Stratec SE (SBS) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Full Year 2024 Financial Results Conference Call and live webcast. I'm [ Serven ], the chorus call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's a pleasure to hand it over to Jan Keppeler, Head of IR and Sustainability of Stratec. Please go ahead.

Thank you, [ Serven ]. And also welcome from my side to everyone joining us today for our full year results conference call. With me today are, as always, our CEO, Marcus Wolfinger, as well as Oliver Albrecht, our CFO at Interim. Please note that this presentation will be webcast live, and you can download this presentation either from our website or directly from the webcast. And before we start, I also want to draw your attention to our safe harbor statement. This is on Page 2 of the presentation. And without further ado, I'm happy to hand over to Marcus.

Yes. Thanks, Jan. And warm welcome from my side as well. I'm Marcus Wolfinger, CEO of Stratec. This presentation will consist of 4 major segments. First of all, I would like to give you an overview of what happened in 2024. Then Oliver will take over for the financial review, which is certainly the main part of this presentation, followed by the outlook and what we believe is going to happen over the next minimum 12 months. And then we would like to get you the opportunity to come up with a question, and hopefully, we can answer those questions. Certainly, 2024 was busy for us as a lot of things happened which were entirely unexpected. When talking to our peers, and to those companies, we meet in front of our customers, we certainly realize that we did very well with our business model where we develop our own technology and the common products with our partners to share their technologies and our technologies, which actually ensures that downstream manufacturing and providing instrument consumables gets to a real win-win situation, and that helped us very much to actually cover the last hangover effects of COVID-19 with still ongoing saturation in certain market segments, particularly in the molecular space. And on the other side, certainly helping us to manage our still elevated inventory levels. Before we dive into details, allow me to just talk a little bit about the delays we were facing over the past minimum 2 months, I think we made that very clear in the announcement that as per standards, we had to rotate our balance sheet auditor move to one of the big 4s. And I think we were not the only ones where the phase of this transition took way longer than expected in parallel. We had a routine BaFin audit, the BaFin, for those ones which are not familiar with German terminologies like the German equivalent of the SEC or FAC, where we had a routine audit and then we unfortunately had to deal with a lot of sickness related obsolescences and vacancies. And last but not least, certainly, we had to change the way how we handle our contracted cooperations with our partners. This was all very time consuming. It was really a phase of a lot of strain. And we came out of that with probably a better setup, how we moved in. On the other side, it's clear that we are continuously and continue to change the processes which are related to reporting. As an outcome of the delayed full year disclosure, we had to move our Q1 disclosure as well, but I will touch base on that later on. We really made progress with the margin, which was ahead of our own expectations and super strong cash flow dynamics despite this challenging market environment, if we are looking into the details, particularly if we break down product groups, you probably saw that as a matter of fact, our customers are still a little bit hesitant to invest into new placements. They are spending a lot of money in keeping their product portfolio young which actually is leading to elevated recognized development revenues and actual development revenues. On the other side, we see this temporary decline of the percentage of sales coming from instruments. I think long term, this will be turned back partly. On the other side, certainly, we will continue to see higher development revenues than in the past, which is very much related to a lot of -- lot of product life cycle management activities we have to deal with, which is very much driven by this effect I described so often this year is that on the input side, we see that suppliers, particularly suppliers of electronics like micro controllers, but other commodities as well are trying to shorten their product life cycle, whereas in our industry, product life cycle continue to get longer and longer, which often leads to high activities in obsolescence management and redesigns and so on, which like as a derivative of the above is leading to elevated activities on the development side, not bad per se, is selling existing products for a longer period of time, is certainly productive in terms of uninterrupted supplies. On the other side, this is a means to an end. And actually, looking into the past, we saw that pattern in similar situations of the industry over the past 2 decades, like 2x or 3x at the end, we always saw a material catch-up effect, and we are expecting the same thing to happen here. Pipeline. We made a lot of progress here. We concluded a development milestone for one of our major customers in transfusion diagnostics is probably one of the most relevant things we have in the pipeline at this moment in time, new contracts. We signed a number of new development contracts or cooperation agreements, which typically include a development phase and the supply phase as well. Here certainly to name one of the biggest one in immunodiagnostics, which have been given to external suppliers over the past 5 years, certainly, we got such a deal as well. I think -- at this moment in time, it's worth mentioning that we see a higher degree of fragmentation in the industry at this moment in time, which means that decision-making processes are taking longer, the duration or the time span of such a decision is lasting longer. Like in the past, we often saw that our partners committed to our long-term development and the long-term supply phase. Like I said, things are getting more fragmented. Our business model is capable of handling such a situation. On the other side, it certainly means a lot of efforts on the sales side and a lot of efforts in program management to handle such more fragmented elements. Then certainly, we are strengthening like deglobalization obviously leads to a lot of consequences, not just elevated cost, but like local presences gets more and more important. So with our already existing good footprint in the United States and Europe, I think we are perfectly prepared to handle that side, certainly, Asia, where we are actually establishing a manufacturing site at this moment in time trying to shy away from any risk. So we actually do only final assembly and final testing there which is very helpful from a few political perspective, but also from a local presence perspective of made in is certainly helpful and last but not least, leading you through the highlights, I would like to mention that the Supervisory Board and the Board of Management will propose a EUR 0.60 dividend for fiscal year 2024. This gets me to the end of the overview, and I would like to hand over to Oliver, who will lead you through the financial details.

Thank you, Marcus. And yes, good afternoon, ladies and gentlemen, and I'm very happy to present you now the financials, and let's have a quick view on our major KPIs. Firstly, on Page 5, sales was EUR 257.6 million, 4.7 percentage lower than previous year. And this decrease is mainly due to the fact that we have applied new accounting principles, which had a very strong upward effect on sales in 2023. Without this adoption, sales development, which show only a very small decline. I will explain this effect on our key figures in more detail later on the next page. But despite lower sales, our margins improved significantly. If you look on the adjusted EBIT margin, this went up by 250 basis points to 19.1%. And the adjusted EBIT margin is up by 180 basis points to 13%, and we could exceed the higher end of our guidance range for 2024, which was between 10% to 12% regarding adjusted EBIT margin. And this is not only cued in regard to the application of new accounting principles, we also exceeded our guidance based on previous accounting practice. Our earnings per share increased by 4.8% to EUR 132. On the next Page 6, I would like to illustrate the effects from the application of new accounting principles. As Marcus mentioned, after 10 years of cooperation with our former auditor, we have chosen one of the big 4s. We have chosen PWC as our new auditor. And after a joint analysis with PWC, we made some adjustments regarding sales recognition from development corporations according to IFRS 15, and capitalization of intangible assets pursuant to IRS 38 and a minor change in inventory valuation. And apart from that, we made some changes in the presentation and classification of figures in the balance sheet and in the cash flow statement. If we look now on the figures here on the left-hand side, you see the reported figures and on the right-hand side, you see the figures just before the adjustments. And on the right-hand side, also our guidance for the financial year 2024. The positive result from these adjustments on the P&L was about EUR 1 million in 2024 and EUR 3.3 million in 2023 upwards in adjusted EBIT. In previous periods, we used a write-down method based on inventory turnover, which is only possible under German GAAP, but not under IFRS. The effect from this correction in '23 was about EUR 0.5 million on net income. We do a case-by-case analysis of all the contracts, the development contracts and circumstances to determinate how to recognize sales, to recognize sales either at point in time or over the time, according to the standards and requirements of IFRS 15. The major impact mainly in '23 comes from the change from a point -- from at a point -- at a point in time recognition of sales to over-the-time sales recognition for some development cooperation contracts. And in the past, this is -- this was our understanding. We have applied a more conservative approach with the at a point in time recognition. Without these adjustments, -- our adjusted EBIT margin would have been at 12.6%, which also exceeds the guidance corridor of 10% to 12%. So this general improvement in our profitability was driven by measures initiated in '23 and continued into '24 as part of our earnings improvement program, but also by a strong performance in Service Parts and in Consumables and higher-margin revenue realization or development projects and services. So let's move on the next page, 7. Here on Page 7, by looking on the left-hand side, I would like to highlight the effects from the adjustments from PPA amortization and some other one-off effects in 2024 on our EBIT figure. The unadjusted EBIT amounted to EUR 27.5 million. And with adjustments, our EBIT was EUR 33.5 million. So adjustments includes PPA amortization for the formal acquisition of Diatron, this is only a small part now, then the Stratec consumables and our latest acquisition, Natech, which we acquired in 2023. Under the other adjustments, we summarized advisory expenses in connection with M&A transactions. This was an amount of about EUR 300,000 and severance payments inter alia for the former CFO, who stepped down in August last year, this was EUR 1.7 million of the adjustments under others. Let's go to the next page now. The graph on Page 8 showed the sales development during the last 5 years. And as Marcus mentioned here, we still suffer from pandemic-related demand disruptions which is shown in the declining sales trend since 2021 and which is particularly caused by a low demand for our tools for our systems and due to an ongoing elevated inventory level of our customers, but we also see that the lifetime is increasing for our products and for the products of our customers, which has a positive impact. In addition, we have a flatter-than-expected ramp-up curve for products newly launched onto the market. However, we can also report some positive developments regarding an increasing sales volume with service parts and consumables and an increased recognition of development and service sales which helped us to compensate the low demand for tools. So we see some light in the tunnel. And I think Marcus, he will comment on this when he's speaking about our guidance for 2025. Let's go to the next page, please. On Page 9 here, these 2 graphs show the sales development of systems, service parts and consumables and development services compared to the previous year and the change in their share of total sales. So looking into the graph, we see systems are down by 27.8% and service parts and consumables are up by 14.8% and development and services increased by 9.8% as well. Let's go on the next Page 10. Despite decreasing sales, we were able to improve our earnings and profitability due to the mentioned earning improvement program which we have been implemented since 2023 and higher margins -- higher margin sales related to development projects and services. And we had -- in addition, we had a positive impact from foreign exchange gains compared to last year. Though our gross margin improved by 29.7% year on year, and due to the strongly increased gross profit margin, we were able to compensate cost increases in our OpEx. As mentioned, the increase in general admin expenses is partly driven by one-off effects for severance payments for consulting expenses related to M&A transactions. This was in total an amount of EUR 2.2 million in last year. Now let's go to the next page where I would like to speak about our cash flow situation. Page 11 now. Looking on the left-hand side, you can see -- our cash flow from operating activities increased by 152% to EUR 48.7 million. This improvement is due to higher profitability and reduced trade receivables. As Marcus mentioned, inventory level is still too high, and we still suffer from long-term supply agreements into which we entered during the tight supply situation during the COVID hype. Also, we have already started to improve our procurement processes, and we have been quite successful in renegotiating some of these long-term supply agreements. You will see a positive impact only throughout the current year and the year after. Cash flow from investing activities also improved significantly. In 2023, we acquired Natech. This is the reason for the strong changes or for strong policy changes also in cash from financing activities. So altogether, our free cash flow turned positive with a strong number of EUR 32.7 million. With this strong cash flow improvement, our cash at year-end improved to EUR 47.1 million, we could also improve our equity ratio, which is on a very comfortable level with 54.5%, and our net debt to adjusted EBITDA improved from 2.5x to 1.8x per year-end. And we also started to negotiate our new syndicated loan in the amount of EUR 125 million with a 5-year term, and we will start the invitation of our house bank in due course, and I expect the closing of this transaction by end of July. Now I would like to hand over back to Marcus, who is talking about our guidance and business development in the first quarter. Thanks.

Yes. Thanks, Oliver. Like before I get you into the guidance, which has already been disclosed, I'd just like to give you like a little bit an indication of what we expect cash flow-wise. So certainly, with higher inventory levels and as a derivative of the product mix expected for 2025, we are certainly expecting a cash release from the still elevated inventory levels of EUR 10 million, in an ideal world up to EUR 15 million. So the message should be that we are expecting very good cash flow development in 2025 as well. Top line, we have guided for low to medium single-digit percentage range growth. And I think Oliver made that very clear that we certainly had to in a phase of such a big transition in the industry from the life -- the industry has changed like 3x over since COVID-19. Certainly, one should expect that after the first quarter where in certain markets, we saw elevated growth rates in the industry of our customers, which was Q4 2024, that at the tail end of such a transition, one could expect that we will see an elevated number of instrument placements as well. And at the tail end of that, certainly positive development for us as well. And I mentioned that at the very beginning that certainly if we break down revenue in 2024 and now looking into the details that we saw an unexpected high level of service parts, consumables and maintenance parts, which -- like I said, it's a result of the approach of our customers to keep the product in the field young instead of placing new instrument, which is a typical pattern of such a phase in the market. So we had to do some estimates we were cautious. Certainly, with all the tariffs ongoing and the decision-making processes in our customers, we certainly were trying to cover both the positive and the negative end of things, and that's why we are coming up with this guidance. Top line. On the EBIT margin side, we cannot expect a similar elevated level of contribution of revenues coming from consumable, spares, licenses and other elements in the same level how we saw it in 2024. That's why we acted on the cautious side on the EBIT level with 10% to 12%. We hope that we can talk about that in the coming quarters as well in the positive sense. And then certainly talking about investments, intangible and intangible assets where we were very low in 2024 and that's why we continue like in the past to guide for 8% to 10% of sales. Yes certainly, there is a catch-up where we were very cautious with new investments, a little bit on the development program side, but certainly on the IT side, we have a better budget in 2025 as we had in 2023 and 2024. Focus for 2025, definitely, we are maintaining cost discipline. That's why we are super cautious on the OpEx side. Like I said, we are expecting if the product mix fits, we are expecting good effects from the inventory level side. We have made structural amendments to the way how we handle things on the procurement side, which helps us. However, we are still kind of stuck in the middle of that triangle of a certain lack of scalability in manufacturing with our instruments. And on the other side, still pressure on the COGS side and the bill of material of our products, which we are working through and continuously improve the situation. And on the other side, certainly a little bit stuck in terms of costing of price increases on the other side. If we only relieve one of those 3 elements, certainly, we will see an acceleration bottom line as well. Second thing is execution on the field pipeline. I mentioned it in the intro that we are talking about a number of programs, which are in a final decision-making stage, where we have already performed certain feasibility and so on, which gave us a good indication in the past, a nice lineup here. But like I said, things are getting more fragmented, smaller bits and pieces. We are looking for the next big thing, obviously. Then we want to continue our growth footprint in certain selected markets where we can use our technology, where we only have to transfer existing technologies into new markets, into new applications, not only from the perspective of diversifying our market, but certainly on the other side of working in other high-growth segments as well. We named a couple of things here where we already have a super strong footprint in High-Sensitivity Immunoassays, one of the areas where we grew nicely in the past and expect to continue to grow, but certainly things where our libraries in imaging, in imaging interpretation, like in AI, where we can actually use our existing libraries in new applications like advanced imaging or things where we can use derivatives of our existing technology where we are looking for a partner in like applications like Cell & Gene therapy. Then certainly, there is a nice opportunity. We typically talk in terms of consumables and complex consumables and going into the third dimension like cartridge-based applications and particularly with the know-how we have on the instrumentation and software side in our legacy business in instrumentation, certainly with consumables, smart consumables in Natech, we have a perfect offering for this fast acceleration in smart consumables, where the outsourcing ratio is still under 10%, and we are expecting a lot of activities here in the next 5 to 10 years. Like I said, outsourcing is only at the very beginning. At this moment in time, the companies with the high volumes are handling the development and manufacturing of smart consumables themselves but everybody in this industry, particularly for next-generation product is expecting that this nicely swaps into an outsourcing model like we saw in other applications and other areas in our industries as well. And certainly, although we were super active in 2024, we couldn't announce anything. On the other side, we are working on our M&A pipeline. As a matter of fact, this is a very binary approach, either where you manage M&A or you don't. But certainly, there are nice opportunities. This is the time, particularly if we are thinking about acyclical patterns that this is a time where particularly looking into the review mirror and trying to look into the next 12 months that this is a moment in time where more nice assets for reasonable prices are in the market as this has been the case over the past 10 years. So this is the time to act. We are actively looking into opportunities and then certainly taking the nice tailwinds we had and continue on that right in 2025 as we had in 2024 to improve our cash flow dynamics with a strong focus on particularly inventory efficiency. Let me briefly walk you through our financial calendar. We'll have a publication of our quarterly statement for Q1, which has been postponed as well as a result of the postponed annual disclosure. We will shorten the Q1 publication according to absolute minimum requirements. That's why we'll not do a conference call due to the proximity to this publication. So the publication of Q1 is in less than 2 weeks. Then we will have our AGM June '27. Then we will have our half year publication at the end of August and then the Q3 publication in November. So we are assuming that we'll be back on track in our announcement in the second half of the year. As mentioned, we had a lot of -- to handle. We had a lot of work on our table with the routine BaFin audit, with the balance sheet auditor rotation on the basis of standards and a lot of things we had to handle. This certainly caused delays. We are very positive that we have established the processes and continue to establish the processes a tool landscape over the next 3 months in order to make sure that this was a onetime occurrence. And this gets me to the end of the presentation. I would like to hand back to [ Serven ], who will explain us how to commence with Q&A?

[Operator Instructions] And we have the first question coming from line of Michael Heider from Warburg Research.

And yes, good to hear you again. Could you please elaborate a little bit on the latest market developments when we last discussed, I think your business was very well on track with the exception of molecular instruments, which -- where the demand was still low following the pandemic. Yes, can you confirm that the rest of the business is doing really well? And what is the situation you're seeing at molecular at the moment? That would be my first question.

Yes, Michael, thanks very much for that question, and this gives me an opportunity. I'll try to put that into the 3-minute answer, not in a 30-minute answer. So definitely, looking into the details. You know that -- First of all, although looking into the KPIs of our customers and looking into our setup. Obviously, the molecular side of things, which is the biggest franchise in our business, the biggest of our 5 franchises in our business certainly suffered a lot with a lot of saturation during COVID-19. In total, we believe that 3x more instruments coming to the market that's in a typical phase or a typical duration of such a phase. This obviously led to saturation. But on the other side, as an outcome, and you probably saw that in the sentiment of the overall market that this was -- this is not the time where everybody believes in the diagnostic market and so on. So there was a certain paralysis with after phase of almost 15 years continuous growth in our industry, the decision makers kind of switched into a paralysis mode, pushed decisions out to the extent possible. And I mentioned that in the presentation already that at this moment in time, people are more looking into product life cycle measures rather than placing new instruments in order to cover future growth. However, when we attended JPMorgan earlier this year, we definitely saw that the mood switched back, particularly in the United States, but in certain other areas as well that it was the first quarter -- the fourth quarter of 2024 was the first quarter where growth came back where testing volume and pricing actually saw a certain renaissance, not in all markets, but it was actually -- you could definitely see that the mute came back and in the communication we have with our customers at this moment in time, particularly with the European customers, which is a bit of surprise. We see that the mood of investment really returns, which gives us a very positive indication. On the other side, and I mentioned that as well, we definitely see that this is not a moment in time where the marketing people are taking this decision. This is actually the time age of the controllers and of the procurement people, which doesn't make life easy. On the other side, we could expect a certain -- not only recovery effect, but certainly, that might include even a catch-up effect. On the other side, we have to admit that the world changed in our industry, a high degree of cost sensitivity, lower appetite of long-lasting decisions. So I would not speak from a full recovery. But I would speak that in all other franchises where we are working, particularly in areas of complex sample prep or in immunoassays and immune hematology, we see that the appetite of our customers comes back, we still see the tail end of saturation in the molecular space. And I think it's worth mentioning, and we forget that too often that when we were at the tail end of COVID-19, it became quite obvious and transparent that those instruments, which had nice tailwinds during COVID-19 led to a certain saturation of the market. But at the time, we had one market launch of a new product during COVID-19 and 2 further product launches right thereafter. And under normal circumstances, we could have expected that the expected slight dip, which at the end, turned out to be bigger, that slight dip coming from the molecular and could easily be offset by those 3 products. And Oliver mentioned that in his presentation that the ramp-up curve is way slower than initially expected. This is actually a product in digital PCR, where the market at this moment in time continues to grow nicely in immunoassay where we definitely see nice growth rates. And the third one, which is actually complex sample prep, the same thing happening there. So one could expect that if those products continue to switch back into a normal sales pattern that we come out of that situation earlier than expected. But on the other side, we have to act cautiously. We cannot expect that the market will come back at this very moment in time. We see, like I said, that the mood and appetite of our customer returns, but if we see this in our KPIs mid this year or only mid next year or even later, that's impossible to say, particularly as this is a derivative of product mix and product mix definitely derivative of the pattern we see in terms of behavior from our customers. I know this was probably a longer than the 3-minute answer, but I hope it shows that we see recovery. We see, as Oliver mentioned, the light at the end of the tunnel, but not the full swing there.

That's very helpful to get your view here. And then the next question might be -- might require a similarly long answer. Let's see. It's on the U.S., and there's 2 subjects basically. I mean one is tariffs, and we will see how that plays out. But could you comment on your competitive situation? Do you, I mean, are there any other players that could maybe benefit from you being behind the tariff wall, so to say. So will the competitive landscape change with the tariffs? Or will everybody be affected and then it doesn't really matter? So the prices go just up and maybe also one word on the research budget in the U.S., which are under pressure. If that has any impact on your business?

Let me, again, trying to keep myself brief. First of all, tariffs. Talking to our customers, and looking into our KPIs, demand planning system and so on, at this moment in time, particularly short and midterm, we don't see a material hit there. This is very much a derivative of the way how this industry works and very much as where our customers are sitting. First of all, I think it is important to understand that the majority of our customers have local presences where they are manufacturing their products like the kids and the tests locally. European companies manufacturing in Asia or the United States, so this is not an issue. And if we are looking into the value streams and value proposition is that if a customer of ours provides the value, let's say, 100 to their end customer like a lab chain in the United States, 90% of the value contribution comes from the customers themselves, which means this 90% continue to be untariffed. Our products have a value proposition of, say, 10%, which is an average figure. And if this value proposition of 10% gets tariffed by another 10%, it moves from 10 to 11 and the overall value proposition towards the end customer moves from 100 to 101. So that's not something which actually changes decision-making process in terms of who do I buy from. Long term, and that's actually the same answer in terms of competitive landscape and in terms of research budget, both may actually have long-term effects, which means if our U.S. customers are worried that uncertainties will continue that they might probably in their decision-making process, consider geographies as well. That's, by the way, one of the reasons why we continue to keep our U.S. presence growing like with the acquisition of Natech was a big move like continuously looking into acquisition, where certainly the United States plays a dominant role. We actually believe that the way of our product offering, the way how we are handling relationships with our customers keeps us at this moment in time a little bit kind of immune. On the other side, I think we should not neglect the effects which uncertainties may have in the future. And talking about research, this is not really our market. Our life science budget is mainly at the tail end of research like for translational research and clinical and LDTs and things like that. This is not where the budget cuts are actually happening. But it may lead to that this industry is emptying the pipeline in 5 and 10 years, which may have an impact to the entire diagnostics industry. So long term, we should expect that we have to handle things accordingly and have to look into the effect of deglobalization. On the other side, short terms, we should, particularly as a derivative of our business model, we shouldn't expect the tariffs. Actually, we are talking to our customers if moving manufacturing may make sense of instrument, but we -- even moving manufacturing in Europe in the past is 2 years' endeavor which is very much driven by regulatory effects and validation of manufacturing sites and then recertification by each and every regulator in the relevant market. Last time we did that. And like I said, only Europe to Europe, it took us 2 years. And this is not something you do in terms of high volatilities. I think if the dust settles and the new world gets kind of reestablished and when we see that the situation of tariffs in and tariffs out comes a little bit down, I think this is the moment in time of reviewing things. Like I said, at this time, talking to our customers and looking into the processes, we don't get nervous. The long-term effects, in long term, I really mean like 5 to 10 years cannot be tackled at this moment in time.

Okay. And then I have 2 very short ones. One is what is your tax rate going forward? And secondly, on your Q1 publication because you said you're going to minimize this. Do you mean that you just don't have a conference call? Or will you just publish sales, for example? Or will we have the full P&L?

No. Thanks, Michael, for bringing it up. Again, we won't have a conference call affirmative. We will certainly announce top line and bottom line, but not much details. Like I said, actually, we pushed our accounting department to the level and beyond feasible, we need to calm down the situation. That's why we are doing the absolute minimum like I said, top line, bottom line, a short report, we won't have a conference call. In cash flow, probably Oliver?

Tax rate, sorry, it was taxation.

Tax rate, sorry.

Yes. Thanks, rate. We had some changes here regarding -- we had some adjustments due to the fact that we changed our accounting principles. And normally, the major part of our earnings is generated within Switzerland, Germany and Hungary, so our tax rate is a mix in between these 3 countries. You know that in Switzerland, we have a lower taxation compared to Germany. These positive effects will a little bit decrease in the future. But in general, I expect on average tax rate of about 28%. So this is slightly below the German tax burden what German companies have. We have also to consider deferred taxes. And here, we had some changes we had due to the adjustments IAS 8. We had some higher deferred tax payables that was the impact here on the '24 figures and '23 figures.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to Jan Keppeler for any closing remarks.

Thank you, [ Serven ]. Yes, ladies and gentlemen, this concludes today's conference call. Thank you for joining, and goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.