Krones AG (KRN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. A warm welcome to the Krones Capital Market Day. It's a pleasure to have you here today. Just before we start, some housekeeping issues. First of all, we're wearing no masks, and we are all double vaccinated and are tested this morning. So there shouldn't be a problem in terms of how we appear today in regard to corona. Second, what I would like to mention before is that in case you have questions during the sections we present, you have a chance to raise your hands on the computer system, of course, and we will take your question at the end of each section because we think there might be some questions in regard to the business and in regard how things are related to each other and we want to offer this opportunity. However, at the end, we will have a big session of Q&A, of course. And Norbert Broger will summarize everything in the financial statements and outlook we have once again. Yes. And here is the agenda, and I just want to briefly explain what we would like to achieve today. We would like to give you an understanding what is driving Krones today and tomorrow, and how we want to transform Krones into the company which we need in order to, on one side, use the opportunities the market is offering us; and second, of course, to get the profitability along you are expecting from us. And I could say that's growth, profitability, innovation, sustainability and digitalization. And I could put it in a different row because sustainability and digitalization are standing today in the middle. And we would like to explain to you how we are going to transform the company from the perspective of sustainability and digitalization and how this is integrated into our business and in our business models. So that's for the beginning, and that's how we want to set the mindset for today. And before we start, of course, I would like to introduce ourselves. On the right-hand side with me is Norbert Broger, our CFO. You all know him most probably. So camera is moving, Norbert Broger.

Good morning.

And Markus Tischer is as well with us. He's actually in charge in the -- our Board for international operations and services. He's quite a long time already on the Board, but he is taking responsibility from the 1st of January onwards for digitalization and R&D. And we believe that's important to bring things together. And you might wonder why somebody who is actually taking responsibility for the aftermarket business is now taking responsibility for digitalization and R&D? And the simple reason is because we believe that the biggest efforts we have to spend is in TCO, total cost of ownership, and the OpEx capital. You will see that later on, and you will then understand why we have made that move that Markus is getting this responsibility from the 1st of January onwards. And last but not least, myself, Christoph Klenk, I am the CEO. And with that, we jump immediately in the agenda. And in the beginning, when I -- when you see welcome and then the next point is sustainability. First of all, we would like to give you a bit of a mindset where we are today, how we have emerged from the crisis we had and we have. And of course, we want to give you an understanding in the beginning of the market and the environment we have. And let me put it on -- here on the screen. We have 4 points highlighted to say, okay, we are #1 in the beverage technology worldwide and that remains. The crisis has not changed that at all. Our top line is resilient and have rebounded very fast, quicker than expected. And we did our homework for profitability and growth because this is the most important for us. And I would put it this way, that Krones is on the way, and you see it here on the lower sentence that we are moving from, let me call it, the old economy into what we call a tech company because digitalization, sustainability, those are all things driving us in a big, big scale, and this will be the dominating factors for our business in the future. So a short recap of the Capital Market Day 2020, and I don't want to jump into details. Just that you see that we have developed a program which we called, at that time, Shaping the Future, with 2 blocks, Saving for the Future and Designing the Future that you will see all those points again on our presentations and that we have followed up that path quite constantly. And this was one of our important slides last time because we wanted to reflect on corona and had, I would say, 9 points, which have been important for us, and you see those reflected again. I would say, the big points out of that is that the supply chain is again due to corona and all the other things quite heavily disrupted. We have this huge scheme, and everybody has looked to Glasgow recently, decarbonization and of course, we are talking about a new normal. But it's just a short pickup from where we are coming from. Now one word about corona because -- and I don't want to reflect at all to the German situation, I want to reflect more to the international situation. And we saw this slide is quite interesting because you see the level of vaccination, amount of people who are vaccinated at least 1 time. And you see that in average, we have around only 50% of the population vaccinated once. And this is a very critical factor. And this plays, of course, a role in particular for us in Asia since, in particular, the Asian business is pretty low at the moment. I wouldn't say pretty low, but not as booming as the other markets. And this is something which is certainly related to vaccination. And corona is not over at all. We believe this will harm us more than we expected in some countries. In other countries, I think business is going as usual. So now let's jump to the market because this time, we don't go deep into the markets because we want to more explain today how we transfer things and how we look into the future. So a couple of words to the market. You see on the upper bars here, you see actually the growth in the off-trade section. And off-trade is everything which is retail, the large-scale volumes going not into bars, hotels and restaurants and which is not on-the-go. So this is what has been booming due to corona. And you see that this segment has been growing. And there's a constant growth even for 2020 -- from 2020 to 2021. And if you look then -- and it's behind me here, you look here, the on-trade sector, and this is something which rebounded extremely fast and better than expected. And this is some momentum, which is giving us. First of all, of course, there was a huge drop, 25% worldwide, in the on-trade sector. And remember, there's even the on-the-go included as well. And this one was coming back quite strong. And you will see one other factor for us, which supported our business quite a lot, and I explain that on the next page. And if you look then on the outlook here on the page, you will see that we expect the overall growth in beverage consumption from 2020 to 2021 by 5% which is pretty strong, a quite strong rebound and there is even significant growth from 2021 to 2022. So the markets are fundamentally okay. And I would say all our customers have adapted to the new normal and making benefit out of it. I think they have adapted so fast, in particular, the big ones that they have really made an excellent job in regard to their sales channels and serving the consumers with beverages. And this is going like you see that here. We believe that's a stable trend. So we don't expect that markets will drop by '23 or '24. They will be stable and this is something which will certainly give us momentum. And this, in combination with all the investment programs from the governments all over the place, it's all over the world, we believe that's a very robust market scenario, even in case corona is not disappearing. And to give you a bit more insights how we see that. I said it already that the on-trade channel has been opened and OOH is out-of-home consumption. This is something -- somebody is grabbing a drink when he's walking from his home to the underground train in the morning. And this is mean by -- even that one here, which is a quite important factor, in particular when you look about smaller package sizes and smaller drink sizes. So this was coming back. Then this is a big proportion for us, the second one, beer from keg to can. Because usually when you have -- in the bar and restaurants, we have a lot of draught beer. And this is even true for the McDonald's, the post mix, when you look to the Coca-Cola section, that post mix is coming in kind of kegs as well. And there has been a big move that this one was changed from beer -- from keg to can, and this was driving, in particular, the business on can lines. There is one other factor. And when you see here, secure legal framework for PET. I mean if we can say there's something secure, this is about that legislation in particular in Europe has made a point how things are going. They have clearly defined how the recycling rates have to be. And I would say, at least from a legislation perspective, there's a lot of more security in the systems than before. And we have seen even in Europe, some investments in PET again, which we have not seen under the uncertainty. So I would say this is one other factor. Then we see an acceleration of e-commerce which is for some customers quite an interesting point. It has not a big momentum at the moment, but I would say it has a momentum as the home order delivery is something which is creeping up even for beverages because if you order something from Delivery Hero or something like that, you order in most of the cases, some drinks with that. Then we have a big move, hard seltzer, that's an alcoholic drink. I think in Germany, not so well known, that has something to do with legislation. But it's coming now to Germany as well. And this hard seltzer business was the overarching scheme in the U.S. So it's a very, very big one and this was driving our business. And we see it now swapping to Europe and having impact on the European market as well. Yes. And last but not least, focus on health and natural topics. I mean people in the pandemic tend to use more healthy beverages. And I would say we see it all over the place that the juice consumption and those, let me say, plant-based things like milk from oat, they are picking up, and this is something we see [ a tendency ] in the market. So in a nutshell, these are the factors we have from the markets. We don't jump deeper today into the markets because we have highlighted them. And again, they look pretty stable. And with all the discussions we had with our big customers, we believe that the markets are developing sustainable for the next 2 to 3 years. That's the message I want to bring across today. Yes. And then supply chain shortages. And I want to say immediately, we don't want to bother you with that thing today because it's -- yes, we are harmed by the supply chain issues. There are a lot of challenges for us, of course, but we do not jump deeper into that because I think that's common at the moment. And we would just explain you something which you have heard from anybody else as well. And our point is, yes, it will harm our business. We have factored that in as much as we can. And our planning for 2022 will be based on the supply chain shortages we have. We do not talk about detailed figures for 2022 for today. But once we are going to do that, you can assume that we have factored that in. What we assume is that in revenue, despite the supply chain issues, we will have growth for next year. So that's the only thing I want to matter. And I don't want to repeat what is written here because you all know those things. In particular, I want to say that the semiconductor issue is the most critical problem for us. And this is related more to our suppliers than ourselves because those components we buy from the external. But yes, there is a severe impact on that. Then we have some short-term issues like cables and something like that. But it looks like that -- even that is in the first quarter, getting to a better stage. Semiconductors will be longer a problem for us than the first quarter. That's for sure. Yes. And just very fundamental. Digitalization is now fundamental for every business. And I don't want to repeat all what is written here, but I think there was an interesting McKinsey study saying that the pandemic and COVID-19 has accelerated the digitalization of the industry at least by 3 years. And I think that's something important we have to factor in. And you will see that in our presentation, we see that exactly the same thing. And something we want to acknowledge is written here in the middle, that 30% of our projects in 2020 in commissioning and installation at our customers have been done remotely. Of course, we had people on site, local people from Krones, but not at all with the skill levels to have on their own a commissioning of a line. I'm not talking about installation, but commissioning, doing all the I/O checks, getting the line optimized and up and running. And we have managed to do that remotely for 30% of the projects. One interesting figure is we have not sent one German technicians for the last 18 months to China. And we have commissioned even there, the most complex lines we have. So this is something which has worked out extremely well, and this is a very good fundamental for the future that we get our operations for services around the world much better aligned. And Markus Tischer will talk about that later on. And of course, last but not least, those companies being in digitalization, they had an excellent move on the stock markets. This is the last point we want to mention here. Now what about climate change? And this is even something interesting. If you look that's -- you know that much better than me, MSCI Index, and there is a consensus that climate change and greenhouse gas emissions, let me call it decarbonization, is on the agenda of every company. And of course, this is a big scheme. You will see that later on. In particular, our customers are pushing that forward. And we see that as the biggest proportion for Krones to drive this for our customers, that we are mirror imaging what our customers are doing and how big their efforts are and how big the programs are they are committed to. So that's the statement I wanted to make here. I think we have almost probably consensus about that. So what does that mean now for Krones? Because we wanted to make it simple and put a couple of things as highlights out here. And how has that been before the pandemic and what is the new normal? I mean a company having no agenda on climate change is not possible. So it's a must-have and it's a must-have in the products because we talk about ours Scope 3 and we talk about how we can help our customers to get their footprint in terms of CO2 emissions and greenhouse gas emissions down. Then, of course, the supply chain is coming in the middle and in the center of everything. And I would say most of our customers are rethinking their supply chains. We have to rethink our supply chain as well. There are big efforts into that, how we do that in the future. The digital operating and business models are essential. Let's see how, I have to move here. You see those are essential. I think there is hardly any customer who is not requesting how we can materialize on digitalization, what systems can we use and how is this set up that he can benefit in his overall output. And of course, Circular Packaging Solutions is addressing PET, which is in plastic, which is important for our industry. Without that object, I would say, we would not talk about the core of our business because at least 50% or let me say, 45% of the business is related to PET, and this is something we have to address, and our customers are addressing that as well. So these are the big schemes we see and we jump in each of them. I will go now a bit deeper into -- dig into sustainability. Then I will hand over to Markus Tischer that he will talk about digitalization. If you look to that, our statement is we are contributing to 3 major challenges for humanity. That might be a big word, but we were internally discussing a lot, and this has quite a big momentum in the company because it's attracting people. And we have brought that on a larger scale in the company to get people into the programs. And you will see that this is far beyond Scope 1 and 2 greenhouse gas emission savings. It's much more about how we can -- together with our customers, how we can actually work on those 3 major challenges for humanity. It's climate change. It's how we feed the world and it's plastic littering. We put those 3 subjects out, and we believe that our sustainability strategy is well set on those 3 pillars. Now let's jump to the first one, climate change. And we have actually 3 items here. And I will not go in depth to any of those. We have just examples how we do that. We have the reduction of CO2 in operations in ours and in the operations of our customers. We have, of course, our energy-efficient enviro solutions. And those of you following us for a long term, are aware of that enviro is already for more than 10 years, a brand we have generated for energy-saving equipment of Krones and this is a true certificated program. So we have something like a passport for each machine where you have on a certificated level, you can tell a customer what energy consumption our products have. I don't jump to that. And of course, number three is reduced food waste. You have heard that as well from us because we believe that's a big thing. And I'll give you now some examples in going through that. First of all, I think that's an interesting chart saying, okay, what will happen in case we are doing the policies we are executing? And you see here, this is -- current policies will lead most probably to a global warming around 3 degrees Celsius. And I think we are all aware of that we should be somewhere at 2. And I have not gone through in detail what has been discussed in Glasgow, but I would say that most probably it's not doing a significant change to the 3 degrees here. These are the commitments given and the pledges made to the targets, which is 2.5 degrees. And you see how critical this is to achieve that. Race to Zero, which is most probably a very well-known program companies are committing to. Race to Zero means a global warming of 1.5 degrees Celsius. Race to Zero is 0 carbon emission, but it will, anyway, lead to 1.5 global warming to 2100. And we don't talk about this one here, no climate policies. I mean that's out of the frame. And this shows a bit how much we have to be committed altogether as companies and being responsible for our companies, what we have to bring to the party that our world is still nice to live in tomorrow. And to give you a bit of a breakdown, and we found that very interesting in all our internal discussions that we have a clear picture on, where is the greenhouse gas emission coming from and who are the polluters actually? And this is something agricultural, the green one is a very big one, and you see that later on, we give you more insights into that how big this is for our industry. So agriculture is a big, big point, and that means for us, how can we save, let me say, grains and coming from there or sugar that the products are getting down. Then, of course, we have the big point of energy. And just for the sake of -- because we have discussed it internally so much, we talk about 1.8% for aviation. I think there are other points where we have to take much more care about what is the emission and where is it coming from and what can we do to reduce emission in those sectors. And again, it's 20% out of the food and beverage production. Yes. And I was -- I have been asking Coca-Cola Europacific Partners, whether we can use some slides of their presentations because I would say we are quite regularly involved in the meetings with our customers and the subject of climate change and greenhouse gas emissions is becoming so big. Any second discussion we had is 50% to 60% related to how do we get that thing fixed. And Coca-Cola Europacific Partners has a big program in place to bring in the suppliers. And you see that here in the red box, we must unite with our suppliers. And there have been tough statements in terms of what is a company like Coca-Cola Europacific Partners expecting from a supplier and one get, I would call it, the air dense in case you do not fulfill the requirements. As of today, it's more self obligation. There is a lot of discussion, but we have been informed that there will be a time where this is mandatory, that you have actually the right things in place in terms of products you sell, in terms of you behave yourself in regard to greenhouse gas emissions and, of course, to all the other ESG targets, which are set from Coca-Cola Europacific Partners. You see what is in their interest. I just highlighted 2 of them, of course, more recycled plastic, more lightweighting packaging. And of course, on the other side, you see here the fossil energy. Actually, everything which is related to what I have said earlier, which is important that they get a sustainable footprint for the future. And even more interesting, and we looked very deep into what is the nature of the greenhouse gas emissions a company is doing. This is something which is published from Coca-Cola Europacific Partners. They have been very open, how they -- how their split is and why did they do that? Just to tell us guys this is something you as a supplier have to react to and you have to deliver solutions that we can together shape the world for the future. And I would say this is a very perfect example because we are very deep in discussions together with Coca-Cola Europacific Partners, of course, with other Coca-Cola bottlers as well, and of course, with many other customers as well. So the point I want to make here is that the Krones carbon footprint targets reflects our customers' ambitions. That's the point I want to make. And I would say this slide here shows you perfect why I'm saying, okay, Scope 1 and 2 is important, but Scope 3 for us is even more important because this is -- these 2 bars are Scope 1 and 2 of Krones in terms of our carbon footprint. And all the rest is related to our products. And when we want to take responsibility, then it's very clear that we have to address the yellow one here. You see here the targets we have set ourselves. You see that 80% reduction for Scope 1 and 2 until 2030 and 25% reduction until 2030 for Scope 3. And this is including growing revenue. So you'll see that later on in how we are actually charged from the big organizations in terms of greenhouse gas emission sustainability programs. So this includes actually our path to grow. But even with that, we are lowering those emissions. And with the qualification of those targets, I think we are well set because they are very ambitious when I would like to summarize that here. We have, of course, set that targets with detailed numbers. So in the past, you could do that just by a percentage. Now it's really above percentage. We are exactly in terms of where we are with greenhouse gas emission for Scope 1 and 2 and for Scope 3. You see how much we want to reduce that, and we are committed to science-based targets. That's our major program where we are going to actually review and do all the follow-up meetings that we see how have we progressed on our targets in terms of greenhouse gas emissions. Now I think this is something interesting, and this is for our R&D, the most important chart at the moment. You see here of our industry, and you see water, CSD, the breweries and the dairies. And you see here underneath what is coming from ingredients, what is coming from energy and media and what is coming from the packaging. And this address very nicely where the greenhouse gas emissions -- let me put it a bit on a bigger scale, where we have to develop products in order to get things okay for the individual CO2 footprint they have. And you see for water by far, the package is the biggest. Lightweighting, recycling, those are the things replacing in the secondary packaging the plastic. Those are the important factors. Now if you look to CSD, you see here even a very big scale on the ingredients, which is, of course, loss and waste in production; and second, of course, sugar and ingredients. You see that here in the breweries as well that agriculture gets -- ingredients gets a big proportion, that's, of course, grain. And here, even bigger because I think for 1 -- for 20 calories of milk, you need to feed 100 calories of whatever grain that the cow can give that milk. So this is quite understandable why this is so big. And I don't want to jump deeper into what we are doing here because we give you some examples. But the point we want to make is we have looked at that very, very carefully. And our programs in terms of developments are aligned to those challenges that we can give our customers the solution to solve their problems. And I just want to jump a bit into what we have here. And again, it's only examples because the R&D program is aligned to what I'm saying here. And there is no development questioning, is this giving a contribution to CO2 reduction? Yes, and this is one example from our brewery section from Steinecker. And I would say we are able to do a 0 carbon emission brewing if it would be on a greenfield. Of course, there is still some R&D work necessary because the biomass conversion, which is in the center here is one of the challenges. And you see here that even with the biomass conversion, you see they are broadly in base, which is for alternative food important. There are some very deep investigations going on in R&D. But in total, we are very close to that. We have 1 brewery, let me say, here in Germany, which is like a test field for us, where we have those things installed and where we have a very good feedback where things are going. I come to that later on a bit because the important thing is it can be used as retrofits, that not everything has been -- to be there from the beginning, but I will talk about that later on. Yes. Just 1 word about feeding the world. I mean it's so simple, actually. If you look to our global problem of wasted food, this number here is really impressive. The 2,100 calories is an adult using in average per day. In average per capita, we lose 500 calories. And this is amazing if you look to that. And I would say we can do a lot to do that much better. If you translate that loss into greenhouse gas emission, then 6.7% of all greenhouse gas emission is just actually coming from the factor wasting food. And I would say that's something we can help to address in certain circumstances, in particular, with processes, making sure that in production the losses are low. From this, let me say, 500 calories, the biggest proportion is actually lost in transportation. So that's a big issue around the world. But a big proportion is even lost in production. And of course, last but not least, you see that here, water. And you see that later on in the presentation for our processing, water is something we see around the world as one of the most important things. And water treatment plants are for us of the essence. And in addition to that, designing processes in a beverage factory to reduce the consumption of water is essential. And I said it earlier in other presentations that in particular, our customers from the brewing side, they have extremely challenging targets to get the water consumption down and in a manner that I would say that the R&D programs for -- let me say, the brewing section, are significantly been driven just by the point reducing water, because reducing water would mean less waste, would mean less heating and less CO2 emission because no heating is necessary for the water. And these are -- and of course, less grain in case we get more out of a grain proportion during brewing. So that's a further example. And this is something I like very much because I was quite surprised to see that. And I have to emphasize that just for the sake of getting a good information. If you put all weight on a scale of all animals and all human beings around the world, you see here the distribution. So 5% of the weight are all animals living in -- somewhere in wilderness. We humans, all the almost 8 billion people are 35% of the weight. And the livestock we have, which we eat is 60% and we have to feed that. And I would say this is a clear indication why alternative food, new food, alternative proteins because proteins are coming usually from meat and from milk, why we have to change that. And in order to get our world fed in a better manner, we have to reduce consumption of meat and have alternative proteins available. Now of course, this is in everybody's mouths. And even we are deep into that because we believe our processing technology will give momentum to that in the future. You see here one of the case studies we have, where we have for oat yogurt plant-based installed a plant for a customer in Russia. This is all coming from MILKRON and it's going through the entire value chain. We have done everything for that customer. So we are already engaged in those subjects. And even -- but it's filling or whether it's processing, so this is something which is on the agenda for Krones. I'll come to that later on more specific. Yes. And last but not least, because plastic littering is a huge item for us, so we need to talk about that as well. No doubt, 8 million tons of plastic being in the oceans is far too much. That's 1 kilogram per person per year. We can't stay with that. In any case, PET wants to remain and not disappear from the market, we have to do something. And just for the sake of clarity, when you look to a German perspective to the PET issue. I mean Germany might face most probably the most tough legal situation in the future despite the fact that we have the highest recycling rate for PET at all in the world, so it's around 90-70 -- 97% to 98%, what is being recycled in Germany. However, consumer perspective is different. But all around the world, outside of Europe, the perspective is totally different. Asia, Africa, China, North America, South America, they are heavily based on PET, and we see even momentum in the market. Now we could be happy that things are going in the right direction in terms of the use of PET. But on the other side, the littering in the oceans is not solved with that, and we have to solve that problem together. This is very, very clear. Together means our customers, the consumers, the recyclers and we as a supplier. For us, and those of you following us for a long time know we are in recycling. And we haven't had big momentum on that. But now it looks like it picks up, and we are the only one having the full process in-house, and that's very important because recycled material behaves different than a virgin material in the pre-form and blow molding process. And second, I would say you need a lot of knowledge just to get the process in the blow mold organized from the recycling. Then recycling itself has a lot of questions in terms of how good can you do food-grade recycling because the only thing we talk about is food-grade recycling. So no down cycling, it's on the same level, horizontal, which is the important that, let me say, the package is really getting attractive. And we can offer those solutions out of one hand. So we have prepared for a short video clip because we have an installation in North America. This is, I think, 4 years in operation. And this is the biggest factory we have built for recycling. It's close to Hollywood. But the movie is real, so don't worry, it's not made in any studio there. So it's a real movie what we have done there. You might have the question, why didn't we have a second order from them? I mean the biggest problem is the feedstock that we do not get enough feedstock from the market. But this, I would say, is getting better every day and gives an impression what Krones can do, how big such a recycling plant is, what capacities are in. And actually, the customer is talking about the plant he has there and what he has done. So please for the movie that you can see what we have done there. [Presentation]

Yes, so far to the recycling. And I just want to highlight 2 things in addition to the movie. I mean we don't do anything ourself. You see that here in blue that we take 2 major components, that's the washing module, and this is certainly with the experience we have gained with our bottle washers in the industry and then the decontamination process of the PET. A lot of other things like the front end is integrated, and we are in cooperation with companies like, for example, the company Stadler, doing the sorting in front, well known in the market. And even here, the utilities integration we do from external. The core is our washing module, and this is something where we achieved excellent results. And the important thing is what we have done recently is extended that to polyolefins. So we are not just staying at PET, and this gives even some momentum for the future. Now last but not least, and then I'm finished with my presentation, you might wonder where we are with recycling. This is the installed capacity. So we are recycling on our plants per year, 2,220 tonnes per year. And this is actually the expectation we have, what we bring in addition into the market. You see that 2020 was pretty low. Most of the recycling projects have been postponed, but you see that increasing significantly, and this is what we installed in 2021. And those orders we have on board, so the 150,000 tonnes are going okay. And you see here, 180,000 is the expectation for 2023. And that would mean, and this is something you see on top of here, that we would then recycle 20% of the PET, which is going out of our blow molders we manufacture per year. And for us, it would be a perfect matching case one day. We would do so many recycling capacity that we could recycle what is going out with the capacity of our blow molders per year. We are not yet there because there's a couple of things we have to see how markets are developing. But we are in a good pace, things are developing. So I'm finished with the part of sustainability. I will hand over to Markus Tischer for digitalization. But now my question is, Olaf, is there -- are there questions so far? I see this is not the case. Then I hand over to Markus. Markus, the floor is yours.

Okay. Thank you, Christoph. It's also a pleasure for me to be with you here today and share with you our way, our idea of digitalization. And to get a first impression, I would like to also show a short video clip. Okay, okay. Yes, sorry for that.

We'll just jump through that. Maybe we'll jump later on to that actually.

Okay. So please take a first impression of our digitalization in the video. [Presentation]

So you've seen how important digitalization is already today for the daily operation of our customers. And as a general statement, the landscape of applicable technologies is evolving constantly. And Krones has been always an early adopter for these technologies in order to optimize their own supply chain, but also in order to improve our services and products. And if you look back on the early days in the 1980s and 1990s, we're coming up with the first PLC controls. We applied CNC. We have the first management execution system. And a milestone for Krones was the inspection technology. In order to achieve the best results with our line performance, we had to develop our own hardware for image processing to achieve that result. And nowadays, in the inspection technology, we apply AI, artificial intelligence, and deep learning to get even better results. Another example is the IoT system, the Internet of Things. Krones developed our own Internet of Things system, Share2Act. We will show that later. So you've seen Krones is involved in almost all of these new technologies today and in the past and is taking advantage for their own supply chain and for the customer side. But let's focus today on the customer side. If you talk about the customer products, we have always 2 criteria's in mind. First of all, it need to add value for the customer and ideally, for Krones as well. And second, it must improve our products and services that we offer. And altogether, must be easy to use. And therefore, we make it very simple for our customer. We're putting all our solution under one roof in one platform. Here, you see all digital solutions that are personalized and that we offer our customers for the entire supply chain of the machines. Starting from the first offering, the building phase of the machine, the setup installation, hopefully, many years of successful operation until to the end of life of the machine. And Krones developed over time many, many applications that is helping our customers dealing with Krones. Let's start in the quotation phase. The customer can make a configuration of a new machine like you do with a car configurator before you go into -- in a car sales shop. In the order phase, we use digital tools for project management. The customer can join the factory acceptance test remotely. We took use of that, in many cases, in the corona times. Of course, for the start-up and installation on site, we use tools for smart commissioning. Later, the customer can train their operators remotely in a digital way to prepare them for the new equipment. And then, of course, over the long operation of the lines, we offer a lot of services like support services, condition monitoring services, performance services and, of course, our Krones.shop, where the customer can find everything what they need for the personal -- for the operation of the line. All under one roof, everything personalized. So the customer can find exactly their documents, their machines, their equipment. It's very efficient to deal with it because it's one point to enter. All kind of remote services are involved in that platform. It's scalable. The customer can use it for a single machine or for his total enterprise to manage it in a better way. And it's on demand. So we offer to the customer the right application at the right time in the process just when he's needing it. And in order to do so, we apply in many cases, artificial intelligence to really get that right on demand for the customer. So it's very efficient to deal with Krones. So in the past, it was a problem because there are many different applications, they're not easy to find. So that's why we introduced this new system, and we put altogether in the Krones.world. So welcome to the Krones.world. Here, you see the landing page, if you lock in, in the Krones.world, and you see a lot of that application that I showed you in the picture before. The customer can get access with this Krones ID. You can compare it with Apple ID. If you have a phone, you enter your Apple ID and you get all access to all the services. It's the same here with Krones. All the solutions we have for our customer is in one platform, and we're bundling all that digital services to our customers. The main element is the Krones IoT system, Share2Act and the Krones.shop, and the Krones customer support inside. And it's continuously growing. We have a lot of ideas that are going in here and that we want to implement in the future. In our vision, the customer could find everything they need from Krones under one roof, under one platform in the Krones.world. So let's talk about the data behind. Of course, we already today use all the data we have in our systems in -- like the -- bill of materials like the transaction data, like the master data. And with that, we build a digital twin. And this digital twin is behind that Krones.world. But there's today a missing link. And that's the operational data when the line is in operation. And therefore, we need to connect the line with our system. And Krones is delivering in every equipment we are selling, edge device. It's called ReadyKit, and this ReadyKit is connected to the Krones machine in line with the Internet. And the customer can use the data for their systems, can connect it to the on-premise databases of the customer for its ERP system, the cloud system. So the customer can use the data generated out of the line. But the full range of services from Krones, we can offer if the line is connected to the Krones.world. And we see an increasing trend of casting and doing so, about 30% of all new lines get connected. And to be honest, the corona pandemic was a booster of this trend. Everybody could see what's possible if the line is connected, everybody could see the advantages, and I'm really convinced this will never go away. This will stay because everybody could see the advantages if the line is connected. Then we can offer proactive support with our Krones Digital Service Center and can offer all services I've shown you in the Krones.world. And the more lines are connected, we can create big data. And this big data is creating scalable business intelligence on our end, and we can offer that intelligence back to the customer with new services and profitable service on the Krones side. So with this intelligence, we can improve the OEE, the performance of the lines and the customer on the one hand and reduce the TCO, the total cost of ownership, on the customer end up to 30%. And of course, we can improve our service delivery because we know much better about the condition of the line, about the problems, we can be much more proactive and faster. It can also reduce our cost because we don't always have to travel to the sites, we can do a lot of remotely. And last but not least, this information of this data is real live feedback from our machines in the field. We can use that for our R&D department in order to optimize our lines and also to lower the cost of our solutions and machines because we exactly know where the problems are and how they're running in the field. So the real benefits of the Krones.world we can leverage if the lines are connecting. And I'm sure this will be a standard in the future like it is with many other devices in our daily life already today. So I want to show you some examples of the Krones.world. So this is one main element, it's the Krones Industrial IoT system, Share2Act. And this is the main page of the performance service. The performance service, you can see how the line is running all the day. If it's green, it's up. If it's red, there was a downtime. You can see the line efficiency all day long and the average. And the average was on this line, on this day, 61% OEE. And you might ask, why is it not higher? And here, our time stealer is coming into place. You can tick into the time stealer and you can see on this day, the filler caused 20% of the downtime. The inspection machine caused another 11% of downtime. So you might want to know what was the problem, what was behind. So you can dig deeper, you can drill deeper here and go further on to the root cause. Maybe the root cause of the filler stoppage was not the filler itself, it was the supply of the caps or something else. And here is coming the Krones expertise into place. We not just only show the numbers, we show the reason, the root cause, what is the problem. And they can even provide how the customer can solve the problem. And this expertise, the customer -- our customers cannot find in just any other third-party IoT system. This is the Krones competence insight. Another example is the watchdog here. In the watchdog, you can monitor every parameter of the line. You can set thresholds where you get alarms. Maybe if the energy consumption is too high or motor gets overheated, and you can set alarms and you can direct the alarms to anybody to the plant manager, to an operations guy, to a maintenance guy. Of course, there are already a lot of these watches installed upfront from Krones because we have a lot of experience with the lines. But the customer can always also put their own watches inside and create their own monitoring. For example, energy consumptions and things like that. And if the line is connected to the Krones.world, we can update the service with all the learnings we have worldwide that can really improve the competence of the system and the line and the customer continuously. Let's talk about another service, the assistance service. With the assistance service, the customer can manage his staff, his operating staff, his maintenance staff. He can manage their day, he can give them task, he can give them descriptions how to do their job. And of course, these descriptions are already built in from Krones. But the customer can also make their own SOP, standard operating procedures. And even the operator can make their own videos and descriptions. So maybe the operator from the day shift giving a hint to the operator in the night shift or in another plant that here's a problem, here is a solution so they can communicate about how to operate the line in the system. So to say, it's a social media for machines, and the customer can take advantage of that. So this is just one example. Let's go a little bit deeper in the task service. We have this running already in a pilot in the German bottler, HassiaGruppe. And if you would ask me today, what is the biggest effect on the performance of a line beside the machine technology, I would say, the operator. An operator are really a difficult topic globally because the availability, the skills, you need a long time to train, then they leave again. So it's hard to find good and experienced operator. It's a global issue. But instead of complaining, we're looking for a solution. And here, we bring together all competencies that we have to offer at Krones. So we're constantly monitoring the data out of the machine, the error messages. We're filtering the relevant data, and we're prioritizing the task, and we make the conclusion of what the operator have to do in order to prevent short downtimes or to make them run better. If maybe the label is getting to an end, and the operator has to reprice the labels or there is a full bottle or a full bin or whatever, and we look and can assign the task to the right operator and we even know where the operators are in the line and can address it to the closest operator. In the past, this was only shown on some signal lights or on the touchscreen. And now we can address it to them via iPhone or any other mobile device. So get the right information to the right operator at the right time, and they can even provide SOPs how to fix the problem. So here, this is a perfect example how we combine all the competence in Krones together with the digital system and bring it to the customer. So another important app is the KRONES.shop. And I would say it's the leading shop in our industry. We have already today more than 6 million products available. And the customers are able to download parts in our RPOD service. Our RPOD is rapid part on demand. The customer can download parts and print it in the 3D printer on site, get it immediately. There is also a lot of other lifecycle services like trainings, warehouse packages, upgrades available. Already 25,000 customers are registered and they are visiting the sites 30,000 times per month. And the service is available in more than 180 countries in the world. By the way, that's more than Amazon. So we see an increasing trend of direct connecting our business with EDI systems directly linked in the MRP system of our customer -- ERP system, sorry. And this is added value because the transactions are much more efficient, and we can create a much more higher customer loyalty because it's very easy to use. So how do we keep up to date and how do we apply new technologies coming up? And this, we ask ourselves every day. So Krones built up a lot of digital competence early on. We have over 2,000 experts globally that are experts in digitalization and automation. Most of them are grown historically from Krones, but we also did some acquisitions like PDA in U.S.A. or our company Triacos, who is an expert and SAP partner for the liquid food industry. But we also looked at other directions. We are a main shareholder of our -- of an AI company in Germany called Tiki. We created 5 years ago our own start-up for digital solutions Syskron and they developed a lot of the solutions I've shown you before. And you will see later, we have also a huge digital competence in system logistics early on. But is this enough? We're asking ourselves every day if we're in the right way, if we're missing any opportunity. So it was a very nice confirmation that we have been awarded this year by CAPITAL and Infront as champion of the digital transformations. And actually, we're asking ourselves, why have been be awarded? We do not feel like we are on the finish line and that we have already the perfect solution. And to be honest, the headline of this [indiscernible] was rising then. I would say in English, it's on a journey of change. And then look, because Krones has applied these technologies as an early adopter. We have a huge top management involvement. We had a lot of initiatives for the change process in the company, not only hiring expertise, crazy nerds from external and bring it in, developing our own staff and bring them closer to the digital solutions because really the application in the daily life is making the difference and not the technology by itself. And also, we're using this competence not to be the best software provider in the world. I think there are many others that are doing it better. We want to make our products and services better. So that is our target, and that's why we have been awarded with this price. So how is this all affecting our top and bottom line growth? And this is just a summary. To give you an idea, growth in this new business models with services and digitalization are much easier to achieve with less constraint on capacity -- on manufacturing capacity. Also on the cost side, we see a much lower variable cost for additional revenue. And we have seen also in the crisis, these are recurring revenue streams and they are recession proof, I would say, much more recession-proof than the CapEx investment that is up and down in the economy. So I hope I could give you an idea about our journey and our way how we apply digitalization in Krones. And you will see later on the business unit presentations, how we apply that in the business. So thank you for now. If there are some media questions, I hope we're open to do so.

Thank you, Markus, for the deep dive in the digital business of Krones. I think we got a question from Mr. [ Wienen ].

Yes. Mr. Tischer, one question, please, about the connection of the Krones lines to the Krones.world or the cloud. If I remember correctly from what Mr. Klenk told us about 1 or 2 years ago roughly, I think you reported that before being able to connect your line to the Krones.world, you had to install a server or some additional equipment to the lines back then. And for this installation, you needed to get access, obviously, to the plant of the customer. And so needed his permission. And back then, it was pretty unsure whether that was granted to you and the customers were still unwilling about that. So from your presentation now, I get that first, you don't need to install an additional equipment to your lines today. And secondly, that your customer is now more willing to allow you access. Is that correct? Or did I misunderstand and probably you can just develop a bit more on how you developed over the last 2 years, probably by COVID and so on.

Okay. No, that's perfectly right. You made completely the right conclusion. The equipment is already on board since more than 1 year. So every line that leaves Krones has the equipment on board. It's easy to connect. And the customer is seeing the advantage already when we install the line. How we work with that. And as I mentioned, corona was boosting this as well. And I think the customers are more open to give us the access to the line because in daily business, every other equipment is also connected to line -- to the Internet. And therefore, we see a trend and already today, 30% of our customers are willing to connect and we see an increasing trend. And I believe in the future, this will be a standard. So perfectly right, the conclusion here is a change in the business.

I think we have an additional question from Mr. Schramm.

So I'm not sure if you can hear me.

Yes, I can hear.

Okay, the camera is obviously not working. Sorry for that. So I was curious to hear if the -- you mentioned this 30% quartile, which is obviously an impressive number. But on the other hand, as you do the service already for quite a long time, I think it's still relatively low quartile. So how can you incentivize customers to jump on? Is there a chance to accelerate this? And what is the key for achieving better penetration here in the installed base?

Yes. We will show that in more detail later. But of course, we're doing similar things that other industries for the first months when you hand over the line to the customer, the customer will get the service for free. And we, by purpose, have a very low threshold, very attractive pricing model to get the customer hooked in and connected. And later on, we can upsell and increase the service levels. But I will show you more about that later. But that is one idea that we can attract and motivate the customer to connect here.

And we have another questions from Mr. Sven Weier, UBS.

Just a follow-up on the other 70% that we haven't discussed about. Are they using competitor solutions? Are they going with Siemens? Or can you just elaborate a little bit how you interlink also with peers like Siemens and your systems? Just curious about the, let's say, the other 70%.

Okay. So of course, many -- especially the big customers have their own systems, and we're very open to share also the data into their system. It's a request from them because they don't want to use a different system for every supplier and they have multiple suppliers. So I think it's a natural topic. But when they want to have a service from Krones, they can also open the access only for a short time, and that's what they typically do. And then we use the data just in case and not as a permanent connection. And even there, we can solve the problem faster and too much lower cost. And I think the cost difference is just so huge. We don't have to send an expert over. We get immediately data, we can analyze the problem. I think if it's not proactive, like when we always connect it, if we are reactive, it's just much, much faster and we can get access to the data just in the case of breakdown or emergency. So in both cases, it's helping us. And hopefully, the trend is increasing that we can get even more proactive in the future.

No further questions.

Okay. So Christoph? Go ahead.

So thank you very much, Markus. We are coming later on more to digitalization because when we are going to present our segment bottling and packaging, this will be a combination, what do we do in the new machines and how do we materialize in service out of digitalization because Markus said it earlier, we don't have the feeling. We are in digitalization on the finish line. It's exactly the opposite. I mean we have done a lot of efforts over the last 5 years. And one significant change we have made 1.5, 2 years ago is that digitalization has to provide benefit in the core and original business and has to drive the business models there rather than having a stand-alone approach where we might sell some digital solutions. That's not our intention. Our intention is what Markus said, we need to have full access to the operations and getting the data from our customers and making benefit and use out of -- in the service section. And again, we are the strong belief we can most probably 30% to 40% of our customers can be in our own system. 50% to 60% will be in other systems. But when you look to the picture in the presentation, right, if you see the data coming up, they are once splitting into the customers' system, and it's going on the other side to the Krones system. So in parallel, even a customer has his own system. We want to provide the service relevant factors through our system. And it seems that this is quite attractive to the customers we have out in the field. Now I have to bridge a bit -- a mistake we have made because I was referring before about sustainability, and we over jumped over a couple of slides, which I think are important to show. And actually, they are more related to, let me say, where we are with digitalization. Why is that? -- because a lot of those datas we are collecting in digitalization will help to push our sustainability programs forward because otherwise, we don't get the data and the clearance where we are with those. And just to give you a full impression on the commitments we have made and in particular, those out of our lines, we just run you through that overview. And for that, hopefully, it's working. So the remote control is out of control. So I don't want to jump deeper into that because this is something we have reported. This is officially an official page. And this is the summary of our sustainable goals, and you could summarize that under the ESG goals. And I would say on the environment, I have spoken on the market as well, ethics are quite clear. But there is one point, I think which is even as important as we talk about digitalization, the establish of state-of-the-art IT security. And this is even more important for the products we have out in the field than of our internal IT -- our internal IT, I won't say we are fully under control with all what happened in the markets with high checking the systems from external. But I think we have very good processes in place. But when you see the installed base we have later out in the field with all the digitalization, and we have to manage lifecycle there and IT security, we believe that's an important point we wanted to highlight it here. Again, this is the official slide for our sustainable goals we have for Krones. Now this is a big discussion to what is Krones committed to. And you see here the science-based targets. I would say that's the most important program for us and we are committed since 2020. So when we joined the program, and we believe, and I'll show it later, this is from the customer perspective, an important program. The race to 0 is this one here. The 1.5 decrease -- temperature increase on the global warming. And this is the race to 0 where we are committed since this year. Then we are part of the European Circular Economy Stakeholder Platform. We mentioned that earlier, this is about PET and of course, the UN Sustainable Goal Developments. So these are the major programs we had already in place. And why are those the important programs for us, it's because of our -- most of our customers are running those programs and looking to that. Now I think interesting is to see which community and which stakeholders are looking to what program. So you see the customers I have highlighted already, and you see here, EcoVadis, which is one of the rating companies. And you see here the science-based targets. This is the highest rated ones on the customer side. You see CDP, Carbon Disclosure Project, which is for the capital market is quite important. There's a bit of problem with my mic here. So this is for the capital market, it's important. You see that, that we have rated at very high. And of course, you have the public to what do they look? I mean in the public, again, it's the science-based targets, which are rated the highest. You see here where we are with the programs and you see all the time, you see it here in relation to the peers in the market. On CDP, we are behind the peers. On ISS ESG, science-based targets or EcoVadis, we are above peers. CDP is something important for you. And the message here is we will improve our status significantly by the end of the year. There's a new judgment of our status and this is becoming in live end of the year, beginning of next year, where we believe we are then in a very attractive level. The message we want to send here, we are measuring those programs. But again, the most important one for us is what our customers see and that we are with the metrics they have are comparable to what we do and what they do that they can judge in a, let me say, procurement and selection process exactly where we are with the whole thing. And again, for what is important for investors, I think we are well on track and we'll get the right ratings by the end of the year, beginning of next year. So that's in a nutshell, the overarching messages we wanted to send for sustainability and digitalization. And now we jump into our first segment. And the segment bottling and packaging consists on one hand on the new machine business. And on the second side, of course, on the service business, which we just have heard. And that's the reason why Markus and myself are splitting up that again. So I'm talking about more on the new machine side, and he's talking then about the service side, which is certainly a very interesting aspect of the business. Then followed by the 2 other segments we have. So first of all, and don't be afraid of -- I do not run you to everything which is written here. But you have seen this slide before already. And Norbert Broger will have in his presentation, of course, the summary for the entire company. But what we thought is important for you is that we have an understanding how we develop in terms of growth and profitability, the individual segments. And this is the summary for our segment filling and decoration the biggest one we have. And you see here, we are around EUR 3 billion revenue and 9% EBITDA in 2021. That's in line with the targets we have set and the forecast we have given. And you see our 2024 targets where we want to grow up to EUR 3.6 million -- billion, sorry, and having an EBITDA of 12% to 14%. And here, we have described the journey, how we want to do that. Now if I would run through that table in detail, I would say we would go far out of the frame. And I would say here are the typical ones that you see, how do we have to work on our processes and structures to get the cost down. This is the typical way how to run the business. Then you have here the points on our global footprint for bottling and packaging, Hungary and China are important for us. You heard it earlier, we didn't have any service technicians from here from Germany to China. China is doing conveyors and packaging equipment, dry end equipment for the Chinese and Asian market, which is going very fine. Hungary, the plant is not yet full in operation. That has a lot to do with COVID-19, but it's on the way. So that's not anymore an issue for us. And it's about supply chain and our digitalized service. On portfolio, I come -- I don't want to talk about. And of course, we have the growth here. There's one important point here. This is the pricing, which I want to point out. Pricing, and Norbert will reflect that later on. Certainly, pricing is working out at the moment well. I mean, of course, there's a big debate in the market whether this is reasonable or not, of course. But the material cost increase we are facing, we can actually give to the market as far as we can see. And there is quite an understanding with our customers because that's coming from everywhere. And I would say none of the suppliers in the industry could live without increasing pricing at the moment because simply the material cost increase is so high that this is a must. I can say we are well on track with that. And pricing, as we mentioned it earlier, it should go into the DNA of Krones, is getting deeper and deeper into it. It's a monthly discussion. It's a very good review. It's an individual setting. It's not something we do dogmatic. So we have a few around the world about the products, about the services. So this is well done and good under the way. So let's jump deeper into what we see. I mean you have seen that to a certain extent already that we have value drivers, how we develop our equipment. And this is reflecting on one side, of course, what we said earlier. You see in green, the environmental friendly aspects which is related to sustainability. But then you see as well the other points our customers are asking, flexibility. This is the most important thing they are asking at the moment because numbers of bottles, of labels, of packagings are increasing and you see it every day yourself in the supermarket that you can buy now any kind of -- all the time I'm used to Coke because there are so many in the supermarket and so many different ones. This explains what is happening here. And new products are coming up, so our machines must be adaptable. Then, of course, what we said earlier, this one here, maximum output, it's all about asset utilization, robustness of our system. And Markus said it earlier, even support that the lines are running in the best case, 24/7 as they should. And don't forget about this one here, safe and secure. I would say Krones is selling a lot of security. This is whether we sell a project and the customer can rely on that, we are really finishing the project. And he gets his data, his output and his financials. So that's one thing. But even more important is we are dealing with beverages and with food. And any machine we built has in the aspect that there is safe food coming out or safe beverages. In particular, once we are talking about more sensitive products like water, like fruit juices and so on and like beer, of course. Even CSD has today very, very high challenges in terms of quality and robustness and safety that the food and beverage quality is okay. So this is what we sell and enabled by digitalization. I would say the potential we see here is huge, and we want to take momentum on that. Now we have actually 4 major line types. And you see that here, and I just want to give you overviews. We are strong in PET. At the moment, the ratio is between, I would say, 45% to 48%. That has picked up a lot again. So PET was moving. We picked up a lot in glass lines. This is going well. Can lines, which was a bit of a weak point of Krones, we invested heavily over the last 18 months and see really good success on that. I would claim that we are selling the highest number of canning lines in the meantime in the market. Even if the perception is you see here, our market position between 1 and 2, but we are picking strongly up. We have huge efforts to put new innovations into that, that will come soon to the market, and we are perceived well in terms of the can lines. And of course, aseptic, we shouldn't forget about this one here, talk about that later on a bit because these are huge savings for our customers in terms of if they put hot-filled products in aseptic, huge trend we see at the moment in the U.S., sensitive products, and they need to be really microbiological 100% okay, which is one of the big things Krones is driving. I give you for everything examples. Again, the market positions you see on the lower end, we are the #1 in PET lines, #1 undoubtedly in glass lines. We are at between 1 and 2 in cans and heading for 1, and we see the same thing in aseptic. I have to abate that one of our competitors, the [ French Italian ] one took momentum in the U.S. But you see we'll bring a new innovation later on, which I'm absolutely sure that we get momentum back. So that's where we are. You see the big schemes we have written underneath. But I don't want to jump deeper at that slide, I give you examples for each of them. Now just a big overview on -- we are addressing 3 major container types. And you see all of them here. We have shown this slide already before. You see the big range of what we do in PET and the products related, which is CSD, water. Here the sensitive beverages, you see the glass here and you see the can business here. So this is, let me say, roughly 75% of all beverages being filled are going in those containers. Then of course, we have the cartons. We have HDPE, which is only to a certain extent ours. We have pouches, which is[ more than ] our scope. And of course, that this proportion, this might stay stable from at least what we see over the next couple of years. But only -- and you see the green one here if we had to get the content of recycled PET to a higher level, and if I mean that, then the recycling has to work. It's not a question of can we recycle the material, the capabilities would be there. Capacity, not yet but the capacities are mainly not installed because the recollection is not working everywhere. But this is the big thing in order to maintain, let me say, where we are. The perception of PET and see that here is quite good. There are a lot of very positive things, in particular, if you look at the CO2 footprint of a PET bottle. But of course, we are all aware of plastic waste is critical and the perception is in some countries, pretty bad. Of course, I don't want to jump into what advantages cans and glass bottles have, you are aware of. What I would like to say is we are well set for all 3 container types and in very good shape. Now just a couple of things, which I don't want to explain in detail, but we are going to ship the highest speed line ever built for a PET water line, and the line is capable of up to 100,000 bottles per hour. What does that address? Of course, this addresses TCO, as higher you run the speed, as lower, your -- let me say, your overall costs are getting. Important is, this has full rPET compatibility in mind. And we have with this machine, and this is an evolution of what we have in the market, we will get the best TCO in glass and, of course, a very good quality. One other thing, inspection technology, I'd just bring to your attention. Markus mentioned that earlier. We have an inspection technology where we look with cameras what happens inside the bottle, and this is for empty bottles. You could easily understand that we want to check after bottle is cleaned to check whether it is really clean, and this was a problem because all the time, you had water drops in. And this led to a lot of malfunction of the machine and rejection of good bottles. With the artificial intelligence we have built in, we get that much better under control and the scrap rate, the number of rejected bottles is reduced by 50%. Again, that's a huge contribution to sustainability because all those bottles have been good, and they are still running into the production process. This is secondary packaging for cans. And one of the points why we gained momentum is because we have packaging equipment addressing the needs of the market at the moment. You see here on top of this can of this 4 pack, this is not anymore with a shrink pack like you have been seen -- like you have seen in the past. This is a carbon clip, you just clip on top and you fix the 4 cans together. Very important for our customers. And surprisingly, we have a machine for it to do it. So we have a good development and we get step by step deeper into the package of cans and the varieties you have there and our machine developments will go in the direction that we have a combination of environmental-friendly packaging in combination with machines, which are able to handle the various packs on the can side. Yes. And last but not least, a few on our aseptic and the new concept we are bringing up. This is going to be in the market by the end of the first half, beginning of the second half of 2022. Again, an evolution of what we have done. Just to give you an impression, we have roughly 450 aseptic lines in operation. And the point was to get costs down, and this is indicated here. There are 2 things you see here, the OpEx. And you see here the CapEx and the new development addresses 2 things, which is not usual that we get both down. We come from here and we get down to here. The CapEx is going down with the new development and significantly going down. So we are getting close to a standard application with this aseptic one. And even more important, the OpEx is getting down. That has a lot of things inside. But one thing we wanted to mention, this is one here is set for automatic robot changeover. So nobody has to interfere -- somebody has to interfere, but not to the extent like we had in the past. So the changeover is much, much faster than in the past. Why? It's done by robots. And the second important point, we run speeds much higher than used. I would say up to now, the standard was between, let me say, 50,000 and 60,000 bottles an hour, now we are at 72,000. And this is something which is well appreciated by our customer again getting TCOs down. So this was my point for the new machines, just examples, and you see it here already. There is maintenance and service and digitalization, and that leads automatically to Markus. So I will hand over to Markus.

Thank you, Christoph. Let's look on the service side of the business. And what do our customers expect from the Krones service? And they are exactly the same value drivers. Christoph mentioned already they need safe product, affordable cost, low cost, flexible production and it all must be environment friendly. And for our customer, that's quite a challenge because they not only have the newest machines Christoph shown in the presentation with the best values and most flexible. They have a very large machine base. They have new equipment, they have middle-aged equipment, and they have equipment running 15 years or even more. So that's the machine base of the customers. Of course, in the new generation is everything, the latest and greatest. And normally, what we do today that, of course, we do a lot of maintenance service and doing the spare parts and bare parts at the services. And in some cases, we do some upgrades and even do upgrades and digitalization, but they're mostly customer-driven. When the customer has a new requirement or a new format or a new bottler, we apply some change parts. So that's the kind of upgrade business we do today. But our customers are under huge pressure. They need to be more flexible. We have seen that in the Corona pandemic, the market demand is changing overnight. There need to be -- food safety is a big topic with all the risk involved, and they are even under more cost pressure. And they cannot just only invest in these topics in the new machines, they need to take advantage of their existing machine base. So we do see the trend already today that the customer need to upgrade their existing machine base. And this could be or this is already a business that we can do in the aftersales area of Krones. So that we upgrade the machines, optimize them in a permanent way. And we see the trend already today. That's why we also, already the new machine -- make the new machines more capable to get upgrades later on. We also scan all innovations. Some of them Christoph showed you. Can we apply them also in the brownfield installation? We're investing, dedicated more into upgrades in R&D for aftersales for the machine base. And that's also one reason why we put the responsibility of R&D digitalization and aftersales under one Board responsibility. And in our vision, we would be in permanent contact with our equipment and would improve it constantly. It's in the same way like you have it on your computer or you're on the phone. You permanently get upgrades and get new functions. But therefore, you need a special relation. Would you let somebody do any upgrade on a computer? You would not. You only go to the original manufacturer of the system and would let them allow to upgrade your system because it's a matter of trust and it's a matter of the contract or business relation you have. Look on Windows. Windows in the past sold licenses, and the computer kept on the same revenue for a long time. Nowadays, with the 365 system, you book the system in Microsoft, and it's get constantly upgraded. And we have the same idea in Krones that we constantly upgrade our machine on a newer stage. And therefore, we can contribute to the needs of our customers and to his value drivers. But therefore, we need a different business model. Look on that business model in a generic way for the beginning. And I think that's a journey a lot of machinery industry companies are in -- starting from just producing machines and lines, as a supplier for equipment, later on providing spare parts, retrofits, updates, offering more and more time and material services, service packages, service contracts. I think that's a journey many machinery companies are in and as well Krones. And we see ourselves here in that area. We do a lot of service contracts already, but it's scratching already that we're building with our customer doing subscription model. Subscription modeling -- models are enabling us to be in permanent contact with the lines and the machine, getting the data and improving the line like with your iPhone or your computer. At the far end would be that we combine everything the machine, the service and the operations support in one package, and the customer could book the line as a service. He could pay per use. So the line as a service. So here, we would be a total asset manager. Of course, we are not there now. I think the important next step is really to increase this number of subscription models. And because it has a lot of advantages, we do think we can gain a better market share in the service area. And if we see we missed something here and with such models, we can get a bigger part of the share. And we can increase the customer retention. It's kind of lock-in effect. The more service we do here, of course, the customer depend on our service. We have a recurring revenue stream in these models, and we have standardized and scale resolutions for the future. Of course, this is changing a lot in the industry. One example is the market access. It's coming from sales more to the service area. Also the way how our technology know-how is gains, less from engineering, more from digital and data. And also a change in the organization. We need to be able to have the service excellence. So you need to have the connectivity we talked before. We need to take advantage of the big data, and we need a digital operation that is working with big data. So that's, in general, a view how we see changing in the market and Krones in this in the same transformation, and we want to take advantage of this trend and change our business model from built by Krones to managed by Krones. And of course, we are a leading supplier of lines for the filling and packaging in the liquid food industry today. And on top of that, with our global service network, we service them 24/7 worldwide, and I think that's an important business element of Krones as well. But we ask ourselves, will this be enough for the future? And who we think we need to, in the future, to even more commit to the performance of our line, to the cost of the line and to the quality of the product in operation. And we even think that we can get paid or get the payments according to these KPIs that we commit. We tried this in the past, but it was always a kind of risky and there were a lot of cost involved because we have to be very lot -- in many cases, we have to embed a lot of people at the customer side to get the control of the operation. And here, we do think that digitalization is making the difference. If the customer is connected to the Krones.world, we can mitigate the risk that we have that commitments, and we can offer our services on a much lower cost base. So we think the Krones.world and the connection to the Krones.world is the basis for these new business models managed by Krones. So -- and the concept of choice for this managed by Krones are service level agreements. The customer can book exactly the level of service he wants or he needs from Krones. And as I mentioned before, we start with very light packages, like a support contract or SLA performance. And we offer such contracts free of charge for the first months of operation that the customers get used to it, the customer can see the advantages and that, of course, the customer get connected to the system. We have a very low threshold level, attractive pricing that the customers kind of get locked in. And here, you see example of the SLA performance. They're all kind of support services, telephone, remote, augmented reality support 24/7. On top of that, the line is connected to our cloud. We can get the data. And this data we use for consultancy service. We are proactively contacting the customer and giving him advice, what we see out of the data, where the weak points, what can we improve. So there's no commitment here, but it's a consultancy that we proactively go to the customer and not waiting just on the service desk the customer calling us. So I think that's one more proactive step. And of course, the customers can then book any other LCS solution. He can put in the contract the complete maintenance for a full year that they have a kind of flat rate, including order maintenance and service costs. And on the high end, the SLA commitment, what I presented to you before, that we commit to cost case or cost per bottle that we commit to performance or quality criteria. So it's a modular concept. Just depending on the customer demand, if you want to be more on the efficiency side, on the cost side or on the quality side, it's plannable cost for the customer and clear responsibility, what is the responsibility of Krones, what is his own responsibility. For Krones, it's a recurring implantable business. That's very important these days. And of course, we get the insight of the equipment in operation. So that's the advantage on our side. But how do we run all these contracts globally? And here, we are taking advantage of our service network that we already built up over the last years globally. We have more than 100 subsidiaries and locations in more than 70 countries already. We built up around 3,000 service engineers globally. And in this structure, we invested over the last 10 years more than EUR 200 million. So I would say it's the leading service network in the industry. We are on the ground. We are close to the customer. We know their language. We know their problems. So this is a huge advantage already today. On top of that, now with digitalization, we're bringing the global competence to the local service and the global Krones domain expertise just at the point. Because in the past, it was already -- we don't always have the expert for every topic in every site. So in combination of both, Krones can offer a unique service package that will be essential or is already essential for our customers. So that is our idea of the service in the future. We think the business model will change and Krones is taking advantage of this business model. And this is a huge opportunity for Krones, and we will take advantage out of that. So I'm really curious about your comments and feedback later in the Q&A or if there's a media question right away. So thank you for now, and I hand over to Christoph again.

No questions so far. Christoph, I think we can make the next topic.

Markus, let's say that was the plan of the presentation that we show you, let me say, coming from sustainability through digitalization, the big picture, how we do that in our core, in the new machines and, in particular, how we harvest in service on our digitalization efforts. That's actually the message we wanted to convey here. The next 2 parts are about processing technology and about intralogistics. And I do not refer to digitalization. Why? Because I would say whatever has a mature level in bottling and packaging, it's relatively easy for us to transfer that into 2 other segments. And what we don't want to do is getting them on, let me say, as an early adapter on it, because we all know that profitability in those 2 segments are not on the highest level. So they need to get something which is already, let me call it, a bit proven and works out. But nevertheless, even in case we don't mention it, of course, we have a kind of a transfer program with a transition road map, how we get those 2 segments even adapted to the learnings we have, in particular, digitalization in combination with services. Now processing. Main processing, and now we come from a very nice, good future-orientated perspective down into the day-to-day things. And processing has been all the time a critical aspect in the portfolio of Krones. And I can say we never forget about that because we have promised that we are going to do certain steps. Once those steps are not working out, we have to do decisions. So whenever you hear what I'm saying here, we have not forgot about that statement, and we will make at an appropriate time decisions either to execute or to continue. Again, you see here the expectations for 2021 just. And this is not the entire segment, like you see it reported. It's the split of the segment into 2 parts, processing and into logistics. And for the sake of clarity, we have only processing here. So expectations for 2021 is EUR 300 million revenue and a 2.5% EBITDA level. The target is to get to EUR 400 million in 2024 and have an EBITDA level of 6% to 9%. Now you might say, okay, that's a big jump, but the important factor is we have prepared for the fundament. Things are fundamentally working out. And this is good that we can now look into a future where we look on growth and technologies and how we can penetrate the market with the stage we have achieved right now. Not everything is fine for the time being. But it looks like that a lot of the efforts we have spent are going fully in the right direction. I come to that. You see here, again, structures, what we are going to do. And I will not jump on everything. Of course, we have some bottom line synergies on the cost side. We have a best cost country sourcing because the Asian setup we have is working out quite nicely in terms of sourcing. And the Indian organization we have is doing a lot of business even for Africa. We are going to further reorganize our U.S. entities. They will be all profitable by this year, but there are further synergies which we can see. We have -- with the acquisitions, we have made a lot of different skills and know-how, for example, for home and personal care, but even more important, for new food or alternative proteins, which we want to utilize across all regions. And of course, we are going to utilize more our setups in Asia and China to get cost attractiveness into the whole thing. On the rest, I want to speak later because, in particular, we have an increased focus on aftersales, which looks a bit different than in the core. We have good synergies with our core bottle filling and packaging with processing, and this explains the strategic momentum. We have -- we say something about energy-efficient breweries. And of course, we are growing in the market with those factors here. Home and personal care, we have good expertise and new colleagues on board driving that initiative. Of course, alternative proteins, even in case this is in the [indiscernible] as with everybody. And we have a big water initiative. I said it earlier because water, we believe, is a very important factor. So where we are with changing our structure in terms of processing? And I think this gives you a good overview where we have coming -- where we have been coming from. We had historically 80% of our revenues within Krones AG. And this is particular the carve-out of Steinecker. Today, we have 20% remaining of the revenues in AG, and this will stay, those 20%, because they are very close related to our bottling and packaging. But only 20% of revenues in AG versus the 80% we had before. And you see, with the employees, we have 10% of the total employees of the processing segment remaining in the in AG. All the rest is outside, which gives us positive momentum. You see that this structure will remain the way we see it even with the growth for 2024. So this will be pretty much the same. We have 9 stand-alone entities while we had before 3. And if you look to the portfolio, we have extended that by dairy business, water treatment and liquid food. And you see that in the future, home and personal care and alternative proteins will be added. We have a whole team for alternative proteins because we are concentrating on that. And even on our sales force, we are getting people carved out just to concentrate on that individual segments to talk to the customers. This initiative is not all over the place. It's significantly related to North America. And it's particularly related to Southeast Asia because we see there the biggest activities, in particular for new developments, on alternative proteins. So I would say we are coming from a structural problem. We have addressed that then significantly, and we are adding now technology and going into new markets that we get the segment in the right direction. One word to the Steinecker carve-out that works up to now very good. We said it already on the 1st of April that was becoming due. So Steinecker was moving out. The results we see with the new structure are good and very promising, so I would assume that we are going to achieve our targets by the end of the year, what we have said ourselves, and then we have to look into 2022. Order intake for Steinecker is good. So we are set there. I think everything should be okay for the time being. Now again, what do we drive into the future? And there's one very good thing about it, and that's the first point I want to mention. Processing is packaging-agnostic. So whatever happens to PET, can, glass, even to carton, you have to create a product. And this is why, whatever will happen, processing is important for us. Even further, if you look to, we are TP in a septic. Once you want to save energy in beer, the filling process has to be done on a more hygienic aspect. So the know-how of how to prepare the product in relation to how it's to be filled in a bottle, a can, a PET bottle is of the essence. And we believe this is a very stable factor, the processing technology for the future. The second big scheme we see is water. We are offering in the meantime, for any water line we sell, we are offering the water treatment equipment. We are doing that in many cases, even after 6 or 9 months later, once alliance is installed. Because with the treatment -- the systems we have, we give good momentum. They are attractive in terms of pricing, and we have seen a good rising market for water treatment. Even some special cases outside of the beverage industry for our water treatment plan, but the big thing is in combination with our bottling and filling lines that we sell the water treatment. And of course, last but not least, again, in the [indiscernible] alternative proteins because we believe this is one of the biggest phases for the future. I mean you have heard that even from our competitors that this is a very big scheme everybody is concentrating on, and we believe this will be a big, big, big change for the next decade to come for a change in process. Now some products here, and I don't want to go in any deep with that, but the point we want to make here is there are very efficient developments, new products, whether it's in brewing, whether it's for water treatment, whether it's for homogenesis, which is more related to food -- to liquid food than to beverages in total. And even here, the deaerator is something very important because you need to take out oxygen of the water if you prepare for -- later on for a juice or something like that because the oxygen in the water would affect the taste in the product. And deaeration of oxygen out of water is a very, very important factor to get a good taste momentum. So these are 4 highlights I just wanted to show, and we are well okay with those. In particular, we sell them as single units, which is important because everybody knows that a single unit has a better price momentum rather than a complete processing system. This I mentioned already. It's one of the examples, I would say we would have been able to put 10 up, where we are in alternative proteins, whether it's oat milk, which is -- or coconut milk or whatever milk. This is something we are dealing. This is a yogurt. And this was very interesting to do that. I made a taste myself. So the taste is good. You wouldn't actually taste the difference. That's really exciting. Again, we did the whole equipment, and the customer was happy at the end of the day. Of course, we had some learnings. This was the, I would say, the difficult part on it because heating and the treatment of yogurt based on oat is different than on a standard one. So there are a lot of learnings to be done that this can be carried out, but they are there. We are taking momentum and things are going in the right direction. This I mentioned earlier, self-sufficient brewery in terms of carbon neutral, and this is on the way. I don't want to jump deeper into that. We could talk hours about it, but I want to say something more about it. Why do we believe this is an important factor for us? Why? Because we stripped that down to individual modules, how you can get your brewery more energy efficient. And you see there even inside some Krones products, that's a filler. And I just want to highlight the first 3 things because, otherwise, we are getting too complex. The point is this is actually a kind of a portfolio you can give a customer. He can look at his operation and say, "Look, I'm going to invest in this particular part because this leads to a saving of CO2 and heat in a certain manner." And we believe this is a kind of a retrofit business, smaller projects where we can materialize on. We have the first positive results on it. We, by the way, are equipping a pretty large brewery in Africa with the equipment with a very nice order, and I can say that with good profitability. Why? Because even our big customers have investment separated in case it's related to CO2 reduction. And therefore, we believe that's so important. And I want to highlight 2 things on it, high-gravity brewing. This means you brew a kind of a single beer, which you sooner than later on with water. Don't worry. It's all accordance with the Deutsche Reinheitsgebot, so no worries about that. But the point is you cannot get more beer out of the grain. That's because high-gravity brewing is so important. And with the way we do it, you save energy on it. Here, you take energy as a recovery out of the process because the -- if you optimize your brewery in a way that you spend less heat and you recover the heat, this is something -- this will help you in the rest of the process. And even this one here, the Krones Dynafill is a filler. Usually, a beer filler works at 4 degrees Celsius. So we have to cool the beer to 4 degrees Celsius that it is fillable. Otherwise, it's foaming like hell. This filler can fill at ambient temperature. And think about that, all the beer filled would be at ambient temperature and you don't have to use the cooling for it. These are huge savings. And all of this, you can, again, buy out of a modular concept. That's the message we want to convey, that we have designed this for the breweries that they can upgrade existing breweries in a nice manner and get good effects calculated to their sustainability targets. Last but not least, for processing, we have a close combination between our filling and processing equipment. And the pictures highlighted that's in the best way, we had in historic -- you have at the moment a processing mixing unit. You have the filler itself. And this will be actually melted together that you have integrated system that the processing is included in the filler. It comes at one big block, and you have multiple synergies of it that you get either -- you get lower CapEx, you get less waste. We spoke about that earlier, food waste, how big that is. And you have advantages because the operator can operate all that from one particular point. So a lot of positive effects, and this is something we push forward as well. Three of those are in operation. And this is actually the next generation we put into the market. So that's for the processing. Are there questions after that? I have to look to Olaf whether he sees something.

I don't think so, Christoph, at the moment. Perhaps, at the end of the -- all presentations.

So let's finally jump to system logistics -- to the logistics parts of Krones. And first of all, we would like to show a video that you have an overview how the systems work. [Presentation]

Yes, a very short movie giving some impressions about logistics. And here, I want to spend a bit about what we have written here, how we change the current revenue and the profitability to our further and future targets. You see here, very comparable to processing, we have EUR 300 million revenue. We are targeting about EUR 450 million, which is a growth of around 10% on CAGR. Now you might say why. In an intralogistics market, the growth is so low. And I would explain that a bit later. Because you see, we are going from 3% EBITDA, which is quite low and is certainly a problem. We want to go to 6% to 8%. And what do we do in the meantime to get along with that? I mean improved project execution, in particular, in Corona, we were suffering on project execution. There, we didn't have the capabilities as we had in bottling and packaging. With a lot of remote support to work, we had to bring the people over, and we had even some problems in the execution to get people into a country that we could execute our projects. And this was, in particular, 2 for 2 countries, the U.K. and Israel. Then we have another issue here, which we have to work on. This business is software-based and engineering-based. And we need to extend our skills. We have a pretty young team. The company was growing fast, so we were materializing on getting access to young people from the university, but we need to bring their skills to a higher level. And we buy from third parties some of the software, not in the sense that's their software, but they work for us, but it's never as good as you have those people you serve on board. So that's the reason why we have to leave here the skills and the capacity. On the footprint, you saw that even in the overview with Nestle. We have significant projects in the U.S. and 1/3 of the revenue -- not 1/3, but 25% of the revenue is in the U.S. And you see that these are usually pretty big projects with Nestle. Even Coke is among our top customers and some others. And as always, everybody is at the moment limited in terms of resources for software in the U.S. And that's the reason we have a good Mexican setup. We have a good installed base with System Logistics in Mexico, particularly with 1 big customer, too. And the Mexican setup is quite robust. So we are going to materialize on that. We have here a big chance to extend because the business in Asia Pacific and China is compared to the rest pretty low. So we need to build up a setup. And the same is true in case of India. You might wonder India, this is a country where you use intralogistics, yes. Why do we say that? Because we have very nice projects on board again with multinationals. And the things we see here is very promising that we can do more business in the Indian market. Another big thing comes why we are a bit careful in terms of growth and is this the mix change to smaller projects, AGVs and LGVs. And this is true as well for picking solutions, which have been historically quite big, a lot of investment. And we -- with the new applications we have, we get that smaller. Once you get something smaller and you put more efforts on smaller projects, of course, this will be less revenue but more profitability. And this actually plays then here in the growth that inside of this growth, there's a significant change in portfolio and a bigger focus on smaller projects on AGVs, automatic guided vehicles. You saw them in the movie. And that the picking solutions to create orders out of a warehouse that you get in accordance to the truck delivery pallets built in accordance to what the stores need. This is a typical picking system that those systems are becoming smaller. Of course, we want to see that in the next stage which markets we are going to address. And there's one other thing here, increased service business. There is a big opportunity for us in as well. You see it on one of the next slides, how much installed capacity we have. So there is further growth on service, which is well giving a good contribution in terms of our profitability. Opportunities are groceries. There, we have nice applications, good reputation where we want to grow as well. And of course, pricing is an issue that we get that along. The limited factor here is less the order intake or the pricing of the market. It's people -- getting enough people to execute the business. That's our biggest issue here. Now one word about the market. You have heard that from many others. So I don't want to talk in deep about that. But what we can say, this is actually the area we concentrate on. This is food and beverage manufacturers. So a typical Coke, a typical Nestle, and this is food and beverage retail. Because in particular in the U.S., retailers are playing a huge role to distribute all the products. So that's a different segment. And in food, there are many retailers as well. So we are concentrating on those 2 markets together between, let me put it, EUR 4 billion and EUR 6 billion. And we're having a share of EUR 300 million out of that. So this is for the time being enough. We have a very good position in the beverage market, which we want to maintain. We have good reputation. You saw that in the movie with Nestle, with Coke, with Pepsi, and this is something we want to further harvest on it, whether it's beverage or outside of the beverage, like with Pepsi with their chips section, the Frito-Lay business. The second -- the next step would be then retail and e-commerce, but we are careful on that because we are aware of the price levels here are pretty critical. So now about the installed base. What we have at the moment, we have around 500 installed high bays. That's quite a huge number. Why? Because System Logistics is already for decades in that business. And even Krones had in the old times 50 high bay warehouses installed. So the installed base is pretty large. For those projects, and that's one of the schemes we have to look into, those projects are, in terms of margins under pressure, they have long lead times. They are difficult to execute. And this is the reason why we say, okay, if you look to HGV projects, let me say, a typical U.S.-based customer runs in 1 operation around 100 HGVs. That's pretty large. So this is something at the end of our bottling lines which we have to address. You see we have 1,600 installed, and we would be capable, in 3 to 4 years, to double that installed base. That's actually the target. And then the picking systems, we have 100 installed, pretty big ones. Now we are -- and that's the reason why we see, say, a typical project transferor time could be between 6 and 24 months. The smaller ones we have at the moment, interesting projects in the food industry, in the cooling chain, where we have from order until the installation is finished 6 months throughput for us. And that's really good because then I don't have to explain revenues are getting -- coming fast. And the projects in their size are very good, handable and scalable, so we can repeat them. So that's on what we focus into logistics. Again, it's food and beverage, our focus. It's cold and frozen because that's a particular competence and it's very close related, of course, to food. And of course, the groceries, where we have big systems in place, in particular, in Southern Europe. Of course, the dominance of System Logistics is based in Italy, the dominance is in Italy with the groceries. Here, just an overview about the solutions technologies. We can do a lot ourselves, and we have put it quite efforts in having our own product portfolio. In the beginning, we saw that it's not necessary. We can buy that all from sub-suppliers, but we figured out that, with that, you can't drive pricing scales because then you are all the time depending on others delivering it. And the price levels over the last 2 or 3 years have not improved in the market. They have even getting in other directions. So the point was having state-of-the-art technology ourselves, and this is whether it's in automatic storage and buffering with mini loads, whether it's in case picking or whether it's in material handling. So System Logistics is doing themselves quite a lot. Now I don't think that's a manufacturing system like we have here in Germany. That's the typical tailing one. It's concentrating on final assembly. What they do, they get a lot of modules sourced from the outside. They have a very nice supply chain where we are materializing on. And so we can realize very cost-attractive products in that field. They have all key technologies in-house. And they said it earlier, the biggest thing is that we get the software and the project management competence that we have quick and fast adaptation of our standard software to the applications we have and that we get it scalable, that the software is in a structure that we can do the services and the upgrades later on. Of course, you get for everything from System Logistics, a full package, whatever it is. So it's from A to Z. We get the full project management, and we can do that all together in the food and beverage industry, where we have certainly the highest focus, the biggest expertise and having a really, really good relation to our customer. The System Logistics is based mainly in Europe. I said it earlier, we have 1 U.S.-based location and 1 in Mexico. We have 1 location in Asia, and this gives you a pretty good overview where they are. I mean, it's mainly Europe, and it's mainly North America and Mexico. But here, the big thing comes. And this you see here in the middle that this is the network Krones have. And since we have now aligned how the sales is working in terms of how do we develop a project because this work totally different than bottling and packaging, that our sales in bottling and packaging is aware of any intralogistics project and then the colleagues from System Logistics are taking over. So one big thing for us is leveraging on the Krones network and sales. The same is true for service. Because whenever we have to deliver service in a country, and this might be a new country for us, we can build on Krones service technicians and convert them into logistics specialists. So we have setup. So that's one big point. And then, of course, leveraging on the local project management because this is becoming more and more important that you get the local service project management in the local language done. Otherwise, you have too much losses just by communication. And this is where we are going to leverage on the Krones network, the biggest factor. Yes. And then I said that earlier that we put more on standardized and easier solutions that we can scale them and repeat them. And last but not least, we put a lot of effort in our simulation software that in emulation that we can figure out the best suitable way for our customers how the structure should be, and that is what we have addressed. Yes. I would say, finally, and this is something we are pretty proud of. I said we are having 2 less engineers, but we have 200 software engineers in System Logistics, in a EUR 300 million company, that's quite a bit. And we have 140 commissioning engineers being able to travel out and getting the projects up and running. So that's quite a number with all the things here in the background. Yes, that's it from my point of view. Now I give the challenge to Norbert. Oh, sorry.

No questions so far, Christoph.

Sorry, Olaf. So I give the challenge now to Norbert to wrap that all up and to translate that in the right numbers that things are going in the right direction. Norbert, it's yours.

Okay. Thank you, Christoph, and also a warm welcome to everyone listening and looking at us here digitally. You've heard quite a bit now in the last 2, 2.5 hours about what is going on in Krones in terms of digitalization Markus told you, about the importance of sustainability, what we are committed to and how we include those big trends naturally in our business segments and create solutions for our customers. And in the end, I mean, I assume most of you listening now have more financial background like myself. So now we have heard from 2 colleagues who are both engineers, a lot of impressive things. But in the end, we always ask the question, okay, where is the payback, where do we see it in the P&L, in the cash flow, in the balance sheet? And that's in the end what it is about. And you can believe me, I always tell my colleagues here, and not only Christoph and Markus. But usually, I'm surrounded by many pride engineers who have great ideas and good products and solutions. And I tell them, it's -- you can be really proud for good solutions for good products. But what we are thriving for is happiness. Because only good technical solutions who are commercially successful make happy -- make us happy, make you happy, make the customers also in the end in the long run happy. And a second point I would like to make is that Krones is midterm and long-term-oriented. And the solutions we are working on, they have 1, 2, 3 years sometimes time in advance until we see the payback. But what is happening here right now and not only right now that gives us a lot of confidence for growth, for profitable growth and for sustainable profitable growth. But let me start first with the actual situation. I know that might be a little bit boring for some of the participants who joined the conference call, but I also know everyone who is a guest today had the chance to participate in the conference call, especially on the buy side. So I'll make it quick, but still that all of you have the same starting point where we are from a financial perspective, Krones after 3 months this year. And you see here the highlights. Order intake, plus 39% compared to last year. The markets are very strong, and we see that they continue to be strong. Revenue up compared to last year 7.9%. So you see there is a significant gap between order intake and revenue. We have a book-to-bill ratio year-to-date of 1.2. And the order backlog is increasing, which is also giving us quite some confidence at least for the next 2, 3 quarters. The EBITDA margin, 8.0% after 9 months versus 6% last year. And a free cash flow of EUR 108 million versus minus EUR 58 million last year. Now when we look at the order intake, I better go on this slide. What you can see is when you look at 2020 last year, the middle column, so the start was already slow with Corona starting -- or COVID-19 in China in the first quarter. Then we had a disastrous Q2 last year, almost a shock reaction in the market, a very weak but still better Q3. But then you can see the recovery started already last year in Q4 with at least under those circumstances, a decent and good fourth quarter with EUR 1 billion order intake. And this trend continued through the whole year, a very strong order intake in the first quarter, better than before Corona. Very solid second quarter and a very high third quarter with the highest third quarter ever in the Krones' history. And I always get the question, okay, are there -- is there a pent-up demand? How much? And are customers ordering earlier because of the supply chain? Yes, to a certain extent, but I cannot tell you how much that is. Of course, there's a little pent-up demand from last year. Of course, we had smart customers ordering earlier because they were foreseeing that prices might go up or will go up, that delivery times might go up. Because it's the same also with our competitors that the order backlog is increasing. But the good message is we don't see an end to this. The market is still very strong right now. And this is, from my side, very remarkable because right now the customers are faced with many things that are not -- that normally do not create an environment for good order activity. I mean there is price increase. You might know that we published a price increase end of August, end of July, for August 1 of 6%. And one of our major competitors follow just a couple of weeks later, also with 5% price increase. We have longer lead times because of the supply chain situation. Normally it works delivery when we get an order around 4 months. Now it's twice as much or even more, plus the customers know that they do not always have the guarantee of fixed delivery dates because of the supply chain situation. And despite all those factors, the market is still strong. On the revenue side, as I said, almost 8% year-to-date above last year, but you can see that it accelerated during the year. In the first quarter, we were still below last year. Second quarter already 12% above last year same quarter and third quarter 23% above last year same quarter. And we expect also, let's say, a similar good fourth quarter, like the third quarter, a little bit above. So currently, our expectation is around EUR 3.6 million in revenue and sales, which is around 9% increase compared to last year. But I think it's important to realize that the speed and acceleration of increasing revenues during the year is accelerated. When we look at the EBITDA margin, 8%. And you see just by the graph, almost after 3 months as much as Krones earned in 2019, knowing that 2019, of course, is not our benchmark. It was not a good year, before Corona, but you can definitely see the improvements from 5.7% 2019 versus 6% last year, already a small improvement, but on a much lower sales level and underutilized capacity and 8% year-to-date. And our guidance is 7% to 8%, but I personally see that we will end up around rather 8% after 4 quarters. Okay. And the last slide, and then I will go forward in my presentation, the last slide to Q3 is the development of our head count or capacity in full-time equivalents. And you can see that year-to-date September we have around 1,200, rough number, less than December 2019. So in less than 2 years, the reduction of 1,200, around 900 in Germany, a little bit more than 900 and around 250 outside Germany. Overall, about 7%. And for those of you who have, let's say, been following on the Krones' development for a longer period of time, you will probably concede that this is something that had not happened before at Krones, and it shows that we are, let's say, a much stricter on managing resources more efficiently. Of course, the crisis, 2019 started it. And with the first programs and then with the pandemic situation, we added additional on top of that. Now it's also clear with this order intake, this program is completed successfully. So we are not laying off any people anymore. We stopped that early this summer. On the contrary, especially in fields of digitalization automation, where we never released people. But here, we are actively recruiting. And also, temporary labor has been increased already to manage the high workload. Krones had in Germany in 2019 around 1,400 temporary labor, and that's a big portion of flexibility. And we reduced that last year down to 400, and now we are back at 900, 950 to help working off the orders that we received so far. Okay. This is the chart that at least the ones who participated last year or some of you might remember. I showed you our, let's say, program and roads to improve profitability from 2020, 6.2% last year. In that slide, we had our forecast 5.5% to 6.0%. In the end, we arrived at 6.2%. This is unchanged. This is the original chart from last year with EBITDA target 2023 of 9% to 12%. And what I have here in the presentation are some remarks that show our assessment where we are at those, let's say, projects and topics at this point of time. And I can assure you this is not for selling to make green marks. It's honest and self-critical assessment, where we think we are with different activities. And looking at structure and process, as I just mentioned, the capacity adjustment is done. Product cost reduction is an ongoing topic. You all know that. There is never an end to it, but we know that this is of high importance always for us. Then reduce own added value in manufacturing. Our plan is that, in the future, because we know we have a much higher own added value in manufacturing, for example, than some of our customers. And this is always nice if you have good capacity utilization, if you have a constant business or constant growth. But in times where you have volatility, unused capacity, then it's always a big problem. And we all know we live in a VUCA world. And I'm afraid this will not become much more stable in the future. We will have to deal with fluctuations wherever it comes from, and that's why we said we want to reduce the own added value in manufacturing wherever it's not core competence of us and where we have good possibilities to sources. Now here we are behind our schedule because the whole supply chain challenges we have worldwide currently make it very difficult to, let's say, outsourcings. We outsourced quite a bit, especially the topics that we in-sourced last year, to get better capacity utilization. But the bigger projects where it's not only about parts, but let's say, preassembled components, right now, difficult to do. But once the supply chain will become more stable, then we will move forward as planned. Similar with projects, with the reduction of throughput time in projects, our target is from order intake to final commissioning to reduce throughput time up to 30%. Now also right now with the supply chain topics, parts not coming, electrical components, as Christoph said. And we see right now the opposite that the throughput time is increasing, and this is part of our flexibility to handle the supply chain shortage, to have longer lead times for projects to tell the customer, "Sorry. We know you're used to get it in 4 months. But in this situation, you have to calculate with 7, 8, 9 or 10 months." The other parts, all of them on track. Plant Hungary, of course, is suffering the same supply chain challenges than all our plants. Plant China, here we have a good success this year. For the first time, a big customer accepted a high-speed water line manufactured, assembled in China. And as Christoph said, since 18 months, nobody from Germany went to China. And Krones installed many lines in China with the local people, some remote, digital support from here, and that's working. And this China high-speed water line with a big Chinese customer is important for us because now we have a reference in China, in a huge market, a product fully assembled in China from Krones China, engineered by Krones Germany, and we are confident this will work and create more momentum for more Chinese made product for the Chinese and the Asian markets. Localized supply chains and best-cost country sourcing. I guess we all know that especially the localization got a boost out of the supply chain situation, more local for local means for our plant in China, more local sourcing in China and Asia. Same for U.S., same for Brazil, same for Europe and best-cost country here for Europe means Eastern Europe. And then we continue with increasing our localized service. Reshape product portfolio, that's the other one where we are not on track in our time schedule. And this is due to the fact that 2020, last year, the priorities were changed with corona. And now we have high priorities to fulfill customer orders and get missing parts, so this slipped a little bit in the priority on the back burner. It doesn't mean that this will not pick up speed once the situation is more stable on the supply chain. Brewery business, Christoph just mentioned, same as profitability in Intralogistics. And then pricing is an important topic, and probably now is the time to make some real progress here. The plan is still based on the pricing assumption that all we want to achieve is pre-corona price level. On the other hand, right now, the situation changed from a buyer's market to a seller market. We experience it. Everyone experiences it. I get daily new requests from suppliers with double-digit price increases. And of course, we are utilizing this situation as well, so we announced a 6% price increase. We were kind of unsure what the impact would be in the market, but the market is very strong. We get the orders despite all the negative side effects that I mentioned. And of course, we are working on additional price increases because we all know this window might be not very long, very big, but we will use it as long as it is there. But in the long run, the assumption is that we need to get the 9% to 12%, and we will achieve it with the price level that we had and that we have seen just before corona and then with corona because demand went down, the capacities were still there, then there was a price reduction last year. Okay. Innovation, I think you have heard quite a bit today, same as digital and remote topics. And now here you see the sales development and the margin development since 2015. And in the upper left corner, this was the scenario that I presented last year in the Capital Market Day. And I remember the very first question of one of the participants was, whether we did this scenario before the information came out that a vaccination is available for COVID-19 or after because information came out that FDA approval is there for vaccination just 2 days before our Capital Market Day last year. And this scenario was made before this information came out. However, all of us were expecting that some kind of vaccination will come out probably in the middle of 2021, but it came out already in November, December last year. And that's why we are better than our scenario. We said 2022, EUR 3.5 million to EUR 3.6 million sales. Now we will achieve the EUR 3.6 million this year. And 2022, 8% to 9% EBITDA. So we will also achieve around 8% EBITDA this year. So we are 1 year ahead and -- to those consumptions last year at the Capital Market Day. And of course, it's because the markets recovered faster than expected at that time. And on the other hand, because the programs to improve efficiency really show results and work. Okay. Cash flow and cash conversion rates, also same development period 2015 up to 2020 and the first 3 quarters of this year. And when you look at free cash flow, the average of 2015 to 2020, because there were 2 really bad years in there -- or sorry, between 2015 and 2019. So the 5 years before corona, the average was EUR 30 million free cash flow, very low. And we -- in the company, we increased the focus significantly on cash flow because I think cash flow is much more important than what it was, let's say, looked at in the past year internally. And we have a very good free cash flow last year, and we have also a very good free cash flow situation this year. And that, of course, results then also in a positive cash conversion rate. Last year, of course, cash conversion rates with a negative result makes no sense. But also the 5 years before corona, cash conversion rate was around, on average, when you take the pluses and minus, 10% and that we all agreed internally is not acceptable. So right now, after 9 months, we are at 124%. So that's also not a long-term realistic target. I will show you later what our targets are here. Working capital is a challenge, still a challenge and will remain a challenge. However, we have managed this year to reduce it to 26.2% compared to the 28% last year. We have specific payment terms in the industry with big key accounts. Some of you know that. So that is one of the topics in there. On the other hand, we improved due to our finance, supply chain finance program, our liability days, extended the days here that helped quite a bit. We also got good down payments. I have a focus on down payments for new orders to improve the situation. The target for this year is 26% to 27%. So we'll certainly achieve this, and our midterm target is 24% to 25%. And ROCE, 2015 to 2017, and even if I would go further back in the history, it was around -- between 15% and 17%. So the growth of the business in parallel increased the EBIT but also the capital employed. So that was a fairly stable figure, which deteriorated starting with 2018. And then, of course, with the low results 2019 and '20. We see the improvement this year, 8% to 9%, and this will continue. And I will show you later what our ambition is in regards to ROCE. I also want to announce here already that starting next year, we will have 3 major KPIs that we will report, which is sales and growth is always EBITDA. And instead of net working capital, we take the ROCE because we think it's the more, let's say, used KPI in the financial world. And of course, it includes the net working capital, and we will also continue to work on the net working capital. But we will use the ROCE as, let's say, the key indicator for productivity of capital. Okay. Financially, no change. We have equity ratio around 40%, slightly below. We have very positive net cash development, around EUR 300 million, and enough free credit lines in case we need them. And this financial stability leaves enough room for investment decisions to grow the company, whether it's internal investments or through M&A. Now from an investor perspective, here, you see the dividend payouts from 2010 to 2020, increasing year by year by year with a long-term increase of the business of Krones until to the problems in 2019 and then the pandemic year 2020. And of course, our plan is to continue this growth in the future, like you see it from 2010 to 2018. And the payout ratio is, most of the years, close to 30% because our, let's say, internal guideline is 25% to 30%. Usually, we -- the orientation is close to the 30%. And this payout ratio gives us enough capital, leaves enough, let's say, midsized M&As without the help of banks and other financing institutions in the past. Maybe also interesting for you. This is the share price development of Krones versus the STEX in Germany. Krones in blue, the index in orange, from last year Capital Market Day to yesterday or the day before yesterday. And you see that the index in Germany, where we are in increased by 35%, whereas our share increased by 73% in this one period of time. Okay. And the midterm targets that most of you know, of course, are confirmed. Growth rate of 2% to 5% and EBITDA margin of 9% to 12%, and the working capital of 24% to 25%. And as I mentioned already, this will most likely be achieved in -- not in 2023, but earlier. Of course, the question is, okay, if the target is almost achieved, what are the next targets. And that brings us to 2025. Because internally, we made the commitment not only on targets, but I think also important, when we want to achieve those targets. Because we all know there are quite a few companies outside that have targets, but they never tell you when they are planning to achieve them. Of course, 2025 based under, let's say, normal business environment. If there is a World War 3 starting, a financial crisis like we have seen in 2009, '10, or a new pandemic situation that we don't hope situation will look different in such a year. But under normal conditions, these are the targets that we have set us ourselves. So first of all, we are convinced that we can achieve EUR 5 billion sales in 2025, of which minimum EUR 4.5 billion from organic growth of the products and the business we already have. And the difference, we will see whether we end up organically EUR 4.5 billion, EUR 4.7 billion. But the difference, we want to fill up definitely with acquisitions -- mergers and acquisitions. And we see the EUR 5 billion as an ambitious but absolutely realistic target that we can achieve until 2025. At the same time, growth makes only sense if it's profitable. So our profitability target 2025, definitely double-digit EBITDA margin. So 10 -- the corridor is 10% to 13%. And our ROCE 2025, minimum 20%. Those are our new targets. We think they are ambitious but also realistic and they motivate us and the company to work on all the different topics to achieve them. And Christian -- Christoph, sorry, and Markus showed you before the 3 segments that we have. The biggest one with currently EUR 3 billion is Filling and Decoration or Filling and Packaging. This is always the lower part of the column. And you see the average overall will stay pretty much the same. Similar to Process Technology, the share of Intralogistics will increase a little bit because there's a lot of growth potential in Intralogistics. And overall, this will bring us to minimum EUR 4.5 billion in 2025 without M&A. And then with M&A, in the next 4 years, we are confident, and our target is to have a EUR 5 billion profitable company in 2025. The M&A focus, it's like very often existing segments, companies that can improve our product portfolio in our existing segments. Or it can be a technology-driven acquisition, especially also in the areas of digital solutions. You have seen from Markus that our digital know-how has been increased in the last years, so also through companies that we have acquired or where we have shares in it. And also improved service coverage is always a topic in a global business. And then, of course, we are also looking beyond beverage. Solid food is a field that is attractive for us as well as health and personal care and also recycling as shown in the movie. I think this was a very good demonstration in -- from Planet Earth, what is possible in recycling as soon as, let's say, the governments of the countries make the necessary regulations for a circular economy for plastic. Okay. And this will continue our growth path at Krones. When you go further in the history, you will see there was constant growth until 2010, '09, '10. Then there was a dip with the financial crisis then a constant growth from 2010, '11 to 2019. Now we have this dip, and we are very confident that we can continue the growth path from this year to definitely 2025 and achieve our targets in terms of sales but also in terms of profitability. The 10% to 13% EBITDA range is definitely something we can achieve, will achieve with all the actions taking place in the company. And here, I will not go through the details because most of, it you have heard in the segments, but this is already the breakdown of the profitability of the segments. The first bar, and just look at '21 expectation here. The first bar is the total company. The second bar higher is our big core segment, Filling and Decoration or as we inside mostly say, Filling and Packaging. Then you see Process Technology and you see Intralogistics. And the segment targets, as mentioned before, 12% to 14% in Product Filling and Decoration and between 7% to 9% in the 2 other segments. And that will bring us in this mix to 10% to 13%. And of course, we will keep our focus on cash. Free cash flow, we see in the years to come, between EUR 150 million and EUR 250 million. And cash conversion rate, our target is between 80% and 90% in the next years. And if we keep this focus on the free cash flow, and we are -- I'm convinced we can do it, we will do it. Then of course, we have enough cash available for the investments, whether they are internal or whether they are M&A, and of course, for dividends. And then I would hand over back to final slide and summary to our CEO.

Norbert, thanks a lot. I would say the targets set are quite ambitious. And we all know that, I would say, 3 years ahead of us where most probably, I would say, the economy should be okay in the market. So this gives momentum. On the other side, there is a lot of things which we have to move and change. And with the -- let me put it this way, the tailwind of what we have achieved in '19 and '20 and the team we have together today that they are also crystal clear in any regard of the business. And Norbert mentioned that a CFO has to take track on is it really bringing the effects we assume? Are the measures big enough? And I would say Krones is today in a circumstance that we have the new thing addressed on one hand. And on the other side, we have shown that execution, we can do in a larger scale and that we have touched issues where, I would say, 3 years ago, everybody would have said, no, this is nothing Krones can touch. And this is something which is aligned from our family, which is the biggest shareholder, through our Supervisory Board and, of course, through the management within our team and the team is big. So this is not only us. It's a lot of more people. So I would say there's a huge alignment on what we can do and what is necessary, and there's a clear commitment to do it. I think that's a very good alignment to get the targets achieved we have in front of us. And again, it's transforming Krones from, let me say, I wouldn't call it older economy, but I had no better word in mind to a tech-based company. I would say, by full definition, that might be not true. But when you see the proportion of digitalization, sustainability, service business, we want to take as basis for that growth, then it's quite understandable. And of course, a big financial ambition to get the EBITDA levels and the EBT levels to the right levels. Norbert mentioned free cash flow, which is in everybody's mind in the meantime. So I would say the composition of ambition and targets are okay, and that makes us confident that we can drive Krones the next 3 years in the right direction. Now we have highlighted again here just as a summary why we believe it's a good investment to invest in Krones. And I would just briefly repeat what we have written here, we have a leading position in a very attractive market, a very resilient market. Even as we had a drop in 2020, I think things recovered quite nicely. And hopefully, we get further pandemics under control and have better view on it. So I would say we are in a very resilient market. I said it, digitalization, technology and innovation, we are leading that factor. And it's going in the right direction we can put momentum in. We have a clear self-commitment to our ESG targets, whether it's internal on Scope 1 and 2 on Scope 3 to our customers. But even more important, to all the processes which we have not, I would say, monitored in Scope 3. So beyond that, there's a clear commitment and it's a self-commitment nobody has to be asked for. I think this is really great that we have so many people being committed to it. And as I said, a clear path with clear measures behind clear definition how we want to grow and how we want to manage profitability. And again, cash is king. The financial stability and cash generation we have in front of us, I would say, is giving us the momentum to be a solid partner on a dividend payment. And we are following that as a very important factor of our strategy. So that's in a nutshell, the summary at the end of our presentation. I hope we could get the message across where we are coming from, how we believe the future would be and how we can drive that forward. Thanks for listening. I know it was a very exhausting and long presentation, but to get the story across is not so easy. So now we are moving into the Q&A section and give you the chance to ask the questions. And I will hand over to Olaf that he is moderating the whole thing that we get the right organized a lot.

Thanks a lot to Christoph, Norbert and Markus about all the information, digitalization, sustainability, our segments, perhaps further in the future, 3 segments. And we now get over to the Q&A session. [Operator Instructions] So I have seen -- I have already some questions. The first one -- the first questions are coming from Sven Weier from UBS. Mr. Weier, your questions, please.

The first one is a follow-up on the new financial targets. I mean you aspire to at least EUR 4.5 billion by 2025. When I add up your divisional targets for 1 year earlier, I already get to almost EUR 4.5 billion and 11% to 13% margin. Should we also take that as a 2024 firm guidance or how does it add up with what you said on the group level? That's the first one.

Okay. Thank you for the question. Maybe we were not bold enough to put it in 2024 because we know what can happen on the way, what we have seen in the last 2 years. So I think this is a commitment for 2025. Of course, if we can achieve it earlier, we will definitely do it earlier and not wait until 2025.

Okay. But the divisional targets are also a commitment, right?

Yes.

Yes.

The second question I had was just following up on the digitization and on the climate change part. I was just wondering what kind of cost do you factor in? I mean digitization, do you see R&D going up from where it is today as a percentage of sales and also the kind of costs for the CO2 reduction. Do you think that's a meaningful factor like, I don't know, for green shipping your products to the client or what should we factor in for that?

For digitalization and R&D, yes, we are planning to increase R&D expenses. We will already have an increase in the budget next year of around, let me calculate -- around 10 percentage points and we know that this will continue in the next few years. That's certainly factored in. At the same time, we know that we have room for improvement and in selling and admin expenses to compensate for that. But on the sustainability costs.

Let me add a couple of things to digitalization. Why -- how we see that. Number 1, costs have been already, the last couple of years, being in our cost structure. So not all what you have seen is coming on top and will extend that cost structure. I would say that we put more money into it because we see the necessity that, in particular, the automation fundament of Krones has to be changed. So that needs to be further efforts, and that's actually reflected in the R&D budget. By the way, those items being in sustainability are reflected as well in the R&D budget because they are most mainly factored in here. Because we're talking about predominantly about product developments helping to reduce CO2 footprint of our customs. Now the remaining proportion for Scope 1 and 2 that we get that along has been factored in, in investments. It's not in the operational cost because we believe this was as well an ongoing thing that we moved, let me say, that we bought green power from certain areas. We have invested in our own power plants in the past. So it has been all the time part of our investments, and this will be the same thing for the future, and that's factored in what Norbert said in the free cash flow and the planning for the investment. Now there's a couple of particular parts being on, I would say in OpEx, like I said, freight cost in case we want to ship that green. This is not yet factored in because we are here in the process of getting that more detailed what would the impact be on operational costs on sustainability, in particular, resulting out of Scope 1 and 2. I hope that gives you in a nutshell where we are with that.

And if I may, just a final one on the Coke slide. There was one part that you didn't comment on, and that was more package, less technology or tech, how they call it. I mean can you give us some more color what they mean by that and how you could play a part in this?

Well, I mean, Coke has a pretty large initiative that they sell products, let me say, without packaging at all. This is actually kind of a post mix initiative. I can inform it only with my words. And let me say, you have a typical beverage dispenser being placed somewhere where you don't have all the equipment around it. And I don't know exactly the thoughts in terms of innovation Coke has at the moment, but there is certainly a particular proportion which will be not bottled and packed as of today. And we said that in earlier presentations that we see the no packaging as well as one fact we have to look outside what is happening to our industry, is that a big impact. But as far as we know from our analysis that the no packaging initiatives, not only Coke has, Pepsi, Nestle. Don't ask me, all of them and even the breweries that they are not in a manner that our growth would be impacted significantly. So we are staying with the targets we have, even in case they give a color that they want to have more home delivery, and we know all, for example, Pepsi did an investment in soda stream in a multibillion size. So these are initiatives where Coke is heading the same direction. So that was the point of that slide.

Thanks a lot, Mr. Weier. I've got some question now from Sebastian Growe from BNP Paribas.

Okay. Great. So the first one is on the expected revenue growth. So the question then would be what sort of growth rate you are envisaging for the service business and how that compares to the group overall?

Mr. Growe, may I interrupt you? I think we could not hear exactly your question. We are trying to make a little bit in the technique, but perhaps you can also ask again.

It looks like he's completely gone. Mr. Growe, are you still there? Now your micro is muted.

Now your micro is muted. Sorry, and perhaps you put your micro a little bit more to myself. Mr. Growe, you're muted. Well, perhaps we give some Mr. Growe a little bit more time to -- and thus also for our technical and solve this problem.

Now I could. Sorry.

Now it's a lot better.

Yes, okay. Perfect, better.

Just down the road and still having problems with that. Yes, thank you for that. And sorry, again. The first question I had was on the overall revenue and top line growth outlook of the 5% organic CAGR that you have put out in your 2025 targets. Can you give us a sense what the expected growth rate for the service businesses and that? And the question related to service, I would still have is how your offering really differentiates from peers. So what is different and what differently, eventually, there? Have you seen cases where really your offering and service has made the difference in terms of winning an order, yes or no compared to your competitors? So I would start there.

Yes. We have an overall growth rate of the segment of 5% CAGR from now to 2025. So the new machine business will be less than 5%. Our assumption service business will be 6%, 7%, 8%, that direction.

And the second part of the question, I do believe already today in the strong rebound from the crisis, that service is playing a role that our customers giving Krones the trust to install the equipment to keep it up and running with our service model. And Christoph mentioned earlier on, how many lines we installed with the local people to combine with the remote services. So I think this is differentiating us already today from any other more smaller competitors. That's one reason for the faster and faster recovery than expected already today, and we do believe this will continue.

Okay. That's helpful. And second question I have is on free cash flow generation. As you mentioned, Mr. Broger the ability simply the window of opportunity and pricing power that you currently enjoy. Is there also some related window of opportunity simply for working capital terms? And against that background, I would be interested if you could at this time to give us a bit of a root cause behind the improvements in working capital that we have seen in the more recent past. So what is really to more down payments. What is really your own internal measures, simply by better cash collection, et cetera? Anything in that regard would be helpful.

I mean one portion is that supplier finance program that we started last year with German Bank has an impact to extend payment terms on our supplier side. For inventory, I don't see a lot of improvement for the next couple of years because, due to the current situation, we are rather increasing safety stock worldwide to make sure that we have no interruption on customer side. Of course, the benefit then has to be additional growth in service with good margin when we can deliver critical parts quickly to the customer. And the third portion, customer receivables, we have not seen any development that the pressure on the customer side on payment terms is reduced. What we are hoping for is that some customers may be put out also supply chain programs that we can use, which we have seen only in very few cases so far.

I would like to add 1 point. Number 1, the pressure from customers are still there in terms of payment conditions that has not been released at all, and we don't see that at all. Norbert mentioned 1 program earlier which will have impact to our free cash flow and to our working capital, and this is the project execution. I mean whenever we look to what can we influence, I mean, Norbert mentioned the point, but in the long run, the biggest point is that we reduce throughput times and get a better cash collection from our customer once commission is going better. That was on a very good track before we enter into the pandemic. Now of course, now that has been offset because a big proportion is outside in the field with our customers. It's a certain proportion related to the internal processes, but the bigger one is to the outside processes where the bigger momentum and let me say, the bigger potential is. And this is what we are going to address as soon as we are moving out of this actual situation.

Okay. Yes, makes sense. -- the last one is around the mix. So Mr. Klenk, you mentioned in the earlier part, I think of today's Capital Market Day that PET has seen a certain comeback with also some projects now in Europe after we have seen a certain improvement simply in the legislation part. So the question here is, if there is sort of an overhang and what you currently see in the pipeline, so that more orders need to come through on PET, more on a higher level, I would be interested in having an idea on how the mix has changed. Eventually compared to a pre-corona year take 2019, for instance. So how much is really PET, what is glass, what is cans? And then related to it, obviously, the question if gross margins are very much different or if things have sort of more and more come together here, that would be the final question.

I was waiting for the question on the gross margins. First of all, to the mix I would -- when you look over the last 15 months, then I would say there has been a significant proportion in the first 6 months of this -- well 6 to 7 months in these 15 months, where can was dominating. I mean I was -- we were really surprised how big the market demand was and how big the order intake was we got. So I would say it was going up to almost 40% in this particular time frame. Now PET catched up and glass has a kind of a rebound. And if you look to the average over the last 15 months, this is exactly where we have been '19. So PET is at 45% to 48%. Cans roughly is at 25%, and the rest is glass and some mixed lines and mix and match. So on the other side, I mean, the interesting factor is that can has almost become close to glass, which we never had in the history before, but now it's getting more level. But cans has a higher level than in the past. Again, PET at the moment, 40% to 48% and cans between 25% and 28% to 30%, that's the ratio approximately. Glass, a little bit low. However, that might change again because we see some bigger orders coming from the breweries, which is, at the moment, more investing into glass than in cans. Why? Because they have invested in cancer now it looks like the glass is behind. Now to the gross margins. One of the points we executed over the last 18 months was improving gross margin at can lines. Yes, PET was the best for Krones. But now in the meantime, we have changed that around with a big focus on can lines. There are huge, dedicated teams to either get equipment out to make the project leaner or to get costs down. And I would say, margin-wise, we are going close to PET, and this is a good development and supporting our profitability all over. Glass was never as much under pressure as can, I can say because there is much more individual design and execution of the lines. So gross margins have been not under pressure on glass. But again, with can, we are heading close to the direction of PET.

Thanks a lot, Mr. Growe. I got some questions from Mr. Lars Vom-Cleff from Deutsche Bank.

Yes. It's shortly after lunch time. Two quick questions, if I may. Also focusing rather on the service business, given digitization is becoming more important and then you're partly changing your strategy from built by Krones to managed by Krones. I can't recall, have you shared the sales split with us in the past between the revenues you generate with your service business and the revenues you generate with your new products business? And a quick add-on question. I guess you're not really willing to share that with us, but could you give us a feeling about the margin difference between your new product business and the sales business?

Norbert, if it's okay. I do the statement because we -- I'm repeating only what we have said for years for that. Let me say the split, we never published in detail. But a good machine builder, a German one has around 25% of its revenues in the machine building area, and that's the important factor, so to take a site processing and into logistics. So a good machine builder has 25% of its revenues in the service section. And we said all the time, we are in good shape with where we are. So that was our indication. And we even didn't say anything about the margins of new machine versus service business. Why? Because, of course, that would be something our customers would like to know every day, and we hide that to a certain extent. But there is no doubt that the margins in services are significantly better than a new machine business. So that's the official statement we have all the time made for it. I hope that helps you a bit. So it gives you a bit of a mathematics, but it didn't give details where we are with that.

At least the growth rates for the service business and the new machines business.

Yes. Yes. Norbert said that earlier, yes. Right? Good.

So thanks a lot from Mr. Vom-Cleff. Peter Rothenaicher, I also see you have some questions for us. Welcome, and perhaps your questions, please.

Yes, Firstly, on your expected CapEx. So can you give us here an indication what you expect from CapEx. And if I calculate it from the current point of view, so depreciations are at around, let's say, this year likely somewhat below EUR 140 million. This means if I calculate from the EBITDA margin towards EBIT, the 10% to 13% target margin for 2024, 2025, would then transfer into 6.5% to 9.5%. Is this correct calculation?

First of all, CapEx. We are planning between 2.5% and 3% of sales for CapEx, that range on, let's say, long trend. Now I couldn't -- what was your calculation to the 6%? I couldn't follow that one.

I mentioned the 10% to 13% EBITDA would transfer into 6.5% to 9.5% EBIT margin.

Yes. That's pretty much correct, yes.

Then on your Intralogistics business, I'm wondering a little bit about your margin target. So we all -- or many of my colleagues also know KION Group. And here, the companies having very strong profitability in the automation business. Don't you see here more potential? And yes, in my point of view, is this margin for business with HEVs and so on is quite low.

Whether we really see them, we have been careful in the calculations we have, we are coming from a hyper orientated business. And the biggest program we have for system logistics is converting it into another product portfolio with different margins. And I mean from what I said, you can easily calculate that we are today at around -- I mean I can say that at around 400 HEVs and related projects, they are usually not being used as, let me say, stupid HEVs. Usually, they are being sold into bigger logistic projects where they are integrated, but the business is not yet on the level where it should be. And high base are still under pressure, and we have projects to be executed over the next 2 years, which we had to factor in. And I would agree with you that the other projects have much better margins. And we would open that once it's going to be materialized that we can give you a split where we are with that. And I would agree with your statement, yes, there is certainly room to improve. But at the moment, I would say I would compare it as more to, let me say, not the ones you mentioned, even to the bit smaller ones. And I would say there, the profitability levels are very comparable to the targets we have.

Thanks a lot to Peter. I've also seen that Mr. Stefan Augustin from Warburg has raised his hand. So Mr. Augustin, your questions, please.

Great. So my question is when you -- it's a bit of a follow-up to many points you have raised when we go in the service business to the filling as a service, and all the implications you have stated so far for growth for the machinery business growth for the service business. Can you give us at least a sense how the filling as the service fits into there is that you're taking the machine or the equipment on your Board, don't sell the machine but sell only the service? Or is it stripped? Or how does that actually work out what you're thinking here? Or what's the idea of hope for that part.

And I think this was just a generic slide. The as-a-service model is not the target at the moment. We just want to reach the next level. That's meaning that we have prescriptions and service contracts with our customers, but the customers still own the equipment. Of course, we're looking for some pilots and some experience to get there. But we don't know if this is picking up and really getting the trend for our industry. But we want to achieve the next level now and take much more responsibility in the daily operation for our customer and lock them much more in, in our service business that we get a better market share. And the as a Service business, as you mentioned, we are looking into, of course, we have already some cases running globally. Also in the Intralogistics side, we're monitoring closely. But we also would see this managing is a precondition that we are able to manage the equipment on-site is a precondition to enter this ultimate stage of business model, and that's where we see a stepwise approach here.

I've seen some participants still have raised their hands. I'm not sure if they have some questions. But I see that Mr. [ Matthias Reinwarth ] have some questions to our Board members. Mr. [ Reinwarth ], your questions, please?

My question is regarding your remote and augmented reality capabilities. Maybe you can, with an example, explain to us the cooperation with the remote technology provider and how you share the economic benefits with the technology provider of the augmented reality. Maybe you can do this based on an example on how you cooperate with the technology provider of the remote technology.

No, it's quite simple like we use this video conference system. So we are cooperating with a leading supplier in the market. We can -- it's like a license model that we use to apply this augmented reality and we use it every day for our internal service guys globally to bring global expert expertise close to them. And I think augmented reality is playing a big role. Since in our business, we cannot see everything through data. We need to have a real few as well. And also, we need real hands on site as well to make some services. And also, our customers are using that and we support our customers with such kind of augmented reality solutions. And we have our own system. But customers sometimes have their own suppliers, then we look into their -- it's a satellite video conferencing. Sometimes we use our system and sometimes we login in the system of our customers. So it's quite open. It's quite standard at the moment and not a big barrier anymore. And you can even use it with smartphones or whatever, you don't need that fancy glasses or helmets or whatever anymore. So it's very easy to use.

The penetration with the clients is high to almost all the clients by up to this?

If all the clients are up to that, if everybody is using that.

I would say, not at the moment, but I think it's -- I would say, together with some other solutions like even WhatsApp videos or other Face Time or other topics. I think we take -- almost every customer is using such systems. Some of them very professional ones, like TeamViewer or similar solutions, and some of them are more standard solutions that on every iPhone or whatever.

I got another question or questions from Mr. Richard Schramm from HSBC.

I have a follow-up on this filling as a service or subscription model. You mentioned -- so if I understood you correctly, it's you who is pushing for this new model. And you have, at the moment, some smaller projects already as a kind of test phase. So I really wonder what will be the benefit for you, definitely. Is it really higher margin you're going for, which I would start because especially your big customers, where this might be very interesting because these are the big contracts which are attractive here might, of course, not accept that you get a bigger share of their cake here. So what is your intention to drive forward this model, which is also a certain risk because then you have sitting in the lines on your balance sheet? Or would you be able to outsource this to a third party?

Okay. Just a couple of words to that. General perspective on service business. We are under pressure, of course, in margins for the OpEx at a customer. That's very clear. What we presented to you is to maintain momentum to our customers that the volume we sell to them is appropriate, and even more important, that the performance we sell to them is appropriate. I mean the whole subject is about getting more performance to our customer and justifying the revenues they put on us expectation even with more pressure on margins for OpEx are expected and factored in. On the other side, we do believe we can improve revenues in a larger scale, so we service more people, you wouldn't see that in the top line. But the revenue, the nature of it will change. Why? Because we are servicing more customers and having, let me say, maybe a bit less margins on that, but with good performance for our customer. That's number one. And again, it's not our intention to take the lines in our books of our customers. That's not foreseen for the next 3 to 4 years. Why? Because our industry has a different business model. There are bottlers doing co-bottling and they are occupying already that business model. They own lines and bottle for Coke, Pepsi, ask me. And you have never heard the names of them. But even for those, it's important that they got our services. So again, our intention is not that the lines are sitting in our books as leased. There might be some, but a smaller scale. The biggest scale is the asset is with our customers. Just to give you a bigger perspective on that.

Yes. And on the cost side, the margin side, one slide I showed, we want to reduce the TCO of the customer, that's meaning reducing the OpEx. And if you would think that through, that's meaning we're doing less business. But every customer already has such programs in place and he's doing his own maintenance or going to third-party services. And we rather help the customer reducing the cost with getting everything from Krones, so huge increase of the market share. And we do believe in a holistic solution with the contract and the data and the competence we have, that we can offer a package that's helping the customer reducing the cost and helping us to get a bigger market share to compensate that to keep our business up and running rather than just giving discounts or the customer leaving along and finding their own solutions somewhere out in the open market. So that is the idea to get much closer there and lock the customer much more in this solution that helps contributes also to the customer cost saving pressure.

Okay. So just that I can wrap this up correctly. You do not expect necessary -- for you, it's more business, but it's more qualitative business and you take this business from other service providers, which at the moment, supplying to your customer and to try to get a kind of preferred service provider role with your customers. So put it that way, to get a bigger share of this business and he might outsource even some service activities he has at the moment by himself to you in the long run.

Yes. Exactly. And reducing the cost on our end due to this digital solutions.

So thanks a lot to Mr. Schramm and all the others who have questions to us. At the moment, I didn't see no further signal from the audience for further questions. It's 12:30 and a few minutes. I think that was our plan to be finished. Perhaps I hand over again to Christoph or the other 2 to finalize with some words.

Yes. Olaf, thank you, and all the others here in the room because you see only the 3 of us, but of course, with mask much more in the room that we get this year delivered and that things are getting, at least, some level of professionality. We are not yet on the level that we are really could work in television, so maybe we have to work on that. But I would say today, it was more important where Krones is going to. And I hope we could deliver you the message that we are going to transform and address the right things for the future and that we have a rock-solid plan in place that we are managing top line and bottom line including free cash flow. I mean this is the message we wanted to bring across today, and I hope you recognize the story behind that we are coming out of. Let me say, we have a growth history, which we can build on. We had '18, '19, '20, not good years, but we took the lessons learned, and from our point of view, even the management and the team is more stable than before. This is the fundamental we took. We put a lot of things on question over the last 2 years and have built up a good, sound strategy, how we want to continue in the future, and this is what we brought across today. And I hope you could follow us. And one last thing I would like to address, and this is some feedback. Because if you stand here and you do not look into faces and see the body languages where you could interpretate, at least, that this is maybe something you have not well explained or this is something we should do different in the setup, we would be happy to hear that and get your feedback on that as well. I can say only thank you in the name of Krones, in the name of Norbert, Markus and myself, that you listen to us and took the time with us. Thanks a lot. And now, [Foreign Language] Thank you. Goodbye.