Sogefi S.p.A. (SGF) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Sogefi First Quarter 2021 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Frédéric Sipahi, CEO of Sogefi. Please go ahead, sir.

Thank you. Hello, everybody. Thank you for being with us for this conference call. I propose we go to Page 4 where we have the financial highlights of Q1. The sales, so let's start by the sales. As you can see on the document and on the report we published Friday, our sales are up on the first quarter versus 2020 by 5%, would be up almost 10% with constant exchange rates. And versus '19, so we will always use also '19 as a basis of comparison, we are down by 5% on a reported basis. But at constant exchange rate, we would have been at 0. So we are over-performing the market. You will see that in each geographical area. And also, we have 2 business units performing very, very well against a decreasing market. The EBITDA is at almost EUR 55 million, so 15% versus 11% in 2020 and also 11% in 2019. So you will see that it's both a combined effect of the profitability increase on our variable cost and big structural actions we have implemented in 2020 on the fixed costs, which decreased by almost EUR 10 million. The EBIT is following this trend with 7.3% on the reported EBIT versus 2.3% in '20 and 3.3% in '19. In this 7.3% of the first quarter, Yann will highlight the special events. We have the equivalent of 1.3% of nonrecurring impacts. So the report -- the normalized EBIT would be 6% compared to 2.3% in 2020 and 3 points in '19. The net income is at almost EUR 12 million versus a loss last year and EUR 1.6 million in 2019. And we have been able to convert the EUR 55 million of EBITDA in a quite good free cash flow with EUR 33 million positive free cash flow in this quarter versus 0 last year and a loss of EUR 2 million in '19. The net debt is at EUR 260 million versus EUR 290 million end of 2020. And we are back at the level of March '19. Page 5, we have the details of sales per month with the 3 years. So as you can see, overall versus 2019, we are losing 5%. But this trend is improving in March where we are almost in line with March 2019. This is mainly thanks to the start of new programs that we have in North America and in China. Page 6, you have the sales by geographical area compared versus '19 versus 2020 and also versus the market. So I would compare versus '19 because last year, the impact of COVID already started to impact the geographical areas. Versus '19, as you can see and as I said before, we are decreasing by 5% on the reported change, but 0% on -- at constant exchange rate. In Europe, we are at minus 7%. North America at constant exchange rate would be almost flat. In South America and Asia, we have a big growth. And you can see that we are beating the market in all geographical areas. The sales by business unit, Page 7. So 2 business units, as I said, are over-performing versus the market and also versus '19. Air & Cooling and Filtration at constant exchange rate would have grown by 6% versus '19 for Air & Cooling and 6.6% in Filtration. Suspensions, at constant exchange rate, is decreasing by 11% versus '19 and 17% on a reported basis. This gap between the business units is mainly due to the different mix by country and also to the fact that Filtration has the OES and ERM, which are performing very well and are kind of buffer versus a decrease on the OEM market. Page 8. So just a few words about the new business awards because on this quarter, we have done well from a financial point of view. But we also continue to prepare the future, and we had many awards on our main customers, both with the historical customers and new customers. As an example, in Air & Cooling, we signed an important contract with an American OEM with a lifetime value of more than $250 million. On Filtration, we have continued to acquire market share, in particular, with oil filter in North America and also in Europe, and we have signed quite good contracts on the cabin air filters. And in Suspension, we have already acquired 35% of our contracts on hybrid and fuel cell application. Page 9, it's a visual bridge of the EBIT '19 -- 2021, sorry, versus the EBIT '19. And then we will have details on the P&L and the free cash flow. So as you can see, unfortunately, versus '19, we have a negative impact of the volumes by EUR 6 million, partially compensated by the efficiency on variable costs for positive EUR 3.7 million. And then we have the fixed costs, which are helping us by EUR 10 million compared to '19. As you know, we have launched structural actions last year in 2020 in order to be ready for decreasing market. And this really help us to offset the negative impact of the market and also improve the profitability. Plus, we had this quarter EUR 6 million of positive nonrecurring and operating items that Yann will highlight to you. So at the end, versus '19, we are able to double the absolute value of EBIT in a decreasing market and with decreasing sales. Page 10.

So I'll take over, Fréd. So the P&L versus '19 and '20, it's mainly a combination of revenue catch-up and reduction in fixed costs. This is true for versus '19 as well as versus '20. What is very important to note is that we have a rebound in sales, as I pointed out, versus 2020. We are still not there regarding 2019, although March was quite good and we are facing headwinds in terms of market, as Fréd probably will emphasize later on. As you can see, contribution margin held up quite well in a difficult market. As you all have read, there are demands for increases in raw materials. And despite these demands, we've been able to hold very strongly our contribution margin in Q1. It might turn more difficult in the coming quarters. Gross fixed cost, it is one of the main reasons for the improvement of profitability versus 2019. Fréd said it already, EUR 10 million savings versus Q1 2019, so EUR 10 million savings versus [ pick a leader ], and this is recurring. This is something we'll get quarter-after-quarter. Important to point out that in this quarter, all the planets were aligned. Not only was there a recovery of sales versus Q1 2020, which was the first quarter we were hit by COVID, but we also have positive impacts in Q1 2021. As you can see, favorable exchange differences, which is quite unusual, and this is mainly due to the evolution of the euro versus the dollar. And you see it makes quite a difference versus Q1 2020 where we had a hit of EUR 3.4 million. So this line alone explains a EUR 5 million difference versus Q1 2020. Yes, the difference is less significant versus Q1 2019. But nonetheless, please consider this EUR 1.7 million of favorable exchange differences as nonrecurring. It's not something we can expect every quarter. We also did benefit in Q1 from the EUR 2.4 million settlement. It is a very old litigation. It goes back, I think, 15 years, and we had a litigation against former advisers, and we reached a settlement with them recently. And they are going to pay in April a total amount of EUR 2.4 million to close the litigation we had with these 3 advisers. So again, nonrecurring, of course, it happens only once. And that's why if you take out both exchange differences and this windfall of EUR 2.4 million, EBITDA would be at roughly slightly above EUR 50 million, that's to say 14.2% versus 11.2% in 2019. And if you go down the P&L, if I take out again these EUR 4 million of exchange differences and this EUR 2.4 million one-off, EBIT would be at EUR 21.8 million, that's to say slightly above 6% against 2.3% in 2020 and 3.3% in 2019. I take the opportunity just to say, I said it already, the planets were aligned in Q1. We are now facing headwinds, so I don't expect as good a quarter in Q2. There will be difficulties with volumes, which are linked to the market. Raw materials are difficult. So don't treat that as a recurring performance. Obviously, there is an improvement versus 2020 and 2019. We are going to do as well as we can, but we are not projecting as good a performance in Q2 2021. If we move to Slide 11, free cash flow. Free cash flow is roughly a duplication of the P&L. You can see it's fairly easy when all goes well. More volumes, it means more contribution, and you see quite a difference versus 2020 and versus 2019. And we also had a favorable impact in terms of working cap, added to which some one-offs in terms of cash. We cashed some tax credits, which are included in the EUR 7.4 million in others. I think we cashed EUR 4 million of tax credit in France. So all in all, a positive free cash flow before IFRS 16. It's a real free cash flow of the company, positive of EUR 33 million versus roughly 0 in 2020 and a slight cash burn of EUR 1.6 million in 2019. What's more relevant to us is when you look at the net debt, again, before IFRS 16, what's very significant is that EUR 261 million, we are -- we have gone back to the end of Q1 2019. That means it looks like there has been no concern in the past 2 years. So we've gone through the crisis without burning cash, and this shows in Slide 12. When you look at Slide 12, the first column, it's a total of committed lines we had end March 2021. So a total of EUR 620 million of committed lines. As we have just seen, NSP end of March '21 was negative EUR 261 million, which means we have an excess of EUR 360 million of committed lines versus our net financial position, a significant part of which, it is the orange box which you can see in the second column, will be used in the month of May to repay the EUR 100 million bond which is expiring in May '21. Average maturity of the lines is 3 years. We are already working on new lines, and we should close new lines in the region of EUR 30 million shortly. Probably too early to work on the renewals. Renewals, it's mainly the green boxes in '22, '23, but probably, as we hope, we are going to confirm good results during the year. We are going to start talking with the banks to renew the 2022 and 2023 lines in order to have a larger buffer than we already have for the time being. Fréd?

Thank you, Yann. Page 13, we have the split of sales by business unit. So as you can see, Filtration is now the biggest business unit with 35% of the sales, mainly thanks to the good performance of OES and aftermarket. Page 14, if we look at the performance of the Suspension business unit, so this is a business unit where the impact of sales decrease is the biggest compared to '19. As you can see, we are losing 17%, so quite close to the market. But we are -- thanks to the actions that we have implemented on the fixed cost and on the contribution margin, we have been able to improve the percentage of EBITDA close to 10.5% versus 8% in '19. And as you can see, we have decreased the fixed cost by 15% versus 2019. Page 15, Filtration business unit. So sales are globally flat versus 2020 and 2019 in a decreasing market. So it's quite a good performance. And the EBITDA, we have been able, thanks to strong actions on the margin and also in the fixed cost, to go from 11% in '19 to 15.5% in 2021. Air & Cooling, the sales are growing versus '19, so thanks mainly to China and North America. And the percentage of EBITDA continue the improvement that we started almost 5 years ago now, and we are above 18% of EBITDA for the first quarter in 2021 with 2 geographical areas performing very, very well, China and North America. Page 18, so a look on the market outlook. So of course, I think you know it very well, it's quite cloudy to have a very accurate estimation of what's going to be Q2, Q3 and Q4, mainly due to the raw material shortage that our customers are facing. So we have customers that may stop the production from one day to another with very short notice. So we have faced that in Q1, and I think we will continue to face that in Q2, hoping that Q3 and Q4 would be better and more stable. For now, our position is very clear. Of course, we consider the forecast of IHS as a working basis, but I prefer to be very prudent on sales because of the potential shortage on the materials and continue to be very, very aggressive on the cost structure so that we are ready for the worst. And if there is a good news on sales, it will be like Q1, a transformation on the EBIT and the EBITDA. Page 21 -- sorry, Page 19. So it's exactly what I mentioned, IHS is expecting a strong rebound versus 2020 in Q2 and also for the last part of the year. Nevertheless, we will still be below 2019 by 6% according IHS expectation. Plus, it can go worse due to the material shortage. So with Yann and the full management team, we are continuing to monitor the activity almost weekly or daily in some geographical areas to be able to adjust very strongly and quickly the fixed costs in order to maintain our profitability. The target right now, it's a bit too early to revise our target of profitability for 2021 due to all the events that I mentioned before. So we continue to target to be much better than 2020, of course, and to go back at least at the level of 2019 EBIT margin. I think around June and July, we will have a better visibility on what could be the full year sales and, de facto, the EBIT margin for Sogefi. We have finished the presentation. So I think we can move on to question and answers.

[Operator Instructions] The first question is from Monica Bosio with Intesa Sanpaolo.

The first one is on the trend of the operating profit margins in the second quarter. You have been very clear, the second quarter will be tough due to the headwinds on raw materials, transportation costs and whatever. But can you try to help us to figure out what could be the margin's erosion in the second quarter? Because as things are, it seems to me that you can land at slightly better operating margins in 2020, maybe even higher than 2019. So just some details for the expected margin's erosion in the second quarter. The second question is on the free cash flow dynamics across the next quarters, if you can give us some highlights? And the very last question is on the shortage in the automotive sector. Are you -- I know that the sector is under a shortage, but are you seeing any impact on your operations so far or no?

Thank you very much for the 3 questions. If it's possible, I will start by the last one because it will help us to explain the 2 other questions. So on this shortage, yes, clearly, we see the impact, of course, not directly, but indirectly. So the shortage about, of course, the microprocessors, this one, everybody knows it. But it's also very difficult to get aluminum, plastic or steel right now from the market because there is a booming demand in Asia. So -- and of course, the suppliers are pushing for price increase. So for now, in Q1, we have been able to defend quite well the purchasing prices. And in Q2, this will be the main topic between the supplier increase, potential increase, and the customer expectation of price increases. So I see a first battle here on the squeeze. Right now, we are end of April, so we continue to defend very hard in order to protect the quarter and the year. But it will affect in one way or another the profitability because we won't be able to continue to defend too long with the suppliers. It's difficult to estimate the impact on the percentage of the EBITDA, but I would say that it can be close to 1%, to make it clear. Then from an operational point of view, I have to say that it's very difficult to operate right now because in automotive, as you all know, we are used to have kind of stability on the volumes, at least in the daily or weekly volumes, and then it was decreasing like in 2018 -- '08, sorry. It was a kind of global decrease, and we were able to find a way to operate in this way. Here, it's not the case. One day, a customer is calling us saying, guys, we will stop the production, so we will not take what you produce. And then for 3 days, they will not produce, they will restart, we will have to do overtime and so on and so on. So right now, the production and the operational way of working are really changing versus what we were all used to do, and we are trying to adapt as much as we can. In Q1, we have been able to do it in quite good way. For now, in April, we are able to do it. Plus, in addition to the issues of our customers, we have also the potential COVID situation. So for sure, to operate in this way is not easy, but I would say it's the same for the whole industry. And for now, end of April, we have been able to go through that in one way or another. I hope it will last in May and June. But this explains also the reason why, Yann and I, we are very prudent giving you figures of forecast because to operate in this way is quite difficult.

Yes, I have understood well. On top of the raw material impact, you could have any impact from the stoppage in production weekly volumes. Is it correct?

Absolutely, because it happens to us each week. One customer who was supposed to produce and work is stopping because he had stoppage -- he had shortage of components or because there are COVID cases. Plus, in the same time, we have the same issue with our suppliers. So right now, the supply chain is stressed, but as in Q1. And right now, we are able to manage that. But I don't know if in May or June, it won't go worse, especially in some countries, for example, as India, where the COVID situation is going very, very bad. So this is what explains why, Yann and I, we are very prudent. You have issues with the customers, issue with the suppliers, plus potential issue in some countries due to the COVID situation. Nevertheless, where if I -- if we look at the positive side of the coin is that we are able to react very quickly from an operational point of view. So if one customer is decreasing the volumes or stopping his plant, we are able to react very quickly and stop our plans and see what kind of help we can get from the local government or using the holidays and so on and so on. So right now, from an operational point of view, we have been able to flex the fixed cost or the variable cost when needed. It's just that from a supply chain point of view, it's a bit difficult to manage, but I think it's the same in the whole automotive industry.

Very clear.

So that's why it's longer. Sometimes to say that -- I would prefer to avoid to give you an indication of the profitability of Q2 due to all these things. Nevertheless, if we normalize the EBIT of Q1, it's 6%. Of course, we want to decrease to 3%. So what we have done on fixed cost is here, it's recurring. What we have done and tied today on the variable cost, it's here and it's in our pocket, if I can say. So here, we need to be able to defend with the consumer, with the supplier and, of course, from an operational point of view, to avoid big issues.

Okay. And when you...

And on cash conversion and cash projections, we have the same approach on cash items as we have on the P&L. Due to the current environment, we are very cautious on our CapEx commitment, on our inventory, on our working capital, customer overdues, in order to be able to over-perform a normalized situation if we have bad surprises due to the difficult way to operate currently. So one thing that can impact the free cash flow are the inventories because due to the shortage, we keep some more inventories than what we are used to do, especially in steel and plastic, in order to avoid customer shortage. But again, it will not consume all the advantage that we had in Q1. But we prefer to be cautious again on these items.

Very clear.

And Monica, it's not over-prudent. Our goal in Q2 is to keep the advantage we generated in Q1 in terms of free cash flow, but definitely do not expect a similar cash generation as in Q1. It's not going to happen.

The next question is from Martino De Ambroggi with Equita.

Follow-up -- so the first is a follow-up on the raw materials. Maybe I missed it, but could you confirm what was a rough impact in Q1 coming from raw materials? And second question on raw materials is, could you remind us, in the current environment, what is your ability to pass through these raw material price increase, rough percentage of what you are able to pass? And third question, is it true, some other players were saying that since also carmakers are able to pass through or at least to limit the incentives when they sell to final consumers, that the negotiation is always tough, but less tougher than it used to be in the past? And the second question -- these were 3 questions on the raw materials. The second big issue is the fixed cost. Because you saved EUR 9.6 million in Q1, should we multiply by 4, probably not, just to understand what is the potential full year benefit in terms of fixed-cost reduction?

Thank you. So the rough estimation of the impact on raw materials for Q1, but it's mainly focused in one business unit, it's in steel. We are close to about EUR 2 million increase versus the first quarter of last year. So EUR 2 million increase from the suppliers, mainly on steel. And right now, what we have been able to pass through, it's 50% right now. And we continue the negotiation with the customers in order, in Q2, to get back the remaining part. So that there is not, let's say, a generic rule for each customer with a contract clear, which says the pass-through is immediate with [ each ] percent. In fact, it depends the history you have with this customer. For example, when the steel go down in '19, we have not decreased the prices with the customers. So right now, the customer says, hey, guys, you come to us wanting an increase, but in '19, we have not increased it. So it's based on negotiation. Our team are quite strong in that, about the squeeze management. And of course, it's all about timing because most of the time, if you get an increase beginning of the quarter, it's very unlikely you will be able to close the negotiation in the quarter. So the tempo will be very, very important especially because we don't know until when it will last. I don't know if it's just a bubble and in July, August, it will normalize, or if we are in this trend for 2 years, 3 years. So that's why we are very, very defensive with the suppliers before going to the customers because, to answer to third question, no, my feeling is that with the customers, it's not more easy than before. I would even say it's more difficult, especially with 2 customers growing because they are now combined, for example. So they have more strike force, and it's more difficult to negotiate with such a giant. So PSA and FCA are now together. And with the German customer, it's the same, before getting a price increase, the negotiations are very tough. So one of our strategy is also to leverage on the interruption that we have on the volumes or the big sales volumes decrease that we had with some customers and not to give the productivity, the yearly productivity that we are supposed to give in 2021. So rather than asking for an increase of price, we try to block the decreases of prices that we should have done in 2021. And this has been our strategy in the first quarter. And I have to say, it works very well. But no, the pressure is just very, very high from the customers because they are like us. They want to protect their P&L and their profitability. So my feeling, it's more difficult than before. But we are about to do as good as we can with our size and squeeze between giant suppliers and giant customers. The fixed cost, unfortunately, no, it's not EUR 10 million multiplied by 4. Why? Because, in fact, from '19, we already started the negotiation -- the reduction on fixed costs. So for example, in Q2, Q3 and Q4 of '19, there were already some actions that we started in the quarter before. So there is a kind of carryover quarterly by quarterly. But for sure, the positive impact of fixed cost will be permanent versus '19 and versus '20. Plus, we have some still big structural actions that we implemented and that we are still implementing that will have a positive impact in Q2 that we don't have in Q1. One is the strong reduction that we are doing in the headquarter of Filtration. The process is about to close in April and May with savings from the second part of the year. So if we have negative impact in one way, in the other end, we will have also positive actions that we are continuing to implement in the 3 business units.

But if I may, Fréd, to rebound on your answer and to answer Martino's question, there are many actions underway to further reduce fixed cost. So at present, we don't expect fixed cost to increase 4x Q1.

Okay. If I may follow up on that. CapEx, just to have an update if you changed your mind on the total amount for the full year. And you mentioned the inventory are higher because you want to avoid the shortages of components, raw materials and so on. Could you quantify this impact that you expect going forward?

Sure. So for the CapEx right now, in Q1 2021 versus the budget that we initially had, we have been able to overpay from. Yann, I don't remember exactly the amount, but we have been very conservative on the launch of CapEx. And we will try to maintain this positive impact by the end of the year. So no, we have not changed our mind, means we will continue to invest on new programs, on everything linked to safety. But we have always -- we had doublechecked before investing in the past. Now it's a triple-check, means before investing, we want to be sure that the activity will justify this increase of capacity or, for example, productivity actions. So the strategy is still the same, but we are more cautious when we launch CapEx on time that there is a stabilization of the market. Inventory, right now, we have EUR 2 million more than we would have had in a normal situation, mainly in steel and plastic. I would like to keep this EUR 2 million as long as the market is under pressure. And once we will feel that the 2 -- we don't -- the market is stabilizing slowly but surely, we will decrease these extra inventories.

[Operator Instructions] The next question is from François Robillard with Intermonte.

Can we just come back on the nonrecurring cost included in your first quarter margin? I see the EUR 5.8 million on Slide 9. On EBIT, can you just recall quickly what's within the EUR 5.8 million and what amount is also reflected in the EBITDA figure?

So François, the big chunk is the EUR 2.4 million settlement, which closed our litigation with former advisers. Then you have 1.7 -- sorry, let me double check, EUR 1.7 million of favorable exchange differences. And then we had some recovery, some insurance recoveries in the region of EUR 1.5 million which, of course, are not recurring on files that took place last year.

The next question is from Gabriele Gambarova with Banca Akros.

My question is a little bit more strategic. You correctly put much emphasis on the new contracts you got for hybrid and electric vehicles. I was wondering if you could remind me what is, in your understanding, the value for each vehicle, for each electric vehicle in comparison to an ICE vehicle. In sum, I would like to understand how much you are going to profit in terms of value for vehicle in that perspective.

Thank you for the question. So the 3 business units are not impacted in the same way by electrification or hybridation. So to start by the most easy one, Suspension, I would say that it's not linked here the -- it is not linked to the engine. We -- Suspension is not directly impacted. Nevertheless, as the other business unit, Suspension needs to adapt its customer bases because, as we all know, there will be newcomers and new customers in the electrification. So our strategy with Suspension is to shave these new customers in order to be ready when they will get market share to propose them or suspension. Filtration, it's negatively impacted in the first time because the decrease of the diesel. So of course, there is a decrease on the diesel. In the other hand, we are able right now to compensate, not with electrical or hybrid engine products, but with the switch of our product range from purification of diesel to purification of air or oil. That's why the last 2 years, we really shaved a lot of new businesses in this area in order to increase our market share in air and oil to offset the decrease that there is on the diesel and that they will continue to have. So as you have seen in the figures, right now, it's working quite well because we are over-performing versus the global market. But in fact, inside this market, if we look at the diesel decrease, it would even be a bigger decrease. So this is our Filtration. And the new product that we will have on Filtration won't be linked directly to the electrification or hybridification, but more on the new trend of the purification of air inside the car. For Air & Cooling, hybridation is a good news because with the cooling side of this business unit, there is a multiplication of cooling products. For example, in an ICE car, you have one electric -- one water pump. In an hybrid, you may have 2 or 3 water pumps. It's the same thing for the thermostat hosing, there are more water ducts. So right now, in Air & Cooling, we are benefiting from the hybrid costs because we sell our new products for the electrical side of the engine, and we continue to sell the ICE application products such the manifold, air ducts or even cooling products. And then with the full electrification, the range of Air & Cooling products, we have already a lot on the shelf, means ready to sell as we are doing currently. We are working already with full EV players in Europe or in China. And of course, we work with our traditional OEMs, traditional customers, on the electrical side of their product range and product portfolio. So Air & Cooling is really, right now, benefiting from this trend. But we need to be cautious because there are a lot of development, a lot of program. It requires a lot of R&D, and we cannot do everything because at one point, the technology is not fully mature yet. So that's why my strategy is to work with a few chosen OEMs where we think they are very advanced from a technological point of view, understand how it works, get expertise and once that the volume will increase, choose our customers and the product on which we will go. But right now, the business nomination in Air & Cooling is quite high for electrical application or full EV customers.

Okay. And sorry, just to come back to CapEx, I didn't understand if you are confirming the EUR 110 million target you gave last time or we are more cautious than that?

I think we will not spend this full amount. Why? Because a lot of uncertainty on many things. Nevertheless, we'll continue to invest where we need to invest. So I think we'll be closer to EUR 100 million. The trend is here, but maybe not the full impact.

The next question is from Roland Könen with Value-Holdings.

Congratulations to the figures in the first quarter. I have just 2 questions, more on the housekeeping side. First one is on the discontinued operations earnings line, where we see a negative impact of EUR 0.8 million, what would be the best guess for the full year at that line? And the second question would be on your tax quote. It was very low at 31% in the first quarter. Is there a positive influence of the capital gain in there? I have in mind, your midterm target is roughly 30%, but in my mind, not the target for 2021. Maybe you could help us there, what would be the best guess for the tax quote in this year?

Fréd, maybe I'll take the questions. Discontinued operations, we do not expect a higher amount for the full year with even being prudent in Q1. So certain items, still under discussion. But definitely, for the time being, we do not foresee any bigger adverse impact on a full year basis. Regarding tax, I said in the last call that we were shooting for something in the region of 30%, 40% tax rate. We are still shooting for it. It's what we've done in Q1. So it depends on results by geography mainly. But the fact that we disposed of one large entity with a significant impact regarding taxes at the end of last year, this helps us in going for this, let's say, 30%, 40% tax rate.

Gentlemen, there are no more questions registered at this time.

So thank you for your attendance, and we look forward to the next call, which I believe is going to be for the Q2 results.

Many thanks.

Thank you. Bye-bye.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.