon again when we publish the first quarter results. Have a good day.

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