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

Dear ladies and gentlemen, a very warm welcome to our today's Investor and Analyst Day 2020. This is Alexander Geis speaking. And today, we, the entire management team of SAF-Holland are going to present our Strategy 2025 and also give you some deep dives into our backbone regions as well as the regions Europe, Americas and Asia Pacific. Before we are going to do that, let's quickly take a look onto our today's agenda, which is Strategy 2025, which will be presented by myself; Christoph will be showcasing our latest technologies; André will speak about operational excellence; Inka, our new CFO, will speak about the CFO area; then we have a Q&A session. And by the way, this Q&A session is already open for submitting some questions, so the window is open. Please feel free to send already some questions if you might have some. Then we have a quick break, and then we do the deep dives into the regions, Christoph speaking about EMEA region; Kent about the Americas; and André give you a look into our APAC region. Then this will be followed by a Q&A session. And at the end, I would like to give you some closing remarks. Let's go on to the next page. And here, with the Strategy 2025, I would like to start with, and let's say, information about 2020, where we stand at the moment and then followed by our Strategy 2025. Before we do that, please allow me to give you a little bit of an introduction of who we are as the management team of SAF-Holland. Firstly, Inka Koljonen, our new CFO, she started with us in September this year. And she has a dedicated, sharp view on cash and EBIT generation, and he is -- she is also leading our Cash-is-King team, which is very successful in 2020. Secondly, André Philipp, our COO, is overlooking our global operations worldwide and in his dual role as President, China -- and by the way, this is where he has lived and worked for more than 10 years. He's overlooking our China operation and makes future success there possible. Thirdly, Christoph Günter, our President, EMEA. He is overlooking the whole region and has full P&L responsibility for that region. And in his dual role as Senior Vice President, Global R&D, he's also passionate about engineering for profitable growth. He is investing into our old steel, old products, SMART STEEL products and also in our digital world. Fourth, this is Kent Jones, our President, Americas. He is overlooking North America and South America and also has a total P&L responsibility for our second-biggest region in our group. For those who don't know me, my name is Alexander Geis. I am the CEO since beginning of 2019 of SAF-Holland. Before that, I was the President for the EMEA region and also the CPO of the company, overlooking the strategic global sourcing for the entire group. And before that, I also was, for many, many years, the President of the aftermarket business unit, which was also and is, for the company, very important. In my career, I have worked on 6 continents and did already business in more than 120 countries so far. I'm very much strategic and also sales-driven, and I totally believe in the success of the company, and we will show you why this is the case. On the next page, let's speak about where do we stand as a company in 2020. Ladies and gentlemen, in a market environment dominated by the global spread of COVID-19, we, as a team, together with our employees, have demonstrated our operational flexibility and achieved a positive operating result. As you know, we achieved an adjusted EBIT margin of 5.4% at the end of the first 9-month 2020, and we also were able to raise the guidance for the entire year to 5% to 6% adjusted EBIT. We also did successful mitigation and implementation of strategic measures, so to speak, the downsizing of the management team. We were 8 people before the management team, 3 Cs, 4 regional presidents, 1 senior vice president for sourcing. And by intelligent, dual roles of our, let's say, colleagues and us and also the lift of the quality of our second level of management, we were able to downsize that team from 8 to 5, and this also, of course, goes along with some cost savings. Secondly, we rolled out, already in September 2019, our SG&A reduction. And since we have started early before the COVID crisis hit us globally, we are now in a good position, and this already saves some money for the company. Thirdly, if you compare 2019 to 2020, and due to the COVID crisis, we reacted very fast as a management team. And so we did decrease the number of employees by more than 20%, which is also leading to lower costs. And then another example, we already started that end of 2019 to negotiate a supplemental collective agreement for the 2 Bessenbach plants where we do our axles and suspensions for the European or EMEA region. And this already got effective March 1 of this year. And I can already add that we also found a solution for our Singen plant, where we do manufacture our fifth wheel for Europe, mainly for Europe, and this will be effective January 1, 2021 and also will last 4 years until the end of 2024. Then speaking about our operation -- operating free cash flow, which came in with EUR 64 million at the end of September 2020, we never achieved a figure like this before. And last but not least, speaking about the decline of CapEx from 3.5% to 2.5% in 2020 in the years to come. For those who didn't follow us the last years, in 2018, we spent, as a group, more than EUR 40 million in CapEx and, in 2019, EUR 53 million. We invested heavily in infrastructure, in equipment, in the plant in Europe, also in the U.S., but also with the new greenfield operation, where -- which André will speak about later on when he's speaking about APAC and China. So we are heavily invested, and we are fit for the success and the growth of the future. We are now in a promising starting position to succeed in the postpandemic market landscape, ladies and gentlemen. Having spoken about 2020, where we want to go in 2025. So with our customer satisfaction as our key motivation, we will focus on becoming better at everything we do. And this goes along with our wishing to be the most trusted and reliable partner in the commercial vehicle industry. Trust is very important. Specifically in Europe and North America, the fleets, our ultimate end customer, trust us and trust in our equipment. So we have to earn that trust because our fleets ultimately inspect our products at the OE trailer and truck and bus manufacturers, and this is a good thing for us. Our mission is to take a leadership role in the transformation of mobility and partner with our customers on the road to a sustainable future. And by customers, we mean fleets, truck, trailer, bus manufacturers, aftermarket dealers, service stations around the globe on 6 continents. And speaking of a sustainable future, let's quickly give you an introduction in our CSR, what we stand for or what we think we stand here because we take this very serious, ladies and gentlemen. Sustainability is a core element of our mission. And we, as a management team, we have anchored sustainability in all areas of our organization and have established a framework that ensures a holistic approach, such as our really good CSR reporting and also our integration into business processes like already into the product development, the supply chain -- we also take our suppliers to be part of that, and also in our manufacturing facilities. And we are also a member of the U.N. Global Compact. Our Strategy 2025 is based on 5 very important pillars, and I'm going to give you a little bit more details in the following pages. But the 5 most important pillars are: the growth and portfolio optimization; secondly, technology as a core enabler; thirdly, our global backbone; fourth, operational excellence; and very important, our people focus. And what does mean -- what this means, we start with pillar #1, which is the growth and portfolio optimization. As you might know, we have broadened our footprint and portfolio over the past several years. Our focus now lies on the optimizing of our footprint, creating bigger economies of scale and also higher profitability and also the bundling of competencies across the group. As you might know, we did some M&A in the past, York. We are a market leader in India with more than 55% in trailer axles and suspensions. And once that subcontinent comes back out of the crisis, we will further gain market share, and this is a good thing for us. Also speaking about KLL, this is our bus and truck suspension supplier based in Brazil. We just won a big Volkswagen tender for their e-crafter with our suspension. Orlandi with the coupling systems; Axscend, and I will speak about that later on with our telematics system; and PressureGuard, which is a tire inflation and deflation system. So we've grown bigger, and we have also now global engineering facilities across the globe, mainly in the U.S., in Germany and in China. And what we also started in 2019 was the plant consolidation, mainly in the U.S., but we also did that with subsidiaries because of the mergers in India, Australia and also in Far East Asia. Second pillar of our strategy is technology as a core enabler. And our product and innovation strategy is based and built on 3 future trends, starting with electrification and alternative drives. This mainly means our TRAKe, that's our e-axle, e-trailer axle; and TRAKr that stands for recuperation, and Christoph will speak about that in detail later on. This is automated vehicles, for instance, our SHAC system. SHAC stands for SAF-Holland Automated Fifth Wheel Coupling, to couple automatically between a truck and a trailer. And thirdly, digitalization. Here, we have a dedicated digital team, consisting of nearly 40 people, specialists in that area, who are investing and developing products in the regards of SMART STEEL, predictive maintenance to make the life of our fleet customers easier in the future. Talking about our product and innovation strategy. I would like to mainly speak about 4 core areas, which is our core products and customer relations, business partnerships, SMART STEEL with intelligent products, sensors and data analytics and our global R&D and centers of competence. Starting with the core products and customer relationships. We want to be, by 2025, global market leader in the medium and premium segment in axles and suspensions, fifth wheels, landing gears and couplers. And this all goes along with lightweight and material innovation. The lighter a product is, the better it is for the trailer and for the truck because that means more payload for our ultimate customer, the fleet, so they can transport more in the future. This is aftermarket growth with a dedicated aftermarket team globally. This is the service network expansion to satisfy our fleet customers globally. And this is also an improved customer experience, which means future sales. Second core area is partnerships. We believe in the power of alliances and partnerships and consider it a core element of our innovation strategy. And this we understand with our partners, we increase the speed of innovation and are able to manage future growth projects. A good example of cooperation and partnership is the French car carrier manufacturer, LOHR. We started already 2 years ago. We manufacture an e-axle to be built into the car carrier trailers so they are able to transport the cars by night into the cities without any noise. We already have test trailers running in North America, in Europe and South Africa, and the end customer is Toyota here. Third main core area is SMART STEEL, intelligent products, sensors and data analytics. What do we understand in predictive maintenance? Give an example. One of the main components and running gear of an axle is the bearing. Without bearing, you cannot run an axle or a trailer. If we can predict that this bearing is going to fail within the next 10,000 kilometers and can send an information via an app to our fleet, they're going to stop, go to the next workshop or we direct them to the next workshop, having our original spare parts. They can repair the vehicle, and they save a lot of time and don't have a bigger damage on their vehicles. This is total cost of ownership. This is good for the fleet, and then they will specify our products when they try -- when they are buying the next trailer or the trucks. Telematics systems. This is TrailerMaster, at the moment, mainly for the U.K. and Ireland. Here, we have a pattern solution, which makes the life of a fleet much easier because they don't have to do multiple brake tests. They use our algorithms, and they can save a lot of pounds -- hundreds of pounds per year, and we get a monthly subscription fee. We also speak about digital services like QR codes, RFID to better identify our spare parts in the future. And also, last but not least, e-commerce with our already existing online ordering platform, POD. POD stands for parts on demand. Fourth core area is our global R&D and centers of competence. So basically, what we are doing is fostering our global R&D approach to become more efficient. We are streamlining our R&D projects, processes and tools to also get more efficient, and we are establishing global centers of competence for core products, groups and technologies. This will be mainly in Germany, in the U.S. and also in China. Now coming to our next main pillar, which is our global backbone. We are setting the base for future product platforms and machinery. We are strengthening our core know-how, and we are continuously improving our cost-reduction efforts. And André will speak about that very much in detail later on when he speaks about the COO area of the company. The next main pillar is our operational excellence, also here, André will speak about. I would like to highlight the 6 most important things, which is create leadership and a culture that empowers; also ensuring, as a team, as a company, the safety, health and a protected environment; optimize our material supply, and we already started, as I mentioned before, with a global sourcing team who makes sure that when we -- that we are, on a global basis, get the best possible quality components at the lowest cost possible; drive the total quality, a happy customer is a good customer; assure best product and process development and engineering; and also build a world-class production system. The last pillar and the most important one is our HR strategy and priorities because we are driving a culture of high performance in the company. And with the right people in the right roles, we are helping the company transform while transforming itself. And our most important HR targets on our way to 2025 are: to increase our employee engagement levels with multiple surveys in the future and also today; increase our employee efficiency; increase the percentage of female leaders in the company; and that goes along to also increase the total female quota in the company; also increase the employee loyalty that goes along with the satisfaction of our people to be happy to work for us in the company; and also increase the training efforts per employee. And by the way, we already doubled our training spend in the course of 2020. Ladies and gentlemen, we build a competent and engaged workforce by investing in our employees and encouraging lifelong learning. We believe that our future growth relies on strong relationships, collaboration and integrity. We deliver what we promise. We are one global team. We are eager to grow, and we do the right thing. And now I'm coming to the end of my presentation, and I would like to close with our midterm targets, which will be that we make sure as a team and as a company, to grow profitably in the future. We will ensure a margin improvement to around 8% adjusted EBIT by 2023, the latest. We are working on a continued improvement of cash flow generation as we have already demonstrated in the course of 2020, and we will optimize our net debt-to-EBITDA ratio. And we also are going to increase our shareholder value. Ladies and gentlemen, thanks for listening to me in that part. I now would like to hand over to Christoph Günter, who will be explaining new technologies and products to come, and this is pretty cool stuff. Thank you. [Presentation]

Thank you, Alex. So before going into the cool stuff, as Alex called it, just a couple of words as introduction to my person. Christoph Günter, my name. I'm since a good year now with SAF-Holland, on the one hand side, responsible as a President, EMEA for the activities in Europe, Middle East and Africa. And from a corporate function, I'm really heading the global R&D activities for the group, which I now would like to go into. Since my studies of industrial engineering in the proximity to the Mercedes truck plant, I've spent my whole working life now in the truck and trailer industry, started at MAN Truck & Buses in Germany and France for 2 years then switched over to Knorr-Bremse, where I have been in different management positions for the last 13 years, the last 7 of them being responsible for sales and development of the Knorr-Bremse trailer systems in EMEA. Now I would like to give you an overview about the projects -- the global projects that we are running in R&D, how and what we are doing in order to increase the customer benefit with our products and what our more than 150 engineers globally are working on in order, yes, to increase the customer benefit and making us fit for the future in our product strategy. The megatrends of the commercial vehicle industry are also those that are driving our developments in -- at SAF-Holland. We are trying, and we are combining the know-how that we have internally here, especially on the excellent suspensions, on the fifth wheels with the know-how that is needed in order to give answers to the megatrends of the future in terms of digitalization, electrification and automated driving. I think it's very important to note that maybe differently than in the automotive area, every answer that we give here and that we develop needs to prove a business case for our customers, so not only internally for us in terms that we are working on solutions that have a real customer benefit and, therefore, might have a business case for us, but they need to be -- have a proven business case in the market because our customers, so the OE customers, but more importantly, the fleet customers, will only invest in any new technology if there is a business case, a saving maybe or an increase of safety and, therefore, efficiency on their side. Otherwise, there won't be any investment in these products from our end-customer side. The drivers for those new technologies in terms of digitalization are the optimization of uptime, so allowing, what Alex explained, with predictive maintenance, increase the efficiency and increase the security in terms of traffic safety. We have been working here over the past years already investing quite a bit into the SMART STEEL activities that I will go into detail in the next slides. For electrification, the drivers are the CO2 reduction, a very present topic all over the world; also noise reduction going along with that and also backed up by legislation and an increasing focus also from politics. And here, I will talk about the TRAKe axle family that we have been developing over the past years. Automated driving. Here, the drivers are the CO2 reduction, going along with it the efficiency that is gained, therefore, but also efficiency gained on the fleet side by, yes, having less manpower for the transport. And all this also backed up by legislation, making automated driving possible. And here, I will go into details regarding the SHAC, the SAF-Holland automated coupling. In digitalization, we have already seen a vast development over the past years. We've seen a lot of telematics companies rising. We have seen digital solutions sometimes derived from the automotive sector, but more importantly, also here, especially for the commercial vehicle sector. And we, as SAF-Holland, as said, have already invested quite a bit into this. In 2018, we acquired the U.K.-based company, Axscend, that is very active on the telematics side, especially for a product that is, from a legislation point of view, needed for the U.K. market. But I want to make sure to you and to the audience, we do not plan to become the next standard telematics company. There's a lot of those out there offering track and trace solutions, and this will not be our business field for the future. What we are looking for and that you can see here on the left side on the graphics, we are really looking for a solution combining the digital know-how that we have acquired with Axscend with the technology that we know about with our axle and suspension technology and trying to increase the customer benefit by adding intelligence to this. So we started off before developing with a detailed customer inquiry talk to our OE and our fleet customers, more importantly, and have asked them about the pain points and what it would be, when they would be willing to invest into digital solutions and where they see the business case for them. So you can see in the graphics the different levers for them. So it is airbag failures. It is brake chamber failures they talk about. They would like to know the load status at a live data point. The brake wear, the tire pressure and the status of the wheel bearing. And we transformed those answers and those pain points from our fleet customers into then the digital or the technical solution you see on the right side. So you see here SAF-Holland standard axle and suspension system. And we fitted these standard components with sensor technology, gathering data so that we can make predictive maintenance possible in the future. It is important for us that this is not something sexy, something very far into the future, but we want to address with these sensors, with that technology that we develop short and midterm solutions that are really market-proven and are helping our OE customers and fleet customers. So how are we doing this? On the left side, you see a standard trailer with -- where 3 axles and suspension systems on the lower left then the head unit. And this is where we equipped the sensors. We then also gather data through the tire pilot system that is already in the market by SAF-Holland that is increasing and lowering the tire pressure, if needed, so ensuring the lifetime of the wheels. Gathering also data from the electronic braking system that's always on board on a trailer. Gathering these data through smart axle gateways that you see on the right side. So that's one gateway per axle gathering all these data. Sending those then to the TrailerMaster telematics device that we have in cooperation with our U.K.-based activities, Axscend; and sending those data to the cloud where they then are being analyzed, where we run algorithms to, yes, derive intelligence from these data that are gathered on the trailer in order to predict failures, in order to make predictive maintenance possible. Important to know, I said before, we don't want to become the next standard telematics provider. So we have created open interfaces from the smart trailer gateway to, in a first step, the TrailerMaster, which is our telematics system, but also, in the future, to other telematics systems because we don't want to force the trailer user, the fleet, to use our telematics system but leave it open to him how he wants to send out the data. What we then need to do is we have to have an interface again to the data sent out because it's us having the know-how, the intelligence to run the algorithms through those data and giving back then the result to the fleet so that he can see the result in his telematics window, in his telematics system, on his PC in the fleet management system. Yes. The next megatrend that I talked about before is then electrification. The drivers for electrification of a truck and trailer, you can see on the left. So we have legislations rising up regarding the noise canceling of a truck/trailer combination. And something very much present is the CO2 reduction, also the legislations around the CO2 reductions. We already see today in the cities that have blocked diesel, we see a lot of cities that have created low-emission zones where, in the future, it might not be possible anymore to enter with a diesel aggregate, especially, that brings me to the right side, where we are currently looking at solutions for cooler and reefer units in order to support electrification of these today, mainly diesel engine-driven units, to switch those to an electrified unit. We have created the TRAKr, which is based on an SAF standard axle BI9. We have added a generator and a gearbox and can provide this system, including a battery and some additional parts so that we can provide the energy that is needed in order to charge the battery on the go and to provide electrical energy that is needed in the future already today in order to run an electric, battery-driven cooling unit. Very important here, this is something that is built up on a platform. Alex talked about the TRAKe that we have developed with LOHR in the past. So the TRAKr is based on this technology and is yielding the same standard parts, from a platform point of view, that we have already gained experience with the TRAKe, the development that we started some 2 or 3 years ago already. Looking at the advantages of such a system, starting here on the lower side of the graph of the page. So you could do such an electric drive just with a lot of batteries on board. So you could equip many batteries to the trailer or you equip a trailer with a battery and a TRAKr system. The advantages of the TRAKr systems are you have the weight advantages because the batteries weigh quite a bit, and you need a lot of batteries if you only run it with a battery. You have external charging time in order to charge the battery, and you don't have any backup. If you run into a traffic jam with an only battery-driven system, you have no possibility to charge the system on the run. Coming to the advantages on top of the page, so you have the flexibility and modularity. We have -- we are using standard parts on the mechanical side. It's a plug-and-play, retrofittable solution with our TRAKr, and we are independent of the trailer or cooling system manufacturer, even though we are believing in alliances and are working together with partners in order to make the whole system possible. I talked about the charging and the recuperation that is possible with the TRAKr, even though we also have grid charging possibilities. So when you're unloading or loading the trailer, you can also hook up to an external power supply in order to charge the battery. Last but not least, the service friendliness. We've used identical wear-and-tear parts on the TRAKr as we use on our standard axles that we deliver every day to our customers. It's very easy to maintain. And due to our large service and maintenance network, you can get all the spare parts around the globe. Last but not least, coming to automated driving. Probably the most long-term trend that I would see compared to the 2 others I talked about, digitalization. We have seen already in the past, solutions. Electrification is the hot topic at the moment, everybody in the truck and trailer industry is talking about that. Automated driving, probably the most long-term trend, even though we see already today automated driving in yacht-maneuvering applications. Also in the Americas, in the U.S., on some dedicated highways, we see automated driving, sometimes still with the truck driver on board in order to react to unknown or unpredicted situations. But I think it will still take some time until we see on European roads, even in inner cities, automated, autonomous driving trucks. So this is why I say probably the most long-term megatrend, even though we still believe in it, because the advantages are obvious. Our solution on the right side, so we have developed a fifth wheel together with landing legs where the tractor can reverse. The air suspension is adjusted in order then to back up, and sensors detect when the fifth wheel is correctly locked. The telematic and electrical connections are being made. And the landing gear is -- motorized landing gear, which is then adjusted, and the trailer brake is released automatically, so that the truck/trailer combination, without a driver and without any interaction of a human being, would then be ready to go. The advantages of our solution. Well, it supports all kinds of automated driving that we saw before. So you can use it for yacht maneuvering. You can use it for hub-to-hub traffic and the automated driving that will come maybe in some years to come. The technical solution is using the existing installation space. It's retrofittable because we have the same installation space, as said, and allows the high-speed communication that will be needed in the future in order to make automated driving possible. It's a full automated system and is increasing, you can see that here on top, the security, lowering the cost and increasing efficiency for the fleets. Yes. Wrapping up the short introduction to our innovations that we run globally. I hope I could show you how -- what we are doing in SMART STEEL in order to increase the customer benefit, how we contribute to the business cases of our fleet, increase the efficiency and attacking really the pain points of our fleets with the smart selectivities that we are running. I showed you what we do with the e-axle family that we developed, starting with the TRAKe already a couple of years ago, using that know-how now in the TRAKr in order to make recuperation possible and in order to allow our fleet still to go to the inner cities where they otherwise might be blocked with the diesel generators running in the future. And we talked about automated coupling and our contribution to making this megatrend possible in the future. Thank you very much. [Presentation]

Ladies and gentlemen, I would also like to welcome you today. I'm André Philipp, and as a member of the Board and COO of the group, I'm responsible for all global operational activities. I would like to provide a quick insight in my most recent career highlights. Previously, I was Managing Director, Germany for a top 10 global automotive supplier headquartered in France, overseeing our German production, our tool shop and our R&D center close to Stuttgart. From this role, I moved on to the role of the President, overseeing our U.S. activities, close to [ Charlotte ], for a well-known German automotive supplier. After returning to the German headquarter, I worked as part of the team who initially introduced and implemented a global operational excellence system, and I was solely responsible for the rollout in one of our business units. At that time, in parallel, we introduced a program very similar to our SAF-Holland U.S. project FORWARD 2.0. Due to a business crisis in our facility in China in 2007. I relocated for a 3-month assignment to provide on-site support, but stayed a little bit longer, like Alex before mentioned. I finalized my work after almost 11 years in China and returned back to Germany. The last 8 years in China, I worked as the COO for a German engine manufacturer supporting the commercial truck and off-road vehicle industry. Ladies and gentlemen, as you can see, I have working experience in Germany, Europe, Americas and Asia, all of which I now utilize as I work with the team to move our operations forward across the SAF-Holland global operations. As mentioned in the leadership principles, which presented by Alex, SAF-Holland has worked hard to make various improvements over the past years at our facilities, so we can confidently say at this point that we have done things right. A challenge, of course, has been the local managers creating their own in-country systems. And as a result, some of our activities have been quite different. Our broad goal has been to implement a tailor-made, holistic system to implement globally, which would allow for alignment and consistency around the world. As mentioned, I joined SAF-Holland on the 1st of January 2019, and I was fortunate enough at that time to travel globally and visit all of our facilities. In the summer of that same year, I made a decision to start the development of operational excellence with the aim to facilitate a set of global guidelines, compliance requirements and standards to mobilize the entire SAF-Holland manufacturing network. So then what is our change story? And how will we drive this? With the use of the Op Ex system, we will all be on the same highway, driving into the same direction. No matter if we have left or right turns, we have the safety cards in place to ensure no one moves out of the lane. Also, we set the rules. We understand that our geographically locations of EMEA, APAC and Americas do present differences. And so we allow the freedom of the facilities to choose their lane and set their own speed as we all head to one direction, to one destination of operational excellence. What is our reward? Global unity. We unite all of our facilities, old and new. We become one SAF-Holland group, where our fully engaged employees deliver new standards of customer service with a professional, dedicated and enthusiastic team spirit. Our system consists of 6 core areas and 30 individual, tailor-made road maps. Please refer to the Op Ex logo, an imaginary coconut, which has a harder outer shell, and this holds the core together. Leadership and culture and the production system is what we see as our outer skin. Embedded carefully inside together are safety, health environment, total quality, material supply and the product development and engineering. With these 6 core areas, we capture all of the elements necessary to execute our business successfully. I would like to guide you through some specifics of the 6 core areas here Alex has briefly mentioned in his presentation. Leadership and culture is the outer skin, is the key driver for everything we want to achieve. Leaders are responsible for the cultural change and need to lead by example on the forefront for every activity. SAF-Holland is committed to following global guidelines and all regional statutory obligations. Both our safety and health and corporate social responsibility not only meet all legal requirements. We are mindful of our ethical commitments to the communities and environments in which we work. Our CSR actions and responsibilities are documented on a dedicated road map. Optimizing our material supply and supply chain is a must. We continually work to ways to avoid waste, and we are sensitive with all resources. Serving our customer with the shortest possible lead times is a critical focus on our business plan. As a manufacturer of premium products, we take quality very seriously. With our powerful quality tool, QRQC, Quick Response Quality Control, we have already seen great improvements. But our actions don't stop here. Our goal is to anticipate and to exceed our customer expectations. The product development and engineering areas are where all the activities that Christoph has spoken of previously are anchored. To design for manufacturing will help to conserve resources and not only meet our customer needs but to exceed their needs with modern and reliable products. Last but not least, the second outer skin element, the production system. Herein, you can find all of the topics which will enhance our manufacturing system, that people generally know as the Toyota production system. Our implementation status. We have rolled out the SAF-Holland operational excellence system around the globe with our English and German road maps and handbooks, and the first workshops have started. The self assessments have been completed by 8 facilities at the moment, and the rest of the self assessments are scheduled to happen until the end of the year. If COVID allows, we will then do corporate audits in the next steps in the year of 2021. On a global landscape, we see valuable opportunity for potential improvements. All of these improvements start with the use of the road maps and the handbooks. The Op Ex system has substantially supported the Program 2.0 in the U.S., which my colleague, Kent, will speak about soon. Globally, we see improvements in all operational aspects. And finally and, most importantly, this supports the P&L statements of our facilities. Within my responsibility for the global CapEx, I can say, we feel that our guidance of 2.5% is sufficient, and we feel comfortable with this estimate. Prior investments have been undertaken, for example, in China, and I'm very selective of any new projects and consider the expected return. Within our current footprint strategy, we have consolidated facilities in APAC and in the Americas, and I will working to optimize our global footprint further. What is our key takeaway here? For the first time in history, SAF-Holland, we have implemented a true holistic global system to guide every facility company-wide to performance. Ladies and gentlemen, I am excited to announce to you that we are on our way to elevate SAF-Holland to the next level of excellence. Thank you. [Presentation]

Good afternoon, ladies and gentlemen. A very warm welcome also from my side. My name is Inka Koljonen. I'm CFO of the company since September 1. Before I move to the content of my presentation, perhaps a few words about myself. I have, overall, about 20 years of experience in industrial manufacturing in CFO functions and leading finance roles. I started my career with MTU Aero Engines while the company was still with Daimler. And when it was taken over by private equity investor, KKR, I took over the EUR 200 million cost-cutting program in preparation to the IPO. Then in the course of the IPO, I took over the Investor Relations role and headed it for almost 7 years. So after those 12 years, I moved to Siemens and took over the CFO role in a very exciting region, which was Russia and Central Asia, moved to Moscow with my family and spent almost 4 years in this very dynamic environment. The business was at that time very dynamic, about EUR 2.5 billion of revenues. After that, I moved to a Swiss company called Clariant, a specialty chemicals company. I took over the CFO role in the Business Unit Catalysts, which used to be a former company called Süd-Chemie, also similar to SAF-HOLLAND, a midsized Bavarian company, but global #1 in its field and also with a very global manufacturing and sales footprints. Topics there were net working capital improvement, cost cutting, of course, quality costs, automatization of reporting, things like that. And as I said, since 1st of September, my pleasure to be part of the SAF-HOLLAND team. Then I would like to move to a short wrap-up of our 9 months figures, which were just published a few days ago. And I would like to start with the sales. The sales came down about 30%, as expected. But I think what is worthwhile mentioning that in our main regions, EMEA and Americas, we performed better than the markets. And also, what I think is very important that we have bottomed in Q2. Our Q3 sales were already 20% above the Q2 results. The same goes for the adjusted EBIT margin, our main earnings KPI. Our Q3 margins singularly. So Q3 margin was at 6.4%, which is 100 basis points above the previous year number. Main drivers were here, I would say, very decisive action to cut costs, which was taken by the management already starting last year and then continuously throughout the year. But secondly, our business model proved to be really resilient with a high share of aftermarket business, which is more profitable. So with that, our 9 months figures came out at 5.4% EBIT margin, adjusted EBIT margin and consequently, we then increased our full year guidance from 3% to 5% to 5% to 6%. What was also very, very good was our cash generation in the first 9 months. We came out at very, very good number of EUR 64 million of operating free cash flow, which is more than 5x the number in previous year. What were the main contributors here? It was, firstly, it was net working capital efficiency. So just to give you a little bit details, the cash inflow from net working capital improvements was this year about EUR 20 million while we had a cash outflow of EUR 20 million in the same period last time. CapEx, as Alex mentioned, our new CapEx ratio of 2.3% versus sales. We are keeping to this. So our CapEx was this year, EUR 16 million versus more than EUR 30 million last year, EUR 37 million last year. So also, contributing to a very strong cash generation. And with that, I mean, we managed to improve our net debt by EUR 47 million from -- since Q2, also very good development here. So where do we go from here? So here, I want to introduce something to you that I call the framework for value creation. So this is something that will provide us orientation going forward and also something against which we will measure all our actions going forward. And I would like to start with performance. What do we mean with this here? The main thing is that we have aligned our incentive framework internally with our outside guidance and KPIs. So all our management, but also the staff is incentivized by sales, adjusted EBIT margin and the net working capital ratio. So I think it was the premier this year that also staff was incentivized by the net working capital. And as you can see, this is showing results. Profitability. We have a plan, a concrete plan and road map to increase our profitability from 5% to 6% adjusted EBIT margin right now to around 8% by 2023 at latest. We have a clear road map here, and this is backed by a mid-term plan, which is very, very solid in my view. If we look at the sales, I mean, we are not providing really a sales guidance. I think this is clear why we are very much market-driven. And at the same time, we really want to focus on profitable growth, right? So we have taken out of our portfolio products that are dilutive, not really profit-making. So really, the focus will be on profitable growth, but at the same time, and I think Christoph's presentation was here -- very impressive. We have a very good position in future high-growth area that will really help us at the same time to focus really on the future growth topics. Cash conversion. Extremely important topic for myself, a topic that I stand for. We had a significant improvement in 9 months. I don't know, and I don't think that this is also sustainable going forward. You can get the bills in only once. But what I plan here is really to anchor the topic of cash in the whole organization and establish really a sustainable and smooth and predictable strong cash generation. And we are in process of doing that. Portfolio CapEx spending, we talked about this very often in the management part. There was a strong investment phase, which started in '17, continued throughout '18 and '19. We have very good facilities, specifically in China and EMEA, and the focus for future CapEx will be clearly in the Americas. Financial policy, we will come back to this later on. A very important topic addressed very often by you, investors. The target here is regarding capital structure is to go back to a level net-debt-EBITDA ratio back to 2 to 3x. And we have a road map to get there, and I will talk about this in a few minutes. Dividend policy, unchanged. It's 40% to 50% payout ratio of the group net results, as I said, unchanged. So how do we get there? How do we get there in terms of earnings? Here is the overview of our running cost programs, which are contributing this year, but will also contribute going into next year. And I think when we look at our regions, and you all know this, that the biggest lever for bringing our margin back to the previous levels and to the targeted levels is the restructuring of the U.S. In the U.S., we have started a program called FORWARD 2.0, with targeted cost savings of EUR 73 million until the end of '21. So there's still more to come in. What have we done here? Headcount has been reduced by 27%. The product portfolio has been streamlined from dilutive products, and we see the results already in the books. So the adjusted EBIT margin improved from 0.6% in Q2 to 5.6% in Q3, and there is more to come. EMEA, this is traditionally the region where we have really strong margins and where we have strong market positions where we really demonstrate our strength at SAF-HOLLAND, but this is also not enough for us. We have initiated further action already in the beginning of the year. And just to give you one example, what we closed is a so-called supplemental collective agreement with the unions for the German location, which will provide us additional cost savings of about EUR 5 million to EUR 6 million. And in Germany, of course, we made full use of the governmental helps during the COVID crisis. I mean short-term work, but also the entire staff, management, white collar, even the supervisory Board participated and contributed in the crisis with their own contribution. Global SG&A, something also we're looking at, I would say, on a weekly or biweekly basis and discussing very intensively. We managed already to decrease our global SG&A by almost EUR 14 million versus last year. But with that, we are not compensating for the revenue decline. That's clear. So percentage-wise, the ratio went up. And even though we expect the revenues to increase next year, we don't -- it's -- we are going to continue to work on this topic, and we are right now in the discussions what else we will do here. So how do we get there in terms of cash conversion? Here, already my predecessor started a program, which is called Cash-is-King in order to increase the cash generation, but specifically, to react to the downturn and to reduce accounts receivables overdues by 50% and inventories by 23%. The baseline was end of '19. The target is until end of '20. And as you see here in these figures, as of September, we have already almost reached our targets both for the overdues as well as for the inventories. And now, I mean, the focus is, of course, to remain here -- to keep the focus for the remaining 2 months, and believe me, we are doing so. Our financing structure is unchanged. It's, I think, a very solid financing structure. We are absolutely fully financed until 2023. We have unused financial instruments, the revolving credit facility with EUR 200 million additional possibility to extend it by another EUR 100 million, again, fully unused. So we have here really flexibility. And the conditions overall for the portfolio are pre-COVID, so we're talking about interest rates between 2% to 2.5%. I think what is also important, and as you saw, we are not burning cash in the crisis. In the contrary, we are cash-generative. Therefore, we will be further reducing debt with the cash that we generate going forward. Balance sheet structure, a topic that I'm discussing with you, dear investors and analysts, on a regular basis. I know this is a topic for you. It is a topic for us as well. But if you just look at the numbers here and see historically where we're coming from, we have actually always been within our target level of 2 to 3x. But of course, now in the crisis, 2020, both EBITDA was hit, so it was lower, and we had a higher net debt. So if you look at the Q2 ratio, we were clearly outside the range with 4.6%. But already Q3, with the debt reduction we made and consider that EBITDA is always the last 12 months' average, so it is a lag in KPI. But already in Q3, we are improving significantly, and we have a clear path for further improvement. I mean, that's basically the improved cash generation, increase in EBITDA, net working capital improvement and the lower CapEx. As the new CFO since 3 months, I don't want to miss the opportunity, and I would like to share with you my observations, my first observations and also my priorities going forward. If we look at the finance function, and if I look at my finance team internally, I think there are like 3 dimensions to the CFO and finance role. It's about securing governance, it's about business partnering, and it's about leadership. So governance, it's really about -- and it's basic. It's basic, and it's a must. Here, it's about having really strong quality books and records, about risk management and it's about really making sure that the execution goes right, with right predictive indicators, with right controlling and things like that. So I want to really strengthen the governance role because it is the backbone of the finance organization, but at the same time move the finance role to a next level in terms of being really a valued spare partner to the -- sparring partner to the business. How do we do this? We do this by freeing resources or investing into automatization of the reporting. I've done this. This is something which will come then maybe later on next year. Externally, we are looking into improving our investor communication and definitely to establish a conservative guidance policy. Capturing untapped value pools. I must say this is one of my personal favorite topics, really also coming from an industrial manufacturing background. If we look at -- if I look at SAF-HOLLAND industrial company, then it's clear that the biggest value pool we have here is operations. And I have estimated, we're talking here about maybe EUR 580 million of a budget for quality cost, maintenance, outsourcing, production material, everything in there. And I'm absolutely convinced that by further improving operations controlling, by having financial KPIs and targets, looking into material variances and things like that, which is something we discussed right yesterday, we have here a lever of getting better. And again, topic very close to my heart, and that I've been doing also in my previous life is net working capital improvement. We are -- when we were very strong now in Q3, so going forward, it's really about establishing and anchoring a cash culture in the entire organization by explaining the people why it's not only about revenues and EBIT, but it's also about cash. And it's maybe the most important thing at the end, which we need to make sure that it comes in. And here, we are looking into, yes, continuing the Cash-is-King program, but with an enlargement scope. So we are looking more at the mid-term and long-term process improvements and not anymore the quick wins, which have been gathered this year. And then finally, I think it's also about improving the governance of the entire organization. We are historically a company with very strong regional organizations, and that should stay as that. We have excellent regions, and they are our global entrepreneurs. But combining this with strong central functions to provide standards, not that every region has to invent their standard in itself, this is a synergy and this makes sure that as a company we have a certain level of standard that we can also measure against benchmarks. So I think there's no way around this. We are on the way to improve the governance of the entire organization, and this is what I also stand for. So these were my first priorities -- my first impressions and priorities going forward. To wrap up my presentation, key takeaways, I think our first 9 months numbers have really demonstrated resilience of the business model as well that the management has taken early and decisive action to cut costs. This is seen in the numbers. We have a clear framework for value creation, which provide us orientation for every action we take and with specific targets and road map how to achieve them. Our cost programs are showing strong results, especially in Americas, and they're not over. So they will provide further contributions throughout 2021 as well. Cash-is-King program will be continued, but with an enlarged scope and with the goal to really increase cash conversion on a sustainable level and smoothe it out over the quarters. Balance sheet structure moving towards the right direction of 2 to 3x net debt versus EBITDA. And finally, as I said, my personal priority is really to further develop the finance function, to develop the investor communication to tap the value pools, the biggest value 2 pools that we have within the company. I think this is clearly operations and cash and then really support and coach the company on the way for improved corporate governance as well. Thank you.

So welcome back, dear guests. We have our 20 minutes Q&A session right now. And the procedure is such that I will read out the question, and then we will do our best, as management, to answer those and really looking forward to the discussion. I will start with the first question, which is what is your road map to achieving global market leadership in trailer suspensions, fifth wheels and landing gears. Alex?

And I would like to take the question, if that's okay?

Yes, go ahead.

And maybe if you have some comments, please share them. Well, this is a really good question to become the #1 in all those areas. So basically, let me summarize the word for us, our world. We are already #1 in axles and suspensions in Europe. So we have really good, high market share, delivering to good customers here. We are #2 and #3 positioned, #2 and #3 in axles in North America, in drum brake axles. We are #1 already in disc brake axles. And once this further grows into the future, we also will become #1 when we speak overall in axles. Then in the U.S. or North America, we have to differentiate between air suspensions, where we are #2; and mechanical suspension, where we are already with about 70% market share, clear market leader. The balance between air suspension and mechanical suspension in North America is at the moment, 50-50, and depending on the situation, 40-60 or 60-40. Where we are very strong also in axles is India. And once that market goes much better, then we will gain also volumes. Where we're very weak at the moment is China, and we will hear about that in China -- China in the future from André. We have set up a massive greenfield plant with a highly robotized and automated friction welding line with welding robots with assembly lines, which are state-of-the-art. And once we gain here market shares, more higher market shares, we'll also further grow this. In 2018, we already were #1 on a global basis in axles, with nearly 550,000 axles being produced and sold. So we want to keep that and further increase those volumes also with suspensions. In landing legs, we are #2. We have to gain higher market shares in China and also in Europe. And in fifth wheels, we are a clear market leader in North America. We are #2 in Europe, and we also will grow that business in the future, but we also need to grow that business in the APAC region, and specifically in China. And this is the way into the future, how we are growing to -- how we are going to grow that business and also the regions. I hope that helps.

Yes. Thank you. Next question is, in which countries is further plant consolidation still possible? So the question was saying, U.S. and China done as a question mark. I think that question goes to André.

Yes. Thank you, Inka. I'm happy to answer. So definitively, the answer is not in China because at the moment, we have just consolidated, and we have one major state-of-the-art facility, so we are quite well set in China. But in the complete APAC region, there is still potential, and we just have some consideration if we could further optimize the footprint there. EMEA has several facilities, yes. So don't only consider Germany. We are also well placed in other areas in Europe here. Plus, for sure, U.S.A., we just have closed one of the facilities and relocated, absorbed into another facility. But even here, potentially, going forward, there would be some opportunities for us. But please also understand that at the moment, I cannot tell about really the thinking and the discussions strategically we have at the moment because we don't want to worry any of our employees. And first, we want to make a real due diligence what is possible and what really makes sense on the mid and long run if we consolidate. We don't do this easily, and we put a lot of thinking and consideration inside before, finally, then do the steps. But in general, APAC, yes; EMEA, yes, Americas, yes; China, at the moment is done. Thank you.

Very good. Next question is about Americas. It says, nearly every trailer axle in Europe is equipped with disc brakes. What about Americas markets? I would like to pass that to Kent Jones.

Thank you, Inka. Yes. In Europe, through legislation, disc brakes has been common for many years. In the U.S. in North America, without legislation, the disc brake population has been less than 20%. It's been on an increase over the last many years. And as Alex said, we've been a leader in that using our technology platform from Europe. But for the moment, it's hovering around 20%, but we do see it increasing over the next 5 to 10 years.

Okay. Thanks. Next question, a technical one. When will your automated coupling system be integrated into a complete system, including landing gears and kingpin?

Yes. I will take this. Thank you, Inka. What I would say as soon as the market is ready for such a system to operate, we have shown the system as a demo on the trade shows already. We have demonstrators running at OE customers, so mainly in automated yard maneuvering. So we have a couple of partners, building up trucks in order to test those systems. So this will depend how long it will take that the market will adapt to fully automated driving to fully autonomous driving. We've seen the timescale that we see in the current applications. There is no serial fit yet foreseen of the truck manufacturers. But I believe that on the timescale that we showed before, where we go from yard maneuvering to hub to hub and then to really automated, autonomous driving, that's the time scale that I also see there. And I will say that we are ready on that timescale that we showed to bring that into CV production.

Thank you, Christoph. Then there's one on the market environment. What is your take on the post-corona environment? Which markets do you expect to provide the best opportunities? And how do you plan to address them? Alex?

Thank you, Inka. Well, basically, we look positively into the future in the year 2021. So as we have seen from the figures, we got hit the hardest in the Americas here, mainly in North America with a downturn of nearly 40%. We think that there will be a recovery. And we already can see that towards Q4 and also in Q1 next year. Europe was hit also not as much as North America, but also here, we see a recovery, specifically in the curtainsider business, trailer and also in the truck business, which we can see already in the last quarter, and we already have good bookings into Q1 next year. And of course, for us, speaking of opportunities, this is clearly China. With the state-of-the-art facility already, we now have the right product and you will see that later on in a movie, how it looks like. We are ready to manufacture. We got the first orders, and we're ready to ship. And this is the biggest opportunity if we speak of opportunities for us as a company.

Okay. Thank you, Alex. Next question is on cash. Cash-is-King has delivered remarkable results during the sales downturn of the COVID pandemic. What makes you confident that these effects will last. I will take that question myself. Yes, it's true that, I mean, the largest effect came now in Q3 with a cash conversion of far above 100%. And I can really tell you, honestly, that we will not be able to provide that type of cash conversion on quarter-by-quarter. But what is clear is that we will have very detailed net working capital and cash targets throughout the company that we will extend the scope of our cash initiative from purely absolute overdues and inventories to looking at the entire process from the beginning to the end to identify and then execute on process improvements that are sustainable, but work more mid and long term. That's how we're going to run this. Next question is on the leverage. The question is, the leverage target is 2 to 3x EBITDA. Do you make a difference between up and down cycles where you want to be? Well, I mean, my view on this is that, I would say 2 to 3x EBITDA is already kind of a maximum. So we do really want to improve our balance sheet and reduce our net debt ratio. And please give me also some time up to 3 months. This is at the moment our target ratio, but then we will definitely revisit this from time to time. Next question. Market shares, question goes, how will you deal with the friction between the goal of delivering profitable growth and the goal to gain market share. Alex, do want to take this?

Yes, please. Thank you. Well, we did our homework. We had a lot to do in the recent years, specifically in North America. As you know, we did the plant consolidation, we went from 7 plants to 5, and this totally went south, not only direction wise to some plants into Texas and Arkansas, but that wasn't a good planning. We did a lot of mistakes. We are now ready, and we learned a lot. And with our operational excellence, André explained before, we are ready for the future. So basically, the whole secret is to lower the cost of manufacturing to be able to profitably grow into the future. And this then goes along with making market share in different areas of the world.

Okay. Then we move to operational excellence. André, be prepared. Question is how far advanced in percentage of completion is the rollout of the operational excellence program?

Yes. Thank you for the question. So in percent of completion, we have rolled out 100%. So each of our facilities, they have a hard copy of our road maps of our handbooks of all of the material, including translated change story posters to also motivate and really take the complete workforce with us on this journey. So it's completely rolled out. We had multiple video and telephone conferences. Unfortunately, I would have liked to do this myself in person. The first assessments have been done. The rest will be done end of the year, and like I stated, hopefully, by next year, I will travel around with my Director of Operational Excellence together and then go through the main facilities, and we're setting up workshops. We're rolling out not only the operational excellence topics, but we're also creating all the actions behind the self assessments which have been done now. So we are very confident in 2021, we already go a big step forward. But rolled out is completely. Thank you.

Okay. Thanks, André. Next question is about working capital. What is the mid-term working capital ratio targets? We don't give guidance on a working capital ratio target, not for the year or not to the midterm. What I can say is that in Q3, we were at 14% versus sales. This is a very good number if we look at our previous performance here. And you have to take into account that if we move next year to growth models like we hope and like we expect, that we will also have to build up some inventories. It would be good if we can stay within this level or maybe improve a little bit, but we are already quite good here. Next question on the EBIT. On the EBIT margin, you shoot for 8% at group level. Could you give us a rough idea of the split by region by 2023? How far is it driven by Americas or APAC or maybe EMEA as well?

Thanks, Inka. I would like to take that. Well, actually, if you see the world, our as foreign world, about 50% of our group sales come from the EMEA region. We are very profitable here because we have a long history of good technology and good products in the market and also in aftermarket. If you see the Americas, which is about 35% to 40% of the total group, with margins, we were really unhappy in the last couple of years. Now it's slowly getting better. So this is due to your imagination to see what's going to happen in the future once we come back on track here. In 2015, we were somewhere around 8% to 9%. I'm not saying that we will be there next year, but it's something we are heading after. And the APAC region, at the moment, 10%, of course, we would like to grow that. And once we get higher production figures, more volume. Also here, we are going to be profitable. And if you take that all together, then we will be a minimum of 8% or around latest 2023 at 8%. And if everything goes well with cycles going up, rest is to your imagination.

Good. Then to future trends. Question is, when do you expect electrification to become a significant market niche? Christoph?

Yes. I think we are there, I would say. I've never seen so much interest in my professional life in trucks and trailers, as I mentioned before, so much interest in a technology as we see it at the moment for electrified axles. We are currently having many companies, maybe OE manufacturers of fleets asking for prototypes in order to test the systems. There's different offerings in the market. Everybody wants to test the different solutions out there at the moment. I think what -- I would like to answer the question. I think it is a question how big the niche is getting. The interest is there today. So I would say it is already a niche. It depends now on legislation. It depends on which system is going to prove in the market how big this niche is going. So we have roundabout between -- if I talk about EMEA, 25,000 to 35,000 cooling units or coolers running a trailer -- refrigerated trailers running in the market every year being produced. And it's now a question of time and technology on how this big this niche of electrified trailer axle spend is going to grow. But it is already a very hot topic at the moment.

Okay. Thank you, Christoph. So we are coming to the end of the first Q&A session, but you will have the chance to continue discussion after the update from the regions. We will now have a short break of 5 minutes and then looking forward to continuing with a deep dive from the regions. [Break]

Welcome back. So after having the introduction and the overview about the corporate or as we call it, the backbone functions, we would like to go now into the regions, and I will start to give an overview about what we are doing and what we are planning in the EMEA region, being one of top line and more importantly, I believe, the bottom line contributors for the SAF-HOLLAND group. Yes, what is EMEA all about? We are the operating region for Europe, Middle East and Africa, with the headquarters here in Bessenbach, Germany. We have 6 OE manufacturing centers around EMEA, 3 here in Bessenbach, 1 in Singen, where we manufacture the fifth wheels for the EMEA market, 1 in Italy with Orlandi that we purchased -- that we acquired 2 years ago. And last but not least, manufacturing side in South Africa, where we assemble some of the excellent suspension systems that we use them for the local market. Very important also, and I'll come to that, the 16 aftermarket distribution centers where we make sure that the parts are at the right time at the fleet if something breaks, if there is a spare part needed, so that the fleets keep running because only when they are running, they are earning money. We have 6 major product lines provided to the commercial truck and trailer industry. Axle and suspensions, we are the leading manufacturer in EMEA. Fifth wheels, we are #2. In the coupling systems with Orlandi, we are #3, mainly serving the Italian market, historically leveraging our sales team and our sales network now also distributed in the rest of EMEA, something where we see growth potential in EMEA. The kingpins, the landing legs, and last but not least, not listed here, the telematics which is mainly at the moment for the U.K. market and which we are utilizing as an innovation hub for the SMART STEEL activities that I already talked about. We have roughly had 1,450 employees last year, end of last year, contributing to the EUR 626 million sales that we did in 2019. A little more meat to the bone. What are we doing? Where we're standing in EMEA? I think it's very important to note that we have shown, I believe, also in the past month with the very volatile market that we saw, that we have a very resilient business model with a strong focus on trailer, axle and suspension systems. The EMEA region has shown with the setup that we have -- that we outperformed the market also in bad times. And I'll come to the reasons for that. But I think we have proven that we're a stable earnings contributor for the whole group. We have had and Inka talked about that taking cost measures, and I won't go into detail, but I think we can be proud that on the one hand side, we have reacted fast and quickly to the market downturn where we bottomed in Q2. But that on the other hand, we also have sustainable cost savings for the region that will not only bring us through the crisis, but that are really sustainable also for the years to come. We've lowered the breakeven point with these cost measures and also -- and that's on the bottom left, one of the key success factors that has brought us through the crisis, we have managed to adapt our customer structure over the past year. You see on the bottom left that in 2016, the share of the big key account trailer manufacturers in EMEA has made up of 35% of our sales, and we have lowered that in 2020 to down to 20%. And why is that so important? We have seen in the last month in the crisis that especially the big manufacturers with the standard curtainsider production have suffered from the market downturn. And especially the medium and smaller manufacturers had a stable path through the past months with their technological solutions that are not so dependent on the economic situation on a short term, and that has brought a stable demand also then to us over the past month or at least, the downturn was not as harsh as it was for the rest of the industry. How do we want to make sure that we remain with the strong position that we have in axles and suspensions? And we had the question in the Q&A, how do we want to make sure that we grow in the other areas to become the market leader? We have talked about that already before as showed at the CVs megatrends in terms of electrification, digitalization and automated driving. And we talked about the solutions that we are aiming for, that we are developing in order to increase the customer benefit, especially also in EMEA with the truck e-axle family with the SMART STEEL activities that we started a couple of years ago and investing really into the future here with a dedicated digital team, bundling, combining with our, as I would call it, traditional products, bringing digital know-how here into the axle suspension, fifth wheel and coupling systems. And last but not least, we talked about the automated coupling, the [ shack ] where -- yes, which is also a growth lever for us in the fifth wheels. Very important for us also when we talk bottom line is our aftermarket activities in EMEA, which drives the company profit. It makes up of around 25% of sales in strong OE years. So if we go back 2018, '19, it's a little below 25%. But more importantly, then when the crisis comes on the OE side, we see that the cyclical development that we have on the OE side is, yes, levered a little by the stable or more stable aftermarket business that we have. We for sure don't have cycles, like Kent will talk about later when he's going through the Americas. But also in EMEA, those that follow us already a little longer, that follow the commercial vehicle industry, have seen the volatility of the business. And one of the success factors then to be stable and reliable bottom line contributor is definitely the aftermarket business. What are we doing here in order to be the partner of choice for our customers with the 4,000 -- more than 4,500 dealers that we have around EMEA and the 16 warehouses I talked about? We really make sure that the products are there the day they need it, the moment they need it. We have very strong brands out there in the market with, on the one hand side, the SAF-Holland OE brand, but also SAUER, which is more for the second life of the trailer. So a best cost product with a good quality. And this leads that -- yes, we are a reliable partner for our customers. They trust in us. They trust in our performance. And we also do quite a bit in terms of innovation in the aftermarket to remain the preferred partner for our customers and the fleets using the aftermarket. How do we do that? So we talked before about OE innovations. And this one -- this page, I would call, the aftermarket innovations we talked about, which also is a lot of development in the digital arena. So we see digital media management that we do in order to use apps to provide technical information to our customers, but also to the workshops out there. We are working on automation of the customer interface in order to increase the -- yes, handability for our customers, but also to gain efficiencies internally, and we are working on e-commerce platforms to make those better to improve them. And we have already e-commerce platforms like the POD, the Parts on Demand, for sure using CRM and the digital marketing. And we've seen very much in the past months with the COVID that it paid off to invest into those solutions over the past years already. Because just as an example, digital training has increased significantly over the past month. I think we did very well in having invested in those things before COVID and to use those now and making digital trainings available to our customers. Yes, wrapping up, what is EMEA all about. So we are a stable and reliable earnings contributor. And our clear strategy is to remain that. We have shown that we have a very resilient business model with strong focus on trailer and axle, suspensions. We want to maintain and increase this position through innovations on the one hand on the OE side, but on the other hand also on the aftermarket side, which have shown that this is very important. And looking into the future, the strong and still increasing OEM population that we have also because of the rising of market shares over the past 4 to 5 years that we've increased significantly our market shares makes us look bright into the future in terms of using this strong position, strong population also then in the aftermarket. Thank you. [Presentation]

Good afternoon. My name is Kent Jones, and I'm the President of the Americas region. I'm broadcasting to you today from the U.S.A. And unfortunately, due to the coronavirus restrictions, I haven't been able to be with my German colleagues during this presentation. By way of background, let me introduce myself before I give you a tour of the Americas region. I've been with SAF-Holland just a little over 1 year, about 14 months. And -- but I have an extensive history in the commercial vehicle industry. Starting with my education, I'm an industrial engineer by degree, and I have an MBA from a top U.S.A. MBA program. I've worked for over 20 years in the commercial vehicle industry, and I started my career with a former General Motors parts making division called Delco Remy. They were a global leader in rotating electrics and advanced electrification programs. I then moved to TRW, another global commercial vehicle brand, and I spent the last 5 years with a strong German company with ZF -- with the ZF Group. And I worked in their commercial vehicle group. So I spent my career in operations, engineering, program management and many P&L roles. Now let me give you an introduction to the Americas, which is the biggest lever for value growth. Well, the Americas sounds, as it should be, it's the U.S.A., and it's the operating company for U.S.A., Canada, Mexico and South America. We're headquartered in Muskegon, Michigan, which is about a 3-hour drive from Chicago and about a 3-hour drive from Detroit. So we're in between very large metropolitan areas. We have 6 major manufacturing centers and 6 separate aftermarket distribution centers. We have over 5 different product lines where we sell to both the commercial truck and the commercial trailer markets. As Alex mentioned earlier, we are #1 or 2 in every single one of our markets. We're #1 in fifth wheels, as you can see in the upper right-hand corner, our lightweight fifth wheel product line; we're #1 in landing legs for both OE and aftermarket; and we're #2 in truck air suspensions, #2 in trailer axle and suspensions with a primary focus on mechanical and #2 in couplers and kingpins. Last year, our total turnover was EUR 534 million at a market peak, and we currently have 1,350 (sic) [ 1,351 ] employees operating in 4 countries and 13 separate facilities. Let me give you some insight into a very important program that's happening in the Americas with a focus on the U.S.A. called Program FORWARD 2.0. This is a restructuring initiative that started over a year ago that has made significant progress in 2020. As said earlier, using our FORWARD 2.0 restructuring initiative, we believe that the Americas is the biggest valuation lever for SAF-Holland Group. And despite a market decline year-over-year of approximately 50%, the Americas region is giving improving results to the overall group. I want to draw your attention to the graphic on the upper right-hand side. And you can see that from third quarter of 2019 to third quarter of 2020 we have had approximately 50% reduction in top line revenue. The U.S. market is unfortunately known, or the North American market is unfortunately known for high peaks and valleys in a cyclical market. And unfortunately, the coronavirus pandemic has made that even more difficult. But if I draw your attention to the orange line, you can see that our third quarter results of 5.6% adjusted EBIT reverses an unfortunate long trend of deteriorating financial results. How did we do this? Well, it primarily is our Program FORWARD 2.0 restructuring initiative. Through this initiative, we have achieved over EUR 73 million of cost reductions in this downturn and improved financial results better than we did in previous years with greater than 50% sales. These reductions in our cost of goods sold and our manufacturing plant efficiencies and our SG&A significantly lowers the breakeven of the Americas region and puts us in a strong position where we are prepared for market upside in 2021 through 2023. You can see in the lower right-hand corner, this is a graphic of our headcount in the Americas region, where we had over 1,900 employees 1 year ago and down to approximately 1,300 to 1,350 employees now. These reductions are both structural and cyclical, but we expect good results for the future. Another big initiative for our Program FORWARD 2.0 restructuring is what I like to call portfolio modularity and complexity reduction. What does this mean? Well, we're trying to make our business more efficient and much simpler to manage. To give you a bit of background, in the Americas here, over the last 20 years, we have accumulated many brands. And you can see in the graphic on the right-hand side we had brands through acquisitions of Simplex, Neway, Binkley. Of course, the global SAF-Holland brand is now in the U.S., Austin-Westran and Holland. And through this time frame, we had far, far too complex of a business and too many low or no contributing applications. So what are we doing? Well we are exiting profit losing product lines. This may sound simple, but when the business is complex as over 11,000 applications through all of these brands, and we really didn't work in the past on synergies of these brands, we're taking in a very aggressive action to reduce this by over 50% to where we have less than 5,000 applications or what you would call an industrial manufacturing part numbers. And we think we can do this and still maintain over 97% of our overall total revenue. So what happens when we do this? Well, I mean it's what you would expect. It significantly improves the business efficiency of all of our product lines, allows us to be better for our customers, improve delivery performance, improve quality and overall improve customer relations. In the business efficiency, it helps our operations with less complex, fewer changeovers, less toolings that we have to be able to buy and maintain, helps us to have a simplified supplier base. We can overall reduce inventory with less applications. And certainly contributing to this year's results in cash management, it improved our cash is king results as well. We're going to modularize every single product line where we're #1 or #2. And if we're not #1 or 2 in a marketplace, and it's not contributing to our company, we give serious consideration that we will exit that product line or exit that application. We think this gives us profitable growth with stable, strong future market share. Let me also talk about the aftermarket in the Americas. It is a very strong business, just as in EMEA region, and with SAF-Holland and Global. But it also smooths the business cycle. In the Americas region, just like in EMEA, the spare parts business drives company profit. And in the OEM business, which can increase plus/minus 50% or minus 50% plus 100% in a business cycle, the aftermarket is much more moderate and gives us strong results. We have 7 aftermarket distribution centers in the Americas. And this allows us to give next day part delivery to over 95% of North America. We have 2,700 dealer and distributor customers and over 3,500 service points where our fleet customers can get service on genuine SAF-Holland products. We really do have the strongest brands in our markets, and we have the top customers. We sell to strong OEM brands like Daimler, Volvo, PACCAR, Navistar, and strong trailer customers like Wabash, Utility, Great Dane and many independent aftermarket customers such as FleetPride and Aurora. We have safety, trust and performance of our customers. Our products are safety critical and they spec SAF-Holland. Just before the pandemic in approximately 1 year ago from today, we launched a digital online e-commerce web shop, and it's called POD Plus. And this was a fantastic investment that has significantly helped us through this pandemic. We see orders online up over 20% with digital information for sales, service, training. And it has been a fantastic tool, and my congratulations to the team for launching this. In summary, as Inka has emphasized, and I would also like to emphasize, the Americas region is the biggest lever of improvement for SAF-Holland, and you can already see those results. We are achieving these results in 2020, and we will continue in 2021 with our restructuring program of FORWARD 2.0. We had over EUR 73 million in savings, and you can see that in our third quarter performance. We're also simplifying our business and making it much more efficient. We're working on product line modularity and complexity reduction to increase overall efficiency. And for the long cycle, the aftermarket remains a strong, strong contributor and dampens these high and low OEM production levels. I thank you for the opportunity. [Presentation]

Ladies and gentlemen, welcome again to the overview of the APAC region. In my dual role as COO and President in China, I'm very happy to introduce you now to the complete region, APAC, which is geographically the most diverse region in our business. With 5 OEM manufacturing centers, in India, China, Thailand, Singapore and Australia, and 115 aftermarket service points, 240 aftermarket dealer points, we are quite well set at the moment. In addition, we're just now adding in China additional aftermarket service and dealer points, which then come on top on these numbers. In APAC, we provide all of the major product lines to the commercial truck and commercial trailer markets. 2019, our sales have been EUR 123.4 million. And at the moment, we have 539 employees, which have been sadly reduced, and I'll come to it in 1 minute. Why did we name this page future opportunity? As stated, APAC is the geographically largest region in our business and has enormous potential for an increased customer base and product distribution. In India, our York brand, holding very clearly the #1 position in market shares. In Australia, we have a very solid and robust customer base, and SAF-Holland has settled well. Over the last years and months, we have rightsized the organization and heavily focused also like my colleagues on SG&A reductions, which then has significantly lowered our breakeven points. Thus, we are very well prepared for the post-COVID time when market return to regular activity. You can see on this slide in the lower chart that we have reduced our number of employees from over 1,100 employees to, like I just mentioned, 539. For sure, we are not happy with our current financial situation, but we are very confident that we can improve this in the next couple of months in the year 2021. To China, I would like to mention in my next slides because within APAC, China is a stand-alone opportunity. In my first year at SAF-Holland, the team and I have closed all of the legacy sites in China, from Baotou in the north of China to Qingdao in the Shandong province, Beijing warehouse, offices, Shanghai offices, and at that time, our largest manufacturing facility, in Xiamen in the South. We have closed all of these offices, warehouses and sites to consolidate in our state-of-the-art new greenfield facility in Yangzhou in the Jiangsu province, which is close to Nanjing and to Shanghai. As part of our consolidation efforts, as I just mentioned, we have reduced only in China alone more than 400 employees. Unfortunately, like many other international companies, we have faced travel limitations and difficulties due to the COVID quarantine. And we could only partially support the ramp-up and our business efforts with our international experts in China in the last months. So step 1 was to consolidate all activities and integrate into our new greenfield in Yangzhou. Step 2 is now to build up and ramp up the state-of-the-art facility. With our main product groups, you can see here on the right side, air suspension, trailer axles and landing gears. Now let me give you a quick insight in the China market. In the regular market, and we are confident we're coming back in 2021, we face around 600,000 trailers per year, the China market alone. We estimate approximately 35%, 36%, so more than 200,000 trailers, that they have the governmental safety regulations, tankers and dangerous goods. And for this, the government has already announced and is in place that these trailers must be equipped with air suspensions and disc brake axles. So this is a product SAF-Holland is very, very familiar with. So if we capture only 10% to 15% of this specific market, we are already utilized quite well with our current capacity in Yangzhou, but we still would have a little bit room for some very special orders to them. In India, our SAF-Holland York company has over 60% of the market share in trailer axles and is definitely and clearly the industry leader in quality and customer support. Our scheduled India greenfield is at the moment postponed until 2022, also due to the market downturn due to COVID-19. But we're following up very closely. And as soon as we have the first indications that the India market will come back, we will return -- we will restart our facility project here in India. Our APAC headquarter is located in Singapore, which gives us the valuable flexibility for all of our export activities. As a result of having long-standing reputation as a quality brand leader, SAF-Holland in both Australia and New Zealand has a very loyal customer base, delivering strong and a stable market share for our premium products. So what is our key message? What we want that you please take away here is, in APAC, we are ready. We have laid the profitable ground for further growth. In China, we are ready for the restart. In India, we are ready as soon as the market recovery will take place. And overall, we also benefit in the APAC region as a whole from a very strong OEM population, and thus, we benefit from our aftermarket possibilities. So at this moment, I would like to guide you to the next movie, which gives you a short insight in our Yangzhou state-of-the-art greenfield facility. Thank you very much. [Presentation]

Welcome back to the second part of the Q&A. Looking forward to continuing the discussion with you. Let's see what we have here as question.

Dear management team, thank you for this insightful presentation, and congratulations to the good results. Could you please elaborate further on China? Why could you not participate in the market uplift in the recent months also compared to your competition? André, I think, this fits very well to your presentation right now.

Okay. Thank you, Inka. Let me start, and then Alex can step in also. So by the end of last year, like I said, we have consolidated all the facilities, and we have been very well prepared for the ramp-up of our Yangzhou facility beginning of 2020. But then, unfortunately, in China, I think we all know it, COVID strike first. So we had to completely shut down also here our facility. Like I mentioned in my presentation, we have really been puzzled because we could not send, as scheduled, our expert team to really support the young team in our new facility. So at the moment, we are just slightly behind because we have greatly catched up. Right now, we have experts on site in China. And over the last couple of months and weeks, we have really done some very big steps forward. And we are confident that now we are already in the middle of catching up to the market uplift in China.

I also would like to add something to here. And to be very honest to the audience, from a product perspective, we also did something wrong because we thought that we can use our European Intra design, which is a standard design for disc brake trailer axles also in China. But in China, the axles have to be a little bit more rigid with more reserves than we use it here, so we lost some time. And since middle of 2020, we are now ready with our CBX25, the 25 stands for 25,000 pounds, which is more than 10 tons in China. And also with the delay of the ramp-up due to COVID, we started later, and this is the main reason why we couldn't participate. Unfortunately, we'd have reached that. But unfortunately, we couldn't participate, but we are looking into the future and also growing midterm and long term in China.

Good. Another question on China. Does government regulation in China also include regulation of landing gear? What strategy is there to enter China domestic demand with landing gear? André?

Yes. Thank you, Inka. I'm happy to take this. At the moment, the government in China is not regulating the landing gears, but so, like I said, the suspension on the axles. At the moment, what we are doing, we have reestablished our business relationships. And please allow me, I apologize, I cannot go in all of the details. But a lot is going on right now with our teams like you have seen in my presentation. Already our sales team was allowed and could travel in the last months to all of our customer and prospective customers to really put these strings again in place. So with our new established manufacturing facility and our lower cost base, we are quite confident that we can enter the local market also with the landing gears very soon.

Okay. Next question is on CapEx. Historically, SAF-Holland has reinvested some 3.5% to 4% of its revenues in CapEx. Previous management suggested there was limited wiggle room to reduce this. Yet you are guiding to only 2.5%, which would drive quite a big increase in free cash flow. How do you explain that your assessment is so different from theirs? I think, Alex, you have been the longest time in the company and can provide the answer to the biggest difference.

Well, first of all, I have to admit it is not theirs because I also was part of the management team at that time. And as I said before, if we go back to 2018, we, as a company, already took the decision to strategically invest a higher amount of CapEx, which was in '18 more than EUR 40 million. So the 2.5% would be around EUR 25 million, so EUR 40 million at that time. And even in 2019, we spent about EUR 53 million, and this also included our greenfield operation in China. We feel that we are well invested now. Of course, there is room for improvement also in the future. But with a 2.5%, and if you take EUR 1 billion, for instance, it would be EUR 25 million, there is a lot of room for further improvements of our plants, specifically in the U.S., but also in Europe, in China. There is no need in the years to come because we have a state-of-the-art facility. And if we are going to do a planned expansion in India, this is a single-digit million euro amount. So I think we can be there from our normal operating financials.

Okay. Next question goes to Kent to the Americas. Out of the EUR 73 million cost savings you target in the U.S., could you please provide the breakdown between '20 and '21? Short this -- I would like to hand this question to Kent, but with a small disclaimer that, of course, at this moment, we don't yet provide margin guidance for '21. We will do that in due time then. Kent?

Thank you, Inka. I'll answer the question relative to 2020. Our FORWARD 2.0 restructuring initiative created cost savings and profit improvements throughout the business. This happened in the sales line, trying to push more profitable product lines. It happened in the materials line, pursuing cost savings in the supply chain, purchase price, logistics costs, freight costs and, of course, included operational efficiency improvement. So it was up and down the P&L. These changes in 2020 are both cyclical and structural. Of course, when the market declines from first quarter to second quarter by 100%, and then we've had some increases in the third by 10% to 15%, we had to take drastic cost-cutting measures. Approximately 25% of these reductions should be sustainable, but many of them are cyclical. And as the market increases, we will have to hire people back to build our product. We will have to buy obviously more material, but overall at a much more efficient level.

Okay. Next question goes in the same direction. And it's when do you expect to return to the historic profitability levels in Americas of more than 9%?

Well, we're not giving -- this is Kent Jones again from the Americas. We're not giving guidance in the future about regions -- regional performance. But we do think that markets will increase in 2021, 2022, 2023. The commercial vehicle economists in the U.S. are showing strong GDP growth, which, in turn, turns into strong freight growth, which, in turn, proves higher vehicle production for Class 8 trucks and also for trailers. We expect to continue to participate with our strong #1 and #2 product lines. And with our lower breakeven that we have in our business, we see strong contributions on the upside of this marketplace and continued strong aftermarket performance.

Good. Next question is about M&A. And what is your M&A strategy going forward? Alex, you or me or both?

Yes. Well, to put that in a nutshell, we will be, as a company, more conservative in the future. It has to really have the right fit for the company. And 1 plus 1 needs to be at least 3. So we want to be more conservative of this.

Yes. Maybe I can add to something on the M&A. I think -- I mean, it's clear that the priority will be on organic improvement. We have here quite some levers to improve our margins organically. And this is a homework we must do first. And then only we would look into something strategic like that. And also the headroom is what it is with the current balance sheet structure. So I think it's clear. It's nothing at the moment that we have on the table. Next question is about dividend policy. Question is with our dividend policy unchanged, can investors expect a resumption of the dividend for the 2020 financial year? The answer is we have to look into this, and we will communicate when we have 2020 results. Yes. Next question is about harmonization, standardization. You've talked about harmonization of tools and processes across regions. Will you require significant IT investments like ERP, for instance? I can take that as well. I'm in charge of IT as CFO as well. So we are introducing ERP and specifically SAP systems since a few years already and have -- are in the process of finishing rollout in China and in Americas. And then we will have the main regions covered with SAP. So that's a process which has been started already quite some time ago and is progressing quite well. Next question is about disruption. Disruption by aggressive new players is a key concern in many industries. How can you be sure that the CVS megatrends listed in your presentation will serve to defend and increase your share in the EMEA business overall? Christoph?

Yes. I think our share of delivery to a trailer is quite significant. If you look at a standard curtain sider, the cost or the sales price is around about EUR 18,000 to EUR 20,000, if we talk about standard curtain siders. So we have a significant share between 20% and 25% to that, I would say, of that share. I think there is significant know-how also contributed to the excellent suspension system. And I think it's about adding know-how that pay into the megatrends that we see. Do I see disruption? Do I see new players entering at the moment? I would say there is new companies entering. If I take electrification, for example, offering that battery systems, which is not attacking our core product, as I would say, since they don't step into our core product like the axle, suspension or the fifth wheels. But we here believe in alliances and have already formed alliances with those new companies entering the market. So wrapping up your question, I see disruption. I see new companies coming in. I don't believe that due to the contribution that we have to trailer manufacturing, the amount we are contributing and the know-how we are contributing that this is attacking our systems, our products. But that we, yes, form alliances with those companies in order then to offer the most competitive product, the most customer benefit to our OE and fleet customers.

Thanks. Next question is about the midterm margin guidance. Could you please provide an adjusted EBIT margin bridge from 5% to 6% in 2020 to 8%? I mean, it's not -- the 8% is not just a best guess number. So we are right now in the middle of the budget process for next year, but also in the middle of the midterm planning for the company. And behind the 8% there is really very thorough bottom-up business plan behind. And if we look at the overall development between now and 2020, there is no hockey-stick effect, believe me. So it's really a smooth, continuous improvement throughout the year. What are the main levers? I mean, we've talked about it. We've done a lot of cost cutting. And it's not only cyclical. It's also structural. So we've taken out loss-making products. We -- the customer base is more profitable. So we are really in a much better position when the cycle goes in and what comes in additionally. I mean those of you who have been following our company know that we've had a lot of one-off topics in the last years as well. So now as we enter into a mode of better execution, so this is a top -- this is a tailwind for us as well. So it's volume, it's mix, mix in terms of customers and products, but it's also less negative one-off effects. Next question. Is your net working capital definition including factoring? Net working capital definition, it includes factoring, but we provide always the breakdown of the factoring. Our factoring volume overall is about EUR 50 million concerning certain customers. And if you compare the numbers now for 9 months, for example, with the last 9 months numbers, so the factoring is really more or less the same at about EUR 30 million. So there's no real -- we don't use the factoring to short-term improve the net working capital. It's a means for very good financing. We have very good financing terms and that's what we use it. Gold Line spare parts is the next question. Is it a success? Can you estimate the loss of revenue from cutting unprofitable products? Alex, do you understand this question?

Gold Line, I would like to give to Kent since that our -- this is our second brand, like SAUER in Europe. This is Gold Line specifically in North America.

Thank you, Alex. Yes, just for a bit of explanation. Gold Line in the Americas is an all-makes value brand in the aftermarket, much like the SAUER brand in Europe. Honestly, it's a small portion of our total aftermarket product line. It has been provided to many of our dealer and distributor customers as a convenience buy to buy all-make product lines in high consumption, high velocity categories, like brakes, wheel-ins, bearings, linings, et cetera. I would say it has been successful, but we've really been focusing on our SAF-Holland branded products, original OEM equipment purchased products into the aftermarket. The -- I think the second part of that question was how much revenue loss would be due to cutting unprofitable product lines. As I stated in my presentation, we believe and we've modeled this, that we can achieve less than 3% reduction in revenue by exiting unprofitable product lines. In many cases, when you have over 11,000 applications, as we have had here in the Americas, you have many duplicates, many easy substitutes to be -- just for example, we have over 4,000 ways to connect a truck and trailer. That may seem impossible, but the fifth wheel applications were over 4,000. So when we take a strong cut at those value -- those applications that aren't contributing any value or just cluttering up our plants or low volume, there's a very easy substitute to be able to move into a higher velocity application, a more efficient production solution and still be able to capture that revenue from our customers. If we can't find solutions, then, of course, we will approach customers in a fair and balanced way to discuss an exit.

Next question. How much of the personnel cost and SG&A savings in '19 are sustainable or remain even when sales volumes recover to, say, 2019 levels? Yes. I mean there's a part of the savings, which is not sustainable. We had a very detailed look into it, and we exactly know what it is. I mean it's clear that travel and marketing came down very strongly this year, but we've included also in our next year budget and in the long-term planning a gradual increase of those costs as well. So yes, we will have some headwind from '20 to '21 because not all the cost savings are sustainable. But on the other hand, we have so many tailwinds from volume. And if you know our numbers, you've seen that we've had some inventory write-offs, which have been included in the EBIT-adjusted number. So this is a tailwind as well. This definitely compensates.

And Inka, if I may add. What will be sustainable is the white collar SG&A we cut already in 2019 and in 2020 and also the supplementary agreements we made with the unions for all the plants in Germany because that goes until the end of 2024 for now. And this will be sustainable.

And that's the last question. And Alex, you can directly continue with your closing remarks.

Thank you so much. [Presentation]

What are our key takeaways for today? Our Strategy 2025 has a main focus on profitable sales growth, EBIT improvement, portfolio optimization, operational excellence, and also cash flow generation. With our technology, we will conquer leadership positions in new business that address the megatrends in the CV industry, and our operational excellence is the basis for future success. Our financial framework has a strict performance orientation based on midterm targets. In the EMEA region, we are going to maintain the high margin level due to our population we have and also increase business through our innovations. Americas, we heard that multiple times is the biggest lever for our margin improvement in the group. And in APAC, we saw and, also documented by the video, you can see that's the state-of-the-art facility, have laid the foundation of profitable growth in the future. Ladies and gentlemen, I am also amongst the top 20 shareholders of the company. I bought a lot of shares in 2019 and also during the crisis in 2020. I am strongly convinced that we will be successful in the future. And together with our team here, with my colleagues, we will make sure to profitably grow in the future, to grow our company, your company, and also that we stick to what we promise. Thank you very much for your trust, and please stay healthy. Thank you.