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

Dear ladies and gentlemen, welcome to this SAF-Holland SE Q2 and H1 2023 Results Call. Today's presenters are CEO, Alexander Geis; and CFO, Frank Lorenz-Dietz. [Operator Instructions] Mr. Geis, the floor is yours.

Good afternoon, everyone. This is Alex Geis speaking, and a warm welcome to our conference call on our Q2 and half year 2023 results. Post COVID-19 global economies have seen supply chain disruptions, substantial inflation as well as interest rate hikes by major central banks. Against this partially adverse economic environment and the cyberattack, SAF-Holland performed very well and resiliently showing strong management capabilities. Ladies and gentlemen, we at SAF-Holland remain focused on delivering profitable growth also during challenging times. Moving on to Q2 '23 highlights on Page 4, please. Here all, we have seen a strong year-over-year sales increase of 37.7%, mainly driven by Americas and APAC regions and the consolidation of Haldex. Even if we were to exclude the Haldex acquisition and just look at organic sales growth, we would have grown very strongly by 11.4% in Q2. Splitting the organic growth by region, Americas and APAC were the main growth drivers, while EMEA was organically slightly down, which was due to some mix effects linked to the cyberattack as well as a demand normalization. Our aftermarket also performed strongly, growing 55% in the quarter due to Haldex and prior strong OEM business growth, so our population we created, our addressable aftermarket is increasing. Let me also speak about the cyberattack briefly. I have to say, I'm proud that we managed the whole situation very well, including a constant communication with all stakeholders. We delivered on what we promised, means recovering the production shortfall, mostly in the past quarter, so Q2, proving we can manage in challenging situations. Let me use this opportunity and thank everyone that was involved, spending long days and nights to recover the whole situation. Lastly, but certainly not least, we updated our fiscal year '23 outlook, now targeting sales slightly above EUR 2 billion and an adjusted EBIT margin of up to 9%. Next page, please. Starting on the left side. As indicated, all regions grew strongly. EMEA plus 12.6%; America strongly with plus 61.5%; and APAC very strongly with 85% growth in Q2 '23. In sum, we have seen Q2 sales at EUR 555 million, a strong EBIT margin of 9.1%, and adjusted EPS of EUR 0.74. Despite strong sales growth, we managed to bring down our net working capital ratio to now only 15.4%. This is including Haldex, of course. And the strict net working capital management will remain a top priority within the company. Our operating free cash flow was also strong, ending the quarter with EUR 25 million. So let me speak about group sales development on the next page, please. We can see that we saw continued strong demand from customers for trailers and truck components, both higher volumes and prior price increases plus aftermarket supported our revenue growth. H1 '23, sales increased by 34% to now EUR 1.036 billion. Organic growth was 11%. Q2 '23 sales grew 37.7% and the 11.4% organically. And Haldex, by the way, contributed EUR 117.3 million to the Q2 '23 group sales. Ladies and gentlemen, overall, the highest sales we ever had in the company's history, combined with a more balanced sales split by region, which we can see on the next page. You can see on the left side, the Q2 numbers of '22, on the right side Q2 numbers of '23. And due to the Haldex strong position in Americas, they generate roughly 50% of sales in that region, we have seen a shift with the Americas gaining importance, now making up 44% of sales per Q2. EMEA now at also around 44%, so balance between Americas and EMEA, and APAC increasing to 12.5% now. With Haldex being consolidated for a full quarter, we're also seeing aftermarket having gained importance. You can see that portion of the aftermarket is now 32% of group sales. So this is what we wanted. 1/3 is aftermarket, 2/3 is OE, a pretty good share here. As Haldex is slightly more geared to the truck market, the split has increased from 12.6% to now 14.4% in the second quarter of this year. And you can see still the biggest customer category is trailers with more than half of group sales, nearly 54% of sales. On the next page, you can see the EBIT improvement. So in the first half of 2023, our adjusted EBIT improved by 69.3% to now EUR 94.2 million, leading to a significant margin improvement from 7.2% last year to now 9.1%. Q2, our adjusted EBIT was EUR 50.8 million, up by 58%, equal to a margin of 9.1% now. Improvement in adjusted EBIT resulted mainly from higher volumes, increased aftermarket share, as well as the prior price increases compensating higher material, logistics and energy costs. Process optimization, cost efficiencies and economies of scale, especially in SG&A, were also supportive, Thus, we reached our targeted synergies from the Haldex acquisition. So not considering Q4 last year, which is seasonally the lowest quarter from a margin perspective, this is the third consecutive quarter with a margin of around 9%. Great results. So let's speak about the different regions, starting, as usually, with EMEA on the next page, please. So you can see H1 '23 sales for EMEA increased by 13.6% and 12.6% in Q2 '23. Organically, both H1 and Q2 were slightly down. However, organic growth was above market development. I will speak about that later on. The slight organic revenue decline reflects mix effects and still some unprocessed orders due to the cyberattack, as well as demand normalization for trailers coming from a very high level in 2022. The EMEA region recorded solid sales growth in the aftermarket business in Q2 '23 due to Haldex consolidation as well as an increased addressable aftermarket due to the OEM population we put in the markets years before. The adjusted EBIT developments of EMEA, we can see on the next page. So we have seen double-digit increase in adjusted EBIT and margin expansion in both the first 6 months and Q2 2023. So slowly coming back on track here. Product mix, higher aftermarket share, price increases and also internal efficiency improvements had a positive impact. Q2 '23 versus Q1 '23, adjusted EBIT margin is slightly down. This is impacted by full consolidation of Haldex now in the second quarter. As Haldex has a much lower adjusted EBIT margin profile in EMEA than the SAF-Holland EMEA stand-alone. And of course, be assured, we have already taken initiatives to improve the Haldex EMEA margins. So on the next page, coming to real success story after years of suffering, let's talk about Americas. So overall, the demand for trailer and truck components remained robust in the region and also will remain at least until the end of this year. And due to our strong position, we also benefited from the trend towards disc brake axle systems, so we can see a sharp increase in axles being ordered, equipped with air disc brake axles, which is good for us in the years to come because of the OE population, and this is deemed good for the aftermarket. Our Americas region H1 '23 sales increased strongly by 55%, and also adjusted for FX or M&A effects, Americas grew 16.1% in the first 6 months, and rest, of course, was the consolidation of Haldex. Our Q2 '23, sales was up by 61%, adjusted for FX and M&A, still an increase of 15%. Let's speak about the adjusted EBIT of the Americas on the next slide or next page. And as I said before, after so many painful years, now Americas region, specifically '17, '18 and '19, I have to say I'm very proud that Q2 '23 was the fifth consecutive quarter with a margin of around 10%. And this is our target also for the years to come. So our Americas region saw a very strong double-digit adjusted EBIT improvements, both in H1 and Q2 '23, with margins of around 10%. And the strong improvement in earnings was primarily the result of the operating leverage, so we did our homework due to the strong sales growth. And we also implemented efficiency enhancements and savings in the overhead area. Also here, the synergies are kicking in. Next page, please. Finally, our APAC region, starting with sales. So you can see there is a substantial growth in the APAC region, and this was driven by the ongoing strong development in India due to the government infrastructure measures and the expansion of its transport sector, combined with much higher export from India, plus the continued strong demand in Australia and Southeast Asia, specifically in the mining sector. I also can report that our business in China doubled sales in Q2 versus Q1. Still on a low level, but we are gaining momentum. And a clear target for this year is to reach the adjusted EBIT breakeven in China, which then -- and we will talk about this in the next page, will increase our margin even further. In sum, APAC H1 '23 sales grew around 70% and an even stronger 85% in Q2. So organic growth was 60%, so mainly coming from the old SAF-Holland [ Group ] and the rest Haldex. And in Q2, organic growth was also 72%. Speaking about the margin on the next slide for APAC. So the overall economies of scale from the higher business volume in India, profitable business in the mining sector in Southeast Asia, and also a favorable product mix were supportive both in Q1 but also in Q2 of this year. I mentioned already the further improvements in the operating performance in China, also helped to increase the margins further. And you can see in sum, adjusted EBIT improved 83.6% in the first 6 months of this year. And a really strong 103.6% in Q2 '23, equal to significantly improved margins of 11% in H1 or 11.3% in the second quarter of this year. Right. Having said this, I would like to pause a bit and hand over for Frank -- to Frank for further financials.

Okay. Thank you, Alex, and good afternoon to everybody from my side. I want to present some highlights of the table EBIT to adjusted EBIT reconciliation for the group on Page 16. The delta between adjusted EBIT and EBIT in the second quarter, this EUR [ 17.3 ] million, is bigger than last year. Main topics are the following: the PPA position of EUR 5.9 million contains existing PPA for prior acquisitions of EUR 2.3 million, Haldex related PPA of around EUR 2.8 million for the second quarter 2023, and a catch-up effect of 1 month of Haldex PPA in Q1 2022 (sic) [ 2023 ]. The PPA run rate from the third quarter onwards should be around EUR 5 million per quarter. We also recorded an inventory step-up of EUR 5.3 million related to Haldex. The position restructuring and transaction costs include extraordinary expenses for external consulting and IT-equipment related to the cyberattack of approximately EUR 4 million and costs for post-merger integration of Haldex of around EUR 2 million in the first half year 2023. Overall, the adjusted EBIT performance, which is calculated excluding the described one-off factors, both from nominal and margin perspective, looks really good. On Page 17, you see the bridge from EBIT to basic earnings per share. EBIT was EUR 33.4 million and up by 20.8% against prior year. Finance result is around EUR 5 million and includes a mid-single digit positive FX-effect. The finance expenses were EUR 10.4 million in the quarter. The second quarter tax rate was 37.2% due to a non-capitalized deferred tax assets on loss carry-forwards at some subsidiaries. The third and fourth quarters should show a more normalized level and full year 2023 tax rate is expected to be in the corridor of 29% to 34%. While basic earnings per share was EUR 0.39 and unchanged against prior year. The adjusted earnings per share was significantly up by plus 45.1%, reaching EUR 0.74 in the second quarter 2023, that means a significant increase. On Page 16, (sic) [ 18 ],we can see the development of our equity ratio. Compared to December 2022, equity is slightly down by 1.8%, mainly due to the dividend payment towards shareholders and some negative FX effects, while balance sheet total is up by 12.6% due to the consolidation of Haldex. Equity ratio is therefore slightly down at 25.7% versus 29.5% per December 2022. On Page 19, I'd like to speak about the net working capital development. I think it's really impressive. Net working capital ratio of SAF-Holland was 15.4%, slightly improved sequentially due to our strict net working capital management. Net working capital management is and remains the top priority for SAF-Holland. Against December 2022, net working capital ratio increased due to the consolidation of Haldex, which has a significantly higher net working capital ratio at around the 20% mark. On Page 20, we see the cash flow development. We have seen a very strong development of operating cash flow and operating free cash flow in first half year and especially the second quarter 2023. The increase in operating cash flow was mainly due to higher earnings before taxes and our strict net working capital management. Cash taxes were around EUR 27 million in the first half year, up from around EUR 14 million due to increased earnings before taxes in prior periods. Payments for investments in property, plant, equipment and intangible assets were EUR 13.1 million in the first 6 months or EUR 6.4 million in the second quarter of 2023. The operating free cash flow was EUR 30.5 million in the first half year and impressive EUR 25.1 million in the second quarter 2023. The second quarter free cash flow generation significantly accelerated against the first quarter of this year, and we are confident to achieve a solid operating free cash flow in the full year 2023 as well. Now talking about ROCE. ROCE, you can see on Page 21. The second quarter ROCE was 17.1%, up versus first quarter 2023 due to a stable capital employed, while adjusted last 12 months EBIT increased slightly. 17.1% is a very good level and significantly up against 2021 and 2022 levels. Moving on to leverage on Page 22. Including the pro forma last 12 months EBITDA contribution of Haldex and the related debt, our net debt to EBITDA ratio amounted to 2.5, down from December 31, '22 value of 2.6. Q2 increased slightly versus Q1 due to dividend payment and PPA items are reducing the last 12 months EBITDA slightly as well. It is important to note that we are calculating leverage against reported EBITDA and, therefore, some of the one-off elements reduce EBITDA and increase the leverage. If we would calculate June 2023 leverage based on last 12 months adjusted EBITDA, it would have been 0.2 lower, ending up at 2.3 instead of the 2.5 you see on the slide. Overall, based on the strong operating performance and strict net working capital management, we confirm our intention to reduce leverage to at least 2.0 until fiscal year 2024. Now I would like to give you an update on Haldex goodwill allocation and Haldex integration on Page 24. Based on the current status of goodwill allocation, the purchase price allocation for Haldex, led to a goodwill on balance of EUR 58.5 million, matching the previously communicated corridor of EUR 30 million to EUR 70 million. Inventory step-up at Haldex, already mentioned before, was EUR 5.3 million, also matching the anticipated amount. Additional PPA amortization from Haldex is expected to be approximately EUR 11 million per year, unchanged against our prior communication. Important to note for this year, due to Haldex being consolidated as of February 21, 2023, PPA amortization for the fiscal year 2023 is expected to be 10/12 of the EUR 11 million. On integration and reaching the communicated synergies, we continue with really good news. SAF-Holland is on a very good way to reach the targeted synergies of EUR 10 million to EUR 12 million this year and integration is running really well. Long-term synergy target of EUR 25 million to EUR 35 million for the fiscal year 2027 remains unchanged. Having said this, we move now to the market update. And I give back to Alex.

Yes. Thank you, Frank. I'm on Page 26 now, talking about the fiscal year '23 outlook, both trailers and truck markets. Starting with EMEA. And due to the adverse economic environment and persistent uncertainty still surrounding the Ukraine conflict, the European trailer market measured in terms of production in '23, is from our side, expected to decline slightly by minus 5%. The truck market, however, based on the strong OEM order backlog and ongoing customer demand, is forecasted to grow by around 10%. And in North America, both trailer with around plus 8%, and truck markets with around plus 10%, should continue to grow. And we also can see that. So order intake is very good and very bullish. The Indian market for trailers is forecasted to keep the strong momentum from H1 and grow in the high double digits. So our current estimate is a growth of around 70% in trailers, whereas the truck market India should grow by around 14%. Please keep in mind, with a market share above 55% in trailer components in India, this is really good news for us, and we are further increasing our production capacity here. So in sum, we are expecting European trailer markets to normalize, while other important markets for us are set to keep on growing, especially North America for both trailer and trucks, as well as the Indian trailer market. And if you take a look on the lower left side, in order to help you to understand which regional markets drive SAF-Holland's performance, we include the 2 pie charts. So the calculation is based on Q2 '23 figures, including Haldex. So you can see that SAF-Holland's trailer OEM business is geared towards EMEA, while North America is second and India third in relevance. As for our truck markets, our OEM business for trucks, this is more geared to North America with clearly more than 60% of sales being generated in North America, while EMEA is #2 in [ importance ] and China is #3. On the next page, please allow me to speak about our updated fiscal year 2023 outlook for the whole group. And starting with sales. Based on ongoing strong demand for trailer and truck components, we are targeting group sales slightly above the EUR 2 billion range. And we are expecting to reach an adjusted EBIT margin of up to 9%, so 9%, this is up to 9%, based on ongoing strong market demand from higher-margin regions Americas and APAC, and also good progress in achieving our targeted synergies from the Haldex acquisition. The outlook for the CapEx ratio is unchanged at up to 3% and includes a focus on expanding production capacities in Mexico, India and Brazil as well as the group-wide implementation of SAP S4 HANA. So ladies and gentlemen, let me conclude the presentation with some key takeaways on Page 28, which is the last one. Overall, our markets in Americas and APAC are set to remain strong, while we see some normalization tendency in EMEA. SAF-Holland is benefiting from a more balanced regional mix with Americas and APAC having gained importance. So as a reminder, 44% in Americas, 44% EMEA, and a 12% plus in APAC and still increasing. The Haldex integration and the synergy targets are well underway. So -- and the enhanced product portfolio and increased aftermarket exposure creates a strong and more resilient SAF-Holland. And remind you, 32% aftermarket share we have now seen for both company SAF-Holland and Haldex together, so 1/3, close to 1/3 is aftermarket, 2/3 is OE. We have shown a strong performance in a challenging economic environment, showing steady group margins of around 9% during the last few quarters. And your SAF-Holland is aiming to achieve an adjusted EBIT margin of up to 9% for the whole fiscal year of 2023. I think that is it for the moment, and we can start now with your questions. Thank you.

[Operator Instructions] Please note, this conference call will be recorded and published on the corporate website of SAF-Holland SE. [Operator Instructions] And the first question comes from Nicolai Kempf.

It's Nicolai Kempf speaking from Deutsche Bank. And well done on the second quarter, good numbers. My first question would be a bit around demand. And we have heard comments from truck OEMs, it could be Daimler but also Volvo pointing to a normalization, meaning that orders are just taking longer to be filled up right now compared to January. Can you share with you, if you look at the normalization of the market to come in H2 for both truck and trailer? And my second question is around pricing pass-throughs. You've touched on several topics, input costs, freight, energy. Do you expect more price hikes to come for you in second half of this year?

That's it, Nicolai.

Yes...

Questions.

Yes.

I would take the first one with demand normalization. Well, I elaborated earlier that we see a little bit of a demand normalization in trailer in Europe coming from all-time high for us in 2022 but also where we talk trailer bids so this is why we see overall trailer is going down by only minus 5%. However, our production facilities in Germany and Turkey are fully booked. We work 6 days, 24. So Q3 is fully booked. I can already say that July was very good for us also. So there is no big downturn or something to see in Europe. In North America, we're also fully booked already until end of the year in terms of trailer. When we speak about truck business in Europe, we are fixed. Okay? So as we learned before, the truck business in Europe is not as big as our truck business in North America. But also here, we are fully booked, the plants are running on the full steam. We are in the process, and we discussed that the last time that we are opening a new facility in Piedras Negras, which is just in Mexico across the border. So, close to San Antonio, we go down across the border. We will be moving in, in September, October. This will also help to increase further, have the availability for the aftermarket if we shift to OE. And in India, we just moved into a new facility in January. In February, we saw that we are fully booked until August. We freed up a little bit more CapEx. And in August, we now go the next mile in this production facility because we are fully booked not only because of orders for the Indian market, which is really boring, but also we see a lot of export going on to Africa, to Southeast Asia, but also to the U.S. So I'm quite confident that 2023 should be a good year without interruptions in the fourth quarter to come.

And I will take the second question related to global cost increase on the input price. We don't see big areas of cost increases and the balance between customer price and input costs have now really normalized, especially in EMEA, what was not the case last year in the first half year. We do have to take the labor cost increase, but we also have a good list of activities in terms of productivity improvement and [ sales team ] improvement to take this cost increases, so no issue to the P&L from that side.

Yes, plus the synergies of Haldex are now also kicking in the second half of the year. We already had the low-hanging fruits, like the delisting the Board of Directors of Haldex, all that stuff, we saw that already in the first half year, but there are more synergies to come in the second half year. So we are quite confident.

And as a followup, do you expect to raise your prices in the second half? Or are the price increases basically done?

This is a very tricky question. While we have seen a stabilization or even a little bit of a pullback of electricity costs, gas is getting a little bit cheaper. However, we have seen, as Frank said, the increase in salaries, of course, specifically in Germany because we are based on the Metal Union, of course. We compensate that. So at this point of time, we don't see a necessity for further price increases because we do not also want to give up our high market share because this helps to fill our production facilities, economies of scale, of course. So we try to balance that as good as possible.

[Operator Instructions] And the next question comes from Jorge González Sadornil from Hauck Aufhäuser Investment Banking.

So Alex, my first question is in relation to your midterm targets. As you were mentioning, you are -- you have achieved 9% adjusted EBIT margin for 3 quarters in a row. So I was wondering if you can re-think on your midterm targets, taking into account that Haldex is really helping you to improve the profitability of the group. And my second question is regarding the market. You were commenting that trailer is [ bottoming ] in Europe. But I was wondering if you can give us some numbers around this, or at least some growth rates that you think are reasonable for next year, taking into account that you have so much in international demand that it's hard to understand nor do the dynamics that are at this point happening in India. Those will go first, please.

Okay. Let me start with the midterm targets for everybody. Our midterm targets we did during the Capital Markets Day beginning of '23, so January of '23. And we said by the year 2027, we would like to profitably grow our sales to EUR 2.4 billion to EUR 2.5 billion with an adjusted EBIT margin between 9% and 9.5%. Well, you guys know that we are guiding a little bit more on the conservative side. And yes, we already got some questions like this. So you already achieved now or you're guiding EUR 2 billion at -- close to 9% or 9%, and Frank will speak about that a little bit later on. Yes, it might be the case that we have to sit and discuss our midterm targets, maybe to achieve that earlier, or that we update that during the next Capital Markets Day, which most likely will be the first quarter of next year, and we do our strategic planning again and might come out with some even more positive numbers. But for the time being, we would like to keep our midterm targets '27 with EUR 2.4 billion to EUR 2.5 billion and the 9% to 9.5% adjusted EBIT. Trailer Europe is one thing again. As I said, we are still fully booked both in Germany and the German plants, in Turkey as well. So Q3, checkmark, as I said, July was really good for us. We saw a little bit order intake weakening specifically for axles and axle suspensions or trailer suspensions. But why is this? A lot of German fleets are waiting to place new orders because there is a huge discussion that the German government will issue subsidies very soon. So everybody is now waiting what's to come. There might be -- or there are discussions, there might be subsidies of up to EUR 5,000 for trailers and that might be up to 20% for a standard trailer. Standard trailer [ tariff ] goes for EUR 25,000 plus/minus. If you receive subsidy of EUR 5,000, that's a 20% discount on this. So I personally spoke with a lot of medium and big fleet, they said, ah, they are a little bit in the waiting mode at the moment. So it depends a little bit on whether the German government is allowing those subsidies or not. And their talks are in the mid of the last quarter of this year, it might be happening. So they are waiting at the moment. But as I said, we see the market 5% lower as of today, lower than 2022, which was all-time high in trailer manufacturing. So still very high level and good for our production fill rate. If we go down by 5%, that doesn't make any difference because we just pick our orders and we can also increase with more orders intake on from, let's say, customers we don't have a huge market share already.

That is very interesting because I was also going to ask you about the aging of the fleet, especially in Europe and U.S. So this subsidy is linked to the aging in Europe, or is there any other reason that...

No orders in Germany. It's the German government -- they did that already some years ago where they issued subsidies also in the ballpark of EUR 4,000 to EUR 5,000 at that time. I think that was like 3 years ago. And a lot of fleets then waited first because discussions was going on, and then they placed all of a sudden the orders. And then all of a sudden, we have to increase our shifts because all the trailer manufacturers where -- they wanted the axles right away. And for next year, however, if we speak trailer business, with the trailer business, also Haldex is involved with the air disc brake, you know that we are producing air disc brakes not only for the SAF but also for other big trailer axle manufacturers. And we won a big tender. Haldex released those informations already last year. So there is a big contract now starting end of this year, with the biggest European trailer manufacturer, with the high share, and also the second biggest trailer manufacturer in Europe is already running with a high percentage on our Haldex air disc brakes. So this also the sale of the air disc brake caliber business will increase starting from end of this year, and we also won a tender and start supplying the first quarter of '24 to one major truck manufacturer in Europe but also one major truck manufacturer in North America. So this is also to come.

And the next question comes from Miro Zuzak from JMS Invest.

Okay, can you hear me?

Loud and clear.

Okay. I have just one question, please, regarding your cost lines. So the selling, the G&A and the R&D cost lines, they have gone up significantly in Q2, all the 3 of those. Is this now like the [ flight ] level or let's say, the new level of cost around EUR 30 million of selling costs, around EUR 35 million of G&A costs, and EUR 10 million of R&D costs per quarter?

I will take this question. First, second quarter is the first quarter where we fully consolidated Haldex, what came in with a different cost structure, likely different cost structure. And in addition, in the second quarter, we booked PPA topics but mainly is related to the admin cost and led to a onetime increase, but also on a run rate some increase on the PPA amortization.

That was around EUR 5 million, right?

Yes...

The run rate -- go ahead.

Yes, in addition, you have to [ say about ] IT topics from the cyberattack was EUR 4 million as well. So the topic I presented on the page, in the presentation, on Page 16.

Okay. And they have been making the [ team very line ] and R&D and selling costs, they could be considered as a run rate.

R&D is a structural change as Haldex has a slight higher R&D rate in their P&L structure. And the other topics as I mentioned, the PPA amortization and the expenses EUR 4 million for cyberattack and post-merger integration of Haldex is EUR 2 million as well.

[Operator Instructions]

If I may use the time to specify a bit more what we said in our guidance. I got some questions in advance. You know that we do always a quite conservative guidance in SAF-Holland and the EUR 2 billion is a base number we've achieved before, even more. But talking about up to 9%, I'd like to emphasize that up to 9% does not mean in between 8% and 9%, it means 9%, only to give you this direction as we had a very strong growth half year with 9.1%, and as already answered before, it is fully under control what comes in the next months' towards year-end, including the synergies with Haldex kicking in, up to 9% is in our perspective a 9%.

Yes. So our internal target is clearly achieving over EUR 2 billion, reaching the 9%, which will be an absolute number, the adjusted EBIT of a minimum of EUR 180 million this year.

Okay, since we didn't receive any further questions. Let me hand back over to CFO, Frank Lorenz-Dietz for some closing remarks.

Okay. Thank you, everyone, for your questions. Our Investor Relations team is available should you have any follow-up questions. And we will be on road shows and conferences and looking forward to see you, next days. Have a good afternoon. Bye-bye.

Thank you, guys.