KSB SE & Co. KGaA (KSB) Earnings Call Transcript & Summary

Dear ladies and gentlemen, a few hours ago, we published our annual report, and we just closed our annual press conference. Now it is our great pleasure to have you for our KSB earnings call. My name is Sonja Ayasse, and I am Head of Corporate Communications. As our main speakers today, I welcome Dr. Stephan Timmermann, our CEO; and Dr. Matthias Schmitz, our CFO. The 2 will present to you the highlights and also the results of our fiscal year 2023. [Operator Instructions] One more technical information. This call is being recorded and for transparency reasons, we'll publish the recording later on, on the KSB website. But now I would like to invite Stephan on stage.

Sonja, thank you so much for the warm welcome and a nice introductory words. It's my pleasure to welcome you all to the earnings call for the fiscal year 2023. I do this in the name of the complete Board, and I will share the presentation together with Matthias. Stephan Bross and Ralf Kannefass, they are not on stage, but we have their full liberty to post the story that we are going to tell also in their name, because it's really a great task that we, as the Board, together with our 16,000 employees will present. I am going to make certain comments, which not only regard the past, but also the future, and I think as professionals, I must disclaim once more, everything which is a future, which are hypothesis and be made for the future, they are based on the best knowledge that we have at the time. There are no guarantees, and this disclaimer, of course, is connected to those slides, which look forward. In itself, the presentation will be short and sweet. I will start with an overall summary our fiscal year 2023, somewhat put it into perspective. Then Matthias, as a major part of our presentation, will really deep dive into the figures. And I will once more then take up the story after the fiscal figures to basically give you an insight what are the drivers of this. I can already tell you now huge success, which we are going to present today and how is the story going to continue, and especially what is 2024 going to be in terms of the economic environment as we see it today, and how we intend to navigate through this fiscal year. With this, let me start, and let me recap the year 2023 for you. And I will start right away, let the cat out of the sack with a summary. From our side, it was one of the most amazing awesome years in terms of all the fiscal figures in the last coming -- in the last past years. We achieved a really good performances in every one of the financial figures. Matthias will deep dive there. We did this in an environment, which was not easy. We did this together with our team worldwide, and we are extremely proud what we achieved. Now you can say when companies present, they mostly present good figures. I have to start and put this into perspective, good figures, yes, if the environment would have been good. Basically, it started with a good outlook last year. It was, if you take the Chinese calendar, the Year of the Rabbit, the rabbit is connected to peace and prosperity and fruitfulness. If I recap once more how 2023 was in reality, then I can only say it was a rather tough year. A world somewhat in a turmoil, a lot of challenges out there, which made economic development of a company not easy. It was the crisis, it was the unpredictable cost development. it was of course, the war between Russia and Ukraine. It was the very unfortunate conflict at the end of the year, Israel-Hamas, which has impacts on companies like ours, because logistical chains have got into a turmoil, again, sea freight just takes longer now due to the fact that shipping routes have become longer, a lot of challenging boundary conditions. And if this would have been the only year of challenging boundary conditions, I would have said, yes, okay, we managed one challenging year, but it was, of course, another year in the light of at least 4 years in the past, which posed challenges. 2020, I've left out because you know 2020 in February, COVID started corona, the pandemic all around the world. key Impact was in 2021 with all the lockdowns. Then 2022 came with the Russia-Ukraine war with the cyber attack, which touched our company worldwide. Then we had the year 2023 inflation, the development of interest rates, all of this heavily impacted our fiscal development. But in the summary, we did an absolute marvelous job. If I look at the order intake, the development of the last year, again, 4% better than the year before. Good for this tight economic situation, but what is even more fantastic the development. And this story of development of trend. This is what I will underline at least more than once, because this is what fills us with pride because it has reasons why KSB is developing. It's the measures that we have put in place. Look where we started in 2018, look where we ended in 2023. The same is applicable for our turnover. Again, 10% better than the year before, absolutely amazing. Look where we were in 2018 and again, every year with the exception of, of course, 2020, when we had the lockdowns, when we had the pandemic all around the world, we managed to ride the wave to perform excellently. Of course, if the book to bill is smaller than 1, where does the turnover come from. It comes from our order backlog. So we were able to use the order backlog, which was basically built up from the corona times due to all kinds of reasons. We used it to put it into turnover last year. And with this, we achieved absolutely fascinating figure of around about EUR 2.8 billion. Now being a company of 46 production plants all around the world, we have high structural costs. As soon as these structural costs are covered as soon as our factories have reached a certain base load, then the fund in terms of profitability begins. And this is what you see at KSB. If you now ask what was the result of the EUR 2.8 billion turnover. It was an EBIT of around about EUR 124 million -- EUR 224 million, thank you, Matthias. EUR 224 million. And again, put it into perspective, look, where we started and look where we ended. This company is really on a performance track, which is incredible. And if we then take the key performance indicator, which is very important for us, also our internal communication, our return on sales based on EBIT nearly 8% last year, absolutely fantastic. That was the value that we wanted to achieve in 2025. We already achieved it in 2024 despite all those macroeconomic hiccups that I mentioned, absolutely great. Now you might ask yourself, what is the secret behind this trend, because you will find no competitor out there, who has such a trend of having raised the profitability in the last years. They are all on a high level. None of them achieved this fantastic journey to even higher profit. Then the key reasons at KSB are rather simple. We have certain drivers of success, which I will pinpoint in this last slide before I then hand over to Matthias, and I will elaborate on them a little bit later on again. Our drivers of success are our market focus, our orientation, turning the company into a customer-orientated company. Our focus on SupremeServ, our cost consciousness, our cost transparency today, making less mistakes, especially on the project side. And if we make them, we always take entrepreneurial risks. We noticed these mistakes much earlier and then put the according mitigation actions into place. All of this has helped tremendously. And what is the most important part of this is the collaboration between the employees all around the world. This again has been taken to the next level. And last not least, you have to work hard. This I have to underline, but you also have to have a little bit of luck. And for sure, we had both of these. Now if I were to summarize these, these are the big drivers. What is the most, most, most important driver, then that is very simple. It's our fantastic employees. 16,000 employees all around the world, running that extra mile for KSB, doing it with pride, doing it with confidence, doing it with motivation and giving us the backup that we need to execute our plans. And we have a plan. And this plan as the last summary slide before Matthias goes into the details of the figures is what you saw in the development of the fiscal figures from 2018 today. This plan is being executed. It is being refined. It gives us the confidence that what we have achieved really has had a reason, and it gives us even more the confidence that the journey which we are presenting today is just the middle of a great story, which is going to be continued. And with this, Matthias, may I ask you to deep dive into the figures a little bit more.

Thank you, Stephan. As Sonja Ayasse has mentioned just some minutes before, we had a press conference today where we already have published our results also in the press release. And during my preparation for this, well, call now, I did take a look at our shares. And I can tell you today the preference shares have rise by [ EUR 12 ] up to [ EUR 596 ], which is 2.1%, and our ordinary shares have rise by [ EUR 20 ], 3.2% up to a level of [ EUR 660 ]. So you see so far, maybe some of you will do participate in this call have already bought some new shares. But our share, even if we are on a much higher level than at the beginning of 2023, is still an attractive one. So let's come a little bit more in deep dive compared to what Stephan has said. Actually, we can say, again, we had sales revenues of EUR 2.8 billion, EBIT of EUR 224 million. This equals up to a return on sales of nearly 8%. So compared to our plan, we are 2 years ahead in our original plan, we have budgeted that we will reach this 8% in the year 2025. Earnings after income tax, EUR 177 million, a huge increase also because of one effect where we have released some deferred tax assets on the equity loss forward -- on the loss forward of KSB AG. We have a higher increase in equity. And of course, we have to take into account that since December 2023, we are admitted to the SDAX. And of course, as I have promised in a lot of meetings with all of you since February 2024, we are listed in the Prime Standard. Again, here, a summary, we have increased order intake. We have increased sales revenue. We have increased EBIT, and we have increased earnings after tax. I do not want to repeat all the figures, but there's one highlight I really want to point out as a kind of a summary here. Our operating free cash flow is at EUR 176 million. In the last year, it was negative. So besides making profit, we also have earned cash, and we have increased our net finance position by almost EUR 100 million -- EUR 99 million to a level of EUR 350 million. The earnings per share is EUR 86. And of course, we have increased the value of the company by EUR 450 million if you take the number of shares multiplied with the value of the share. Order intake, let's go a little bit deeper. You see, we had EUR 2.96 billion. The FX range compared with the previous year had an impact of approximately EUR 70 million to EUR 80 million. So that means previous years, which is 2022, order intake and FX level, we would have reached almost EUR 3 billion rate. When you take a look at the first half and the second half of the figures, EUR 1.35 million in second half of the year. Then, of course, you see that the second half of the year was a little bit weaker, so that means we could really not escape from the worldwide economic development, nevertheless, we made an order intake all high. Sales, we have increased the sales by 9.5%. One thing I want to point out here, we had an increase in pumps. We had an increase in valves and we had an increase by 11% in SupremeServ. While taking a look at these figures, please take into account and remember, when I talk about pumps and valves, that's only new business, whilst the spare part business is incorporated in SupremeServ. That means SupremeServ is service business, maintenance plus the spare part business. And again, in all of the meetings with you, I worked out, and we said it all the time that SupremeServ is the muscle of our company. Here, we have the highest profitability. Here, we want to grow in the future over proportionally from today, 32% up to a level of 40% in the next years until 2030. Our strategy works out. This higher increase is one of the main effects for the increase in return on sales. If you take a look now at the EBIT margin, of course, you see Pumps are positive. We have a very high profitability in SupremeServ. Unfortunately, we show a loss on new Valves business with EUR 7.5 million. There, we had to do some recruits for some project businesses. We are absolutely sure, first, [indiscernible] that we will make plus a higher profitability in the year 2024 in the new business of Valves. Secondly, if you also add on the profit of some EUR 20 million profitability in spare parts valves, then the spare part -- then the Valves business all in all is positive by EUR 10 million. EBIT all-time high. Why? On one hand, we could increase our sales price. Secondly, the purchase department, it makes a really good job on saving costs on the material. Third, we did take our concentration on keeping the fixed cost more or less stable. And fourth of all, due to the reasons that the spare part business has increased over proportionately with a high-margin, this also had a positive effect on our cost of material. EBITDA with EUR 312 million is 1% higher in terms of sales compared to previous year. EUR 177 million earnings after tax. There's one special effect on due to the release of deferred tax assets on loss carryforwards of KSB AG with an amount of almost EUR 28 million. This has had a positive effect on the earnings after income tax, so that our tax rate with 15% is really low. This will not be the case in the year 2024. Once you calculate your numbers in the future, you might say that for the normal growing content of our business, we have a tax rate of about 28% to 29% to be expected in the year 2024. Again, this is a onetime special effect. R&D, of course, in good hands, KSB did invest in its R&D some EUR 60 million and also was 2.6% higher than in the previous years. Noncurrent liabilities, you see was EUR 551 million. They increased. One major effect are the pensions. The pensions have increased to a level of EUR 496 million due to the reason that the interest rate we are calculating went down from 3.7% to 3.17%. Strong operating cash flow. Compared to last year, if you're going to take a look at the figures here, we only had an operating cash flow of EUR 2 million, which is nothing, which is, in fact, 0, which was due to the reason that our working capital in terms of receivables and inventory has increased. This year, we had our inventories much better under control. So we earned some EUR 280 million out of our operating business. We ended up with a free cash flow of EUR 177 million. And if you take a look at our net finance position, we have increased it by EUR 99 million. So besides a good return on sales, also our cash position has increased, although we have paid some EUR 40 million on dividend in the year 2023 for the business year 2022. Equity has increased up to EUR 1.2 billion. Why? The main effect here, of course, has been the net profit of EUR 177 million. Then, of course, you have to deduct, as I mentioned before, the dividend of EUR 41 million. 45% or 45.6% is a very, very strong equity ratio for companies in our business. So besides the profit, besides the cash, we are proud on our equity position as we are really, this is part of our strong balance sheet we have. Over the last 5 years, we steadily have improved the structure of our balance sheet. Statement of cash flow. You see here the calculation coming from EUR 280 million cash flow from operating activities, minus EUR 103 million cash for investment, all this equals up at the end at cash and cash equivalents at the end of the period of an amount of EUR 340 million. We have a very, very strong cash position. And so we are able to finance our growth out of our free cash flow and also to finance acquisitions out of our cash flow. If not, of course, we are prepared after discussions we had with banks. We have been investing in the future, EUR 136 million. Also here, we increased our investment. And again, in the year 2024, we will further increase our investment for the company for the future, and we will especially invest in growth. Let's take a look at the share price. Here, we have to point out that our market capitalization has increased from EUR 644 million, up to EUR 1.1 billion, so we have increased the value of the company by almost EUR 450 million. And I know a lot of you guys -- I know that a lot of you people are invested in longer time in the company, and we, as the members of the Board are very, very happy that we could pay the trust you gave us back in the higher share price. Higher share price is one thing. The other thing is the dividend. We will pay EUR 26 per share, EUR 26.26 for preference shares this year. This is what we will ask the shareholders meeting to approve. EUR 26 is, I think, the highest dividend we ever have paid. And I think this should be in the range of your expectations. As a summary, we had the best year of KSB, 8% return on sales, high dividend, the market value is at EUR 1.1 billion. And one thing I want to point out, we want to improve our figures in the year 2024, order intake, sales, return on sales should be higher in the year 2024 than in 2023. Of course, you cannot expect such a high jump as we had in the last year. But again, we are on our way to do. And when I take a look at the outcome, the profitability of the first 2 months in this year, we are convinced we can make it happen, because here, we have been better than in the first 2 months of the year 2023. Thank you very much. So far these have been the financial figures. I hand over to Stephan Timmermann.

Matthias, thank you so much for the great presentation. So let me continue by giving you small insight into what we're doing and then also utilize the chance to pitch something which we pitched in front of the press today. So it's really something absolutely new, and this is our new logo and our new claim. And of course, you as our cherished investors should know because this -- what we're doing because this new logo and this claim, this is attached to a new mindset and new self-confidence of the company, which we make visible. Let me begin with what we have done, what our plan is, what our plan is in terms of being executed and where all of this is heading. Those of you who have been following the company for quite some time know the big headings. CLIMB 21, Voice for our Engagement survey and Mission TEN30. Due to the time and the constraints that Sonja has given me, I will not deep dive into all of these subjects. But I will try to pinpoint the key success drivers. And the key success drivers to start on the top are the megatrends. We are today in a market-orientated organization energy, chemicals, water building industry, which are growing. This growth you see in our fiscal figures but all of these have underlining megatrends, which are pushing the markets. And these megatrends are summarized here. It's growth of popularization, it's urbanization, it's the hunger for energy, it's the hunger for food but of course, it's also the impact that the global weather change is leaving, which you can summarize, there's always too much water or too little water. And at the end of the day, you solve this by pumping. These are the megatrends that accompany the company and which have led to the growth. And these growth milestones, which you see here, they are not projects, which we started and have stopped and have reaped the fruits. These are long-term missions, getting an organization into a SupremeServ spirit, this aftermarket orientation, it costs -- at least it takes at least 10 years, getting an organization to think from products, in customers, in markets, it takes us least 10 years, getting engagement up from the 47% that we're coming to, to the 65% that we have today and the 70% that we want to reach at the end of the year, this needs a lot of work, this takes at least 10 years. And also our Mission TEN30, this will take at least 10 years, but it heads the company on to a new level of profitability. So our journey, we are maybe in the middle of all that we have addressed with this plan. Now you might ask CLIMB 21. You know Voice, you know what is Mission TEN30 all about. And the answer to this is a rather simple one. Mission TEN30 is about the question how do we differentiate ourselves in the market of competition in our world of competition. You know our competition big names, I won't mention them, a lot of them with double-digit profitability, which shows you there is no reason not to reach double-digit profitability also on the KSB side. All professionals, all with their special areas of focus, but these will be our areas of focus. It's all about qualification, it's about digitalization, it's about service orientation. It's about sustainability. It's about technology, and it's about quality. In 2 years of work, this is what is summarized in this slide, the advisory board, the supervisory together with the Board and a lot of engaged employees have worked out. KSB stands for these main 6 differentiators in competition. And this is what we are going to cherish in what we call our Mission TEN30. You can see these are the overarching pillars. This is what we are going to grow, because we know KSB is all about these 6 competitive pillars based on the market area strategies, which you know, which have bullish plans with a lot of measures which will take the company to the next level. And if you ask what is the name, Mission TEN30 all about, then it's very simple, the TEN stands for at least 10% profitability and the 30 stands for at least in the year 2030. Very, very clear plan. We're executing this step by step. And the mission is clear. We are taking this company to a next level. And as I pitch this, you can see KSB has a new self-confidence. We have the self-confidence that we are not only good, we are the best. And that's why in our advertising, our brand labeling all around the world, Global Champion, especially in those areas where we say, this is what differentiates KSB. This is what we are ramping up. And in a summary, for those, as Matthias said, who have been following us for quite some years, maybe 1 or 2 of you say something is happening, a hidden champion is getting visible. And there you're absolutely right. And because this hidden champion is getting visible, we are also putting a lot of energy now into this visibility process. And this is what you see as the most -- the last action that we have now taken, we call it, KSB to the Next Level, really executing a repositioning of the brand. Now repositioning of the brand is nothing, which I can do as a person or the Board can do as a person. This is, of course, something which touches the heritage, the genes of this company where you have a lot of people, for sure, who have their opinions. This is nothing which is new. If you look at the repositioning of KSB in the history of 153 years, you have seen, there have been several repositionings. Now it's time to reposition again because the KSB that I am addressing today, that I'm allowed to work in is a different KSB than the KSB, which was positioned in 1996. At that time, it was a KSB, which was extremely proud of technology, of products, of production, which you saw in the claims that we had, but also in our logo. The products, the technical expertise, that is what KSB was all about. And this was right. This was the time where German engineering was really the top of the pops. In our logo, we tried to, at the time, summarize this by having this big sign graphic symbol, which is supposed to be a circulation part with a bump in the middle and then the flowing of the liquids. KSB and letters was much smaller, because we said technology, this is what it's all about. And then you have a name attached to it, and this is KSB. If you compare this company, which was right at the time, which is a great company, which is the basis of the success of yesterday and combine it with the success of today and tomorrow. Today, it's not only about production. It's not only about products, it's not only about technology, it's also about customer centricity, about lifetime solutions, about services, about thinking in markets, about thinking in business models like the project business, standard business, the aftersales business. This is what is changing. So we have to put the company into a new equilibrium from what was super yesterday and what will keep on living really good products, German engineering manufactured in 46 plants all around the world. We combine this with customer solutions, something which adds value to the people all around the world. We rebrand label to what was important yesterday, technology, which made your success to what is our new claim solutions for life. A pitch, a claim, which shows that today, we are, of course, still focused on good products, but we think holistically, we think in life cycle, we think in what is good for the world and the fun part about KSB, there's not a single product, which does not add value to humanity, be it in terms of providing electricity, be it in terms of providing natural resources, be it in terms of cooling or heating of putting refrigeration in place. And if we change our claim, then of course, we have to think about our logo. I explained this was the logo so far, small KSB, a big symbol, which symbolized the technological power of the company today, more in the equilibrium with life cycle solutions in the front. This is what we are going to brand label from today onwards, a new KSB, our global champion signified or indicated by the fact that the letters are now of the highest quality, 3 dimensional that we have put our graphic symbol in front, put it into the same size as our letters and with pride, say, KSB solutions for life. This is our new company. And this is what I present to you, what I've just presented an hour ago to the press, what we will roll out in the company now worldwide to really put that winning spirit, which is in the team on to the ground for the next years to come. And now I have to make a psychological break because from this lovely chapter of how we are growing our company, we now come to where do we stand today? What is the economic environment and how are we going to continue our journey. And if I put it into perspective, I again take the Chinese calendar. I start with good news it's the year of the Dragon and the dragon is something which demonstrates power, which is strong, which is bullish, which is confident. I think this is fully in line with what I have just shown. If you now ask me personally, how is the dragon going to face the world, then I must say, at the moment, what we see is a world, which again fourth year now in the row is more or less fragile. There are no true economic drivers out there, which will help us really push the business by the market. So it has to come out of all of the actions, which we are taking. World peace is fragile. We have voting all around the world. We have high interest rates, so a hiccup of very difficult and challenging boundary conditions. It will not be a smooth ride, which is pushed by the market. It must come out of the energy of our organization. And if I now deep dive into the German market, you will say it's getting sadder and sadder. Of course, the big German market, this is even worse. We have very difficult conditions here. We have high salary costs, we have low working times, we have a new attitude regarding work-life balance. We have a lack of professional working force. We have high taxation of companies. We have high electricity bills to pay. So Germany is not an easy one. And the worst for me because I'm very often asked the government, unfortunately, does not yet have a master plan how to drive our company out of this. But we as KSB being a global player are confident, irrespective of the global boundary conditions, which are not going to make life easy and the difficulties that we have in the big market, Germany, we are going to execute our plan. And in summary, our plan for this year is better than last year. We've given indications in the corridor where we expect to be. We will hold our cost, and the absolute must is we will be better this year than we were last year. And with this, I want to summarize. 2023, the figures that Matthias showed absolutely amazing, one of the most awesome best years ever in the company history. 2024, a challenge, but we have seen quite a few challenging years now in the past. We have the troops on the ground in order to win these battles. The most important part, we have a plan. We're executing this plan. We're refining the plan, and we expect that 2024 will be a better year than it was for 2023 despite all of the hiccups. And with this, I thank you for your very kind attention. And hand over to Sonja to answer possible questions that the presentation that Matthias and me were able to give might have given. Thank you.

Thank you very much, Stephan, and thank you very much, Matthias, for your insights and presentations. And as you can imagine, we are super excited to launch our new logo. But before we do that, we want to switch to the Q&A, and we already have some questions. So I would like to start with the first question. What is management planning to do with all the excess cash on the balance sheet? 35% on the market cap in cash does not seem an efficient use of shareholder funds. Will a special dividend or even better share buybacks be considered?

So first of all, we are happy about this. How is it really in excess of cash, yes? Because for us, cash is freedom. I know a lot of companies, who have a higher profitability. But at the end, they do not have cash. What we do not take into consideration is a buyback of shares and also not a special dividend. What we have in mind and what we are really looking for is for an M&A terms, especially in the United States, which should be a big one and not only a nitty-gritty one. And for this, of course, more or less EUR 350 million we have on our bank accounts is the basis to pay such an M&A transaction or maybe a big part of it, yes. Cash is freedom.

That sounds exciting. So there 2 more questions from [ Johannes ]. Congratulations first on the excellent figures and the nice increase in the dividend. So there are 2 questions from my side. First, you expect 2024 to be slightly better than 2023, which is great. But how is the development distributed between the first half year '24 and the second half year '24. Do you also expect the first half year '24 to be better than the first half year '23? Or do you expect a decline in the first half year '24 compared to last year and a significantly better second half year '24?

Only 1 question, but it's a long one, yes. So again, what I've said before is the following normally. The business of KSB is split, the first half of the year is not as good as the second half of the year, yes? And we expect that the year 2024 will go along in a way as the previous one. So we expect the second half of the year to be stronger. Why? Yes, on one hand, we see that the first 2 months, not the quarter, we do not have the March figures yet available, have been better than previous year in 2013. So this is almost really a good start. For this reason, we are also confident that the year 2024 will be better. Yes, actually, the economic situation is not as good, but I want to add something to what Stephan said. We see that the bottom, especially in Europe, has been reached so far. So we expect during the year, a slight increase of -- or improvement of the economic situation, which also leads, especially for the standard business in a better second half of the year 2024 than the first half.

Let's switch to the second question. Can you elaborate a little bit on how far you are in the process of registering your existing Pump population in your computer system and addressing those customers?

Yes. this I do with pleasure, to detail what is the background of the question. In order to grow our aftersales business, we, of course, have to know where our pumps are. Now you must say this is absolutely normal. You produce a pump, you sell it and you know where the pump is. Unfortunately, in real life, at least in the past, this was not done with the diligence that you have to do it. So we are now in the light of growing our after sales, registering our population worldwide, and we started somewhere in the 20s. Now we are somewhere in the 40s. I would present -- I would estimate. The good thing about it is because I personally follow this up, the energy, the motivation in finding the population all around the world, this has now massively ramped up, because people have realized only if you know where your population is, can you attack your customers and ask them if they need a new pump, if they need energy optimization measures with their pump or if we can do anything for them. And this, again, is a totally new way of doing business from reactive, waiting for somebody to phone to proactive attacking basically the population that you have put into the market, an extremely fun story. And one of those drivers where I say we're somewhere in the middle, let alone via this we will grow, because we are now actively taking up business. Nobody can stop us.

Thank you very much, Stephan. And I can see that there's another Stefan, Stefan Augustin, who would like to ask us a question, so you can just unmute yourself.

Can you hear me?

Excellent.

Actually, there's a couple of ones. So the first one would be around the pricing you envision for 2024. Is it still possible to increase prices going forward? So that would be the first. The second is actually on the mixture between...

There are too many questions, Mr. Augustin. Can we answer one by one. Because at the end, we have a list of 5 questions and can maybe almost remember 2 of them. So let me answer this question then the others? Okay.

And we do one after you other and start with the pricing.

I'll answer the pricing issue and then start with someone with a tone from the top. Sometimes, I hear that there is an illusion you increase prices and then the money streams in. It would be nice. We are in tough competition everywhere. And this is, of course, extreme on the project side where you hunt the big elephants where, in most cases, the price is only decisive. It continues in the standard business. And today is also very challenging on the spare parts side, because prices are transparent. Customers ask KSB, they ask for second quote somewhere else and the price and delivery time they decide. So we have to be extremely prudent how we raise our prices, especially in this time where prices are starting to fall again. And to put it into content now, thus pricing is very different depending what we address, whether it's an project, whether it's standard business or whether it's spare part. All in all, I would say we have or will increase prices around 2% to 3% this year, in line with the wage increases that we know will come in Germany, the wage increases by the IG Metall, they are defined already. So in order to counteract the price increases that we have on the material side and on the wages side.

Maybe let me add one thing. We have increased our prices at the 1st of January 2024 this year. Secondly, because at the end, when you ask for pricing, it's a question also of margin. We do not see a further increase of our material cost. We see in a way a deterioration. So we think that our margins are not in danger. Maybe we have an opportunity out of this development.

Thank you, very much. And Stefan, I think you have another question.

The next one is actually on valves and pumps. So if I saw that correctly, the second half had a lower sales volume of the standard pumps. And from the past statements you have made, there was the idea that the standard pump business is a little bit more profitable than parts of the project business. So on the other side, I was seeing that the profit in the second half on the pump side more than doubled year over year, which is a very strong development. So the first question is, is there something extraordinary in here? And is that actually a, let's say, very promising development, we can roll forward into 2024 and especially when we see the standard pump business also coming back, should we expect an even further increase from here?

Now let me try to put this in perspective and take the subject of standard pumps. If you look at the order intake last year then you will see from the beginning of the year, the overall company KSB to the end of the year, it dropped month-by-month. And this was basically mirroring the economy, which was going down and all business was touched. The standard business is a business where we have standardized pumps where we have low variance and where we try to reap economies of scale. This is something which we are picking up, I would say, now. And now is we started last year, where we decisively say if we are able to sell standard pumps in lower variance with higher economies of scale, because we just go into mass production our margins there must be much higher. They are much higher than if it's a pure project business. And this is the project, which has been taken up in -- also in the Mission TEN30 project, which is push standard business, one, to reap the economy of scale on the production side; but two, also to be more efficient in the market. But to be in the efficient in the market, you need in this business, dealer networks. This is not a one-to-one battle as we have it in the project business. This is ramping up dealer networks all around the world. And this is the process which is now being put into place. There are certain countries like India there, we are absolutely top of the pops in terms of dealer networks. In China, we're somewhere in the middle. And in other countries, we are still rather poor. But since we put focus on to this, since KSB has an absolute fantastic reputations, dealers are willing to take our products into their portfolio. This for us is a huge mover in order to grow our business. And this is, again, irrespective of the overall economic development. This is something, which we just have to do because basically, the market is waiting for it, and we didn't do it in the past. Others have done it very professionally like Grundfos or [indiscernible] or those who are more on the mass production side. So for us, a huge chance.

Thank you. Stefan, do you have another question?

Yes, a very small one finally, which is on the valves. The Valves business was on the new business negative, but we had 2 items in that segment in '23. One is the insurance payment. And then you mentioned you made provisions for some, let's say, kind of restructuring, most likely in France. Can you outline how much the charge was for doing France? Or let's say, if you won't share that one, at least maybe if the insurance payments and the provision taken in some is a negative one so that we will have in '24 a positive push from simply the one-offs not being in there?

So please understand that I will not go into the details of these figures, of course, not. But what is the message here? The message is that we are confident. First of all, the message is, which you also outlined the new business plus the spare part business, the Valve business, all in all, makes a profit of around EUR 10 million to EUR 12 million. So first sentence. Second sentence, yes, there have been some provisions for some projects. Third statement is in the year 2024, we are absolutely convinced that the Valve business, the new Valve business will be positive. We have majority of these losses are coming from France, from La Rochelle. And we have set up a -- how should we call it, restructuring program. We have a new plant manager in charge. And the first outcome we see we are absolutely confident that we will have, again, a positive result on the Valve business, on the new Valve business in the year 2024. And this is also one of our plans for the increase of the result compared with 2023 to bring the Valve business into a positive area.

Are there any further questions either in the chat or also using the microphone is the final chance at least for today. It doesn't look like it. So before we close the call, I would like to highlight that 31st of July, because that's the day when we publish our half year results 2024, and we will host the next KSB earnings call. So we look forward to meeting you latest end of July. And with that said, I think it's now time to close the call. Thanks for your presentation.

Thank you for listening.

Thank you very much.

Bye.