Semperit Aktiengesellschaft Holding (SEM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and a very warm welcome from Vienna to our results presentation for the fourth quarter and full year 2020. With me on the call today is our CFO, Gabriele Schallegger, who will present the financials later on. Ladies and gentlemen, this is a very special moment in our company's history as we managed to achieve historic record results, and I'm truly delighted to present them to you today. As the CEO of the company, at the same time, I naturally feel absolutely vindicated for all the hard work of restructuring we've done over the last 3 years. Right at the beginning of our presentation, we thank everyone, particularly our employees, for their patience and perseverance but also our shareholders and all other stakeholders for their trust and support. Before I start with the highlights, let me stress today's key messages. Firstly, we achieved the best result in our recent corporate history, and this despite an unprecedented pandemic and global recession over the last 12 months. The corona crisis may have led to a huge surge in demand for our medical gloves. But at the same time, our Industrial Sector managed to improve its underlying profitability, which I will show for each segment in a minute. Secondly, by the end of 2020, we have successfully completed our restructuring program and entered a new transition phase where we aim to focus on industrial rubber and separate from the Medical Sector. Currently, we are running the medical business as a profit maximizing project as long as the corona-driven gloves party continues. Thirdly, we have started with a new SG&A cost reduction program to identify a substantial amount of permanent cost savings. Here, it is important that these go beyond short-term discretionary cost benefits following the corona outbreak. This new cost program will make us fit for the future while we approach the next phase of transformation. With this brief overview, let me now start with the highlights at Slide 3 where we have put the magnitude of results improvement into perspective ever since 2017. While the 4 charts undoubtedly speak for themselves, it is important for me to emphasize that our thorough restructuring program over the last 3 years laid not only the foundation for future growth, it has also helped us, as we proved so far in the context of the external corona shock, to achieve operational resilience and further profitability improvements in the Industrial Sector. Let me be clear about this pandemic shock as it brought both headwinds for the Industrial core business but also tailwinds for the Medical Sector. The latter allowed us to strengthen our balance sheet, reduce debt and start repaying our hybrid while, at the same time, being able to reinstate the dividend. Over the page, I would like to pause for a minute as nothing has more impacted the last 12 months as the corona pandemic has done. In our previous quarterly calls, we had highlighted all the efforts we had made in terms of health and safety. In contrast, I would like to take today's opportunity to precisely outline the 2 different developments of the Industrial and Medical Sectors. As you will remember, at the beginning of 2020, we announced that we'd be focusing on the Industrial Sector in the future and, among other things, expanded the Industrial portfolio into 4 segments in order to achieve greater diversification. In turn, the operational efficiency measures we took at Sempermed before the corona outbreak helped to build a strong basis for sales and margins at record levels. Since the corona outbreak in early 2020, the management of external factors has played a major role in our day-to-day business decisions, first, by increasing global supply chain disruptions and, later in the year, creating bottlenecks for both container and raw materials availability and finally, prices rising for transport, energy and raw materials. Against this backdrop, all our Industrial segments faced lower demand and reduced order books which, in many ways, accelerated a process which had already begun with the global economic slowdown in late 2019. However, the marked recovery over the last 4 months went faster than originally anticipated, with yellow goods and construction industries gaining momentum. In this context, I would like to particularly highlight the recent sharp increase in the number of projects for Sempertrans. The two key observations for the Industrial Sector during the corona pandemic are that, firstly, the previous restructuring effort led to more operational resilience; and secondly, flexible time models supported by various governments in our markets as well as our own flexible shift models and head count planning helped to optimize capacity utilization. In turn, the Medical Sector was riding an unprecedented wave of demand for hygienic equipment while, at the same time, market prices have tripled. However, this was not only a combination of higher volumes and prices but, as I had mentioned before, we achieved a significantly higher productivity with overall equipment effectiveness improving from a factor of approximately 65% in 2018 to more than 90% in 2020. I always call this as duty met opportunity. In this respect, operational efficiency gains made during the restructuring phase were of huge support to meet the high demand for medical gloves. We are currently still working at full capacity given the order books filled until the end of 2021 as well as already advanced bookings for 2022. From today's perspective, please bear in mind that there is no visibility for an immediate end to this market really. While the corona pandemic has undoubtedly defined our transition period, I'm very pleased to report today that the restructuring efforts in 2018 to 2020 have helped to make Semperit a more profitable, agile and sustainable company. With this in mind, let me now provide some further update on our Industrial strategy on Slide 5. Against the backdrop of a continuously volatile industry environment over the midterm, we aim for a balanced and sustainable Industrial portfolio, targeting sales of over EUR 1 billion sales and an EBITDA margin of more than 13%. On the back of this strategic target, we have conducted a thorough portfolio review and set a number of new strategic action plans going forward. In this context, we have investigated adjacent technologies to expand and complement our existing product portfolio. At the same time, as we had announced with our new industrial rubber strategy in January 2020, we also aim for strengthening our geographical footprint outside of Europe, notably in North America. Most importantly, we came to the conclusion that our organic growth potential needs, at this stage, to be further supported by strong strategic M&A for which we have started thorough and multidimensional screening with a first shortlist of targets. To avoid any misunderstanding, let me be absolutely clear in this respect, we will firstly only target companies which can offer a compelling technological opportunity and/or expand significantly our geographical footprint and, secondly, apply strict criteria for return on investment, synergy and earnings growth. Let me start now our operational highlights at Slide 7. I think this picture proves that we have definitely kept our promises. Revenues were up by 10.4% to EUR 927.6 million, largely driven by the exceptional performance of the Medical Sector in the wake of the corona-induced extraordinary demand for medical gloves, with top line growth at Sempermed being up by 53.1% year-on-year. This converted into a strong operational leverage, with EBITDA more than tripling compared to 2019 and the EBITDA margin also almost tripling to 22.5%. At reported EBIT level, we need to take into account the positive impact from the reversal of the Sempermed impairment in Q2 2020 but still, on an adjusted basis, it's still a sixfold increase year-on-year. Gabriele will take a bit more time to explain the details on that in a few minutes. Over the page, we show the dynamics of annual and quarterly EBITDA developments in the Industrial Sector over the last 3 years. Two points I would like to make here. Firstly, at a full year basis, 2020 EBITDA was slightly higher than the comparative number for 2017, which is extraordinary given the top line pressure in the Industrial Sector faced in the wake of the corona pandemic and global recession in 2020. Secondly, similarly, the Q2 and Q3 2020 EBITDA numbers were higher than the comparable ones for 2018 which, again, is very impressive given that we were in the middle of a major lockdown over that period. The steep decline in Q4 2020 EBITDA is a combination of seasonal and corona-specific sectors, notably the above-mentioned bottlenecks in container and raw material availability as well as rising prices in transport, energy and raw materials towards the end of 2020. But I still want to mention here that even though we see the pressure easing, for example, on the level of better order intake, still all the negative impact of last year's crisis are not yet off the table. A full recovery is still not something we do expect for the time being, especially in the first half year. Starting the segmental analysis with Semperflex at Slide 9. Revenues were down by 14.8% to EUR 190 million as a result of reduced market demand in the wake of the corona crisis in 2020 but also the global economic slowdown starting in the second half of 2019 already. In this context, the order book was down year-on-year, but the order intake has improved in Q4 2020, which is the first positive sign. EBITDA was down by 12.6% year-on-year. And when looking at the quarterly analysis in the upper chart, you can see a strong seasonal development, with Q4 2020 being at a low point given the bottlenecks and price developments I discussed before. Here, we had some missing economies of scale due to delayed sales caused by bad container availability, on the one hand. On the other hand, we also had some onetime effects, such as an accrual for customer claims. On the next slide, you can see that Sempertrans sales were severely impacted by the corona pandemic, down 15.7% year-on-year, as global mining companies were largely forced to stop operations. This is reflected in the decline in order intake, especially in the second half of 2020. While Q1 2019 EBITDA had still the benefit of a EUR 1.3 million profit from the sale of assets of a closed factory in China, notably, second half 2020 witnessed a severe pressure on EBITDA margins, with Q4 2020 being essentially at 0. Please bear in mind that the reported EBIT for Sempertrans was burdened due to the EUR 19.8 million impairment loss we had to make at half year results 2020 following the consistently negative market impact from the corona pandemic. And we were able to keep the operational results positive despite a capacity utilization ratio at only about 70% compared to the normal levels. Moving on to Semperseal at Slide 11. Revenues were down by only 6% year-on-year as various industries recovered at different speeds, notably the construction industry. We are particularly pleased about the order book in Q4 2020 being above the comparative period in 2019 with clear signs that our new strategic traction in targeting customers is successful. For this newly formed segment, I am delighted to be able to report a 5.6% improvement in EBITDA year-on-year and the EBITDA margin being 1.3 percentage points above last year's comparative. This is a clear sign of stringent operational restructuring. At Semperseal, we can also report for Q4 2020 a signing for a first bolt-on acquisition with M&R Dichtungstechnik in Germany, which is a leading company in individual facades and nicely complements our existing product portfolio. On the next page, we complete the Industrial segments with Semperform, which managed to defend its market share despite the strong negative impact from the skiing industry, which mainly affected the ski foils and sheave line of product areas. The skiing industry was disproportionately affected by the corona lockdowns, which is why we were already hit by the cancellation of the annual maintenance work in summer. However, on the back of a better product mix and substantial operational savings, we managed to improve EBITDA margins by 1.2 percentage points, and this was despite the severe slump in the skiing industry, which has normally very strong margins. Our stronger strategic focus on customer intimacy paid also off in the segment, witnessed in the increased average share of wallet. Finally, on Slide 13, Sempermed, which I had already explained in great detail before and where the numbers simply speak for themselves. The two points I would just like to emphasize here are as follows. Firstly, the phenomenal growth in top line and EBITDA would not have been possible without our previous restructuring measures, which have now made us much more competitive at full capacity and top quality. Secondly, you might, of course, wonder how long the party is possibly going to continue, and let me tell you that our order books are at historically high levels. For 2021, the examination and surgical glove capacities are completely booked, while bookings for 2022 are at an already advanced level. And with this, I hand over to Gabriele to take us through the financials.

Thank you, Martin, and I truly hope that everybody is well and in good health. Having been with the company now for only a few months, I'm extremely encouraged by the support I received across different departments and the energy and stamina my new colleagues have shown to weather the corona storm in recent weeks. Thanks to this incredible and restless contribution from everybody at Semperit, today, I'm in the very privileged position to present exceptional year-end results. At this point, I also want to express my appreciation to the management team who started the turnaround some years ago. I had a very well-prepared base to start from. And without their efforts in making the company fit for the future, these results would not have been possible. So starting with the top line development at Slide 15. Group revenues were up by 10.4% to EUR 927.6 million, largely driven by the unprecedented demand for hygienic protection gloves in the wake of the corona pandemic. As a result, revenues at the Medical Sector surged by EUR 155.8 million or 53.1% at the year-on-year comparison, which more than offset the EUR 68.8 million aggregated top line decline by the Industrial Sector. Within the Industrial Sector, all but the newly set up Semperseal faced a revenue decrease by double-digit percentage numbers year-on-year. This is the combination of both a global economic slowdown, having started in the second half of 2019, and the corona health care crisis with all its negative effects on the market. As we focus on our new Industrial focus strategy, all 4 segments had not only to go through an unprecedented exogenous shock on the top line but to prove and stress test their flexibility and agility in marketing, sales, procurement, customer intimacy, et cetera, which, as you remember, were major initiatives in our restructuring program. As management, it is these factors which we strongly believe made a huge difference towards operational resilience and margin strength, which you can see over the page. So looking at the same year-on-year comparison for EBITDA by each segment, it becomes visually clear to what extent top line growth at Sempermed translated into strong EBITDA growth, with the EBITDA margin increasing from 1.9% in 2019 to 33.5% in 2020. There is no doubt that in combination with the very strong market price development, our previous restructuring effort has produced this kind of operational leverage, with our factories in Malaysia not only running at full capacity but being highly competitive and producing top quality. In turn, the Industrial Sector witnessed operational efficiency improvements and strong double-digit EBITDA margins for all segments, except Sempertrans. For the latter, Martin already explained some of the difficulties faced through plummeting orders and reduced CapEx, notably in the mining industry. But even then, Sempertrans produced a respectable 7.7% EBITDA margin, which compares with 10.1% in the year before. So overall, the EBITDA margin for the Industrial Sector remained constant at 16% year-on-year, which we feel is an incredible success under given economic and epidemiological circumstances last year and evidence for strict efficiency enhancement. We thought to present the major highlights of the P&L in 3 charts today, which you can see on Slide 17. There are essentially two key observations on this slide. Firstly, whether looking at reported or adjusted numbers for EBITDA, EBIT and net profit after-tax, the year-on-year improvements are significant and well above 100%, implicitly setting new record numbers for our corporate history. Secondly, when just looking at the adjusted numbers, which apply only to EBIT and net profit after-tax, the impairment reversal for Sempermed at EUR 86.2 million even so, to some extent, mitigated by the impairment of EUR 19.8 million for Sempertrans explains the difference. Major moving parts below EBIT include, in terms of significance, taxes increasing by EUR 19.3 million year-on-year to EUR 34.6 million by end 2020 and also some exchange rate movements in the other financial results, which implies essentially currency depreciation for the Polish zloty and the Czech koruna in March 2020 but also opposite effect from the Schuldschein loan in U.S. dollar. As to the tax line, most of the increase is explained by the extraordinary profit development in the wake of the corona pandemic, amounting to a higher current tax expense of EUR 11 million year-on-year. In terms of deferred taxes, last year's deferred tax losses due to an expected nonrecoverability of unused tax losses partly reversed as tax losses partly became recoverable due to the uptick in result. This led to deferred tax gains and the change compared to the previous year of EUR 4.3 million. Hence, our tax rate amounted to 14.8% compared with minus 59.7% in 2019. Going forward, and given our positive business outlook for 2021, I would expect the tax rate at the level of the isolated Q4 tax rate, which was 22.4%. Over the page, we present the main components of working capital, which has increased, on aggregate, over the quarters since the outbreak of the corona crisis given all the supply chain disruptions, inventory buildup, not to forget to mention the limited container availability towards the end of the year. This is also expected to lead to building up stocks of semi-finished goods in Q1 2021. However, when looking into the details of each component, you can clearly see improvements in our efforts to collect trade receivables quarter after quarter while, at the same time, trade payables were kept more or less at constant rates during 2020. In terms of inventories, we managed to reduce the total by the third quarter 2020, which then moves up again as a combination of seasonal factors and the pandemic developments in some of our major markets during the fourth quarter. The latter was also significantly impacted by increasing difficulties with containership freight, both in terms of availability and prices, especially since November, it poses tangible challenges. And for the time being, we do not see when this tense situation will really unwind. On the next slide, 19, we present free cash flow development for the period 2017 to 2020 with a clear improvement of operating cash flow while, at the same time, reducing investment cash flow. As a result, free cash flow generation almost tripled between 2019 and 2020 and remains one of our major focus points going forward. We learned a hard lesson in our previous restructuring effort, and the most recent experience during the corona pandemic shows indeed that cash is king. Apart from stronger results, the improvement in free cash flow generation was also achieved through strict CapEx control, which remained at the low level of EUR 26.4 million in 2020. Going forward, we would expect CapEx to at least double in 2021. Here, I have to mention that the increase is not only a result of a very low baseline but, as you might imagine, also from picking up some of the projects which we have postponed last year. This amount also includes a lower double-digit CapEx for replacement investment in Malaysia for production lines. We clearly have the focus on safeguarding the positive efficiency situation at the production site and do not want to put it at hazard. Cash outflow strongly related in 2020 to the partial repayment of the hybrid capital and repayments of Schuldschein loans. You might ask the question of what we intend to do with the cash available. Well, this year, as I have just mentioned, we will have slightly increased CapEx requirements. The dividend will also take its share, and we also have the remaining part of the hybrid capital, which shall be paid back. Further to this, part of the Schuldschein loan will be due in 2021. My final slide should perhaps be seen as evidence that we got our financial homework done systematically and diligently despite the corona impact, with cash and cash equivalents being at a record EUR 145 million by end 2020 while, at the same time, having secured liquidity through undrawn credit facilities. As the new CFO, let me reassure you that we will not go on a spending spree but have set our priorities, first and foremost, in strengthening our balance sheet and repaying the hybrid, which we had done in 2 installments in the second half of 2020, with the final tranche of EUR 30 million being planned to be paid back by the end of March this year. With a net debt-to-EBITDA of only 0.1x and an equity ratio of 43.5%, and both metrics being well above the threshold of our covenants, we feel naturally in a very comfortable financial position, providing strong support for our new strategic direction despite the headwinds from the ongoing corona pandemic. With this, let me hand back to Martin for his concluding remarks.

Thank you, Gabriele. And now let me finish with some final remarks to outline our strategic road map from restructuring to transformation at Slide 22. No doubt, the first proper tick we can make for the restructuring period 2018 to 2020, we managed to turn the Industrial Sector into a resilient and profitable business while, at the same time, running the Medical Sector during an exceptional market really at a profit-maximizing project basis. The other important point here is that we have started a new sustainable cost reduction program to further accelerate efficiency gains. As we speak now, we are in a new transition period, largely defined by the ongoing corona epidemic, and we will thoroughly focus on implementing our new industrial rubber strategy. This includes ultimately the separation from the Medical Sector, which will follow a clear strategic rationale. While we cannot provide a clear timetable for this process, what we can say at this stage is that, a, 2021 CapEx will double from the low 2020 level; and b, the remaining EUR 30 million of our hybrid will be repaid timely. And last, but not least, at this point, we have just announced this week our guidance for 2021, which is predominantly driven by the Medical Sector. Of course, this assumption depends, in particular, on the timely availability of necessary raw materials and their price development, the sales prices for medical protective gloves during the course of the year and sufficient container availability for the delivery of Semperit Group's products. Looking ahead, we have started with a comprehensive strategic transformation project to address future megatrends, expand our geographical footprint, enlarge the industrial business exposure and position ourselves stronger in digitization and sustainable development. As I outlined at the beginning, this will require, next to our predominant focus on organic growth, some selected but strategic M&A to get us to strong and sustainable future growth by strengthening our geographic footprint, fast-forwarding our technological and digital capabilities and complementing the existing product portfolio along the entire value chain. Let me reiterate here that, firstly, we will only target companies which can offer a compelling technological opportunity and/or significantly expand our geographic footprint; and secondly, we will apply strict criteria in terms of return on investment, synergies and profit growth. Unfortunately, we are unable to provide you with more detailed information on this subject at this moment in time for which I ask for your understanding. With this, we have come to the end of our presentation and are now available for any questions you might have.

[Operator Instructions] The first question is from the line of Markus Remis from RBI.

Congrats to the figures. First question relates to the Medical business. If you could provide us with your interpretation of the pricing dynamics early 2021. So do you still see them going up? Or should we -- or are we rather at a plateauing phase compared to the fourth quarter of 2020?

Thanks for the question. Obviously, it's a product mix question. There is a mixed picture here. I think on nitrile, we're slowly approaching a plateau. While on natural latex, we already do see that the plateau has basically been reached.

Okay. Very clear. Does that then, in turn, means that the quarterly EBITDA run rate we've seen in Q4, that there is not too much further headroom at this stage, so that, I don't know, we won't go to a triple-digit EBITDA on a quarterly basis? Is that a fair assessment? I guess your volumes are sold out, so the variable must be then on the pricing side or maybe there's a bit more upside.

Yes. I understand where you're coming from, but please understand we're trying to basically give you an overview of 2020 numbers, and we do not want to go into details, looking forward, of the segments. I mean you saw the guidance for the group until the year-end, but please understand that I don't want to comment in detail on segment profitability in Q1.

Okay. Then on the guidance, it was actually -- as much as I appreciate the guidance at this stage of the year already, I was quite surprised that you pinpoint a certain number rather than giving us a range as you used to do. So even looking back in December, you still were giving us EBITDA range. Why now this, more or less, specific number? Is it kind of more of lower that we should look at? Or is it kind of other considerations behind?

It's a good question but that we answer to ourselves that we would feel more comfy in giving you a midpoint of our assumptions, and that's basically what we have communicated into the market earlier this week.

Okay. Good. On your Industrial strategy, I was -- I would be interested to hear how much organic growth you would actually see as realistic going forward. I mean, of course, there is a lot of M&A built into this greater than EUR 1 billion target. But what's kind of the organic growth potential you would see?

Well, the overall assumption, also basically reflected into our internal midterm plannings, always underlying at least a 5% CAGR in the Industrial segments. So -- and I think that's still a valid figure.

Okay. Very clear. The 13% EBITDA margin, I mean, just looking at your historical achievements, I think, in the last decade, a calculated and median margin of 16%, 16.3% on a stated basis and not used any adjustment here. So in that respect, the greater than 13% does not actually look overly demanding from my point of view. Am I missing here something? Or how should we think about the, I don't know, margin profile of your M&A targets?

Well, don't forget that the numbers that we show also -- they also include corporate cost. So in a fair calculation, I think you will then pretty much understand why 13%, at this moment in time, is an appropriate target level for us.

Okay. So when I include the Corporate Center, then I get to 14.2%. I guess it's fair to say that you've streamlined the Industrial operations in the last years, as you outlined. So this is -- to me, it still looks a bit conservative, to put it that way. And on the operational business, two questions, please, on Semperflex and Sempertrans. You indicated the improving order intake. Is it fair to assume that the revenue inflection in Semperflex will be reached earlier, so maybe already as of the first quarter, and Sempertrans, it might be rather around midyear so that growth again turns positive on the top line?

What I currently -- what we currently do see is that, obviously, the markets in Semperflex, for instance, have picked up stronger than originally expected. While in Sempertrans, we definitely, and you know the nature of the business, might have to wait a little longer. So here, we are more looking into the second half of the year most probably.

The next question is from the line of Christian Obst from Baader Bank.

First of all, I have a question concerning the regional split. You reported a 23% increase in sales in North America. Can you give us an idea how much this is driven by Sempermed on the selling of gloves? Or how much is it driven by your original growth idea, especially for Semperseal and Semperform in North America? This would be the first question.

I suggest you move on with the second question because we're just looking this up as this is not a number that we have in our mind permanently. So please go ahead.

And the second one is, I was really positively surprised by the development of the EBIT margins in most of the segments, almost every segment. But starting with the Semperflex, so we had a 15% decline in our top line and, nevertheless, reported an increase in the reported EBIT margin. So normally, I would say, with a further increase on the top line on volume, you should exceed -- or going towards 20% EBIT margin. Is that some kind of a right assumption? Or is there some special effect there?

Sorry, the line was just broken for a second here. Can you just repeat that, please?

You -- for example, Semperflex, you reported a 15% decline in revenue and, at the same time, increase in the EBIT margin to 16.3%. So is there some special effect included there? Or if not, with an increase in volumes going forward, you might exceed even the 20% EBIT margin, right?

I mean, again, I don't want to disclose now precise target margins here, but we definitely aim for an even higher Semperflex margin, yes.

And what was the main driver for this stable margin in 2020 compared to 2019 despite the decline in revenues?

Well, it's predominantly raw materials and savings.

And the raw material prices going forward, do you expect some kind of a headwind in 2021?

I'll take this. I mean, going forward, we are seeing raw material prices increasing. Basically, we have been seeing raw material price, the trend being reversed in Q3 2020. So in Q4, the raw material prices in the industry segment as a percent of revenues was already above the comparative period from last year. So this trend is actually increasing. To what extent, I do not want to speculate here. I hope you understand. Coming back to your first question on the increase in revenue in North America, that is predominantly coming from the Sempermed segment.

Okay. Then again, on Sempermed, there was a bigger portion of third-party sales before you reduced that already. What was the amount of third-party sales as a total revenue number in the last year?

That's a very detailed question. Just give us a second to look up into the numbers, please.

Yes. And then I have one last question, it's concerning strategy. Of course, the Americas is always the target going forward. What are the current plans for your growth in the U.S.?

The drivers of Semperit growth in North America are, firstly, around Semperseal. We have already mentioned last time that we are in the process of building a local manufacturing site for profiles. And on top of that, as the North American market will be the first region driven not by a segment approach but by a regional approach. We're also putting more emphasis on -- how to say -- consolidated sales strategies in the North American market. And currently, I mean with having more distributors, agents, but also own key people involved into the business, we do see very promising North American industrial order intake numbers for the remaining part of the year.

The next question is from the line of Markus Remis from RBI.

I'm sorry, excuse me because there was still one open question that Gabriele and I would like to answer.

Yes. Thank you for the patience. So the amount of third-party sales in 2019 was close to EUR 77 million and in 2020 was down to approximately EUR 73 million, and that is predominantly in quantity.

Good. So now we may move on, please.

Okay. A few follow-ups, please. On the cost inflation side, I'd be interested to -- we're hearing container prices are up from, I don't know, $3,000 to $10,000. Maybe you want to comment on this inflation. But is it -- have you experienced any -- how do you say it -- already any shortage? Or any -- have you been hindered from sending gloves from Asia to Europe or the U.S. already? Or is this more of a preemptive hint towards a risk? And also, in general, on the raw material price inflation, I'd be interested how easy you think it is to pass on higher selling prices, I would guess, in Sempertrans given the rather low share of cost for a conveyor belt and the mining industry might be -- or the clients might be less price sensitive? Is it generally more easy given the good economic development?

First, coming to the container situation, you're absolutely right, there is a significant increase in prices for containers. That's the first impact. The second is it is getting more and more difficult to basically have enough containers available for getting goods shipped from especially Asia to North America and Europe. We're dealing with it, but it's definitely a big challenge. And the third issue that we basically see is that the time containers are basically being transported on ships is increasing significantly. You might have seen those photos already from big harbors where the ships are basically waiting 7 to 10 days until they get unloaded. So it's -- that is a problem that not only impacts Semperit, I think it's a global problem because to whomever we reach out, we basically understand that it is -- there is a big problem similarity all -- basically across all industries. On the other question with prices in Sempertrans, I mean, of course, there's a price pressure. But definitely, we're trying to not give in. While in Semperflex, with lead times again increasing significantly at this moment in time, we're also in a position to basically start increasing prices.

Okay. On the CapEx side, your guidance implies about EUR 55 million. I see that, for instance, in May, you have not invested -- how should I say it -- a very high figure in the last 2 years. Where is the increase coming from? Is it some projects that have been delayed due to the pandemic, and it's now kind of a catch-up? And to which extent are we seeing kind of funds deployed into expansion projects?

I mean the -- our CapEx is predominantly driven around maintenance CapEx, and those processes didn't suffer during the crisis. And in terms of bigger projects, we have one replacement CapEx program in Sempermed, which is currently underway.

Okay. Final question, again, coming back to the disposal of Sempermed. I mean I understand that you're maximizing the cash flow and, I mean, it's going to be exceptionally strong in 2021. I mean I guess, it's a very difficult decision to balance out the maximization of the disposal price and the cash flow. But I mean where do you then make the decision, I guess, as soon as it is apparent that, I don't know, the pandemic dries up more and more and also that the selling price you will get will be much lower? So anything you can share with us in this respect to better understand the timing or the drivers of this decision because when this sale of -- for instance, mid-2021 or -- yes, let's say, mid-2021, you're lacking the cash flow for the second half of 2021, but at the same time, this should be reflected in the purchase price or disposal price in this respect.

Well, as I said -- it's actually a very good question. The way we look into it is a -- I mean, obviously, we have developed some KPIs that we use for understanding market dynamics. And they are, which is not a surprise, all around order intake, ASP development, I mean, the selling price, cash flow, EBITDA and others. And once we do basically see a change in the development of those numbers, we understand that basically the pressure in starting the project is increasing. That's how we look at it. But it's a valid point you bring up, yes. It's a very valid point.

But at that point in time, it will be again more difficult to, a, find a buyer because the Asian peers will then have more capacity available? I mean they're building lines, as we all know. But at that point in time, there will be then kind of more of this capacity be onstream already and probably the potential circle of buyers will be narrower than it would be now. Or is this kind of -- or am I missing here something?

Yes, what you're missing is the brand that we bring along and the strong customer access that we have developed for the last 100 years. So the question on the asset is not only about the production capacity that a potential buyer would basically take over but also having customer access and basically customer database and brand. And that is also in the light of the pandemic and also with the experience that some of our global customers made with some of our competitors during the crisis might basically bring this into a different light because we understand that many customers are turning away from their suppliers during the pandemic, our big competitors, because they have not necessarily been treated nicely. That's something that we currently see as a positive impact from the business. I mean there are customers we haven't seen before who now turn to us because they didn't feel being treated nicely during 2020. So there's more than just the pure production capacity, that's what I'm trying to say here.

Okay. Okay. Anything in terms of COVID cases in your plants? We all heard the stories about Malaysian peers having to shut down temporarily the sites. Anything you would have to report to us?

No, we implemented right from the beginning a very harsh regime, basically following our strategy, better safe than sorry. And luckily, we only lost 2 employees out of the 7,000 that we employ within the last 12 months. We've seen sometimes clusters around our factories in Poland and in Odry, also in Wimpassing, for a couple of weeks. Currently -- I mean, as we all know, Czech Republic is still a big issue, and we're giving a lot of attention to the safety and protective measures in Czech Republic. But operations have always been up and running throughout the last 12 months without any disruption due to COVID clusters in the factory.

Okay. Very good. All right. Congrats again.

[Operator Instructions] There are no further questions at this time. I hand back over to Martin Fullenbach for closing comments.

Okay. Thank you very much for taking the time this afternoon. Of course, we are proud of having presented those numbers to you. It's been a very demanding challenge last year. But yes, I hope you share the joy and the pride that we currently feel. And we reach out to you again in May -- 19th of May for the Q1 numbers. Thank you very much. Bye-bye.