Outokumpu Oyj (OUT1V) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Outokumpu Capital Markets Day presentation. [Operator Instructions] I must also advise you the conference is being recorded today, Wednesday, the 18th of March, 2020. I would now like to hand over to your first speaker today, Reeta Kaukiainen. Please go ahead.

Thank you, Summer, and good afternoon, ladies and gentlemen, and welcome to Outokumpu 2020 Capital Markets Day conference call. And as you heard, my name is Reeta Kaukiainen, and I am the Head of Communications and Investor Relations in Outokumpu. So many of you were enrolled to our event in London today, but due to the coronavirus situation and all related internal and external restrictions and requirements, we had to change our plans and now we have this conference call covering key topics around Outokumpu. And we actually wanted to arrange this call just to give you an update where we are at the moment. The main themes for the day are to review Outokumpu -- what Outokumpu has achieved during the past years and recently, talk about the development and future risks on the stainless steel market and how we secure our competitiveness and navigate through these difficult times. And naturally, we take a deep dive on some of our key financials. Our agenda will follow the sequence that you see here outlined on the screen. And after each presentation, we will have a Q&A session when you have a chance to ask questions from the presenters. Our operator will guide you through all the practicalities on how to post a question. And today's speakers will be our CEO, Roeland Baan; CFO, Pia Aaltonen-Forsell; Head of BA Americas, Olli-Matti Saksi; and Head of our BA Europe, Mac Gwozdz. At this point, there is an addition to the agenda. We have reserved some time after the final presentation to go through the coronavirus situation from Outokumpu's point of view, and I will then hand over to Roeland to go into the details on that. So I kindly ask you to save your coronavirus-related question to that session, if you will. That would be nice. But before I hand over to our CEO, Roeland Baan, I ask you to pay attention to the disclaimer as we will be making forward-looking statements also in this call. But now, without further ado, I will hand over to our President and CEO, Roeland Baan. Roeland, go ahead.

Thank you, Reeta, and a warm welcome to all of you. It's a bit awkward to do a Capital Markets Day over the telephone. It's one of those settings whereby you used to have an audience to interact with and you can actually, here and there, do a joke from time to time, which on the telephone normally falls absolutely daft. So I will refrain from any joking today. Having said that, no jokes here, we go into the presentation. And as always, I'll start off with the vision. The vision 2020, which is this year, it's coming to an end, to be the best value creator in stainless steel by 2020 through customer orientation and efficiency. And of course, the thing that keeps us busy and probably you as well is have we achieved our vision? Have we gotten there? And the honest answer is, not completely, but we are getting very close, and we are convinced that we will get there by the end of this year. Not though on the numbers. As you know, we gave financial targets when we launched this in 2016. But as you will appreciate given what happened in 2019 already with these -- the trade wars and import penetration and price declines plus overall slowdown in the world, now added with the coronavirus issues, it makes no sense to reiterate those targets. What does make sense is to look at the issues and topics that we said in our vision that we are addressing. So we said there are 3 stakeholder groups that we address here: Customers, shareholders and employees. On the shareholders, I'll come up latest, but I will start with the employees and then start especially with safety. Safety is and has been a top priority for us. It's not just about securing our -- the safety of our employees, it has a lot to do as well with how we work. We weren't very good, to be honest. We had a total recordable incident rate in 2015 of close to 15, which is way out of the benchmark. We have been able to get into now 3.2, which is better than the target we had set out at the beginning, but more importantly, brings us absolutely at the forefront of our industry. So clearly, job well done and well achieved. The second one is our organizational health. Organizational health is important. We came from a very disintegrated, fragmented company, a lot of alignment, and we have been able to, actually through the OHI initiative, move significantly into an -- later into a completely different culture of working. When we started the OHI initiative, we were solidly down in the fourth quartile, not surprisingly. We have, in the last year, moved up now to the second quartile, and we are 2 points away from entering the first quartile, which is absolute benchmark. More important for me is what it has done to the company. Just to give you a number, we have an 87% -- 89% participation in the OHI questionnaire. That is unprecedented for a company with ultimately 9,000 blue-collar workers who do not all have access to a computer. But they all went out of their way because of their passion for the company to give their opinion, and they didn't only do that by answering the questionnaire, they actually gave us close to 3,000 remarks on how to improve further. So we can look back at this journey and say we have come a long way, and we are now a very, very aligned company. And we will, this year, enter into that first quartile. And that brings me to the cultural shifts that we have gone through in this company as well. As I said, we were not aligned. We were fragmented. We came out of a number of acquisitions that had never been completely consummated, so to say. We have been able to make that cultural shift, which is at the heart of the transformation of the company. And the transformation can be seen in things like the step change in the Americas. No, we're not where we want to be. That is clear. But we have come a long way. And I think that what you have seen recently with the changes in the Americas on the management team, what they have achieved, the underlying improvement in the last quarters of last year and what we see happening now in this year, I'm absolutely certain that we are there. The same goes for our cost competitiveness, whereas we were struggling always to get best practice disseminated throughout the company, the new culture has made this not just easy, it is -- it has been embraced by all our employees. And as a result, we have exceeded, by far, our annual 3% productivity improvement that we set out to do. Commercial excellence is another one where operating as one single entity rather than as different mills, we have been able to focus much better on our markets and our customers. And as a result, we have moved our mix from 8% of our Pro products to 14%, so significant improvement in our mix as well. And then last but not least, digitalization. The basis of our next step, we have implemented Chorus. We're still rolling it out further, but the first steps have been done and we're successful. But as good as all this is, ultimately, it is our customers that pay us. And I'm very happy to say that we are now, by far, having the highest customer satisfaction in the industry. If you look at the share of absolutely or highly satisfied customers, we have moved from -- when started this -- measuring this in 2016 at 56%. We are now at 72%. Our competitors, unfortunately for them, have been stuck at 58%. We are 14% ahead, a very significant competitive advantage going forward. And not just going forward, because all this has led as well to significant financial success. We have been able, in those 4 years past, to move our net debt to below EUR 1.1 billion if you adjust for IFRS 16. That's a EUR 600 million reduction in our net debt, a 35%, 36% reduction in our net debt. We have produced an adjusted EBITDA of EUR 1.7 billion cumulative over those 4 years. And just to put it in perspective, the 4 years before that, we had a total cumulative EBITDA of EUR 269 million. So a EUR 1.3 billion better performance over a track of 4 years. And then our gearing improved to 35% -- by 35% to what I would say today a very solid balance sheet. But it's something that we will come back to. All this has not been without bumps in the road, obviously. The environment has been pretty harsh in 2018 with the Article 232 involvement by the U.S. and the ensuing trade wars. And with that came a lot of other stuff, like increased import penetration through the deflection of volumes out of the U.S., new players from Asia trying to get a piece of the action and getting into it. And as a result, as you see here, on our top-line numbers, from 2017 peak, we -- our adjusted EBITDA went down in both '18 and '19. Whereas in 2019, as you know, we dropped down to EUR 273 million from the EUR 600 million that we had in 2017. However, if you go back to how we set our vision, because it's always what we do, we want to reset the numbers to see whether we are operationally on track. But the underlying business actually is delivering what we said we would deliver. But our actions actually have gotten us what we wanted to have in terms of productivity, in terms of market penetration, in terms of mix improvement, in terms of pricing excellence, et cetera, et cetera. So if you adjust those numbers for what the assumptions were in 2016 when we set our targets, then you see that we have underlying, measured by those steady status quo numbers, we have actually been able to improve year-on-year result. Now that doesn't bring you, as investors, direct money into your pocket. But it does, and that's for us the important part, it does show the improvement that we as a business have made and how we have been closing the gap behind our 2 main competitors in the west, Acerinox and Aperam. So I would say that if we look today at where Outokumpu is that we have, to a large extent, closed the gap with our competitors. And I'm pretty sure that by the end of this year, we will be able to say -- stand up and say, "Look, we now have, in a comparative way, we have been able to surpass our competitors." Now if we take a step back and look a little bit at 2019 and see what happened there. We had quite some strong market headwinds. We had the ferrochrome prices down significantly, which cost us about EUR 100 million. We had the European base price down on our realized pricing by EUR 80 a tonne. We had very low deliveries, actually record low for -- in our history. And the timing and hedging losses were 4x higher than in 2018, driven by the fact that nickel fluctuated between $12,500 and $18,500 a tonne, which, of course, gives tremendous whiplashes in both your hedging book as well as in the lag you have in the pricing. We had some tailwinds as well with clearly lower input costs and that was specifically in graphite electrodes and refractories, which all together were about EUR 50 million, EUR 55 million. And then we had some advantage from the exchange rate, another EUR 100 million. So altogether, EUR 300 million in absolute down, but if you then look at the relative performance in EBITDA year-on-year, you see that we didn't have EUR 300 million down. And the difference is all the mitigation that we have done in terms of productivity, delivery, better mix, et cetera, et cetera. So self-help. But still, the numbers that we saw in 2019 reflect the reality of the market. And the reality of the market is that we had historically high imports into Europe. We had, in December, 35% of consumption in Europe was done -- was satisfied by imports. It has never ever been that high. We had unprecedented price pressure. If you follow the CRU price calculation, at some stage, we were over 40% down on the prices of 2017. And we had weak demand as a result of the reduced activity -- economic activity in the world. So what are the underlying reasons for these realities? And it's pretty straightforward. As I said, it all was triggered by the trade war that came from Article 232. Then when everyone was trying to find new outlets, whether it was India or Korea or Japan, ultimately, all the Asian exporters found that the one relatively open market was Europe. So a flood of product went to Europe at tremendously low prices. And low pricing, of course, comes because of unfair trade practices. We see subsidies are still rife in many Asian countries. We see raw material price manipulation happening, preferential financing to domestic companies. Things that are very difficult to compete with if you are a business in the Western world with normal cost of doing business and with a shareholder base that needs to -- or a financier base that needs to be rewarded for the risk they are taking. We've also seen that with this, pricing mechanisms have changed. Where we are used to having the base price plus the alloy surcharge, we are now in a situation that with so much imports, [ oil prices ] effective pricing, the alloy surcharge model is not functioning anymore. And we are now selling probably 70% of our spot sales on effective pricing. And then last but not least, and that's both a plus and a minus, is that the world has shifted to NPI as a source of raw material for stainless steel. And NPI, of course, is not linked to any metal exchange. It is linked to the cost of producing the ore and then the NPI. Whereas the scrap pricing, of course, was always linked to the LME. And that has changed as well how we approach the market in scrap in Europe and in the U.S. Scrap is actually, when you look at it longer term, a huge competitive advantage. The -- if you look at the cost of scrap, and it's interesting to look at the difference between carbon scrap and nickel-containing scrap. The cost of collecting, processing, gathering and then distributing the scrap is exactly the same. There's no difference whether you collect carbon scrap or stainless steel scrap. However, carbon scrap is trading at $300 and stainless steel scrap, at some stage, was trading at $1,200, $1,300. So there was a $900 perceived value difference between the two. And the value difference, that perception, comes from LME. However, the scrap that holds nickel cannot be used for anything other than stainless steel. You cannot make batteries out of them. You cannot sell it at the LME. So there's a falsity in that perception. Now we have been addressing that as Outokumpu specifically. And we have been working hard to decouple as much as possible the price of scrap from the pricing at LME. And we have been partially successful. We're not there yet, but in the process that we are continuing to do. And ultimately, that will give us a competitive advantage over the NPI producers because ultimately, we will be able to get closer to the cost of carbon scrap than to the cost of scrap based on LME pricing. A second reason here is that as now 50% of the world's stainless steel production is out of NPI, it means that the arising of scrap will only increase exponentially over the demand for scrap. And already today, the scrap markets in the U.S. and in Europe are long. So they will only get longer as time continues. So being a scrap-based operator actually is a long-term strategic advantage. So that is long term or medium term, but what do we do now because it's now that we are being attacked by all the imports? And the market balance must be restored, and we must restore it by using the trade defense measures that we have at our hands. One, of course, is safeguards, we -- and the other one is trade defense tools like anti-dumping, anti-subsidy investigations. We had a meeting with the new Commissioner, Mr. Hogan, not so long ago, talking about these. And there is very clear understanding in the Commission that action is needed and is needed quickly to make sure that this unfair competition is being reined in. As a result, the Commission has, earlier than expected, started the review of the safeguards that started already in February, and we are expecting outcomes by June. And as far as trade defense tools are concerned, they have started the anti-dumping and anti-subsidy investigation into Indonesia, Taiwan and China. And again, we are expecting shortly to have an announcement on preliminary tariffs on those imports. We also have put a complaint to the WTO through European Commission. Indonesia's export ban is distorting the value of the ore. Local companies are still getting nickel holding -- containing ore at subsidized pricing at less than half of what the world market is, which is an unfair practice, and WTO has taken this up. The U.S. has shown interest to join that complaint and is actually in contact with the EC to make that happen. And then last but not least, carbon border adjustment. The average carbon footprint of an NPI-produced stainless steel is up to 5x the CO2 footprint of what we -- you do in Europe and U.S. using scrap through an EAF process. That means that with these imports, a lot of carbon leakage is taking place. And again, we met, not long ago, I think it's about 4 or 5 weeks ago, with the new Vice President of the Commission, Frans Timmermans. And he absolutely concurred that, a, the stainless steel industry is of strategic importance to Europe; and b, that we need to do something to make sure we do not have that carbon leakage. And of course, a carbon adjustment at the border would be the way to go. One of the results is that we have now agreed to have a combined working group between industry and the Commission to investigate this issue and come up with a solution. It will not be immediate, but it will come and it will help tremendously. So going away from that and going to the market itself. The market for stainless steel keeps on growing. We have said it before, you know the megatrends. And there will -- in spite of the fact that we have a number of hiccups currently, the trend will not change. And the world will ask for more and more -- will ask for more -- sorry. And with this comes an increase not only in demand for stainless steel, but as well for sustainably produced stainless steel. We are looking at the CRU numbers and SMR numbers, and we see that we have a rough 25% growth in demand in the next 5 years. And as we are growing, more and more of this will have to come from sustainably produced producers. So here is our advantage. Outokumpu has always embraced sustainability. It has been part of what we have been doing. And we are, as I said already, we are one of the most sustainably -- sustainable producers of stainless steel. We have now -- in our must-win battles that you know from previous presentations, we have now put sustainability in as one of those must-win battles. We want to reflect that increased focus on sustainability, not just to the outside world, but specifically to the inside of the company as we are going to go further than we have done before in satisfying the demand for sustainable products. We have invested, over the last decade or so, EUR 450 million in sustainable investments. We are looking, as you know, in significant investment in slag furnace that would be another step change in that sustainability and in reducing the carbon footprint of the company. Our carbon footprint today is already less than 30% of the global industry average, and that includes all producers, NPI and non-NPI. If people use our steel rather than what is the average in the world, if you look at our customers, they have reduced their carbon footprint by 8 million tonnes compared to sourcing from the average. And if you would say if they source from the most dirty producers, so NPI, then you are getting up to 50 million tonnes of savings. So it is significant. It's absolutely significant, and we will not be stopping at the lead that we have. We are committed to reaching our goals. As we stated, 20% lower carbon footprint by 2023, and ultimately, the carbon neutrality by 2050 at the latest. Not only do we believe that it is necessary for society to bring down the overall carbon footprint, it is necessary for us to significantly contribute to those climate goals and to the climate goals of our customers. So to wrap it all up, we are, today, in a leading position where it is about our operations and our products. Our company is extremely well positioned to continue a path of growth and improved profitability on the basis of the industry-leading position that we have today. And with that, I'll open up for questions.

Okay. Thank you, Roeland. And operator, we are now ready for our first Q&A session.

[Operator Instructions] Your first question comes from Anssi Kiviniemi from SEB.

It's Anssi from SEB. First of all, kicking off with the financial targets. You had financial targets when you went towards 2020, now there seems to be nothing left. So could you elaborate a little bit on kind of your ambition level? Where do you want to go? And potentially, the reason why you don't have any financial targets going forward? In addition, kind of what will be the key KPIs you will drive the company in the future? That's the first one.

Okay, Anssi. Thanks for that. So as I said, it's not that there's nothing left. It just makes no sense to hold on to the EUR 750 million that we set in 2016 will be a target for 2020. If we would still have had the same trading environment as we would -- as we had in 2015, we would still have that target. We don't because it's a different trading environment as I explained. Secondly, currently with the coronavirus, who knows where it's going. So the KPIs we are following are and have been consistently our operational efficiency, and we measure that in terms of productivity where we have achieved... There is someone talking whose line is open, so can you please mute if you are not talking? So our productivity where we have actually achieved an over 4% year-on-year productivity improvement versus a target of 3%. We keep on measuring that. We look at our market penetration of our high-end products with the market mix. And we, of course, look at our cash. Cash is the most important thing. Ultimately, that's where we want to drive it. So those are the KPIs that we follow.

Okay. And could you elaborate a little bit...

Just a second Anssi.

Hi, it's Pia here. I mean just to still reinforce that in terms of a scorecard and sort of internal KPIs, obviously, we have a deck that is based on our must-win battles and the mission and the focus that we have for the year. So I wouldn't go through all of those, but there's obviously a profound deck of KPIs that we are following.

Okay. Then a few words on the balance sheet. Kind of do you have any thresholds, ambition levels in mind going forward?

Pia?

Yes. I think I will focus a bit more in my presentation on the balance sheet. So maybe we can come back after my presentation, if that's okay?

Definitely. Then the last question from my side. You highlighted the carbon border tax and the process has been initiated. Could you elaborate a little bit on the timetable that you are seeing in the process? We are at the early stage, but kind of -- do you have any idea on how long it will or could take?

Well, I think it's fair to say that nothing goes fast when it's so -- such a significant change. So I would say that if we are lucky, 2 years, but more realistically, 3 years.

Your next question comes from Seth Rosenfeld from Exane.

If I can ask two, please, to kick them off. First, with regards to European trade protection and second with regards to the CO2 reduction target. With regard to trade protection, it looks like this morning, the EU actually already provided some color on the provisional anti-dumping duties for Indonesia, China and Taiwan. I believe in your comments earlier, you expected that in the coming weeks but I think it's already public. The tariffs are clearly broader in 15% and 20% for the anti-dumping measures. How does that level of tariff compare with what you are expecting? And what impact do you think that level of tariff will have with regards to import penetration into the EU and price competitiveness? I'll start there.

So that's informal, Seth. It has not been published as a formality yet. So -- hence, my careful assessment. But yes, there are numbers in the market. What it will do is it would add EUR 300 to the tonne of hot rolled coming into the country -- into the EU, which would be a significant improvement on the competitive position of the domestic supply, especially in combination with the pressure on scrap pricing, that would be effectively a -- I wouldn't say it will shut down the imports, but it will make it very difficult for them to penetrate.

Assuming that you begin to see a reduction in imports, and it looks like that may have already begun to kick in, in February based on the tariff rate quarter data, how do you think about price trajectory moving forward? Obviously, coronavirus is a giant question mark. If you were to, in a hypothetical world for the purpose of discussion, ignore coronavirus, demand was where we thought it would be 2 months ago, where do you see inventory levels in Europe? Is the market getting tighter already? Or will we have to wait quite some time before mills feel comfortable to potentially secure better pricing?

Yes. So what we see today in spite of -- even in spite of the coronavirus is that already, as you said, imports are down significantly. And as a result, our order books are very strong. At the same time as well, our shipments are strong because order book is one thing. You can say orders can be withdrawn. But we see that our actual shipments are going out at a very strong clip. So if this is indicative of what the future is going to bring on the reduction of imports, then it bodes well for the industry.

Thank you. We have no further questions at the moment.

All right. Thank you very much. If there are no further questions, I think we can move on with our program.

And the next speaker or presenter will be the Head of our Business Area Europe, Mac Gwozdz. And he's going to lead us through some of the key developments and completed actions that we have done in this business area and also talk about how we mitigate the market changes and secure our competitiveness going forward. Mac, go ahead.

Thank you, Reeta, and good afternoon. I would like to spend the next 20 minutes sharing the Business Area Europe perspective. While we are meeting remotely and following the information on the European plant closures, border restrictions and stock market development, it is all showing that the religious execution of cost and efficiency programs that we have over the last years was just necessary. And as business area, we are currently much stronger and better prepared to face the market turmoil than we were just a few years ago. We have improved our record in a number of areas. So we improved the safety by over 50%. And it's also now very much relevant because when we are going through actions to protect our facilities also in the outbreak environment, the good level of discipline, the organizational procedures and well-coordinated sites are much easier to manage. We also moved in terms of our Organizational Health Index to second quartile, and that means committed employees who are currently working remotely. We have implemented social distancing pretty fast, and we can see that the system is operating. And we also see this commitment of employees in hundreds of improvement projects that are going across the functions, and I will elaborate about them a bit more. We have generated, just 1 year -- last year, over EUR 60 million savings in raw materials. And it's not just savings around scrap, but also on other alloys and other metals and other input materials where we are more creative in the metal sources and we are better in our buying practices. Then in terms of our production cost savings, since '15, we have generated over EUR 130 million of annual savings, which is showing now with profitability in the market environment with much lower pricing. And also the ability to flex between volume and cost efficiency is important for us. We have seen that second half of last year, we were able to generate EBITDA in the environment of extremely low volumes. If we go back to 2019, yes, it was a very difficult year for us. And actually, 2020 doesn't seem to start any easier. Our transformation has prepared us for really bottom market condition. So as we are expanding our applications of products and we are reaching more customers with higher nickel grades, we utilize our cost efficiency that we have on commodity grades and that is enabling us to actually be really price competitive for the premium product. And those products produced in Europe are sold globally, and it's giving us clear #1 market position in the premium grades in global markets. Last year, due to really weak demand and high imports, we have seen the headwinds to the extent of, I would say, EUR 300 million. We believe that the import penetration was at its peak second half of last year. As already mentioned by Roeland in the Q&A, the imports are going down and with the expected decisions, we would estimate that the market share of imports will be significantly lower this year. The anti-dumping measures are almost announced. Anti-subsidy is following. So those should stabilize the market in terms of market share of imports. We currently also see the price levels of input materials, electricity and emissions trending down. So while we observe closely the development in customer segments and we react with any shutdowns in segments by moving the volumes to another niche of the market, we see that our cost structure will be better this year with all those input materials reduction. If you look at the import pressure from Asia, we are delivering on making our operations more cost-effective. So even with extremely low Asian pricing, we are able to compete on our commodity grades. And at the same time, we are in numerous discussions with decision-makers on addressing the level playing field. So our cost competitiveness, if the market is getting more constrained, will play definitely to our strength. We have delivered 4.3% productivity improvement last year, and there are actually other 2 pillars of our cash generation from last year. So higher share of Pro grades and efficient working capital management. On productivity, we will review the project for 2020 in the next slide. On portfolio mix, we are almost at 20% of growth, which has significantly higher profitability, and we are further developing this segment strategically. Also quite important, our net working capital management. As we are reducing our lead times and modernizing supply chain, we are able to run with a significantly lower level of inventories and also reducing our metal risk with that. In terms of European market, it is expected that the market will grow. It may look like a rather optimistic assumption in the face of current corona outbreak, but underlying trends are there and the sustainability element of stainless will prevail. So we already see in some market segments where stainless was not yet used. The discussions are encouraging. For example, we had an event a few weeks ago in London where we talked to a number of decision-makers both in terms of design companies, local authorities and the interest in making the investment choices more sustainable was really high. So you can see that the trend in Europe in terms of sustainability is growing. So that will clearly play to our strength. Our efficiency in BA Europe is coming from a number of areas. So productivity comes from hundreds of projects where we target reliability, speed, quality and labor efficiency. The successful rollout of reliability-based maintenance, Six Sigma and statistical engineering, all of those originating in either automotive industry or companies like GE or Motorola, applied to steel manufacturing is giving good results. In general procurement, both category management and supplier development outside traditional pool of our suppliers is giving us the savings to the extent of 10% of the project. Then the way we tune our melt shops and run the projects on alternative raw material sources will continue this year, and we expect similar savings like last year on raw material costs. Digitalization is a major area, and actually, it is giving us additional advantage with sensing and processing technologies, data analysis and closed-loop manufacturing. So we already can see that it is strengthening our quality leadership on the market and giving us further opportunities to reduce the cost. While we reduced the productivity -- increased productivity by 4.3% in '19, we see that we can expect similar results in 2020. The project pipeline is solid, and the projects are already identified. So we see after mid-March that we are on track for similar productivity gains. And even now, we continue the multi-site and cross-functional projects using the remote working technology. We are also in the middle of restructuring in Germany. So the process is affecting approximately 370 jobs and will generate annualized savings of EUR 25 million that will fully be visible in our P&L in 2021. Next area is our ferrochrome production and Kemi mine, which is clearly competitive advantage from a number of angles. I think the most important one is the fact that our CO2 footprint is 42% of industry average. So on one hand, it's giving us superior CO2 footprint for our stainless, but it will be increasingly attractive for our ferrochrome customers to buy from us and not from the competitors with inferior technology. We are also the only European manufacturer. So as we see the consolidation of ferrochrome manufacturing within 2 players actually globally, we see that there are customers looking for diversification and who buy from us just to make sure that they are not fully dependent on one supplier. The mine is also operated according to strict environmental rules. The deposits are going well beyond 2040, and our deep mine projects are on track, so the availability of ore is sufficient. On carbon footprint, we have a number of initiatives to reduce our carbon footprint even more. We are working to increase metal recovery from all production side streams. We increased our scrap fuels and reduced our emissions. And we also have very close cooperation with industrial organizations, looking at additional opportunities. We are not committing any specific future technology yet because we are waiting to see what the framework of green deal will be, and we will then adjust our investment decisions to be able to use this program to highest extent. The increased recycled content has required development in our technology as well as supply chain. And particularly for premium grades, it's quite special know-how and skills with raw material strategies to be able to maximize the recycled content because you cannot just use the regular scrap while you are producing the advanced grades. And we believe that we are a global leader in this know-how as well. In terms of our customer experience, we are leading player in Europe, and it's coming from our strong R&D, with our 3 R&D centers and early integration with customers' R&D departments. Our product portfolio is clearly second to none. And we have also a leading expertise in stainless solutions. So our development engineers are working with the customers' R&D departments, helping them to solve the problems that they encounter. We have also a strong network of partners in universities. For example, we are working with the University of Aachen on automotive applications. So this is also helping us to gain the competitive edge. The next area I wanted to briefly talk about is our digitalization program where we are partnering with Microsoft. Tornio will be the first fully digitized stainless mill by the end of 2020 when we will have the plant-wide data lake and data collection. And we will have executed 15 projects by the end of the year, which will enable us to generate 100,000 tonnes of extra capacity. We are also working with our next-generation sales project with e-commerce pilots rolled out in Germany and Italy and more to come. And we are also working on our seamless transaction experience to make sure that we take advantage of this process. And then we are continuing with our ERP renewal. In Germany, we did the first rollout and will continue in the next locations with the project, and it's giving increased efficiency and it's giving better capabilities for us to be integrated with supplier systems and customer systems. With Tornio, the digitalization is going through flow, so automated and data-driven information. We are working on predictive maintenance with a number of partners. We are working on quality. And we are actually generating the machine learning systems in our quality inspections, resulting in closed-loop manufacturing, which is something that will be presented on Microsoft stand in Hannover Messe when it will be rescheduled because the last one was canceled. And also, we work a lot in terms of changing our culture and attracting more digital talents, which is a very interesting project right now. And the impact of Tornio program itself is over EUR 10 million of annual financial impact that will be sustainable. On the products, I think that very important areas that I would like to go, one is our success in scrubbers and in the marine industry in itself because we had almost 33% of the total sales of pro grades in this segment where our experts are working with a number of key players, whether it's Norway or Finland and also in Asia. And we believe that this segment, after the -- a bit of standstill in first quarter of this year, will move forward. Then another very interesting project is the use of our H-series for electric car battery casing. We are working with major battery suppliers for global automotive market where we actually are the single supplier of the casing. This material is superior compared to currently used aluminum because of its properties. And it's not just the fact that stainless steel is not burning, but it's also giving better battery protection, and it's also giving the weight advantage. And we expect this market segment to be growing really fast. And we're also actively working on the fuel cells technology with a number of players. So that's promising segment that should be growing over the next years. Commodities though are still crucial for us. So the cost competitiveness on commodity product is still our focus. So to summarize, our plan is to continue to strengthen our competitiveness in Europe. We will enable the success of our customers. We will drive the productivity improvements. And we will continue with efficient working capital management, which is a must in current market environment. Thank you for your attention.

Thank you, Mac. And we are now ready for our second Q&A session. Operator, please go ahead.

[Operator Instructions] And your first question comes from Veikko Silvasti from Nordea Markets.

It's Veikko Silvasti from Nordea Markets. Just a quick question regarding the cold rolled import duties that the European Commission has imposed on China in 2015. How do you see the continuation of those duties?

So the duties are supposed to be going to the transit review, which will be initiated in the next month. And then Commission will investigate the current market situation and take the decisions on extending them beyond 2021 in due course. But based on the recent discussions with the Commission, I would say that the perspectives to keep those tariffs are quite strong. And also the decisions that are expected on the hot rolled would suggest that Commission is looking at that positively. So I'm rather confident that it will go well.

Okay. And then the second question would be around the ferrochrome. How do you see the ferrochrome market at the moment? And now that the South African producers are suffering and taking down production capacity and maybe some additional capacity coming up in China, how do you see the market balance? And is it going to tighten in maybe this year or the near future?

It's rather a difficult question because there is a lot of moving elements. So the situation in China with market turbulence is clearly putting a lot of waves, and it's difficult to predict how the balance between ferrochrome shutdowns and stainless shutdowns over the last week will play out. So we need to observe the market. We, in Outokumpu, we are clearly focusing on our cost efficiency to make sure that we stay in the most cost-competitive manufacturer segment, and we are last man standing, and we are well positioned for it. And if you look at the South African situation when there was a number of major announcements for closures and taking capacity out, one would say that it is possible that South African government will react and try to put some barriers in terms of our export to protect the local market. But we have no information that would say that it will happen soon. So I'd say that we would expect, mid to long term, the ferrochrome price to go up, but the exact timing is impossible to predict right now.

Your next question comes from Luke Nelson from JPMorgan.

Just with reference to Slide 36 -- can you hear me?

Your line is a bit bad.

Okay. I'll [Technical Difficulty].

It's all right because you're breaking up.

[Technical Difficulty] now?

No.

You're still breaking up.

Sorry, Luke. Would it be possible for you to redial?

Yes. Okay, I'll try that.

Your next question comes from Bastian Synagowitz from Deutsche Bank.

I hope you can hear me well. I think the line is quite bad indeed here. Mac, could you just please talk a little bit about how you see the scrap market? I think you really achieved a lot on that front already in the past 2 years. So first of all, how do you want to go about putting more pressure on the scrap collectors to cut their pricing terms? And then secondly, why do you believe that scrap prices will possibly pivot towards the carbon -- price of carbon steel scrap over time? You still obviously have quite a few metal units in there, be it nickel or chrome. I guess the sophistication in metal refining is pretty advanced. So don't you believe that if the price of scrap drops to just 20% of the value of the metal content here, metal refinance will start focusing on this as an area to possibly get involved, similar to some areas like [Technical Difficulty]? That is my first question.

Thank you, Bastian. I believe that long-term cost of scrap will level out with the input cost of the nickel other sources because we have the open market. So it's rather unlikely that the scrap will be much cheaper than other nickel sources because then the exports would start. But what we see now is the volatility of scrap is much lower than volatility of LME. And scrap is more following the development in NPI or ferronickel than the development in nickel grades that are used for batteries. So we believe that scrap will be closer to the lower grades of nickel and much more less volatile than actually LME. Also, the benefit of scrap is coming from close cooperation with partners and global position. And the fact that we are present both in Americas and Europe is keeping us advantaged in terms of coordinating those markets and deliveries from those markets. And then we believe that we have industry-leading knowledge of how to maximize the scrap use in various grades. So that gives us advantage as well. Hopefully, I answered your question.

Do you have a view -- yes -- I mean so do you -- I mean do you have a number in mind versus just the current scrap price level and what you aim to achieve? I mean do you think about it more as an absolute number? Do you think about it still more as a relative number versus primary nickel? So I really wonder how you sort of try to go about it.

The ideal situation for us would be if the market price is rather stable than fluctuating around 900. But we are not there yet. So it's still something that is relatively fluent, but it's moving between 900 and 1,100 to give just rough numbers rather than moving like nickel between -- equivalent then between 11,000 and [ 19,000 ]. So scrap volatility is much lower.

Okay. Understood. Then just one more question also on the carbon emission side. In your vision here, you obviously have now been putting out the target to become neutral by 2050, and I appreciate, obviously, that is quite far away. But what would be the technological steps which you would need to take to really fulfill your vision? We obviously know a lot about what steel companies aim to do, but I think so far, you have actually not been giving too much color on what your strategy would be.

And there's good reason for it. As we are the EAF producers, a lot of our CO2 is coming from our electricity. So it is more European strategy that we also discussed with the Energy Commissioner recently that if we in Europe are supposed to be carbon-neutral, we need to have the carbon-neutral electricity. And we are much better positioned being in Finland and Sweden than some of our European competitors. But still, to get to 100% of CO2-neutral electricity is a step. Then on our ferrochrome manufacturing, we are looking at the number of alternative technologies to eliminate CO2 emissions there. But again, here, you have a choice between various technologies and what will be the decision of Commission in terms of supporting certain technologies will drive our choices. I think in the industry, there was a lot of buzz about hydrogen. But clearly, we don't have enough electricity and enough hydrogen capacity in Europe. So if the Commission will take decision to go in that direction, we'll accommodate. We keep the flexibility to choose the technology based on what will be the most cost-effective and most supportive technology.

And when you talk about new technologies here in -- particularly in ferrochrome, I mean are we still thinking about the traditional old concept of ferrochrome smelter powered with energy and then basically where you put in, I guess, coke? Or is there a different concept potentially which just requires a totally new infrastructure?

We have 2 or 3 ideas, and they do not require the new installations. So they can be fit into the current infrastructure. And again, which one we will choose depends on how the new green deal will be developing. But we don't look at a complete replacement. We put the ambition in quite distant time frame because we are unable to be more specific at this point of time. We will be clearly on leading-edge, and we will be among those who are moving faster, but we will do it when we see the financial return on the projects.

Okay. So -- but, I guess, given that we are obviously currently in a phase where, I mean probably in the next 2 years at least, the European Commission has been flagging and guiding expectations for taking some of the key decisions, and whether there will have more or not obviously remains to be seen, but is it fair to assume that you will basically decide on these steps also in the next 2 years?

Yes, we will provide a bit more clarity.

I'm sorry. Could you please repeat that?

There are many moving parts, Bastian, that play a role here. What is important is that we have our clear objective. We have a number of paths that are possible. Which one we choose to do will depend on not just what we do but as well what the Commission is implementing in terms of policy for the industry and for the broader economy. So it's very difficult to say how we're getting there other than that we are committed to getting there.

Okay, fair enough. And is there possibly any early-stage guidance you could give us for sort of like lower end and upper end of CapEx corridor, which is required for this transition?

Not at this moment, Bastian. We know that to get to our 2023, we have limited CapEx needed. Beyond that, we'll -- as soon as we have clarity, we will communicate.

And there are no further questions at the moment. We've not had Luke Nelson rejoin the call.

All right. Okay. Thank you very much. And I think it's now time for our break. We will have a 10-minute break, and we will be back at 3:50 Helsinki time, so 1:50 U.K. time. Talk to you then again. Have a good break. [Break]

Ladies and gentlemen, welcome back to your conference call. I'll now hand you over to Reeta Kaukiainen. Please go ahead.

Thank you, Summer. Welcome, all, back from the break to the second part of our Capital Markets Day. And we'll start with Olli-Matti Saksi and with Business Area Americas. Olli-Matti has been leading the business area for a year. And now we will hear on what type of actions and activities have been going on there during the past year and a bit earlier also and how we are securing a good platform.

Yes, Reeta. Reeta, thanks, and good morning from the U.S. Roeland was wondering if I was still in my pajamas, but I have to reveal I'm not. But good afternoon there everybody in Europe. Bit of back to 2019 as Mac did. My first point would be here is that we have a lot of large assets, and I might have to say really a great profession-devoted team. So I have a very, very, very good feeling about it. So let us start. Let's go to the topics and successful year for us. We have made many fundamental improvements in especially commercial supply chain area, but also operationally, we were able to improve quite significantly. And some of the results, like I said, we already see now. But just give you a little bit of pointers, our underlying EBITDA already improved by more than $40 million versus 2018 despite of very significant lower volumes that we had in -- than 2018. And another pointer is that, typically, also in Americas, quarter 4 is the weakest volume quarter, but still we're able to improve quarter-by-quarter our results. So that shows that our trajectory is strong at the moment, and we have a very good trend going on, like there. So what did we do? In the commercial area especially, we took a very critical look at our -- all of it, I would say, strategy, our processes, what we do, how we do it, our capabilities, the team itself and the leadership as well. And also, we strengthened our commercial team. We changed our commercial leadership as well. And we took a lot of best practices from Europe, which have been proven to be very successful and working very well. So from that point of view, had a very good position to come to the U.S. and do all of that. And I have to say it has been working very well so far for us. Also, not only commercially, but also in the raw material area, we increased much of the focus in the very, very central areas like how much we use scrap. Our scrap ratios really went up over the year, and that brought us as well financial benefits already. I will come back to that as well later on in my presentation. Obviously, the more scrap you use in our industry is more beneficially economical for you. So that reason remains a key topic for us. But all these topics, I will come back during my presentation. So let's go on. So I would like to, first of all, make the point that, not to get the wrong impression, it's not all that happened in 2019. We had a very good runaway already before, you look a bit back in time. So I have to say that we have a modern state-of-the-art production facility in the U.S. I think some of you have been there, and you've seen it. It's the newest mill in the U.S.A. And also, we have our Mexican facility extremely well maintained and managed as well. So we have 2 factories, 2 mills that are, to my belief, second to none in our markets from technological -- from quality point of view. And that has been achieved definitely over the past years, and that is a great fundament for us. I would like to also point out that our safety performance in 2019 was further improving from '18, and really, it is best-in-class within the Outokumpu group. And I believe as well, if you look at beyond that, we are very far up there. And I think many of you also do recognize that there's a very close link between safety performance and operational performance and the quality performance. And again, here, we have very much feedback from our customers, which is very, very loud and clear. And also coming from the latest customer satisfaction survey that Roeland was also referring to earlier is that our customers are very satisfied with the quality of our products. So -- and I believe that it is absolutely the case that we are the leader in this respect in the U.S., North America markets. We are second to none in terms of quality of products. Costs, obviously, a very, very important topic for us as well. Mac spoke about that. We have a similar identical approach to that; very systematic, working on both productivity costs in a very detailed way. We have a big number of smaller and larger projects, which we follow up in a detailed manner, having milestones and reviews in place. So I would say here that we have really a great fundament for the solid growth and profitability, which is the operational fundament that we have. So I would like to still speak a bit more about our underlying performance in 2019, which you see in the next slide. So despite of volume loss about 20% versus 2018, we were able to increase our underlying performance in EBITDA. And especially, that was very, very clear during the second half of the year. And the point here is that our breakeven volume has come down dramatically as a result of the improvements that we have made during the year. And obviously, it's not just one thing that we've done to bring this breakeven volume down, it is all of it. So really the optimal raw material mix and very detailed focus on production and transportation costs, for instance. And also transportation mix, I will come back to that as well later on in my presentation. I spoke about commercial team and its performance, its management and also mentality that we have. So it is now much more profit before volume than volume before profit. And that is, of course, in steel industry, sometimes if volumes are overly dominating, looking at KPIs, but I believe that we have now made a change to look at in much more balanced way. We try to understand better our customers and our profitability, and as a result, the EBITDA performance is also increasing. Now you may ask, okay, not much -- not enough to be just breakeven. I would agree with you. It is not enough. And now our strategy really is to gradually, step-by-step, improve our asset utilization, which is worse in 2019, still rather low. And we do that by carefully thought-out commercial and portfolio strategy. And I believe that is exactly the right recipe for us to true and sustainable profitability, to load the assets in a smart way, keeping and improving further our operational and cost performance and bring the profitable volumes in, and then we will be there. So 2019, as the year was, like Mac also spoke, equally challenging, I would especially focus on this volume issue that we had in Europe but also definitely here in -- at Americas. And if you look at it, the market demand, so apparent demand in the market decreased almost 10%, both in Mexico and in the United States, despite of rather okay economic conditions. And that was much due to destocking in the market. There was clearly too much purchasing going on, destocking in 2018 and then over 2019, I would say, most part of the year was a destocking situation. We had additionally some issues that led to further volume loss and not just 10%. You may recall that USA introduced also temporary duties from Mexico into United States. So -- and you know that we have volumes and contracts from Mexinox to United States. That 25% killed many of that -- much of that business. So that was -- later on, those were removed. But as you base our annual contracts, you don't get it back right away. Of course, now with the USMCA in place, we will be getting those volumes back so -- but that was a hit in 2019, especially. And second point is that we lost our export markets, especially in Europe and in Italy, which were, from a volume point of view, very significant. And that was again due to this reciprocal duties that were introduced by Europe to count 232 [ that was we came in ] here in Americas. And another point I would like to make here is that despite of these volume losses, we did not lose market share. So we kept those market shares stable in both countries, Mexico and the United States. Now I see a lot of growth opportunities in both countries, Mexico, U.S. and even further down in Latin American countries. I see the USMCA will support domestic sourcing, especially in the automotive industry. We have also -- you may have heard, Mexican duties for Chinese cold rolled. And there is a process against Taiwan ongoing at the moment for cold rolled as well. And I think there is an overall global trend for, I would call, deglobalization or regionalization in supply chains. Maybe, also this current virus environment will encourage and push even further towards that direction. And we have many customers, and for instance, in Mexico coming back, which we didn't have for a long time, asking for us to supply material. So I'm pretty optimistic about the demand picture for us. We are mitigating the market headwinds as I spoke already. In the next slide, I would especially like to focus on the working capital management. We have spoken about productivity. We have spoken a little bit about raw materials and improved delivery mix. I will come back to that more specifically later on in my presentation, but the working capital side, I would like to go into here. So we were able to improve or actually bring our cash flow from Business Area Americas to very strong positive, over EUR 100 million, actually in 2019, and I believe that hasn't happened in the history of this business area yet. And we are very proud of that. And how did we do it? We started with, I would say, somewhat too high inventories. We have been over 100 days in inventories already for some time in Americas, and we brought that down to typically more sustainable industry standard comparing even to our European operations, 80 to 85 days, which is quite enough, and that's where we should keep it. So that was one component of improvement. And the other one was much better in management of our receivables and especially over the receivables side, which contributed about 1/3 of that cash flow of EUR 100 million that we had here. Now, we are much closer to the benchmark numbers in terms of overdue payments as well. And so going to our next slide, looking especially now early 2020 market picture in the U.S., I would say that the year has started from commercial point of view, from sales bookings point of view, very, very strongly. We had exceptionally good bookings. Our lead times were, in 2019, around 4 weeks constantly and right now we are more towards 6 to 8 weeks of lead time, especially in the USA that is the case, selling at the moment, volumes for the second half of May. Our quarter 1 order book is absolutely as we have planned it before, we are very happy for that. And as we see in Europe as well, we haven't so far seen any dent in incoming orders despite of the virus situation. Last week, for instance, was very good. We're following our orders on daily basis and we see right away if something happens. So far, it has been quite amazing that it has held so well as it did. So -- also, I'm looking to see a strong and good quarter 2 unless we start seeing cancellation of orders, which is not yet the case. Overall, our ambition for 2020 would be to improve our volumes around 100,000 tonnes versus 2018. And so far, we've been successful at least for the bookings side of it at the moment. Now, I think everybody knows that we don't know what the virus will do. I think it will most likely slow us down at some point of time. But despite of what will happen, we will be in a good position from commercial point of view, operationally as well, to take advantage of the upswing when it comes and it will come as well, sooner or later. Talking a little bit more about the USMCA and the demand side in Americas, in NAFTA area about -- the projection for the next 4 years is an increase of demand around 7%, which, well, doesn't sound that spectacular. I mean it's a relatively modest growth. It is a mature market growth. And again, if you look into the specific market segments here, nothing really special -- nothing really is standing out, maybe ABC and infrastructure a bit more than the others. So you may ask, what is the story for us then in our growth? I think you need to consider 2 key aspects here. First one is that, like I mentioned, the USMCA and 232 and the trend towards regional sourcing will benefit us as a local producer and maybe also other local producers here in the U.S. and Mexico. And we are really perfectly positioned in the U.S. and Mexico to take advantage of that trend. And the second and even more important point from my perspective is that we are, I would say, greatly underrepresented in some market segments in -- especially in the USA, like consumer goods and automotive, which are, as you can see, very, very important market segments from demand and volume point of view. And these markets and these segments need -- they need Outokumpu as an alternative to the traditional suppliers of these segments. We see many customers overwhelmingly asking us to enter those markets. So I think we have there the doors wide open. In Mexico, specifically, we have not fully participated in the market growth in the past years, especially in the automotive side. So that should allow us a disproportionate growth versus the market growth overall. So again, small summary here in between our success, yes, it will be built and is built on much improved commercial platform, logistics improvements, richer customer and product mix and then improved raw material efficiency. So this slide is a little bit more like a transition slide. I would like to drill into these topics bit more in detail in the coming slides, especially the commercials, logistics, mix improvement, raw materials. For each of these areas, I have to say, we have very clear and detailed strategies and milestones in place. And I will not obviously be able to share with you all the details that we have within this time, but I think you will find some of that very interesting, I hope. So about the commercial. We have the commercial leadership in place, really, and I'm very pleased with that work and achievement that we so far have achieved in this area. I would say we did reboot our commercial team, its strategy and its leadership in 2019. We turned all stones. We looked into our processes everywhere. Our field sales strength was significantly increased. Accountabilities and targets were all clarified, we're not always 100% clear. Salespeople's individual targets were derived from our renewed strategy, was broken down into granular pieces. Sales performance management was really much improved by introducing, for instance, weekly, monthly and yearly performance matrix. Instead of volumes, the sales team is now rewarded for total contribution generated, that is if you multiply the volumes x the profitability per tonne. So it's a balanced KPI and that should encourage the right behavior as well, which will -- we have seen already. And that is the same what we do in Europe. I could give you much more examples. I could continue forever, but this is just that we really revamped it and it has made a big change. And then you may ask where are we know then. Despite of challenging targets and stringent follow-up, the team seems very happy. I'm talking about the sales team. They scored actually the highest scores in our annual OHI measurement. I think they may be working much harder than they were. But commercial people tend to be happy with well-defined targets and good follow-up and some good internal competition as well. We have good transparency between the sales team and individuals. They know where they stand against each other as well. And more importantly, the customers seem much happier too. We actually scored a great improvement in the customer satisfaction survey coming from relatively modest 49% to 68% in this latest customer satisfaction measurement. And there, 75%, I believe Roeland mentioned it as well, represents world-class. So we are getting closer to that. And even more importantly, what drove that improvement was actually the customer service and the customer experience. Responsiveness, for instance, was rated top-notch together with product quality, which I spoke about already. So improvement of customer service and sales contracts were the main drivers, and that really was the testimony from our customers that they thought that something had happened here as well. Now going to the second topic here was the distribution and the transportation topic, which you see here next in the slide. So overall, we have the freight cost improvement and more flexible service, including short lead times now in progress. We've been working with that now last month. We reduced our transportation cost by 14% in 2019. I would say that in the past, we have almost only used trucks for transportation of our product to almost all customers, even long distance. And now obviously, we will change that and we are in the process of changing that to more rail. The longer you go in the U.S., the more beneficial railing is versus trucking. Short distances, truck is good, but long distance, rail is better. So that will bring us savings. And also in the slide in the map, you see the logistics hubs that we have created and that allows us 2 things. First of all, we can rail material there with lower cost because of bigger volumes in that, I would say, the big route -- volume route in [ sales ] trucking and then even more importantly, allows us to sell those products with the shorter lead times to the local customers. And that is without any notable increase in working capital. So that concept, we pulled up in 2019 -- mid-2019 and has been working ever since pretty well. We are looking about EUR 10 million plus cost -- annual cost savings from the freight cost initiatives, that is not a small penny that we are looking there. Then going to the next topic, which is our ferritic investment. I would say that -- in the short update on that one is that we are under budget and on time. So we will start the production fully there by end of this year. And I believe that the payback for this investment will be very, very short. So it's a very important investment for us. And then if you look at a bit more the commercial side of this ferritic investment, it's really, really important. Rather than we would be pushing more volumes to some of our very strong market segment like distribution, this investment enables us to diversify and grow where we are smaller today, like automotive in the U.S. or appliance in the U.S. from Calvert. You know that new mills like Calvert have to start from basic products, commodities for distributors. And that's what we did and that was right, but that phase is now soon over with this investment. And with this investment, we can and we will address all customer segments in a much more cost-efficient way. And we can, therefore, spread our sales portfolio in a much more balanced way over the U.S. market. And I believe this is very good for us, first of all. It is very good for the customers because they get more alternatives. And I believe as well, it will improve the market balance because we would be less overrepresented in some market segments and much more evenly over the market. Then topic of scrap, scrap ratio, which I have mentioned. We improved our scrap feed by 11% points versus 2018. How did we do it? The first thing is that the focus needs to be there. We increased the focus of this particular KPI a lot, started looking at it on daily basis and a weekly basis. That was, I would say, maybe the main thing. But also, we introduced new tools for the team to use and understand the value of scrap in use. For instance, now we have a program called SCOOP that enables us to optimize each grade, preventing us over-alloying, for instance that could have happened before and now using the optimal cocktail of raw materials in our melt shop. And also, we installed equipment that enables us to increase scrap feed in our AOD converter, called the chute. So there are also technical side of it, but pretty much also performance management here that made the difference. Furthermore, I think there are still other potentials in this area that we can improve. We have not fully harvested it yet. For instance, we can improve utilization and recycling of our slag. Our dusts that are coming -- containing still a lot of valuable alloys that may today still end up as landfill. Equally, we have potentials as our benchmarking with European, especially Tornio operations show consumption of ferrosilicon and lime are still not optimized. So we're working on those, for instance. So this brings me to the end of my presentation, just a little bit of summary. From my perspective, the key for our sustainable profitability is growth, smart volume growth. As you have seen, we have a very solid foundation now to achieve this. We have the team and we have the equipment. Unmatched quality, good cost position, very soon full product portfolio, optimal raw material mix combined with great customer service and high-performing commercial team with clear strategy will do the trick. So I would say that we are now very well positioned for profitable growth here in the U.S. and also in Latin American market. So thank you very much.

Thank you, Olli-Matti, for your thorough presentation. I think we have now time for maybe two or three questions. So operator, please go ahead.

[Operator Instructions] And your first one comes from Seth Rosenfeld from Exane.

Sorry. Excuse me, can you hear me now?

Yes.

Yes. We can hear you.

Great. Two questions, please, for Americas. First, with regards to the ferritics investment, I believe you mentioned earlier that project is on time, but perhaps below budget. Can you give us any sense of scale of CapEx savings we should assume for the year? And then can you please remind us with regards to the ramp-up schedule, expected volume contribution both in 2019 and also in 2020? And then secondly, please, with regards to working capital. Obviously, the Americas was a key driver of the group-wide working capital release last year. Can you please give us a bit of color on what scale of incremental savings you think could be achieved in 2020? I remember at the time of Q4 results, there was a group-wide target of EUR 100 million. What portion of that might come from the U.S.?

Yes, yes, yes. Maybe I can start, or Roeland, do you want somebody else to answer that or should I go ahead with that?

No. Go ahead.

Yes? Okay. So starting from the working capital side, we brought down our working capital inventory, especially from about 100, like I said, 100 days to 80, 85 days. I don't think that there is a very significant amount of further reduction. There is some, but not huge. There is some reduction opportunity in the procurement side. There is some reduction opportunity or improvement potential in the procurement terms with our customers. There is some improvement potential in the receivables collection side in Mexico. In the U.S., we have brought down to really the benchmark with our customers. So I would not expect the working capital release to be extremely significant, not as much as it was in 2019, but I would expect our profitability to deliver cash instead. So -- I can't share numbers with you here, but I'm sure Pia would do what she can do. And then about the ferritics investment. So your first question was the amount of CapEx and how much we're actually going to spend CapEx for that one. That is a number that, unfortunately, I can't share. The initial communicated was EUR 40 million. I would say that at the moment, the forecast is significantly below that with delivering what -- exactly what we wanted in the beginning. So we have not taken out capabilities from that. We have been able to find -- we were able to find more economic solutions for some of the equipment that we were purchasing. So that's a very positive outcome from that project. And the...

Olli-Matti, just one second. Olli-Matti, one second. Pia?

Yes.

Just to -- maybe just conclude sort of on our CapEx estimate, I'll come back to that. But obviously, this is a project that was already a little bit in 2019 and will be carrying over a little bit into '21 in terms of cash-outs. And this year, the cash-out is somewhere between EUR 20 million and EUR 25 million.

Correct. Some remainders for the next year. And the ramp-up of the volumes and the full benefit will come 100%, 2022 latest. We will need to introduce new customers, get them testing our products from Calvert and then the ramp-up will happen. So there will be benefit for 2021 already quite significantly but full benefit will come in 2022 and onwards.

And your next question comes from Alan Spence from Jefferies.

I was interested what you're talking about bringing down the breakeven utilization rate in the Americas. Can you give us a sense of what that number is right now and where that's come down from? And then on top of that, can you give us a sense of what the incremental EBITDA or margin might be for each tonne above that breakeven utilization rate?

Oh, Alan, you're asking very sensitive questions. I would say that our breakeven volume we brought down by close to 20%. If you take [ it more ] you can calculate, you can see our volumes, we were operating maybe at 60,000 tonnes, 65,000 tonnes a month in Americas. In total, we were able to break even at levels of 50,000 tonnes or even below that with the scrap market that we had also in late 2019. So that gives you the magnitude.

And of course, margins, we don't comment on margins.

No, we don't comment margins. Unfortunately, we can't do that, yes.

That's fine. And a follow-up, can you just give us a sense of anything you've heard from your customers in the oil and gas space? Just given what you've seen in the plunge in the oil price recently, do you think those forecasts where you see demand growing in the next 3 to 4 years could be at risk?

You -- are you referring to the current buyers situation and what's background to your question?

The oil price decline and what that makes you...

Oh, sorry, I missed that. Yes, yes. Look, we don't have any solid projections based on the oil price crash at the moment and its impact there. Now I have to say that the exposure of Americas Business Area to this market segment is limited. We are not producing those very specialized grades, that are more produced in Europe. And the volume impact there would not be significant. We are supplier to pulp and jute mills here in the U.S., but I would not expect the oil price and the investments there, smaller investments, to have a significant impact to us at the moment.

And we have no more questions at the moment.

All right. Thank you. Let's continue with our program. I think we are roughly 15 minutes post our original schedule. I think everybody can stay on the line until the end of the scheduled presentation, so I will now hand over to our CFO, Pia Aaltonen-Forsell.

Thank you very much, Reeta. And dear all, good afternoon. And I have to say, after Olli-Matti has served off the optimal cocktail, I hear a little bit of echo on the line. So I'd just kindly ask you to mute in case any one of the other speakers has the line open. I'll try to do a very sort of efficient fast food serving here, but I definitely want to focus on cash and cost and also just talking about how we have been strengthening our foundation and working with our balance sheet. So first, I want to talk briefly to some very familiar KPIs and key figures that we have here. I mean, obviously, Roeland has talked to this. I'll certainly talk more to the net debt during my presentation. Cumulative adjusted EBITDA of EUR 1.7 billion. And then in terms of the operating cash flow, I mean since 2016, we have generated EUR 1.3 billion. And in addition, I would like to mention that we have paid over EUR 200 million of dividends. So I think there's a few really good milestones reached there through the years. And now next, I want to turn to the year of 2019 and talk a little bit to the harsh market conditions that we have faced by commenting on the BA results. So let's start with Europe. And here, obviously, we have been fighting back the impact of the Asian imports that have increased and the low prices that have occurred really since the mid of 2018. And I would like to mention a figure here. I mean the headwinds in 2019 only versus 2018, from lower volumes and lower prices in Europe alone was more than EUR 150 million. And you can look at the figures here, the EBITDA development yourself, but I would just say that with this in mind, these results that we are showing here are a true proof points to our self-help measures. And Mac did talk to the religious execution, but this very diligent execution is really exactly what we have needed. Olli-Matti has just talked to the Americas figures. I mean the negative impact of lower volumes are clearly visible in 2019, but we have also really talked to the improvement during 2019, the sequential improvement that we have seen and then really ending up with this EUR 10 million of EBITDA in Q4, which I think is a good proof point also of that improvement journey. Obviously, for long products, 2019 was a tough year from a market perspective. And then finally, on ferrochrome, and actually, the ferrochrome price was the single individual heaviest headwind that we experienced during 2019. I mean production was as good as it has ever been. So operationally, we were really strong and successful in 2019 in ferrochrome, but the market headwinds were in excess of EUR 100 million. As a summary of this slide, I would just say that our self-help measured -- measures and continued transformation in 2019, they have been instrumental in fighting the market conditions, but also in building a stronger foundation for the future. Okay. So next, here's a slide that I think is important, not only because the minus EUR 64 million in timing and hedging that we had in 2019, it was obviously a big figure, bigger than we have ever experienced in the past. So let's talk a little bit into those areas. But I also want to just sort of remind of the bigger picture here. I mean obviously, raw materials, they are the major sort of part of the cost buy. I mean they are 57% of our cost. And in terms of risk management, I don't want to spend time on ferrochrome. I mean that's a strength -- that's a strategic strength of ours and we are self-sufficient in this area. So I really want to focus on the nickel and that's why we have here some information about how we think around the hedging and then also a bit of information on NRV and timing. So on metal hedging, our losses in 2019 actually amounted to EUR 40 million. And typically, we would get some, let's say, balancing from the timing aspect here, but as Roeland also talked, and as you know, I mean there was a very volatile price movements in the nickel. And I can only say that we've looked at really long time series and again and again, we can prove that we have the balancing and we have the risk mitigation from the hedging vis-à-vis the timing in those times areas, but it doesn't work for 2019 because we have some of those offsets in the timing actually than in other years such as, for example, in 2020 and partially, we had timing losses in 2019 that came from sort of impacts -- balancing impacts in the previous years. So the timing impacts simply the difference between the pricing in and pricing out of the nickel and then the net realizable value, just a short comment on that as well, in an environment with sort of lowering price or even rapidly decreasing prices, then there are accounting rules. They don't apply the other way, so if prices go up, you don't write-up your inventory, but if they go down, you might have to take some sort of accounting adjustment there. Then on the hedging, shortly here, you can see the types of hedging that we do. I mean we have transactional positions in sales, purchases as well as stock that we call excess stock that is stock ready and available for sale. And here, by our policy, we would always hedge 100%. Then on the base stock, which I could maybe explain as sort of the roof on your house. So what we always need in terms of nickel through our pipeline of inventory and production. Here, we can do some balancing between managing earnings and cash flow volatility. So here, there can be variation in the hedging ratios. And with that said, I would really like to turn next to our self-help measures. And I think we have actually got a lot of good proof points in Olli-Matti's and Mac's presentations as to the self-help. But as a reminder, on a group level, one significant step has been the SG&A cost reductions. So here, we've taken step changes, reduced more than EUR 100 million in absolute values in 2015. Then more recently, in 2019, the 4% productivity improvement for the group in our kind of industries, actually is really, really significant. And the 4% productivity improvement translates into a more than EUR 80 million improvement in our earnings. And obviously, through these improvements, we have also built a stronger base for tougher periods and future years. And finally, a word on metal efficiency that's really not in the slide here, but obviously, if we think both about our sustainability, our development as a company and then looking at also the results of 2019, obviously, metal efficiency, improved yields were really, really important. Okay. And now I would like to focus more on the cash and -- the cash flow and the balance sheet. So first, on the slide here, we can see how our balance sheet has continued to strengthen. Our net debt is down to even below EUR 1.1 billion, as Roeland talked to earlier. Obviously, leverage in '19 was impacted by the lower EBITDA. So as a group, we've had a really strong focus on the cash flow generation. And just to give one practical example of what that can mean and a point that I think would be of importance to all of you. It's really about how we have introduced a 13-week rolling cash flow forecast. So within the group, we keep on iterating, using data, but also using some forecast to really constantly stay on top of where we believe our liquidity will be 13 weeks from now. So this is 1 example of new measures that we introduced during 2019. I will come back to the working capital management in later slides. But I would still say that on the divestments that in 2019, we had almost EUR 100 million injection to really our cash flow from divestments of noncore assets. And we continue this. And obviously, we already have a lot of items in the pipeline or sort of in negotiation phase. And currently, our assumption is that this could mean another EUR 30 million to EUR 40 million contribution to our cash flow in 2020. Next, we are showing our gearing figures and you can see the strengthening of the balance sheet here as well. You can see the IFRS 16 impact, that was EUR 131 million. So despite adding just to 2019 figures, that debt, we stayed at the gearing of 45%. And I think this is maybe a good point as to pick up Anssi's earlier question on the targets. I mean we had the balance sheet gearing target of EUR 35 million for this year. And obviously, you see that we are at EUR 45 million at the end of 2019. We continue to focus on reducing the debt. We continue to focus on the cash flow. We have talked about the release of working capital during this year. So it's clear that this target still remains important for us. And I think it's a relevant target even though due to the coronavirus, obviously, the market situation for this year is, maybe somewhat more unclear. This slide also briefly talks to our liquidity reserve. I mean this was up to EUR 1.0 billion at the end of 2019. Typically, our Q1 cash flow, we have some investments into working capital during Q1. That's the typical seasonality. But I will still talk a bit to some other financing arrangements and our maturity profile that we have done during the first quarter of 2020 as well. So we remain with very strong liquidity reserves also at this point. My next slide is on working capital management. Obviously, important part of our cash flow, we released more than EUR 200 million of cash in 2019. And Olli-Matti also talked to this, but another way of expressing what he said was to say that out of this EUR 200 million, 2/3 were improvements from America. And they happen at the same time with so many other improvements in America, really showing how the team rallied towards the transformation of the business and really staying on top of the situation. And if we then talk also here maybe picking up one of the earlier questions on how much could America still improve during 2020? I mean Olli-Matti talked to that point saying that it only -- there are maybe smaller possibilities during this year. And I would also say that from the group-wide targets, where we have communicated that we want to achieve at least EUR 100 million during 2020, Americas is now a much smaller part because of the big improvements in 2019. And then you can, of course, ask that well in the current market conditions, is this 2020 target relevant? And we've talked here to some of the reasons for fluctuations in working capital. So it can be metal prices. Of course, it can be seasonality as well. And even though I think it's a good question, can we repeat, it was such a good improvement. I would, at the same time, say that we have detailed plans. The improvements that we made in 2019 were purely operational. We built a stronger foundation. We have better ways of working and I remain confident that we can release EUR 100 million from working capital during 2020. Okay. And then turning into CapEx. I mean obviously, capital expenditure is really important from a cash flow perspective. But I mean we should really keep in mind that it's not only the short, it's also the midterm, it's also the long term. And we really have to balance these different perspectives. And you know that in 2019, we took some measures to really balance the cash flow from a short-term perspective. So we balanced the CapEx figure. We reduced it by more than EUR 30 million from our original estimate. We ended up with a CapEx cash flow of EUR 194 million. For 2020, we currently still plan for CapEx cash flow of about EUR 220 million. You see that we continue our investments when it comes to the Kemi deep mine project, ferritic project that we talked about earlier, but also some other developments such as digitalization and ERP. And I think the way for us to work with this is that we really watch this with a very vigilant eye. The market environment makes it necessary perhaps to reassess this at some point and we will keep a good control of that. And if necessary, we still have some possibilities to adjust downwards as we have shown that we can do in 2019. But currently, we continue all of our strategic projects, and our estimate -- estimated CapEx cash flow is EUR 220 million for the year.

Just a short announcement. I think there is something wrong with the line. And we will be redialed in from this end. So there will be a short pause. Apologies for that, wait for a second or a minute. Thank you. [Break]

All right, everybody, we are back online and I will hand over back to Pia.

Okay. I'm sorry if you missed any of my earlier slides, but I will now talk very briefly to the interest expenses and sort of the reduction of those. The interest expenses have been reduced by over EUR 40 million due to the debt level reductions, but also several refinancing activities that we have done to improve the situation. And now our focus has really turned to the maturity profile. And through that, I want to say that we will focus a lot on finding the right balance between the maturity profile and the interest cost. And at least at this point, I'm rather comfortable with the level of interest costs that we have had in 2019. So we will continue, of course, to be very active and working on our debt portfolio, but we will also focus on maturities and the interest cost will be balanced to that. And that would actually bring me to my lovely slide of the maturity profile. And why do I say this is a lovely slide? I just want to say it's good to see the results of a lot of actions that we have taken since last summer when we signed the EUR 400 million sustainability-linked term loan. Up until this February, when we have repaid the convertible bond of EUR 250 million on the 26th of February and then also here through March, we have remained very active in this area. We have actually signed refinancing of EUR 120 million worth of pension loans, which reduced these scheduled repayments in 2020 and 2021 with a total of EUR 80 million and then the new loan has a maturity of 10 years. So we are really focusing on this maturity profile here. And obviously, also, we continue to use other instruments such as, for example, commercial papers. We continue with a good cash balance. Cash balance at the end of the year was EUR 325 million and we continue to be on a good level also when it comes to the cash balance fees. And then finally, I thought no CFO can do a presentation without mentioning tax in some way. So we have here a very brief summary of what we have in our balance sheet in terms of tax. I think the key message is that due to the fact that we still have a significant amount of tax losses, net operating losses, from the previous years, we don't expect sort of high cash tax payments going forward, but maybe one other note also could be here that there are some tax losses that we are not recognizing in our balance sheet such as, for example, tax losses in Americas. And that leads to a situation where, so to say, the P&L tax amount can vary quite a lot, simply because we are not able to recognize those losses at this point. And this actually brings me to my final slide and here with the focus on the cash and the cost, I just wanted to bring a really short reflection more from sort of a personal perspective. I come from a family background where my father and basically my family was running a small business and sort of the typical sort of weekly traditions or sometimes even daily traditions we had was always to look at the cash balance and the debt balances. It's just the way when you have a small company, that's what you need to do. Obviously, now I've been a year with Outokumpu. I think it's obvious that the scale here is much more massive, but I also want to say that my experience in some other big companies are that at points when the scale is massive, you end up in a situation where cash is a little bit more distant. People are measured on other KPIs, operative performance. And sometimes, you get the feeling and now I'm trying to make a job, which is not easy on the telephone that cash is like electricity. You just plug in and it just flows. In the end, I think that Outokumpu is different. Since I've been here for a year, I've really seen this focus on the cash flow throughout the organization. And I think it's a great proof point to how we all can rally towards the mission, towards the target that we have. And I'm very proud to be a CFO in a company where we have proven that we continue this path even sort of in a very tough period. And we build a very firm and sound base for the business to operate. And this is not only true for today, but also in the future when we are together building the future for stainless steel. So thank you very much.

Thank you, Pia. And I think we can now jump into the Q&A right away. So we are ready for the first question.

[Operator Instructions] And we've not had any question request at the moment.

All right.

Okay. So then I think we touch on, as we said, the coronavirus issue. Let me just do a short introduction and then open up for questioning. Obviously, this is not something that will pass us unaffected. As I said earlier, where we are today, is that, as yet, we have not seen any impact on our business. We have a very strong order intake, stronger than we have seen for a long time. This is probably driven by the fact that our customers are careful not to order from abroad as well as in the South of Europe, of course, there is clearly more corona impact than in the North. And in the Americas, business is continuing as well. As I said, our deliveries are continuing at equal levels. Our mills are running at full throttle. However, this is probably going to, at some stage, stop. We do not believe that, as I think Seth brought up, with oil prices dropping that the activity in exploration will continue as they are before. So it will be have -- it will have an effect on, for instance, the pipe and tube industry and thus the loss. And same goes for automotive. We have seen plant closures in Europe, which definitely will have an effect on overly demand for our products. So the way we tackle this is we have made a number of scenarios, and they go from what we call a base case, which is a downturn scenario, all the way to what we say, it's an absolute crunch case where liquidity dries up, supplier finance dries up, markets are down significantly in terms of volume, shipments, et cetera. We have looked at what that means for us, especially what it means for our cash position and we have looked at what we can do in the different scenarios in terms of mitigation. And of course, some mitigation is heavy medicine that you'd rather not do because it influences your future growth, but when you get into the worst scenarios, you'll have to do it. We have all these plans on the shelf. The good news is that even in our bleakest scenario, we still are absolutely fine in terms of our cash, our covenants and our balance sheet. So this is how we're tackling it, apart from the more pragmatic issues on social distancing, specific rules on how to behave, how to -- how we run our plants, changes in shift patterns in slowing times, et cetera, et cetera, to minimize interhuman contact as bad as it sounds. But it seems to be working for the moment. We have had one case of coronavirus in Italy. We closed our facility there for 10 days and have reopened in the meantime. There are no further casualties or victims. We had another case in our sales team in Germany where the person and 3 close colleagues have been isolated and are in self-quarantine. So we are -- we have many early warning systems as well running to try to mitigate whatever is happening and to avoid any infection. With that, I would say any questions?

[Operator Instructions] There are currently no questions in the queue. No, we've got one come through from Veikko Silvasti of Nordea Markets.

Go ahead.

Okay. Sorry, can you hear me now?

Yes.

Great. So given the scenario that there would be a material slowdown in the economy and in your deliveries, is there -- what kind of scope can we expect for your net working capital to come down? If you have EUR 1.4 billion tied in inventories, is there kind of a material scope for this item to come down in this kind of slowdown scenario?

Yes. Look, I think it's a really good question. And actually, the question of managing inventory is also challenging in growing volumes because then you really have to make sure that you have something available to sell in all relevant locations. So in sort of slowing down scenario, there's a range of ways how we can impact and look at that. And just as a comparison, we had very low volumes in 2019. And through that scenario, I think we learned how to sort of fine-tune and set the right levels of inventory at various places in our supply chain. So I think there are -- in these different scenarios, they are a little bit varying in terms of how much we can reduce during the year of working capital, but as typically also seasonally, we would be with lower volumes in Q4, the impacts are not, so to say, at least not triple digit, maybe double digit in some of the cases, but not very high numbers in our current plans.

Okay. And then secondly, have you seen any major shift in demand in Asian countries now that the coronavirus has slowed down in China, for example? So is there a pickup in demand from there?

We haven't seen that yet, Veikko. We -- on the other hand, as we have said in previous calls, we actually have a pretty good market in China where we export our higher end grades and this has not really suffered that much yet. So again, we haven't seen for ourselves a lot of impact. I think as far as Asia is concerned, you can read the reports about how the activity has been down there and how it's slowly starting back up.

Your next question comes from Alan Spence from Jefferies.

I just have one question around some of that scenario planning you're doing. In that scenario you described as the bleakest situation, can you give us a sense how much you're assuming sales or shipments would be down year-on-year?

It's Pia here. I would rather sort of talk to the sort of what we think about the global growth in that scenario. And I think that's down to some of the bleakest figures I've seen circulated around right now, which is that really global economy for the year would not have any growth at all, and it will really be kind of around 0-ish percent.

I'm sorry, I missed that last bit. Could you just repeat it?

Yes, to say that the global GDP growth would be around 0%. That's one of the bleakest that we have seen and our bleakest scenario is based on that assumption.

Okay so...

But I wouldn't comment our volumes. Yes. Sorry, I can't comment our volumes in that scenario.

And your next question comes from Bastian Synagowitz from Deutsche Bank.

Yes. Again, I just have 2 follow-up questions. So just on the inventory situation in Europe, and I hope you read out the current demand dynamics, I guess, usually in situation like that, the market would pretty much instantly towards destocking, it does not seem to have happened. And I think you're also talking about good volumes in Europe and, yes, at the moment, I guess, a lot of your clients probably at the moment in the first just worried about supply chain risks, but obviously, there are quite a few anecdotes, which suggest that inventory levels have gone up a lot. How do you see the general market inventory levels both in the distribution, on the distributor side, and then also among your OEM clients?

So that's very difficult to answer. As you know, we get the official data with normally about a 2 months lag. So the last data we have are back to December and there we were on the expected demand, we were at normal levels in Europe and at below normal levels in the U.S. Of course, if there's a significant sudden drop in volumes, then that changes -- that days of inventory metric changes and we have to see how that goes.

But you -- from what you're telling us is you have not seen any, say, any changes in the purchasing behavior of your clients, basically, where you would have thought that they have been maybe ordering more -- even more than what you would have expected otherwise?

Not really, no.

Okay, understood. And then just one more question on the financing side. You obviously -- you've been calling the convertible. Do you have any plans to potentially review another convertible now or at a later point in time? Or is this potentially just also part of your scenario framework?

I think it's part of the bigger question also of further improving the maturity profile. And with that, I mean that we are looking into a range of options really to do that. However, I also want to put that in some perspective. As you know and when looking at our maturity profile right now, I mean we have repaid what I would call the old convertible. And then if you look into what kind of maturities for long-term debt we have coming up, there's really none significant sort of in the near future. So I think we remain, in that sense, a bit opportunistic that we have a range of options that we can look into when the timing is right, also from a market perspective and we will keep on tapping into opportunities that make sense for us financially and I would say, from all perspectives of maturity profile, interest costs and obviously, sort of an overall judgment of the situation. So I wouldn't rule any option out, but I wouldn't say that there's like a preferred option either.

No, I would like to just focus a little bit more. This, obviously, if you look at the current market, is -- and where equity values are, is not the market where you would launch an equity-related instrument.

That's what I meant with the overall judgment.

I know.

And we have no further questions at the moment.

All right. Thank you, so much. Well, I think if we don't have any questions online at this point, it's time to conclude. And a warm thank you all for spending the afternoon with us and thank you for the good questions. As Roeland said in the beginning of the call, this was not the -- this is a bit of an awkward way of conducting a Capital Markets Day and not definitely the preferred way and not something that we had in mind when we started to plan this event 8 months ago. But despite that, we wanted to give you an update on where we are. And should you have any questions after the call or later on, don't hesitate to contact me or my colleague, Linda. We can arrange conference call of virtual meetings with you until this whole corona situation is over and we can all return to our normal ways of working and living and have also face-to-face meeting at some point of time. Also, the replay of this call will be available on our website where you will also find the presentation material. So thank you again, and have a great rest of the day. Bye.

Thank you. That does conclude our conference. Thank you all for joining. You may now disconnect.