SAF-Holland SE (SFQ) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. And welcome to the SAF-HOLLAND S.A. conference call regarding the full year 2019 results. [Operator Instructions] The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mr. Michael Schickling.

Yes. Good morning, ladies and gentlemen. And welcome to the annual analyst and investors' conference call of SAF-HOLLAND. I'm Michael Schickling, Head of Investor Relations. Today's speakers will be our CEO, Alexander Geis; Dr. Matthias Heiden, our CFO; and Dr. André Philipp, our Chief Operating officer. We will start with the presentation followed by the Q&A session. I now would like to hand over to Alexander Geis, our CEO.

Thank you, Michael. Ladies and gentlemen, a warm welcome to our today's conference also from my side. This is Alexander Geis speaking, and I do hope that everybody listening to us today is in a healthy condition. On Page 5, you will find the summary of our fiscal year 2019, where I would like to start right now. On the upper left side, you see the summary of the figures for 2019, starting with sales on the upper left side as I said. We came in last year with a revenue of EUR 1.284 billion. That's a slight decrease from the year before of EUR 1.3 billion. The adjusted EBIT margin came in with 6.2%, accounting to roughly EUR 80 million. Net working capital ratio has been 14.9%. And last but not least, we spent a total of EUR 53 million of CapEx. On the right side, you find a summary of our achievements, starting with -- that we met the revised fiscal year 2019 guidance. Remember that we said 6% to 6.5%. Our program FORWARD in the United States or in North America shows further positive results. I will speak about that in a second. In China, we can report that the plant consolidation was successfully executed. We only have now 1 mega plant in China and closed everything else down. We already started in Q3 last year a comprehensive cost-cutting program, which will also last into 2020. Our free cash flow generation strongly improved, Matthias will speak about that in detail later on, and we also secured our solid financial profile. Three things we're remaining to focus on in 2020 are: to reach the next stage in operational excellence. Colleague, André, will speak about that later on. We further accelerate efforts on inventory management and free cash flow generation. We have a dedicated "Cash is King" team in place now. And we also would like to sustainably improve our quality of earnings. Having said that, I would like to go to the next page, which is Page #6, speaking about the markets and how did the markets develop last year. On the left side, starting with Western and Eastern Europe, you can see there was a small decline in the truck business of minus 2%. Trailer declined by minus 7% coming from a record year in 2018. North America, further improvement last year in truck with plus 6% and also trailer with plus 3%. Another really good year. In China, you can see there was a dip of minus 3% in the truck and another massive dip of minus 20% in the trailer business. South America, very good development with truck, plus 4%, and the trailer, plus 23%. And in India, it remains a very weak market with a further drop of more than 50% in the truck business and 65% in the trailer business. On the next slide, I would like to give you a little bit more overview of the group results, which is Page #7, please. You can see also here on the upper left side the comparison between the sales 2018 versus 2019. As said before, 2018, we had a total sales number of EUR 1.301 billion versus EUR 1.284 billion in 2019. So as I said, a very small decline. And if you take a look at the different quarters, you can see that Q1 was a very, very strong one with sales of EUR 346 million. Also Q2, we were quite satisfied with a little increase year-over-year to now EUR 349 million. But then, of course, with weakening markets, we can see the dip in Q3 already started, and it remained in Q4 with -- in only Q3, EUR 313 million, and then in Q4, with EUR 276 million coming in sales. Speaking about the adjusted EBIT margin. On the lower left side, you can see 2018 coming from EUR 6.9 million (sic) [ 6.9% ] to now, in '19, EUR 6.2 million (sic) [ 6.2% ]. Here, speaking about the quarters, same picture: 2 very strong quarters, Q1 and Q2; and then in Q3 and also in Q4 due to the missing sales, we see a dip in adjusted EBIT to then 5.4% in Q3 and 4.7% in Q4. On the right side, some more details, such as our sales in 2019 was influenced by acquisition effects. So that was a positive effect of EUR 41 million. FX effects, EUR 25.8 million, mainly from the sales in the United States. And also, if you will summarize that, the organic effect, if we deduct the M&A and the other effects, we came in with EUR 83 million or EUR 84 million lower in sales. Adjusted EBIT margins, worthwhile to mention, were influenced 2019 by substantial losses due to the restart in China, and Matthias will give you an overview how that looks like or looked like in 2019. We also had some product mix effects and inventory write-offs, also mainly in China, higher selling and admin expenses. And the positive effects were the contractual passing on of last year's steel price increases, I will speak about that if -- when we speak about the North American market. Then we achieved some sustainable price increases in the North American aftermarket business. And also, the earnings generated by the entities we acquired since January 2018 had a positive effect. Having said that, I would like to go to Page 8 now. And let's take a look how the different regions did perform. Worthwhile to mention that since October 2019, Christoph Günter joined us as the new President EMEA, succeeding me. So Christoph is onboard for the last 3 months 2019 and is heading all the EMEA business since then. Please, I would like to draw your attention on the upper left side, starting with the sales again. You can see that we have dipped 2018 to 2019, which was coming in with the sales in the EMEA region of EUR 626 million. Going to the different quarters, you can see same effect. The first 2 quarters were quite strong. And then in Q3, with softening markets, we saw a dip to EUR 144 million, and in Q4, a sales of EUR 134 million for the EMEA region. Adjusted EBIT margins coming in 2018 from 10.8% to, in 2019, still good, 9.6%. You can see that all the quarters remained stable in terms of adjusted EBIT. So with 9.7% and 9.8% in the first 2 quarters, Q3 with 8.9% and 10% in Q4. Here, the main reason is that we -- in Q3, we already implemented a cost-saving program, which was then paying off in Q4. Also here on the right side, some summaries in terms of influencers in sales. Also here, acquisition effects were positive by EUR 20.5 million. Nearly no FX effects. And the organic effects, if we take acquisition effects out, is a minus of EUR 53 million. Speaking about the adjusted EBIT margin. The companies we acquired since January 2018 were really positive. Also, the strict cost discipline paid off. But we have to mention the declining sales volume and higher personnel expenses was negative on the adjusted EBIT. On the next page, which is Page #1 (sic) [ Page #9 ], we will speak about the Americas. And also here, beginning of September, Kent Jones joined us as our new President Americas and started right away to further restructure specifically the U.S. organization. Last year was a very solid year for us, with one of the best years in the fifth wheel sales and with the highest number of disc brake axles we ever sold in the North American market. Also here, starting on the upper left side. Sales, you can see, coming from EUR 472 million, a jump to EUR 534 million in '19. And this was distributed equally over the different quarters. As you can see, an increase in Q1, also in Q2, also going into Q3 and still a very stable Q4 in Americas. On the lower left side, speaking about the margin, that was a good thing and a good stage for us or next stage for us in the development of our margins. As you can see, coming in from 1.8% in '18, we achieved a total percentage number of 5.5% in 2019. And if we speak about the different quarters, you can see that our restructuring already paid off in Q1, coming in with 5.2%, then a huge jump to the second quarter, 8.1%. Here, I need to say that this was the quarter where we also passed on the highest number of steel prices to our customers. So we gained a higher price than in the other quarters. Then in Q3, there was no passing on, on steel prices anymore. You can see the development to 5.4%. The 5.1%, I have to mention, in 2018 was due to the partial settlement of our medical plant in the U.S., which was more than EUR 4 million at that time. Q4, under pressure since the markets were slowing down, but still coming in with 2.7% in 2019, coming from 1.7% in 2018. Having said that, please go to the next page where we will see Asia Pacific, including India. China, we will speak about in a minute. Also here, starting upper left side, you can see, coming from EUR 94 million in 2018, a little bit of a dip to EUR 89 million in 2019. And here, specifically talking about the quarters, good quarter, Q1. Q2, on the same level. But here, it started, and this is mainly due to the dip in India, only achieving EUR 19 million in Q3 and only EUR 20 million in Q4. Adjusted EBIT, coming from 8.9% last year to 3.8% in 2019 only. Also here, distribution was weak all over the quarters and specifically negative in Q4. And I have to say, personally, I'm very unhappy with our APAC EBIT development. And also here, we took already SG&A cost cuts, which will help to come back to a good positive number. On the right side, also the summary here in terms of sales. Acquisition effects was plus EUR 20 million. FX effects was EUR 1 million. Taking that out, the organic effects were a minus of EUR 27 million in 2019. Adjusted EBIT was substantially burdened by a lack of profit contribution due to missing volumes of the Indian subsidiary to very weak markets in end of '18 but also in '19, and restructuring income from the sale of a building in the course of the merger of SAF-HOLLAND Australia and York Australia was also a burden to us, and also the product mix, mainly in Australia in Q4. I also have to say that there will be no goodwill impairment on York. And for those who are interested in that, we have published that in the report. If we would have to do that, that would be an impact of EUR 6 million only. On the next page, 11, last but not least, our market in China. Here, I want to mention that we did put APAC and China region together again after we splitted it beginning of '19 since both regions together are too small to have them separated. So our colleague, Mike Ginocchio, which was the President of APAC, also runs both regions now, say, APAC and China together, from January 2020 on. In China, I would like to mention that we closed all plants now, all offices and all warehouses by end of 2019, and we only have one location now. Headcount reduced by more than 400 people, which helps us now in those difficult corona times because we don't have the burden anymore since January with all the people being onboard. Starting on the left upper side, comparison between '18 and '19, sales dipped from EUR 76 million to EUR 35 million now. You can see the distribution all over the quarters: EUR 12 million in Q1, EUR 13 million in Q2. And then we had the burden also from the tariffs to the United States. So the sales of Q3 only came in with EUR 6 million and EUR 4 million in Q4. Speaking about the margins. This is a total disaster of last year, I have to admit, coming in with a minus EUR 37 million (sic) [ 37% ] adjusted EBIT margin. And also here, you can see all the quarters were negative, specifically the quarter we had to do the announcement in regards of the goodwill impairments. And the other restructuring costs in Q3 came in pretty negative, and also in Q4, pretty negative. Q4 was the quarter we restructured and closed everything. Also here, we had the burden with some strike-related costs and also some severance payments. Sales on the right side were influenced by the declining export business of the Chinese customers following the trade dispute between China and U.S. As a reminder, in May last year, the U.S. government put in the 25% tariffs. Then we saw some short-notice cancellations and delays in orders in the declining domestic market. And I mentioned already the temporary strikes of our people following the announcement of the planned closures. Adjusted EBIT margin burdened by low level of capacity, of course. If we cannot utilize our plants, we have a higher burden in costs. Cost burden from duplicate structure, we opened our greenfield but still had the other plants. We did inventory in accounts receivables impairments, strike-related costs and losses on disposal on fixed assets. And Matthias will speak about that in detail in a second. So now I would like to pass on to Matthias, our CFO, to give you a little bit more insight into the figures. Matthias?

Yes. Thank you, Alex, and good morning and a warm welcome also from my side. On Page 12, in continuation of the slides that we first offered somewhere around the half year mark last year, I would like to give you some more color on the one-off items in China and underline a little bit as to why we say in the headline that the substantial restructuring was successfully executed, now giving us a good starting position into the new year, albeit a difficult starting position for everybody in China due to the corona situation, which we will come back to at the end of today's presentation. Let me start by talking about the negative EBIT. This is the clean EBIT that you see in the upper right of a negative EUR 32.9 million. I want to put all the numbers on the page in a little bit more perspective and structure them a little bit for you. This minus EUR 32.9 million are composed of operational losses, as we call them, of EUR 5 million across the year; the operational one-offs, which are laid out specifically in the table, summing up to EUR 8 million; restructuring expenses of EUR 13.3 million; and the goodwill impairment that we reported about after the third quarter of EUR 6.6 million, giving us in total the EUR 32.9 million. Here, it's important to underline one more time that the operational one-offs are one-offs, but accounting-wise, they do not qualify as restructuring expenses as they were originally caused by the operational business of the company, which is why they go all the way through to the bottom line even on an adjusted basis. Underlining with some additional numbers, 2 comments that Alex already made: the closure -- and this is the bottom of the table, the closure of 5 plants to 1. This is just to be more specific. The Qingdao plant that we had acquired from York, our footprint in Beijing being the office space as well as the warehouse and our plant in Xiamen where we really went through a fantastic effort as a team to close this before year-end, relieving us of the cost base moving into 2020. And this is expressed, and this is the penultimate line, in a reduction from 431 FTEs down to 174 at the end of 2019. If we move on to the entire P&L globally and take a more holistic view on Page 13. There are a couple of comments I would like to make. First of all, Alex touched on at the very beginning, sales and adjusted EBIT stayed in the corridor that we guided on when we had to take down the guidance in the fall of 2019. So we stayed on top of our own forecast there. Then the second comment is around the selling expenses and the admin expenses. You see 2 respective lines in the table there. And if you do a quick comparison from left to right, you see a relatively steep increase in those 2 line items. I just want to give you additional color. And as much as this is due to the expenses from the entities acquired and the already referred to shortfall of the noncash item that we had in 2018, namely the termination of the medical plan that we had offered at the time in the United States, that puts these numbers into perspective. Moving down the table, into the finance result, you see an improvement there which has 2 components. One is an item that you are already familiar with. This was the bond repayment with a high coupon in April of 2019. But also, on the finance income side, you see stronger performance than in the previous year. This is driven by a higher income in countries where we still are able to earn interest rate, where we have accumulated liquidity, which gives us albeit a small yet nice impact on the bottom line. One additional item, yet not the last, on this slide to comment on and give you additional color on is the tax rate. The penultimate line in the table, which has shot up to 57.5% for the full year. This was already foreseeable when looking at the Q3 numbers. Why has this happened? The explanation is a logical consequence of the items that I discussed on the previous slide. As the increase in the effective tax rate is mainly driven by the impairments on inventory and accounts receivable in China, the expense resulting from these impairments cannot -- they do increase the tax carry loss forward in the respective China entities, for which we did not recognize deferred tax assets on such loss carryforwards as the respective IFRS requirements were not met in 2019. Furthermore, just to complete the picture, we had to recognize an expense in SAF-HOLLAND Brazil resulting from an increase in the put option liability for KLL due to the strong recovery and outlook of our KLL subsidiary in Brazil. The related expenses are not tax deductible in Brazil and lead to a corresponding increase in the effective tax rate. Before I move on to the next slide, let's move into the adjusted column of the table. You see that total adjustments increased to EUR 44.6 million from EUR 11.6 million in the previous year. This also deserves a comment to put these numbers in perspective because I think it's only fair for the sake of full transparency to disclose the components that make up the EUR 44.6 million. And I will do this in 2 ways: I will, first of all, start by saying that the EUR 44.6 million are composed of restructuring and transaction costs amounting to EUR 25.2 million; PPAs, EUR 9.6 million, which is a regular run rate if you divide it by 4; the goodwill impairment in China of EUR 6.6 million; and the put option valuation at KLL of EUR 2.9 million. The second way to look at this is to dissect the restructuring and transaction costs of EUR 25.2 million into the regions so that you have a full understanding as to what the restructuring efforts caused on the P&L and where they actually take place, but also that you have a feeling that we treat this consistently in a way that, for example, to start with the APAC region. Alex alluded to this when discussing the APAC results. There was a negative contribution, if you like, because we had a gain of EUR 1.2 million, which we also eliminated here. The remaining true expenses then can be allocated to Europe with EUR 5.1 million. This does include the severance payments and agreements with 2 former Board members; North America, with EUR 8 million; China with EUR 13.3 million. And that completes the picture because these numbers then add up to EUR 25.2 million. Jumping deeper into the P&L on Page 14, investments and depreciation. Investments in plant, property, equipment and intangible assets, excluding IFRS 16, that is, reached 4.1% of group sales or EUR 53 million in total. We spent some on the focus areas shown on the slide. If I give you some additional color and put that into regional buckets, the EUR 53 million can be allocated to EMEA with EUR 20 million, the Americas with EUR 21 million, APAC with EUR 1 million and China with EUR 12 million. Towards the end of the year, both André, our COO, and I applied a close monitoring of the investment approval process to streamline our capital allocation and really only invest in those projects that have a short-term payoff for us and that the organization is capable of executing in the short-term to deliver that payback. When we then look at the depreciation, which is 3.3% of sales for the financial year 2019 or EUR 42.7 million in total. I think, here, we also need to offer some additional color because it is, of course, of prime interest to the financial community as to how the new investments actually play into the depreciation line item. Here, I can say that only "EUR 2.9 million" form what I would like to refer to as new depreciation because we can then add up the EUR 29.5 million at the bottom. We have a depreciation on PPA with EUR 1.7 million. We have an IFRS 16 impact of EUR 8.2 million and then a smaller other impact of around EUR 0.5 million. When looking at net working capital, on the next page here. I would want to put the picture into perspective and draw your attention first to a more technical aspect, which is described in the footnote. SAF-HOLLAND, historically, and we have not changed that on this slide for the moment, has had its own way of calculating the net working capital ratio as this was based on extrapolated Q4 sales in the denominator, to be mathematically clear, with the decline in Q4 sales that Alex described at group level. This is the explanation why the ratio here mathematically went from 13.5% to 14.9%. Yet when we look at the descriptive comments on the right-hand side, I think these are more useful because we can see that net working capital is EUR 8.1 million in total below the previous year's figures, with inventories being 6.3% below previous figures. Trade receivables are down 9.3%. Trade payables, because we have to secure some supplies, were down 14.5%. But if we then -- to sum up or to connect it with my initial comment on the calculation, if we then do the more traditional practice of calculating net working capital ratio related to sales over the last 12 months, we see that it actually went down from 13.3% to 12.8%. And if you allow me to comment at this point, it's exactly that method that we will apply going forward, beginning with the Q1 results that we will publish in May. Obviously, as usual, following on from net working capital, we need to look at operating free cash flow, where I'm happy to report that we did accomplish a turnaround. In many conversations prior to today, I have highlighted that we would want to return to a pattern that looks like the pattern that we saw in 2017. I think, visually, on this slide, you can see that this has been achieved. We have returned to this picture. And with the cash flow from operating activities coming to EUR 90.5 million, significantly above the previous year level of EUR 40.8 million, we were, of course, able to finance our investments of EUR 53 million, which I described on an earlier slide that the improvements are based on improved working capital management, especially in the area of inventories and [ AR ]. I also described, yet allow me to also say, as Alex said on the first slide, we haven't reached the end. I think the refocusing of the organization shows that such efforts do pay off. If we then deduct the EUR 53 million in investments from the EUR 90.5 million, we arrive at a markedly improved free cash flow from operating activities at EUR 37.6 million. And then taking into account the outflow for the smaller M&A transactions, namely Stara and PressureGuard, total free cash flow stood at EUR 26.7 million compared to minus EUR 59 million in 2018. Turning the page to Page 17 and looking at the balance sheet structure. Here, the net debt has gone up to EUR 251.7 million. As shown on the slide, 2 major components as described in the bullet points: one is the IFRS 16 impact and the other one is, of course, the dividend payment that we still did in April 2019 and the outflow that I just referred to for the 2 smaller M&A transactions. The equity ratio has stayed stable at 32.5%. And now following on from equity, allow me to deviate a little bit from the full year financial focus and to spend a few minutes on the evolution of our debt maturity profile in the context of our recent debt refinancing. And we start on Page 18 with the so-called former financing structure before planned refinancing activities. And here, the most important points are, number one, the initial hint again that depicted in the gray color our RCF facility of EUR 200 million, plus an additional option for an additional EUR 100 million remains a backup line. In preparation of the refinancing that we have just executed, which I come to on the next page, we did draw the RCF to repay some of the tranches in parts. You see the details in the first footnote on the page, in total, amounting to EUR 85 million. This was important to free up some investor pockets, if you allow me to use that expression, and prepare the transaction and then return to the capital markets in much more detail in early 2020. Transaction was already prepared in 2019, but then, of course, executed in the first weeks or months of the new year. Then turning the page, and this is where my comments come together, on Page 19. I would like to start by saying under the refinancing with this different tranches, there are no additional financial covenants under the new agreement. We continue with the same documentation that we had previously. That includes -- that implies, of course, a step-up in the basis points or in the fees payable for the promissory note loan, or for the Germans on the call, for the Schuldscheindarlehen because that is the instrument that we used, of 50 basis points should the company exceed a leverage of 3 but no more and no less. Looking at the structure in further detail because I think this is important for you to understand as you follow us through the year. The initial cash inflow at the end of March will amount to EUR 200 million. There is a tranche that will come in, in the second half of the year under the agreements of the Schuldscheindarlehen. But with the EUR 200 million flowing into the company, we intend the RCF drawing to be repaid for this to be EUR 300 million in total as free liquidity at the backlog line for SAF-HOLLAND. In September, we then take parts of the remaining funds to repay the convertible. And with the remaining funds and the additional inflow just alluded to, we repay the remaining portion of the 5 years' due. And if you then focus on the new debt maturity profile for the years beyond 2020, you see that the company has been well prepared for the next few years with the RCF backup in place and financial headroom for the months ahead, and in particular, for the year 2020. In the spirit of the aforementioned strict balance sheet management discipline, difficult words, and to protect our leverage ratio overall, the BoD, our Board of Directors, as you saw this morning, will propose to the shareholders' meeting not to pay a dividend for the financial year 2019. With that said, you have probably seen that we are well prepared in principle at the outset of 2020. But what we want to do now is to give you a lot more insight into the concrete activities happening inside the company and to shed color on what others use as buzzwords and make you familiar with the projects that we measure ourselves against, that we hold each other accountable for. And for that purpose, André Philipp, our COO, will give some color on operational excellence. André, I pass it to you, floor is yours.

Thank you, Matthias. Good morning and welcome, ladies and gentlemen. I'm very happy to introduce to you the SAF-HOLLAND Operational Excellence program. So before, already on a global basis, for sure, SAF-HOLLAND had lean activities. But they were very fragmented. This means every site picked and applied quite freely. This led sometimes to better, sometimes to not better implementation levels. With our now new SAF-HOLLAND global operational system, we provide a clear expectation guidelines to all facilities globally, how to read the wheel of operational excellence. You can see on the left side our wheel and the cornerstones which embrace the other areas: our leadership and culture and the production system. So inside the wheels, you find then the safety health environment, total quality, material supply and product development and engineering core areas. We initiated this program with a kickoff in January 2020. We are ready to roll out the first 10 road maps, most likely end of March, latest, beginning of April. And our timing was that in June, we will issue the other 20 road maps because, in total, we have 30 road maps. Now due to the COVID-19, there might be a small delay for the second wave. But I'm quite confident at least 20 road maps, we will -- will be ready and we will issue to our facilities. However, the main part of the implementation is, for sure, linked to a cultural change, and this needs to be driven by [ Asia ] by the 3Cs. On the next page, you see the Project FORWARD 2.0. This program already started last year, like Alex mentioned before, has 4 cornerstones with -- on the revenue side, aftermarket product portfolio and pricing, which also will help us to look inside our complexities in terms of the portfolio and to do improvements; on the cost side, for sure, we look in the facilities, in the supply chain, and also we focus on direct material. Why Program 2.0? Because we have already had our lessons learned from the year 2019, and we installed now an expert, especially for such programs, sitting in the U.S. who upgrade the methodology and also our tracking system. This person will also lead the program management office to ramp up, to run and to steer this program in the coming weeks. The current downturn in the U.S. is, for sure, not something we are very happy with, but at least, it leads to the opportunity for us to improve now our processes in the different facilities and also to take the potential to be ready as soon as the markets pick up. To show you some of the latest achievements, you will see on the next page. This is our largest facility in North America. Our axle production plant in Warrenton, Warrenton North. So the pictures just gives you a brief glance how the facility looks right now in these days. And the complete group management board have just been there in February for a visit. So we have had accelerations of improvement since the second semester of 2019, but for sure, this was hand-in-hand with the exchange of some key people at this facility, plus very specific dedicated and focused operational support. What you see is absolutely the start, the foundation where we now build on improvements. Only to give you some insight, the scrap reduction is already larger -- improvements larger than 50%. We have reduction of special freights. So the quarter 1 2020 is less for the complete quarter than what we faced in history even per month. And our OTD levels are already greatly improved and are now close to the absolute normal standards again. Switching now from our facilities in the U.S. to our new Yangzhou greenfield on Page 24. So we are in the ramp-up process in our new Yangzhou greenfield facility. But for sure, there are some difficulties because due to the global COVID-19 crisis, we also took care of our employees and we pulled back the expats we had at this facility back here to Germany. Nevertheless, even these hours, and I confirm myself this morning, we are running customer orders for one of the main trailer builder in China. So production is going on. And as soon as our travel ban is released, we will send again our expat team for additional support to China. With this new facility, we directly focus to implement all of our latest lean methods, and for sure, safety, our quality systems, the focus on material flow is absolute given that we directly do it right from the start. Also here, I would like to show you on the next page some of the insights, where you see the first pictures -- the first 2 pictures on the left, the fully automated axle welding line. The third picture from the left is our state-of-the-art painting cell. It's a single-digit million euro investment. And on the right side, you see our highly automated final assembly line, already to go to produce highest-quality level products from our new China greenfield facility. With this, I would like to hand over to our CEO, Alexander.

Thanks, André. Ladies and gentlemen, before I give you a forecast of the different markets and our financial outlook, please allow me to speak about the COVID-19 coronavirus for a minute and what does that mean in the terms of impact on the SAF-HOLLAND Group as of March 18 or 19, which is today, which can change on a daily thing. On the upper left side, first, speaking about our employees. We protect the health and safety of our employees worldwide through close monitoring and regular guidance updates. All travel is suspended and precautionary updates have been issued. Everywhere, globally, early quarantine measures are established, and we also have a global COVID-19 response team, a dedicated team in place. And we also established already flexible working models. To give you a little bit more insight. For instance, to secure our production, which is running at full speed in Germany, we have separated the shift model in the course that the beginning shift ends 10 minutes earlier. The second shift has to start 10 minutes later. So there is no overlap of people in between. Those 20 minutes help that in case of an infection, only one shift would be infected here. And we have other measures in place as well. Secondly, the ramp-up of the greenfield operation in China, as André already explained a little bit. We extended the Chinese New Year and also took regional quarantine measures. And they have delayed the ramp-up of our greenfields. But now, the plant is back in operation now, and we can report that the availability of our workforce has improved to more than 90% again. And also, the challenges remain for international support and leadership, as André already said before. On the upper right side, you see the supply chain and our customers. So while we have a dual and multi-sourcing strategy in place which mitigates the risks and manage the supply chain, our dedicated supply chain team and sourcing team checks on a daily basis the incoming goods and is in contact with all the suppliers necessary to build our products. At the moment, we don't have any lacks of material as of today, as I said before, so there are no significant supply chain shortages. We have communication lines to both customers and suppliers in place globally and also on a daily -- with a daily focus. Here, I have to mention that, as of yesterday, the first key account customer in Germany announced a complete plant closure. We adapted already our output of axles in the German plants and gave more quantities to other customers. And by doing this, we also reduced our lead times to the other customers. The anticipated financial impact for 2020 is not fully quantified yet. What we are guiding now is as of today. Corona adds to market downturns and puts pressure on the industry and its supply chain. We have, as we said before, already savings measured, initiated on a global basis. And we have a dedicated team which is running our Cash is King initiative on a global and also on the regional countries. Having said that, on the next page, which is Page 27, I would like to give you an overlook of the markets as we see it today. Starting on the left side with Western and Eastern Europe. We think that the truck market will shrink by 10% to 15% as the trailer market will shrink by 5% to up to 10% in this year. North America, very volatile. We know that after the record years in 2018 and 2019, a massive dip in truck with minus 40% and in trailer with a minus 35%. China, in the middle, you can see a truck dip of minus 20% and trailer, a further dip of minus 30%. South America still continuing to be very strong, with truck, we think, with a 20%-plus number and the trailer also growing with 5%. India, last year, massive drop already, further drop in 2020 with minus 20% on the truck side and a minus 20% on the trailer side, which will be further challenging year for us. What does this mean for us in terms of our financial guidance for 2020, you can see on Page 28. Coming from EUR 1,284 million last year, we would guide that the sales will be coming in at a low double-digit percentage decline. Adjusted EBIT, as of today, we see somewhere in the ballpark of 4% to 5%. And we already reduced the CapEx for this year to a level of roughly around 3% of sales. Worthwhile to mention, and I have to say that, again, we don't know what corona brings in the course of this year. If this is ending soon, that's good for everybody in the industry and for the global economy. If this lasts the whole year, then it will change, of course. So worthwhile to mention. However, the economic effects on us cannot currently be adequately determined or reliably quantified in full. The guidance we are giving out now is as of today. I would like now to draw your attention on Page 29, please, and remind everybody that nearly all of our EBIT we do generate is from the aftermarket sales. That means that our business model is resilient. And also, we think we are well positioned for the future. On the left side, you can see a summary, as we published that, just for the aftermarket sales in million. You can see, coming from '15 to '16, which was flat, EUR 268 million, we are increasing year-over-year of our aftermarket sales, which comes in with a pretty high margin. So to summarize that, you can say that we have a stable contribution from the aftermarket business. As you just saw insights from André, we have a global footprint with local content, and we also have a diversified customer base. And we do not rely on 2 or 3 really big customers, but we have a whole battery of medium-sized and also smaller-sized customers. As you can see in the graph, showing that the top 10 do account for 35% of our overall sales we do and 65% is accounting to all the other customers we have. Having said that, I would like to come to the last page, which is past Page #30. And saying, last but not least, I want to summarize as follows. As a reminder, again, we have a stable contribution from our aftermarket business, even in difficult times. We already have a strong focus on SG&A savings and our free cash flow generation with a dedicated Cash is King team. Operational excellence, we see as the key strategic cornerstone for our company to get leaner. We have a global COVID-19 corona response team in place. And as Matthias informed you earlier, we have a very solid financial position. However, nevertheless, again, the financial impact from COVID-19 on our fiscal year 2020 is not fully quantified yet. At the end, I would like to thanks for listening to us, and we are open for questions now. Thank you.

[Operator Instructions] And the first question comes from Nicolai Kempf, Deutsche Bank.

So the first one would also be partly on corona and partly also on the underlying markets. Can you maybe quantify how much of the guidance is related to corona and how much is likely due to market downturn in 2020?

Nicolai, its Matthias. I can take that. I think that is a slippery slope. A thin ice that you take us on with that question because what I would hesitate to do is to issue a parallel guidance to what we have put out today. Let me still try to give you an answer. In as much as I would like to explain where our guidance comes from, at least what we did methodology wise. We, of course, did simulate against original forecast, original budget in our original plan and simulated an additional downturn. But overall, I think we just gave us a ballpark. And let me sort of answer the question or conclude my answer by saying, I have tried to explain during the course of last year to help the financial community model SAF-HOLLAND that a downturn in markets of around 10% is associated at group level with a downturn of adjusted EBIT of around 1.x, the x being a number below 5, before the company starts to breathe. So originally, let me stop my answer by saying, originally, the plan was that we continue the path upward. That has been revised. And with that, I would like to sort of close my answer because anything else would take us to a parallel guidance. And I would rather come back to you with the team in the course of the year when we have further clarity.

Sure. That's understood. And maybe one follow-up. Since you've heard about the production shutdowns, just speak from Volvo, from [ Trenton ] Do you also expect to close production plants? And if so, for how long?

I can take that question, Nicolai. We are running in Europe under full steam. That means we have 2 dedicated axle plants in Bessenbach, close to Frankfurt. We have 1 in Turkey. Both run on a 2-shift model. Interesting enough, we had an agreement 3 weeks ago with the Workers' Council to increase the shift model because the order intake for axle was quite strong coming from the second half of December, continuing into the new year already. And so we thought that we can increase the shift models. Having said that, is in times of corona, we are not going to do that. We did not plan any shutdown so far. As I explained before, the supply chain is secured. And we are getting the parts necessary. We have so far no infected person, nor in the blue collar, nor in the white collar, working for us. We have some people in quarantine, so they are not on the property. They're staying at home. But we are producing under full steam, and have also all our white collar people working for us. We also here, we implemented some shift models, just in case a shift is infected that the other can run the business. This is for the axle plant, so we are continuing this. On the other side, we have our fifth wheel business. And due to the shutdowns of the big truck manufacturers, of course, we got already went the step to go to the government and ask for acceptance for short work. So we have that option to do that. And whenever we need to execute that, then of course, we will do that. Most important thing is the healthy -- the health condition of our employees. But so far, we have no infected people and people are working.

The next question comes from Frederik Bitter, Hauck & Aufhäuser.

I would like to learn a bit more about your trading in Q1 thus far, if you could talk a bit. I mean, already, Alex, you already mentioned it a bit earlier on trailer axles. But just more generally on -- like in terms of the regions, how you've seen business developing so far? You've seen margin development as well. Just, as we approach the end of Q1, it would be interesting how you started in the year. I mean, obviously, there's big uncertainty now going into Q2. But at least how did you start into the year?

Fred, its Matthias. Maybe I can take that. Of course, standing where we are with 2 months closed and discussed internally inside the management team, it's a bit difficult to conclude on Q1, also considering the fact that corona really hit everyone hard in March only, at least beyond China, if I simplify the situation a little bit. Yes, you heard Alex talk about surprisingly -- positively surprisingly strong start in Europe. That was good for us, and that is something that we are really happy on. The rest, I think if you take what Alex described on the market outlook page for 2020 where you know we take the research institute's forecast for the full year, I think we see a reflection of that already in the first 2 months of the year because the other regions outside of Europe have become under pressure. Overall, I would argue that we can be okay with the first 2 months of the year. Yet, I would not want this to be taken as an indication for our Q1 performance because it is in March when it all happens around the world, and we would first need to look at this on the inside of the company. Last comment on this. I have always claimed, and you hopefully can follow this in the 2019 actuals, that besides the global footprint, the leading position of the company also serves as a protection due to customer proximity and the close interaction that we have. So that we do have a tendency to weather the storm, if you don't mind me saying that, if something happens in the market. That's no guarantee, but that is something that has helped us also at the beginning of 2020. Yet, let's come back to your question when we publish Q1 in May.

Yes. Absolutely. That's fine. And then just coming back also on the question which was just asked previously, on OEM production shutdowns really across the board in Europe. And that's obviously just a question of time until this happens also in the U.S. So just -- I don't quite think I understood your response to that question, how you're going to navigate that, how you will be impacted as largely as a just-in-time supplier. I'm a bit puzzled how that should not be -- how hard it really will impact you. And you were talking about, obviously, production is still going strong and talked about shift model. Obviously, that's now, I think, now going to change. So just if you give a bit of an heads-up over the next coming months. Say, are we going to see production being stopped broadly in Europe and U.S. by, let's say, a month. But because the 2 weeks has been announced by OEMs, it should be clearly not enough. It's certainly at least a month, I would estimate. Just talk a bit about what kind of measures you're going to implement.

Yes. That's a good question. Try to answer as follows. Let's differentiate first between trailer business, and the trailer manufacturers, and the truck manufacturers. And starting with the truck manufacturers. We are the second biggest suppliers of fifth wheels to the truck builders in Europe. And the total volume we are doing with fifth wheels out of the EMEA business is less than 5% of the total sales. So with having the truck manufacturers shut down now, of course, we cannot continue for weeks and weeks and weeks to produce fifth wheels and having them lying around in our warehouses. So we also then, at a certain point of time, we'll be stopping the production. And once they are opening again, we will also reopen. But as I said before, if you see the total sales in EMEA region, only 5% or less than 5% accounts for fifth wheels. And we are -- as I said, we are closely monitoring and speaking to our customers. And then we will be shutting down that small facility as well. Coming back to the trailer manufacturers. Everybody is open, except one, who shut down, that's one of the bigger ones, who shut down yesterday for the next coming weeks. The others, as far as we know, and as I said, the team is speaking with them on a daily basis. I also speak with the CEOs of the companies. They are not intending to shut down because they have still orders and they would like to maintain production as long as they can. What's going to happen in April, maybe by governmental regulations, I don't know, to be honest. We are producing under full steam. We have our people coming in. We have different shift models established, and we're producing. But as of today or as of yesterday, only 1 shutdown. And it's all I know at the moment.

Yes. That's a very good insight. And obviously, that's very interesting also to talk about the difference between truck and then trailer OEMs. And obviously, trailer OEMs are basically non-listed, all of them. So that's really interesting also. Obviously, they behave maybe slightly differently. Obviously, with the exception of -- if government regulation will be imposed on like forced shutdowns, et cetera. But as of now, that's very interesting. And obviously, I understand you have higher exposure to trailer overall compared to truck. So that's well understood. And then the last question I had was, Matthias, if you could talk a bit about the interest rates you have on the promissory note loan and also the revolving credit facility. And just, obviously, I understand that you said once you crossed the 3x covenant threshold, I assume that's net debt to reported EBITDA. Just -- if you confirm that as well. I'd just like to know a bit more about interest rates you're paying at the moment. And then also, you said, obviously, there will be a step-up of 50 basis points or so. So just to do a bit of the math, let's say, work in a few scenarios. We say, "Okay, we are reaching something of 3% -- 3x net debt-to-EBITDA this year and maybe slightly above that. Just some scenarios, so we get a bit more granularity and the feeling for the sensitivity on your financial leverage.

Sure. I think I will give you a more general answer on the terms and conditions in terms of the interest rates on the new financing, because I don't want to run through the different tranches during this call. Happy to provide that. It's also reached Bloomberg on the day, so that it is somewhat a public knowledge, but we're happy to follow-up on that. Overall, let me say that we do expect the overall interest expense for the company to come down during 2020. This does not mean that we have refinanced more cheaply, but overall, interest volume, interest expenses, should come down a notch further, at least that is the forecast that I get from my treasury people. In terms of net debt to EBITDA, and I'll give you the number as per the RCF definition, which is the leading definition as to how we calculate that number because the RCF is also the leading agreement in this regard. At year-end, we stood at 2.54 to be very precise. And if you then take, because if you look at the annual report published today, you see that the put option was exercised by the former minority shareholder in Orlandi that was exercised in January, so that in January, we moved up to 2.74 to be very precise there. And that is what we need to come away from again. We need to move to 2.5x and below. Again, that's the clear goal of the company. That is what we need. There is still headroom to the 3 before we incur a step-up, but no challenges under the RCF foreseeable at all because there, where we have agreements that give us enough leeway to fix a situation once we reach 3.5. I don't want to take you through all the technical details, but I feel the company is well positioned. Yet, I do take the point, management takes the point that there is an expectation for us to manage this downward again. We will. We are in the process of doing so. The Cash is King task force is an expression of that because that should continue my work that I have established and put in place on the cash flow profile in '19. I pause there to ask you the return question, Frederik, whether I included all elements of your question.

Yes. You gave very, very helpful insights. Just maybe if I could ask a follow-up. Just on the -- obviously on the -- in the revolver, you also showed us, so once you -- if you were to cross -- obviously, we don't -- we hope it's not going to happen, but if you were to cross the 3x threshold, there would also be a 50 basis points increase there. That correct or it only for the note loan?

No. The 50 basis point step-up is for the note loan, in particular. Let's not go down to the technical detail of the RCF. I don't have it in front of me at this point, and I don't want to sound like making it a secret, but this is really something that we're not working on at this point because we have sufficient coverage under the RCF. And given how I took you through the procedures of the cash inflow from the recent refinancing transaction, I think we are well positioned there in terms of what we were able to draw down. And given what we forecast and simulated, we don't see this coming at this point.

Okay, okay. Sure. Now I just wanted to clarify because then I probably misunderstood your earlier comment on the revolver where we also heard there will be a step-up in interest rates.

Yes. And that is probably because I used the phrase, "of the leading agreement." I apologize if that has created confusion. You were right to ask that follow-on question.

No. That's very much okay. And then one thing that is left to open is the net debt to EBIT -- of the covenant we're talking about net debt to reported EBITDA, is that correct or...

No. It's -- and thank you for following up to clarify that. The RCF agreement does contain the calculation convention as to what is inside that calculation. Rest assured, it is not a funny calculation that only works in the company's favor, especially when it comes to the calculation of the EBITDA. So there is a limit as to what we are allowed to adjust overall, because, obviously, the loan providers, the service providers also want to monitor this very closely and have us under scrutiny, but it is a net debt-to-EBITDA defined in the agreement. And that is why I gave you the total numbers because, sometimes, we get questions on calculation. There are other calculations that are done face value that deviate from that, and that is why I wanted to provide the transparency around this.

Yes. That's helpful. Obviously, I still to remember the obvious way to calculate your net working capital, which is obviously a bit of a funny one. Okay. That's helpful. So basically, the EBITDA would be adjusted for like -- but if you -- if there were like a bigger restructuring expenses, obviously, clearly one-offs, et cetera. I understand.

Yes, but only clear one-offs and clear nonrecurring items with also a clear limit on the further adjustments possible. So let's avoid one confusion at this point and take a concrete number, the EUR 44 million that I took you through on the adjustments that we did for IFRS reporting purposes. Those EUR 44 million are not allowed to be adjusted under the RCF, to be perfectly clear.

The next question comes from Harald Eggeling, ODDO BHF.

I've read the guidance, actually. And a question on the quarterly split of the group guidance with some color on the regions. I mean there should be some kind of corona-related delay between the regions. That would be the first one. The second one would be if there's a guidance already on restructuring expenses for 2020? And the third one, if you could give some more color on the order mood of Chinese customers, please.

It's Matthias. I'm afraid I'm left with the first 2 questions and Alex will probably take number 3. On the first 2, you know that we don't issue quarterly guidance, #1. And #2, that we don't guide on the regions. I think let's leave the conversation at where we are for the group level. It is correct what you say that, of course, there is a delay in how corona moves around the world. We have chosen the phrase that corona is about to impact markets further. This is something that is clearly not forecastable, if that word exists in the English language. At this point -- and so let's not sort of go down the path of doing the analysis and not even try that here on regional guidance and what the impact on markets is.

Yes. Sorry. I did not mean a regional, concise guidance, but a rather more like seeing a weak first half and then a continual improvement in H2. But I mean you must have some underlying core assumptions of the guidance. I mean it's pretty clear it's highly uncertain, but I was rather going for soft H1 and improvement in H2, for instance.

Yes. And Harald, I tried to answer that question in my response. I do not think that, that approach would be prudent at this point because this can change over the next few days, over the next few weeks. I will say that, of course, everybody hopes that we see a softer Q1 and a stronger second half of the year, but the value that you can attach to that statement at this point, I think we should all be very careful with that. And this has nothing to do, excuse me for saying that, with SAF-HOLLAND. I think if there is somebody around the world who can reliably forecast GDP developments, transportation volume, et cetera, et cetera, plus the behavior of our customers, then I would like to meet that person and offer him a job at SAF-HOLLAND. I, of course, take your question and acknowledge the interest. We have the same interest to go to the heart of the matter, but this is not possible at this point. I can only ask for everybody's understanding. I think we're not the only company answering questions like this in the way that I just did. This is not to avoid the question, but it simply would lead you and the capital markets astray at this point. I know that this is not what everybody is wishing for, but we can only ask for your understanding. What we can certainly do is shed a light, a small light on the demand behavior of our Chinese customers and what we observe in the market, which Alex can do.

Yes. Thanks. Let's go back one month in China, which was February. It goes without saying, and that you can imagine, that we did nearly not do any sales in February. This is for 2 reasons. First of all, the first 2 weeks were shut down by the Chinese New Year ceremonies. So China did not work, so didn't we. And the second half of February was also shut down because of the corona -- COVID-19 virus. So people were not allowed to travel. We didn't manufacture. So that was a very difficult month for us. We see now, since about 10 days, there is the lift of the travel bans between the cities, even in the Hubei province. Our people in China tell us that nearly, as I recounted before, more than 90% of our employees are back to work. They restarted production. And basically, we started producing now axles for different customers, but also landing legs for different customers. However, the order intake is not [ gorges ] at this point of time, of course, but we see that more and more trailer manufacturers and customers are coming back and placing orders. Will that be remaining for the whole year 2020? I don't know. Will there be another impact in China with corona? We all don't know. But at this point of time, we can say that the first orders are placed from customers, and we started producing.

And the next question comes from Jasko Terzic, Bankhaus Lampe.

Yes. And I need to bother you a bit more on COVID-19 and downside scenarios. So my first question is, could you give me an indication about the scenario of top line decline which would lead to a breakeven on your EBIT level? Do you have such a figure that you can share with us?

Yes. Its Matthias, I think we gave that answer earlier when Nicolai asked the question around impact and how we separate that. And I avoided the answer by describing the methodology, how we arrive at those numbers. I'm happy to repeat that again. You can model this in such a way that for every 10% that we go down in overall business, give or take some assumptions around that, it's 1.x on the adjusted EBIT line before the company starts to breathe. And we do breathe, and we have programs in place. But to start your modeling, you can look at it like that. And I also said the 1.x, with the x being below 5. The reason I'm not telling you is exactly that. It's depending on some of the assumptions around that, but that should help you on your way if you go from the current adjusted EBIT margin level to see what happens to the adjusted EBIT in certain scenarios on the top line.

Okay. Understood. The second one is, could you give us an indication, how much of your -- or how much production visibility do you have with your inventories currently at your company, and assuming that there would be an immediate disruption?

Okay. So basically, as I said before, the sourcing and logistics team is in contact on daily basis with our suppliers. And if I understood your question correctly, "How long would it take unless we need to shut down?" because we don't get components anymore, so we cannot fill the production. We are secured for the next 3 weeks for very difficult components. With other components we see, that it is more than in the ballpark of 5 to 6 weeks. This is due to our dual or multi-sourcing strategy, but also with some important suppliers, we have consignment stocks, and those stocks are filled with at least 4 weeks consumption time. So that means, again, if now hell breaks loose and we do not get from our suppliers components anymore, we can at least continue to manufacture for 3 more weeks.

Okay. Very interesting. And then again, on COVID. Did I understand you correctly that you don't really share the part of your guidance that is related to COVID-19? However, you already have penciled in a negative impact here?

Well, we included the COVID-19 impact as of today. So for instance, with having one of our key accounts shutting down for the next 2 to 3 weeks, something like that. And overall slowing down of our -- of buying behavior. There is a slowdown, we can see this. But as of today, we incorporated our knowledge into our guidance.

Okay. And the final one is regarding your guidance. You were spoking -- you were speaking of a 2-digit decline. Could you give us a range what the exactly low 2-digit means for you?

Yes. Yes. Its Matthias again. Happy to. We understand this to reach 10% to 20%.

So it is teens? So it is not really 2-digit then? Because low 2-digits could also be 30%?

If you -- we say low double digits, we actually spoke about this to some of your colleagues in the financial markets, how they would perceive, not the exact, but the wording, right? And this is 10% to 20%. So if you perceive -- if you prefer to use the term teens, I'm happy for you. Again, it's between 10% and 20%.

At the moment, we have no further questions. [Operator Instructions] And we have one more question coming from Philippe Lorrain, Berenberg.

Sorry to bother if the question has already been asked, but I was kicked out a couple of times. And on the outlook that you give, like, if there is downturn in market for about 10 percentage points, there is downturn in adjusted EBIT of 1.x percent, you mean, of course, like in margin terms, I guess, no?

That's correct, Philippe. That would be in adjusted EBIT margin terms before the company starts cost-saving measures.

Okay. And in that case here, so when I look at 2020 versus 2019, you've got like several pieces, like the one-offs that you haven't adjusted actually last year, that will probably reverse in China, plus normally, an underlying improvements in profitability from ramping up the new plant. So seizing like these inefficiencies and everything like that is playing actually more in your favor? Same in the U.S., I guess with less pressure stemming from the very high level of activities we just registered when the market goes down. So that's why you're guiding basically for, let's say, 10% to 20% decline in sales versus, like 1 points, exactly like you said, x percentage points decline in margin, no?

That last piece of the question, Philippe, I have not understood. There is not much to argue with the analysis. But I can only comment if you can rephrase the last part of your question.

Yes, yes. I was just saying that basically, with all these positive effect -- or negative effects reversing this year, plus inefficiency stopping in the U.S. and these kind of things, so that's why basically you are guiding for more than -- basically more than 10% decline in sales, yet 1.x percent points decline in adjusted EBIT margin.

I will try whether I understood this because I think the guidance is actually relatively easy to understand. If you do the number crunching from what we have published for the 2019 actuals, you go down 20%, and then you apply the math that I said, then you arrive in a ballpark of 4% to 5% somewhere. Yet let me comment on what you said, which, of course, is a correct analysis that this was the original plan, and this is the original plan, yes? The question that arises now for everybody around the world who's running a business is, "What of the original plan is executable?" And this includes, for example, the measures that André described, because you're absolutely spot on. If utilization goes down in the North American plants, to give just one example, we will focus the organization with full steam on the projects that André described, right? But of course, if you have a workforce that could be infected, in theory, or an authority shuts down your plant or whatever else might happen, then this is difficult to execute. And this is an element that nobody knows, which we cannot include in the guidance. Yet, if we are able to do this, you're absolutely right. That is where we see margin improvement potential. And the same is true for the reduction of the EUR 12.8 million adjusted EBIT loss in China, which can also come down substantially. But for this, the plant needs to be ramped up, the customers need to be back in action and the demand behavior needs to continue the way Alex outlined. So maybe that gives a little bit of color on the scenarios. Again, super difficult to comment on at this point.

Yes. Yes, I understand that. And perhaps just the last one is more -- have you come out like perhaps internally already with the calculation on your monthly cash burn just in case you have to close down like all of your factories throughout Europe and perhaps NAFTA as well?

We have, not only because of corona, I'm tempted to say, Philippe, because this is something that we did as a due diligence. This is something that we do regularly about once a year, an exercise that I do with my treasurer, that we also present to the Audit Committee. In 2018, the case in hand was the refinancing of the RCF at the time. In 2019, we did the very same analysis and update to it. And this was obviously in Q4 when I went into the Audit Committee for the purpose of the refinancing, yes? If you now ask me, as a follow-up question, "So Matthias, can you share some of those numbers?" then I will refrain from doing so because I do not think -- again, and don't take this the wrong way, this wouldn't be very prudent. That is why I referred to during the presentation to the financial headroom that we still have. Right now, cash is pouring in. We're starting the -- or we have started the Cash is King initiative. We see at this point no signs yet of people withholding payments. Yet, I think all of us, as participants in the financial markets, know that this is a question of time before payments are slowed down. But as Alex said, we're still producing in Europe and customers want their material, so whoever gets the material also needs to pay. And that is where we stand on that. We feel good about this because we do have quite a bit that we can afford on that, but we will also be prudent in as much as this certainly depends on the length of the crisis.

And as we have no further questions, I hand the floor to Mr. Shickling for closing remarks.

So ladies and gentlemen, thank you very much for your participation. If you have any further questions, please do not hesitate to contact Investor Relations. Have a good day. Thank you. Take care.

Thank you.

Thanks, everyone.

Stay healthy. Bye.

Stay healthy. Bye-bye.