TKH Group N.V. (TWEKA) Earnings Call Transcript & Summary

Good morning, everyone, especially our guests here in our tech -- in Amsterdam. We are very happy that we also have a physical possibility to meet here. But also everyone in the webcast and in the Teams, a very warm welcome here at the presentation of the annual results of TKH. What a year 2020, a big impact of COVID on TKH, I believe the whole world. But yes, we can also say that we came out quite strong in 2020. We were able to pay our dividend of EUR 66 million. We were able to announce a share purchase program in November of EUR 25 million. We came out at a net debt of EUR 1.6 billion, and we had a very strong cash generation. So I believe that proves a very strong TKH, coping with difficult circumstances in some of the areas we are active in. But I believe the general picture gives us a strong foundation to build on for the year 2021 and beyond. Yes. What we saw is a big impact on the turnover. Organic growth reduced in the first half year by 9.9%. And in the second half year, it was around 12.5%, so a heavy impact. And especially to color that picture a little bit in the Industrial Solutions area, investments for capital goods were really limited. A lot of uncertainty at our customers for the perspective of the demand of the products that they manufacture. However, what was very good that after, let's say, a very difficult Q2 with also a lot of lockdowns, the perspective developed in a more positive direction, and that ended also for the whole year into an order book which is higher than the order book of end 2019. What especially made the market more positive is the development of the vaccine. And we saw that in more appetite for orders. And yes, more positiveness, less uncertainty at our customers to restart the investments again. And that helped us in a quite good development of the order intake in Q4. So yes, based on the strong position of TKH, we also decided to have a dividend of EUR 1, which is lower than the dividend of last year. However, you have to take into account that with the share purchase program, we are almost at a similar level of cash out in respect of share purchase and the dividend that we propose to pay this year. Well, what's very good is the strategic progress that we made. We see that we have a very strong return on sales despite the big hit in the turnover. And the coverage, it was the high gross margin that we achieved, around 50%. The loss of turnover has a quite big impact, which is difficult to compensate with cost saving. But in the end, have we made it to 10.5% return on sales, which was slightly lower than 2019. But if you would take the impact of, let's say, the turnover loss, especially in Industrial Solutions, I would say that about -- around 3% is because of, let's say, kind of one-off effect with the hesitation and the strong hesitation that we saw for investments in capital goods. So if that returns back to normal, you would see that we made a quite big step in the return on sales development and that we are, let's say, on track to achieve the targets that we have set for the 15% return on sales as a minimum. And also for the return on capital employed. What also was good is that we kept our investment program for R&D. So we reduced some capital goods investments in the TKH Group. But all our R&D investments, we continued, and that is mainly based on the fact that we see a quite -- yes, positive outlook for the medium, longer term. And that has also translated in the growth scenarios that we have for the vertical markets where we still have a strong belief and commitment to realize these targets that we have set. Also good progress in further integration of activities. Not always easy to do these integrations, but I believe is a very strong management that we have within the group and people exciting to work on the Simplify & Accelerate program. A lot of new initiatives came in, but also the execution of the program that we were running in 2019 and in 2020 went very well. So in that respect, also we can be quite confident that we can reach the return on sales targets. The divestments continued in 2020. So also there, good progress with the commodity cable activities in China, data cable activities that we divested and a nonstrategic activity correction in the Netherlands related to system integration activities. Yes, I believe, very good that, that was still possible to realize that in 2020. We also stepped -- did not realize everything. So as of Q2, we said we postponed further divestments and the good news was that in Q4, we restarted again, the divestment program, where we still have about EUR 100 million to go. And the good news is there that the results of the companies to be divested came back at, let's say, the original budgets and levels of profitability. And also we saw that appetite came up again from parties to be interested in investing in these companies. The vertical growth markets, a share of 63%, a little bit higher than the year before when it was 61%. I would say good progress in a strategic way. We met all the milestones that we had put as a target in 2020. So I believe also very good news there. Despite that we saw in some of the markets that there was a quite steep drop of turnover. And especially in the Parking area, and the marine market, especially for cruise ships, we saw that almost a complete standstill of investments and postponements. And Parking, we see that many Parking garages only have utilization of around 5%. And yes, that also makes it quite clear that investments are postponed because many companies in the Parking world, but also in the airport world, they are -- have their first priority to survive and to see that the business is coming back. So that they have a higher utilization and then can afford again to invest in the very interesting technologies of TKH. What was interesting there is that, especially in the United States with all the investment programs that are coming in, in the infrastructure, here, we see that not every customer in Parking and in the airport business needs to wait until the business comes back, a lot of stimulus programs, and we will -- we are certain that we also get an interesting share of that. A good segment was the Machine Vision segment with more than 20% growth. Organic growth was around 3%. And of course, also Machine Vision is related to a lot of industrial investments and production automation. And also there, we saw that not in all the segments, everything was running in all cylinders and some hesitation was there for investments. But a good order intake in Q4 and also a quite good perspective for the first half year in that segment. At Tire Building, yes, that was hit quite hard, especially related to the capital goods investment and mainly the top 5 tire manufacturers were very careful in investments. And so the investments mainly came from other customers. Especially also Asia did quite well. China did quite well. A lot of players in China are on the move for investments outside of China, in Europe but also in the U.S. and they made quite good progress. Anyhow, we saw that the Asian market, the Chinese market was already recovering quite fast. And I would say even already in Q2, Q3, we saw a normal level of investments again in China. And again, that was not the case in the Western world. Yes. When we look at the solutions, part of it I already covered. Here, we saw also within telecom, a big impact of the lockdowns. It was actually mainly the lockdowns and especially in France. And -- but also during the year, we saw a kind of recovery. People know how to cope now even with lockdowns and yes, the COVID situation to work and to continue. In some areas, we even saw record order intake. And so the impact is getting less and less of the COVID situation, and we will also see a good recovery of the telecom solutions in 2021. When I go to Building Solutions, we saw a drop of turnover of 9.7%. However, the EBITA, we were able to increase, and that was especially related to the mix of activities, here, the Machine Vision activities, which really contributed well. We have an above-average gross margin. And of course, that helps then to keep up the profit level. And you can even see that we were able to increase the return on sales by 1.4%. A few areas are doing quite well there. I already mentioned Parking, which is not doing so good in 2020. But infrastructure is doing quite well, especially the energy networks is very attractive area for increased demand, and we were positioned quite well with capacity that we had available to take advantage out of the situation of the increased demand. We decided during 2020 to further increase the capacity. And I believe that was a very, very good choice. It takes a while before you have the capacity onstream. And we expect to have the capacity available in Q3 and will take advantage out of further utilization of the additional capacity during 2021. Marine & Offshore. Yes, the offshore market and especially the wind energy market, offshore wind, is doing very well with a good order book and good order intake. We are, yes, also moving in the right direction there for 2021. We indicated in the press release that we believe we can realize around EUR 40 million turnover already in 2021. And which then also means that we are in a quite good profitable situation. The uniqueness of the proposition is more and more realized and seen by the market. And yes, that helps us, of course, to position us very well for the medium- and long-term order book. We see interesting developments in the offshore wind market with, yes, increased size. And in that respect, that also has effect on the proposition, the cable proposition, the connectivity proposition that we supply in that market. Everything will be bigger and utilizing the same equipment. That means that also your contribution margin is moving in the right direction. Yes. And also in the infrastructure market, I forgot to mention that the good progress that we made with the big win of the Sabiha airport, a sizable project that speaks around in the market. And I have to say that also the sales funnel is developing in a very good direction. And that should also make it possible to translate that into orders and a bigger order book. Industrial Solutions, yes, we see here the big impact, 40% -- more than 40% drop of result, 20% less turnover. And -- but still a good profitable situation with EUR 47 million EBITA. Always difficult. What do you do? How far do you cut the cost? And I'm glad that we didn't go too far last year. Here was the uncertainty in Q2, Q3 with a very low order intake. You always question how long will it take before the order intake will come back and how the demand will come back. And fortunately, we were able to keep up the capacity to act in the right way, with the high order intake we saw in Q4, which was around EUR 100 million, and that is quite unique for Q4. Most of the time, Q1 and Q2 are the better quarters, and it is quite rare that Q4, we are at these kind of levels of order intake. So it's a good confirmation that the Tire Building industry is more confident about their outlook. And of course, it's also for them a long lead time before the capacity is onstream. It takes about 9 to 12 and sometimes 18 months. So they cannot also wait too long. And yes, with a very steep drop of demand there, I believe it was even around 60%, 70%, yes, that recovery and more positive development of the outlook helped the investment level. Also very interesting to see that the UNIXX really is a breakthrough technology. The first serial production took place in end of 2020. So we are also very positive there about the outlook for the UNIXX, which is, yes, again, a breakthrough positioning in the Tire Building industry. We will see an important trend in the Tire Building industry of smaller manufacturing plants more close to the end customers. And yes, the UNIXX technology is really well positioned there to be active in a smaller capacity level, but with the same productivity and margin potential and a lot of less working capital. Because you are more close to the end customers, just-in-time deliveries are helping to reduce the working capital, the inventories in the supply chain. Yes. So far, my part of the presentation, I'd like to give over to Elling de Lange. Thank you for your attention.

Thank you, Alexander. Good morning, everyone. I'll walk with you through some of the financials of 2020. First of all, starting with the revenue distribution per region. Some changes there. Of course, the divestment of the data cable activities in China had some impact in the share, which Asia represents in our revenue. But more importantly, I would say, is the increase of the Dutch share from 20% to 24% of total revenue on, of course, also related to the drop in the Tire Building revenue. There are not too many tire manufacturers in the Netherlands. So most of the drop took place in the international environment. So that puts a little bit different perspective in the distribution here. But still, as you can see in the past -- from the past, the main focus is the European market, no different than in the last few years. Looking at the revenue itself, organically, minus 9.9% last year. Of course, some acquisitions, which were still impacting it positively in total with the value of EUR 29 million. But of course, the divestments of EUR 77 million in value put a further reduction of revenue there. All in all, we came out at EUR 200 million less revenue than in the year before. Encouraging though is the increased added value from 48.2% to 49.4%. That's a substantial increase. Of course, the acquisitions of the last few years with higher margins, different kind of technologies, they had a positive impact but also the divestment of the lower-added-value business improved the overall margin for the group. And of course, Machine Vision. I think that's also important to mention here that Machine Vision saw nice growth in the recent periods. And as a result, also improves the overall contribution margin. Then looking at the operating expenses, of course, you see many companies having reduced OpEx levels, no different in our case, minus 8%. There are some delta in there in terms of we had acquisitions coming in. They contribute to higher OpEx, divestments, which reduce the OpEx. And then of course, there are reductions of OpEx as a result of lower activity levels due to COVID. And then there are, of course, OpEx savings as a result of some of the programs we put in place. When we talk about the programs, they are also associated with the one-offs we have taken and part of the Simplify & Accelerate program introduced in the middle of 2019. Already some effects were organized in late 2019, having it spill over in terms of some efficiency improvements in 2020. That also leads to a further focus, I would say, on the R&D expenditure. Alexander already mentioned that despite the fact that it has been a tough year in quite a few areas, we kept our R&D agenda well in place. So R&D expense in 2020, basically was at a similar level, slightly below 2019. And for some of you who follow this, the capitalization level is same as the years before, roughly 50% to 55%. Depreciation, almost no difference compared to the year before. We had a one-off in terms of a book profit from the sale of some assets. That's why we are coming out a little bit lower. But if you have the depreciation before this effect, then basically, it's in line with 2019. In the end, the return on sales, fairly well at a level of 10.5%, lower than 2019 obviously, but we have seen encouraging effect that in the second half of 2020, we were able to get a little bit of a higher return on sales at 10.9%. If I walk with you from the EBITA to the net profit definition, which we use. As I mentioned earlier, we had some one-offs. We have cost of EUR 8.9 million, and we had some benefits coming in at EUR 2 million, so a net of EUR 6.9 million. We highlighted in the past already some of the programs already expressed in the Simplify & Accelerate program and in a few areas, we have added a little bit as a result of the developments of last year. Amortization level, EUR 53 million -- almost EUR 54 million, EUR 24 million is related to amortization charges connected to the R&D. Slightly up compared to last year due to the increased R&D agenda as well as the acquisitions which have come in, which are high-technology companies with their fair share of R&D. Impairments, EUR 4 million. Some was taken already at half year. I would say that it's not all related to COVID effects. Roughly half, I would say, is related to COVID effects. The other half has to do very much, again, with the programs of streamlining our business, Simplify & Accelerate, integrating activities and therefore, have some write-offs. On the financial results side, we had lower interest cost, a little bit more foreign exchange effects, but all in all, in line with last year. Worth to mention is the line result from associates. You might recall that in the second half of 2019, we divested our industrial connectivity, but we remained a 41% shareholder in the divested entity. That entity has also to deal with the purchase price allocation. In total, EUR 2.8 million, which puts pressure on the bottom line in that entity. And our share is then reported back into our P&L and that had a total impact of EUR 2.8 million. Also, as we have seen already in the explanation of Alexander on the telecom side, the fiber optics, volumes did not operate at the levels we had seen in 2019. That also means in our supply chain. We have some issues to manage and our participation in the Shin-Etsu preform joint venture also had lower result, as a result, than 2019. Tax rate -- sorry, I forget the book profit, the divestment of ZTC in China at a book profit of EUR 5.5 million, which brings the result before taxes of almost EUR 63 million. The tax rate, 24.5%. That's higher than it was in '19. It has to do with the fact that, of course, with less result in the areas where we have lower tax rates, it, of course, pushes up the overall rate. Now you might recall that for especially our Tire Building activities in the Netherlands, we are having a so-called innovation box. That's more a Dutch word for that, but that's a tax incentive. And of course, if the results are lower in that segment, it also pushes up the overall rate because we have less benefits coming out of this scheme. And going forward, I think that's also a kind of level you have to use roughly 25% in your models. This brings us all the way down to the net profit distribution, net profit before amortization of one-offs, expenses attributable to shareholders of EUR 70.3 million, and that's slightly above the bandwidth, which we have guided for, EUR 65 million to EUR 69 million, so slightly above we came out. On the balance sheet, still roughly the EUR 1.6 billion in terms of balance sheet total. I think important to mention is the net debt development. I will show that in the next few sheets. Starting with working capital. I think probably you recall that at half year, I mentioned to you that we will face some headwind in terms of working capital development because at that point in time, we did not have access to many customer locations. So we were carrying quite a lot of activities on our balance sheet because we were not able to transfer ownership and install and commission some of our portfolio at customer sites. Our working capital at half year was EUR 235 million, 16.6%. And we were able, especially in the fourth quarter, to bring this down substantially. We were getting access to customer sites. So we substantially improved from where we're standing at the middle of the year. And actually, we came down to working capital level of 12.1%. That's also below the level of 2019. So EUR 235 million at the end of June to EUR 156 million at year-end. We did not substantially increase the instruments like supply chain finance or factoring, basically at the same level as of half year. So most of it was organized organic, of course. Two important points to mention. Already at the first half in our working capital, we had EUR 22 million of deferred tax payments already included at 30th of June. That is expected to be paid out in the first half of 2021. And we still have some effect of not having had the possibility to deliver our entire portfolio at customer premises. This effect, which was, of course, much higher at half year, came down to about EUR 10 million, impacting the working capital. This leads, of course, to a substantial improvement in the net debt. Also here, I mean, we started the year with EUR 300 million, and we came at EUR 261 million at year-end. If I put in the numbers for the middle of 2020, so at the end of June, we were at the level of debt, which was almost EUR 100 million higher than where we ended the year. So also here, the working capital effect had this very strong impact. Cash flow from operations, as you can see, last year, EUR 216 million. Of course, you see the different expenditure items. We have in total, same CapEx, just below EUR 70 million last year. When you talk about '21, Alexander mentioned already that we have this expansion -- capacity expansion in energy cable. So the level to work with for '21 is slightly above the EUR 70 million, EUR 70 million to EUR 75 million. All in all, the dividend, as I said, came out -- sorry, the debt came out at EUR 261 million, and that transfers in the bank covenant of 1.5x, and from that perspective, well within the agreed structures with our funders. If I look at the free cash flow. We have always seen a pattern in the second half of the year, our cash flow substantially improves. This is definitely the case in 2020. Our free cash flow in the first half was basically 0 but came out close to EUR 110 million in the second half of the year. And you can clearly see the change in working capital, minus EUR 40 million in H1, plus EUR 80 million in the second half of the year. And that leads to an EBITA -- to a free cash flow conversion of 64% for the full year, which I think is a good level also if you compare that to the previous 2 years. That brings me to the outlook. We have a lot of text on this sheet. I'll quickly walk you through this. We believe that the COVID situation, of course, still has its clear impact in the first half of the year, but we believe that the effects gradually will support an economic recovery in the later part of '21. Taking away unforeseen circumstances or major changes in this respect, our outlook for this year will look as follows. For telecom, for the fiber optic networks, the investments in Europe are further to be increased. We will see in the first half of this year, though, that not everything is immediately addressable or accessible. We also still deal with the overcapacity in the Chinese market. This, and we have been mentioning this in the past as well, can further lead to margin pressure. But with our product mix as well as the higher level of share which we get out of the fiber to the home project, where our integration works best, we have a possibility to shield some of this margin pressure. On balance, we expect an increase of both turnover and result for this year compared to last year. Building Solutions, Machine Vision, we see further growth driven by the newer technologies like the Alvium 2D, which is fully in the market right now, but also a further strengthening of the possibilities in 3D with the confocal technology, which has also shown a good contribution in 2020. Infrastructure. Also there, further increase in turnover. We see strong need coming out of the market for energy networks by the network companies. And we also see growth potential or growth being realized for the CEDD and AGL activities based on what we have contracted and what we see in terms of potential projects. Marine & Offshore, strong growth is expected from the subsea part. Alexander already mentioned, we have a strong order book. So an important part is already there for this year. And this will compensate the challenging segment of the cruise ships cable systems. Parking, limited recovery is expected. COVID is still around and affecting some of the end markets where we are active. And for Care, we expect revenue to increase in this year. And that the normalization of some of the COVID restrictions will also improve the demand for the health care domotics solutions which we carry. On the other hand, we see that the nonvertical revenue within Building Solutions, some partial recovery is expected compared to the decline which we saw in these other segments in 2020. And further, of course, the effects of Simplify & Accelerate will also have a positive contribution to this segment. I highlighted already some of the one-offs, et cetera, we have been working on. So all in all, we expect an increase of both turnover and as well as results. For Industrial Solutions, for Tire Building, due to the low order intake in the second and third quarter of 2020, we expect a sharp decline for both turnover and revenue in the first half of this year. The higher order intake in Q4 and also the expected order intake in the first quarter of this year provides a very good perspective for the increase of turnover and result in the second half of 2021. Industrial Care, also there, we expect on the back of the Indivion, a further increase of revenue for this year. And for the other industrial activities, we expect some recovery compared to last year. So all in all, for Industrial Solutions, we still expect a decline of both turnover and result within this solutions segment. Due, in particular, for the impact of the low order intake for Tire Building in Q2 and Q3 of last year, the profit from the first half of '21 will be lower than in the first half of 2020. For the full year, we expect a higher profit. And of course, we will do our utmost to come up with more specifics and a quantified outlook in August at the half year presentation. This concludes my part of the presentation. I think we're probably opening up for questions now. Martijn, probably if you can go to the microphone, please. You have to work to do.

Martijn den Drijver, ABN AMRO-ODDO. I would like to kick off with Simplify & Accelerate. If I go back to the Capital Markets Day 2019, you mentioned less complex businesses and communication structure, 10% to 15% reduction in opcos and an integration effect from all these measures on EBITA, margin of between 80 and 120 basis points. I know that's medium term. If I look at where we stand today -- where you guys stand today, it seems like there's still a lot to be done. So what can we expect? And then specifically for 2021? Then the second question is on Tire Building. Can you walk us through how the order intake funnel discussions with your clients have gone through Q3, Q4 into 2021? And then in relation to that, the UNIXX has been delayed somewhat. But how are your discussions with clients, specifically on the commercial rollout of this unit? And then a third element then with regards to Tire Building. You spent an enormous effort on the UNIXX in terms of R&D. What is your next focus now that the UNIXX is about to hit the market? Should we think about R&D expenses going down? Or are you going to invent in a completely new lineup? If I look at the Tire Building market, tire cutting could be an interesting segment, which is dominated by Fischer. Can you tell and talk us through how you think about R&D for the Tire Building? And then the third question, and then I'll leave some questions to my colleagues. Machine Vision, the outlook. What gives you the confidence for the full year that you can actually increase sales? Is that order intake, funnel, co-development projects? What gives you the confidence? If you can elaborate a little bit on why you see that growing and also provide a bit more granularity as to what kind of growth we're talking about. Are we talking about single digit, double digit? That is it for now.

I don't know if I can't remember all your questions. I've got them written down. So yes, the first one, I indicated also during the presentation that here, there's a big impact of the Industrial Solutions, where we saw a very big decrease in demand and also profitability. And if you would take that at a normal level again, then yes, it adds about 3, 3.5 points of return on sales. So if you add that to the 10.5%, you can see that we make very good progress in the other segments. And whereas some of the other segments and verticals have not been performing at the initial targeted level, for instance, parking and airport. So if you add that also, I believe we are very close already to the 15%. The only thing that needs to really recover is the Tire Building activity. And then, as I mentioned, we are getting quite close already to the 15%. So you can calculate by yourself now what, in absolute figures, the effect is in Tire Building, which is really huge. So we are really confident about the progress that we are making even due to the difficult COVID circumstances. And yes, going back to the order intake. I mentioned that Q4 was an exceptionally high order intake compared to other Q4s that we saw. It is a long, let's say, time of preparation for the Tire Building companies to get back to their investment plans. We have seen that in the top 5, a lot of actions were taken to close plants. And you can imagine, when you are in the phase of closing plants, that is very difficult to come up with greenfield plants and areas where you are going to invest. So the closure of these plants have been communicated and have been, I believe, organized and what we said mid-2020 is that it would probably take, and we were a little bit conservative, that the top 5 would come back in 2022. But we see already coming -- them coming back in 2021. So in Q1, they are there, we believe that they will come stronger in the coming quarters. And that is, yes, again, a confirmation of the technology that we can supply to them. I'm not yet even talking about the UNIXX. But it's the other, let's say, the MAXX and the MILEXX, there for the truck building that is really well positioned and the state-of-the-art equipment, which can help them to reduce their inventory, to improve their productivity, to improve their efficiency and quality level. So it's spot on what we are doing there. UNIXX should bring an additional wave of investment and now we are not yet there. I believe it could happen in, let's say, the second half of this year. We are a little bit careful ourselves. We are in serial production. But yes, there are also a few things we further like to optimize. That helps if we can optimize before we have the real big-bang launch. However, we are in discussion with customers about investing in UNIXX. And again, that has a kind of additional upward potential beyond the MAXX and the MILEXX systems. One of your questions was also, what will be the next-generation for the MILEXX or what will be beyond UNIXX. Now it is a continuous development. So we are looking at a new generation of MAXX equipment. We are looking already at a new generation of MILEXX equipment. And that is -- yes, the game we are in, we see also competition around TKH. So the only way to beat competition is that you are continuously ahead with your technology. So it's easy to copy the technology of today, to copy the newspaper of today, but you cannot copy the newspaper of tomorrow. And that is the success story of VMI that we continuously stayed ahead of competition. And that is in the pipeline for MAXX and MILEXX that we will have new generations of equipment to be positioned in a certain segment where UNIXX is not suitable. There's an interesting replacement market. So we also have to realize that. We are not only positioned in the growth opportunities that the tire building industry has. I believe more than 50% is replacement market. And yes, the replacement urgency, I would say, is -- has been growing. A year of standstill, they need to recover there. And especially within the top 5, it's dangerous if you are not continuing your leading position by investing in the right technology. And that's why I'm quite positive that the top 5 will come back earlier than that we originally expected. But that cannot have a positive effect in the first half year. It will have a positive effect in the second half year. And that is not what we have already taken into account in the outlook that we presented. Perhaps I'm missing now one question in the Tire Building, but I want to move...

Tire cutting.

The tire cutting. Yes, especially with the UNIXX, it's a big opportunity that we move in that direction also and to take market share because of the complete UNIXX solution. And yes, I believe we have breakthrough cutting-edge technology. But you see it as a very conservative market. Once you have a position and Fischer has a very, very strong position, it is not so easy to convince your customers even if you have breakthrough technology to move to another supplier. But we still believe there's interesting potential. Turnover of Fischer in the good years was around EUR 100 million, EUR 120 million, and it is a building stone that we are looking at to increase our market share. Then the vision activities. They go beyond the Machine Vision vertical. For instance, we are also active in infra. It's very state-of-the-art technology for traffic enforcement, and that's an attractive market. Last year, it was a difficult market. We also see postponements because of less traffic on the road that the toll companies and other companies were a little bit hesitant in investing. We see a much better perspective there for the coming year. Within Machine Vision, yes, why are we positive? And I believe I would dare to say that a 10% organic growth is possible there. Partly is based on, let's say, a very good start of this year, especially in consumer electronics. We believe we can beat the success of Q1 and Q2 last year. Again, because of the state-of-the-art and unique technologies that we have, especially in the 3D area. But also the other areas are doing quite well. We see that the investment appetite in the industrial environment is really picking up, especially in the automation sector, machine-building sector and robot sector, there's a big boom. If you look at KUKA and all these kind of companies, how they are expanding their capacity and are even in difficulty to cope with the market demand. So that gives us a good perspective of the investment levels in the industrial area. And yes, also there, the innovations that we have, the Alvium technology. We had a breakthrough last year in the vaccine analysis. So also interesting new areas we see coming up, where, yes, we are a newcomer, and the market is new, and we have, again, very advanced technology where we can position ourselves and beat competition. And we have technology that competition doesn't have. And we have a scalability of our capacity which is quite unique because we have a completely automated manufacturing. So many of our competitors need to hire a lot of people to ramp up the capacity. And we can, by just a press on the button, I would say, it's a little bit easy pronounced, but we can ramp up capacity very, very fast. And that is also what some of our end customers really like because they see very big steps in their ramp-up of the capacity that they need for serving their markets. And then last but not least, the sales funnel. The sales funnel, we have a very good dashboard of all the projects that we are in, design-ins. That is important that we are spec-ed-in, in certain applications and at certain customers. And that gives also a very good indication that you can be positive about the market demand and the outlook for this year.

Tijs Hollestelle, ING. I appreciate your last comments on the outlook of the Machine Vision business. You seem to be quite accurate because last year, the first half, we saw growth of 40%. And then you warned us for, let's say, moderate growth, it was indeed 2% or so. So this sounds like the quality of the guidance is quite good because profitability in near-term is better. So that's interesting. Then on the outlook for the subsea cable, we all know that you have invested for quite some time in that particular market. Now the growth prospects are huge, you have enormous amount of offshore wind developments going on. Not only in Europe, but also now increasingly in Asia, potentially in the U.S. If I understand correctly, you speak to the -- yes, the cable layers directly to get the orders from. So the EUR 40 million, I mean, it sounds great. You have 75% of your revenue already at hand, but it seems that the old oil business is completely gone. Now I would assume, let's say, EUR 100 million of revenue in that business. So the question is, what is your idea about this? Because yes, you cannot be a small player, you either have a breakthrough and then become a standard supplier to that industry or not. So what is really the, let's say, 3- to 5-year horizon in terms of revenue? And then a range is fine.

An important remark I also have to make is with the EUR 40 million, we have to realize that it is with aluminum conductors. And the original plan was to supply copper conductors. The value of aluminum, the price of aluminum is much lower than copper. So in respect of added value, we are on track to have perhaps EUR 80 million turnover already because we have mentioned before that we could easily grow to EUR 100 million, EUR 75 million, EUR 100 million. Actually, with the EUR 40 million, we are, on copper base, already close to EUR 80 million. So from the original plan, that's very good news. And to be honest, I believe that in the coming 1 to 2 years, we will decide to build an additional plant and a plant near the coast to cope with the, yes, huge increase further in demand. We have made good analysis, and the perspective today is much better than 4, 5 years ago. It's really getting a huge market, and we believe that we could easily get around 20%, 25% in that market. That's based on the success story. The tenders that we win from reputable end customers, [ Area A ], Vattenfall. So yes. I believe the perspective could be that now we have the guidance in the vertical market. I believe it is between EUR 150 million and EUR 200 million. And yes, I would say that is a realistic scenario, and I believe it will be more close to the EUR 200 million than to the EUR 150 million. And what is also an interesting development that we will be able to move up in the voltage. So we are now positioned in the array cables, and we believe we can make a move to the export cables. And with the additional investment, which is not a very huge investment, especially in respect of the size of the cables and the transportation, it's not so for Lochem to transport everything to the coast, to the sea, the additional investment would be a plant at the coast. And then we would be able to achieve the EUR 200 million turnover. It's around a EUR 20 million, EUR 25 million investment. And yes, the foundation on which we can be confident now is much stronger than 4 years ago. We have confirmation on the U.S. piece. And we have several projects where we get very nice compliments from the installation companies also that our cable is repairable. And in the past, when there was a kind of damage during the installation, they had to completely replace the whole cable.

I heard that, too, yes.

And so yes, that's was perhaps not in the original plan. You need to have that proof and you need to have that feedback from the installation companies. But again, that's very positive. And that's why we are really excited. And the margins are also, let's say, interesting and fit into the TKH targets.

Right. That's clear. And then also managing expectations on Tire Building. You see it also with equipment providers that if there's a kind of a weakness in the market, that your clients are all over the place in hiring the latest equipment. So in the past, we have seen that it could have a bit of a negative impact on the margin because it's all new, it's a lot of engineering work, installation. Are you running the risk this time that people are altogether ordering the latest machines and that has an impact on your cost base? So that we're not penciling in, let's say, if we see an order intake, coming up to EUR 100 million and more in the coming quarters and that if we pencil in, let's say, the historic margins or do we have to be more prudent on that?

In the first half year, we see kind of effect that we had a relatively high order intake from Asia. And yes, you perhaps all know about how competitive China is at the moment for especially equipment. With the Chinese agenda, we didn't lose any order, but we saw that there was kind of margin pressure for the short-term in, let's say, the order intake. But yes, in general, we don't have a many new systems. So the MAXX is a very well-developed system and could be very smooth in how that develops and translates into margins for the Tire Building group. And yes, UNIXX is really new. And that's why I also mentioned that we are careful to ramp up already in a big way the capacity. So that's what we learned from the past, better to take care that all the engineering is finished to the end and that you are not creating an order book where you still have to do a lot of engineering. So I believe the risk is relatively low, except for the first half year with the Asian order intake.

Peter Olofsen, Kepler Cheuvreux. Maybe first a follow-up on Tijs' question on subsea cable, where you refer to the switch from copper to aluminum, which obviously has a sizable impact on the sales. Does it also mean a comparable lower EBITA or is the...

No, because the absolute margin is exactly the same. We just exchanged the raw material. But the raw material share is much higher in a copper subsea cable. So the gross margin percentage-wise is much higher for an aluminum cable.

And what's -- what are your competitors using? Is -- aluminum, is that the industry standard or was that copper?

What you see is that because of the low price of aluminum, yes, it's a no-brainer to use aluminum instead of copper. And yes, it's the same, let's say, capacity you get with the square meters of cable but at a much lower price. So -- and today, the copper price is around EUR 8 and aluminum is way lower. It is -- I even don't know exactly the price, but it's around EUR 2.5 to EUR 3.

But is it fair to say that most of your peers will also be able to make this switch?

Oh, yes. Yes, that's a standard. It's exactly the same dimensions. It's just a different raw material, metal.

Then a follow-up on the earlier discussion on Simplify & Accelerate. Could you be more specific on the exact benefits that you had in 2020 and that you expect in 2021?

Yes. Martijn also referred to that. I mean you highlighted even that we were going to reduce 15 -- up to 15 operating entities. If you look at where we currently stand on these kind of approaches, I think we are getting close to the 10% to 15% OpEx operating entity reduction. So the integration which is the program under which this is all taking place, that is full in speed and in rollout. We have integrated basically our Parking and security operations on a worldwide level. So different leadership, different R&D focus. This brings some partial benefit in, let's say, the latter part of 2020, but that's very minimal. Of course, the benefits are going into '21. If you look at the other elements when we talk about full integration, of course, the integration of our cable manufacturing activities in the Southern part of Netherlands into our operations in Haaksbergen, that has been completed by the middle of the year. We have mentioned earlier that benefits coming out of this would partially be already in 2020, and the remainder would come into '21. I also refer to the one-offs, which we have highlighted in last year, close to EUR 9 million in expense. Gives a benefit of EUR 4 million. I think about EUR 3 million to EUR 4 million is already taken in 2020. The remainder annualized is going to be added in '21. So there are a lot of different steps ongoing. Of course, when you take Simplify & Accelerate program, the divestments, clearly, we have seen the impact in the gross margin. Gross margin is up 120 basis points partly because of the divestments we have been doing. So there's a lot of elements which are ongoing. Of course, you don't get the full benefit in terms of, let's say, the commercial benefits of having entities merged working on brands, et cetera, in a year like 2020 with COVID effects in that. So some of the, let's say, elements might have seen lesser benefit in 2020 but they will then be on the agenda for '21 and the years after. If you talk about what was the program and what has been executed, I think you can mark quite a lot of the actions as being executed so far.

Then a question on Machine Vision where you did quite well last year in consumer electronics, which I think is highly skewed towards 3D. If you look at '21, how do you expect the mix between 2D and 3D to develop? And if that mix changes, does that affect the margins and the ROS in Machine Vision?

No, it will not really affect the mix will not change heavily, I believe. So we will see quite strong growth in 3D, especially in the first half of the year, I believe it's difficult already to predict the second half of the year. But we see that 2D is growing in that slipstream and especially based on the new technologies that we developed in the past few years that are getting now, let's say, traction in the market and seen as, yes, the preferred systems. So that helps. Because competition also not standing still. So you need to do something additional to be really successful. But it looks now that 2D will be in the slipstream of success of 2D-- of 3D.

Okay. Margin-wise, it doesn't have a -- much of an impact?

No. Yes, a little bit -- 3D is a little bit higher than 2D. But in the mix, it will, let's say, stay around the level of 2020 and 2019.

Okay. And then my final question is on the Indivion. Last summer, you won a large contract, I think, from a U.S. client. You now talk about international rollout. Could you elaborate? Which markets are you looking at? What's the sales funnel look like? And then could we expect similar-size orders as what we saw last year?

Yes. I believe that is -- that has a lot of potential to get further traction in that market and build a foundation of a good order intake. It's a market of several hundred million euro, and it's a growing market because of this application of the distribution of medicines with that strict movement, for every moment that you have to take your medicines. And it is a market that is still in a kind of embryonic phase. So in that respect, a huge potential. And we know that this is the only way the market will be served unless you will get a chip in your veins that is distributing medicines in a completely different way, but I believe that will take a while before we will see that application. So the U.S. market is really discovering this kind of way of distribution of medicines. It really helps the way people can recover more quickly because you have a better system how to take your medicines and more disciplined way, supported also by all kind of software tools through your smartphone. And that is also for the health care companies, a huge advantage. I believe, in just the Netherlands, you could already save EUR 1 billion in health costs, if you would systematically roll out the dispensing of the medicines like we can do with the Indivion. Any other questions?

Michael Roeg, [ BDP ]. A couple of questions from my side. First of all, you started a share buyback program of EUR 25 million. Has this changed your capital allocation? So will you be buying back more shares in future after you have completed this one? Then secondly, regarding Tire Building in the first half of '21, your expectations. In the second half, Tire Building lost some 35% to 40% of sales. Is that more or less also the decline we should expect for the first 6 months of 2021? And then thirdly, regarding subsea, you mentioned you expect some EUR 40 million of sales in '21. Could you give a reference what it was this year? And you also mentioned good profitability. I presume we will not be at the 15% ROS. Maybe we are, but could you also highlight in what kind of range we should think? And then lastly, when we look to your order book, there are several divisions which have a high order book limit, just like that. Could you indicate more or less how that has developed compared to last year, so for example, for subsea, Airfield, Tire Building and Indivion?

Good questions for you, Elling.

Thank you. Your first point on share buybacks. I think we have communicated in November that, depending on the progress with the divestment program, that we will allocate part of the revenues into further share buybacks if that enables us to do so at that particular point in time. That's a small disclaimer there, but that's already stated in November, and there's no change from that. Tire Building, second half, your estimate, minus 35% to minus 40% of revenue, is that going to be similar for H1? I think it's going to be -- that's a very specific question. Obviously, with the guidance we have provided for, we are lacking the order intake, Q2, Q3 last year, having its impact predominantly in H1. So levels are definitely at a level where, let's say, the H2 part are more or less comparable, I would say, from the point of view that H2, of course, still had some higher order intake when it started the second half of the year. Then on the subsea, EUR 40 million you referred to and your question about 2020. That was substantially lower in the sense that the EUR 40 million is the order book and brings us quite far with revenue into 2021, with the footnote which Alexander highlighted about aluminum and copper. Last year, revenue was more in the range of EUR 20 million to EUR 25 million. Profitability, indeed, you need to have a good capacity utilization in order to get to the levels of the 15% return on sales. So there, we are not yet with this level of revenue and level of operation. So from that point of view, we are not yet to that point, and we have mentioned that also in our press release. We talk about order book. Subsea, obviously there is a positive delta, airport as well, and the same applies for Indivion. Our total order book starting '21 was EUR 430 million. And in the like-for-like with prior year, the start of '20, we had an order book of EUR 410 million. So the order book is EUR 20 million higher than the start of last year. And that is partly driven by, let's say, the elements which you just mentioned.

Martijn den Drijver, ABN AMRO-ODDO. Just to be clear, airport solutions and subsea, can you give us the EBITA loss for those units? Is that EUR 3 million, EUR 5 million, low single digits? Just to get a bit of a sense of what it contributed negatively in 2020. That's the first question. The second question, the JVs and associates negative in 2020, what have you baked into the guidance for 2021? Because you won't have certain elements that you did have this year. Otherwise put, can we expect a positive contribution from CCG and the Chinese joint venture? And the third one is on Tire Building. Can you share with us the proportion of revenue, just to get a bit of a sense, no actual numbers needed, of the maintenance and spare parts sales and the margin development? So from year-to-year, '19 to '20 in terms of sales growth and margin contribution.

Subsea and airport roughly, you mentioned a figure of about EUR 3 million to EUR 5 million. That's what we roughly estimated. I think if you take the 2 together, then it's roughly in that ballpark. When we talk about the result from associates, indeed, in last year, in 2020, negative EUR 3.2 million, EUR 2.8 million coming from CCG, of which EUR 1.6 million related to 2019. And so the actual impact was smaller in 2020. And there, we are, let's say, I don't want to give a specific outlook for that entity, but it's substantially improved, let's say, compared to last year. As for the contribution from machine -- that's preform operations. Also there, steps have been taken to get a further result improvement despite the fact that there's still overcapacity in China and keeps margins low and competitive. So from that point of view, it's not going to be to the levels that we had seen in the past with slight improvement. On Tire Building and maintenance and spare parts. I think that's a very valid and important point. If you look at the revenue contribution from, call it, the recurring part, if I categorize your maintenance and spare parts scope, it was getting close to 20% of the revenue base. Obviously, with the lockdowns, this is people going to sites, working with customers on their premises, getting maintenance done, getting trainings organized, et cetera. And some parts, trainings can be organized online, but the actual, let's say, level of maintenance has been reduced. And also, therefore, the spare parts business. And clearly, these are the activities with the, I would say, attractive margins. I don't want to be too specific on that. But this clearly has an impact. And especially when you talk about last year with the lockdowns, this is an area which has been disproportionately affected from that point of view, and therefore, having also a disproportionate impact. Once, let's say, regulations are more relaxed at country level and at, let's say, customer premises, that will go back fairly rapidly is what we predict. And obviously, this is partly why H1 is also impacted because we still see that in H1, these kind of activities are restricted. Hopefully, in the second half of the year, we have much more easy access to customer premises.

And just to be clear, the associates, it will remain negative, with slight improvements or that's the...

I don't want to be the one who is going to give a specific outlook on the third party, but I would be disappointed if we are still negative. We go to the online questions. Go ahead with the first speaker.

Emmanuel Carlier, Kempen. A couple of questions from my end. First of all, on the CapEx, could you give some guidance on tangible and intangible CapEx for 2021? Secondly, on tire manufacturing. So there will be a lot of volatility in top line and EBITA in 2021. So I think it would be helpful if you could give a little bit more color on the kind of delta you expect in sales first half and second half. Then on Machine Vision, I think the organic growth was good, but if you compare it with some other peers, it looks like they are growing much faster. So I'm just wondering what the main reasons are for your lower organic growth rate versus peers and if that is something where you could catch up it in the coming years. And then lastly is on the guidance for 2021. So you don't give an exact guidance, of course. But if you look at consensus, the market is expecting something like 25%, 26% growth in net profit. You're guiding quite -- yes, negative, I would say, on H1. Do you believe that consensus is still realistic? Because maybe the drop in Tire Building will be much bigger in H1, but maybe we will also see a bigger recovery in the second half. So what are the main drivers for still expecting growth in 2021?

Your first point about CapEx guidance. I mentioned in the presentation that CapEx is to be slightly up compared to 2020 due to the fact that we have the capacity expansion for the energy cable having its effect by the summer of this year. So there's -- the increase is mostly on the tangible side. And I mentioned the EUR 70 million to EUR 75 million for this year, roughly. Yes. On the tire side, H1, H2. I think we already have mentioned quite a few points what the elements are which drive this kind of development between the various half years. And I think there was also a question of Martijn about the level. I think we covered that part as far as I'm concerned. We talked about Machine Vision. I'm not sure if you want to address that.

Yes.

Can I maybe interrupt first, on tire manufacturing? So we know that the order intake in Q4 was around EUR 100 million. Is there anything you could say on how the order intake is evolving so far? So you mentioned that Q1 was also quite good. I think order intake, Q4 and Q1, that is sales or most likely sales, second half. So it would be helpful to get a bit more color on order intake Q1 so far.

I think if you look at Q1, as we highlighted in the press release, that looks to develop very nicely. I'm not going to make a statement before the month is completely finished or the quarter is finished. But I think it supports definitely our statement that the second half of the year will be better. And indeed, you're quite right. Intake Q4, intake Q1 still will have its impact in the second half of the year. So we're well on track to make that statement.

And then should it be more or less in line with Q4? Or is Q4 order intake really exceptional and a bit catch up as well?

Well, I don't want to call the levels which you referred to as exceptional. We have seen them in the past as well. Of course, there's always a little bit of project effect, whether a project specifically falls in quarter 1 or in quarter 2 or in quarter 3, that can have some deltas. Because some of these projects have reasonable size in terms of volume or value. I would say that the dynamics, which are behind this level of order intake, that we have not seen weakening. And I think that's important rather than the exact amount which falls in one quarter or the other because that's just a closing effect of a particular order. But the momentum, which we saw coming out of the third quarter into the fourth quarter, I think that's what we see being continued.

The Machine Vision. Yes, we are, let's say, not even in mid-March and then already guiding for 10% organic growth. I believe we are confident that, that is possible. But to go beyond that, I would not dare to do that at this moment. I believe there are opportunities to get beyond that. So I would see 10% as a minimum, but I'm not going to be stretched at this moment for higher organic growth. And what competition is telling, I leave that to competition.

And are you making any inroads in the logistics market?

Yes. Yes, that is absolutely a good move that we have been making during 2020. Because it's not a push on the button. Also there, you need to be spec-ed-in, and I'm very, very positive about our position that we are gaining there. Any other...

And then maybe the last question was on the 2021 guidance. Yes, you don't really have a very specific guidance. But if you could give maybe a little bit more color on where consensus stands and if you meet that is still realistic and what the main drivers are.

Yes. If you look at the whole picture, that also is in the outlook, then what we see as consensus, I believe the consensus is not unrealistic. Is it easy to get there? Even that question, I cannot answer because there can be still uncertainties during the year. But let's say, if it normalizes on the level that it is today, I believe consensus is very realistic. And there are, let's say, some analysts that are not on the average. There are -- 1 or 2 are quite far above. I believe that is challenging to get there. But it can change also quite fast. We are very, really good positioned. What is kind of new and you might have heard it also within other companies is the supply chain. So we see that some components are scarce, and we are really focused on that. And we -- even with the good reduction in working capital, we invested last year in a lot of components for the Machine Vision group. So we are safe there for at least the first half year to get to the growth that we see in the demand and the order intake. But that's a scary development, I have to say. You know that the automotive sector is short-time work and even closure of plants for a while because they cannot get certain components. We see that also in the metals, copper and aluminum, sky-high prices, it has not led yet to scarcity. But how does that develop? It's really difficult to predict it. And of course, you can do something with your inventory, but it's not an endless what you can do with your inventory. Another area is plastics, also plastics are really getting scarce. You see up to 30%, 40% price increases. And yes, with the higher price, you can still get the raw material. But yes, where will it end? So that's a kind of uncertainty that is not only for TKH, but I believe for every company that uses raw materials. You have to take into account and be on alert that nothing happens there. So for us today, we don't have fear that we cannot supply and manufacture what we need to supply. But it is a little bit scary situation, I have to say. Thank you for your questions.

So -- okay. Go ahead.

I have a follow-up question. The expected value-add tax, you expect to as a cash-out from the first half, where is that in the balance sheet? Is it in short-term liabilities?

Yes, part of payables.

Yes, part of the trade working capital, yes. And also to be sure, the adjusted net profit guidance, you always give in the table, you always provide us, do you already have a view on kind of exceptionals in that line item?

For this year?

Yes, like revaluations or any fundings which are quite difficult forecast.

Not really, not something which is substantial to highlight now.

Yes. So the guidance is just based on your operational performance, including the adjustments we have seen for years in that to get to the adjusted net profit?

Yes, correct.

Ruben Devos of KBC Securities. We've got a few questions left. One topic that hasn't been discussed just on telco. Given ongoing margin pressure, you talked before about using optical fiber to get into projects, but then realized better results from selling integration solutions. So I'm curious to hear whether that go-to-market strategy has been sort of paying off. And then also, what has been the evolution in terms of overcapacity? Does that persist? Is it mainly in China? Or is it still rather broader development across the market? That's telco. And just a second one relates to energy. Obviously, strong growth in the market for energy cables. We're planning additional investments in production capacity. I believe the last analyst meeting, you mentioned that there was scope to increase your midterm revenue targets on this end being EUR 150 million to EUR 200 million. So of course, my question is, yes, have you made the reevaluation sort of for this vertical?

Thank you, Ruben. As for telecom, the situation of overcapacity is mostly taking place in China. But of course, what we see is that there's a lot of transparency in the fiber optic in the sense that the fiber itself, I would say, is fairly well a commodity. And therefore, this transparency of overcapacity and pricing from China, let's say, moves over to other regions like the European market. What we do in order to hedge against this kind of commodity effect is that we integrate the cabling into an entire proposition, which basically takes care of a complete rollout and a complete infrastructure for fiber to the home networks. And that's also where then all kinds of connectivity components come in. And with the uniqueness of the overall features and the design which we put in place on the overall infrastructure, we basically are able to weather some of the impact on the commodity part, the optical fiber itself. This capacity -- overcapacity is still there. We see that 5G in China is rolling out fairly rapidly, but it does not pick up the large remaining overcapacity on the supply side. So it doesn't have a cushion, let's say, for pricing. What helps, though, is that with these price levels coming into the European market, in the second half of last year, the European Union has started an investigation, antidumping investigation on optical fiber and cable coming out of China. And this, of course, I don't want to say scares off, but has some impact on European customer base going forward with sourcing from China. And we have operations in China, of course, we manufacture, but we have an exemption because we are not manufacturing, let's say, from a point of view that our Chinese operations focus on the same scope and strategy as the Chinese pure -- [ sunk ] players. But this antidumping investigation, as I said, puts some relief on immediate transfer of price pressure in the European market. I think so far, the part there. And maybe on the energy...

Maybe on the power cable, let's say, growth has not yet been translated into a higher bandwidth of the growth scenarios. There are more activities in that -- activity in that vertical. So I believe it's too early at this moment to take that step. But it has potential, and we will look into that in the coming quarters and perhaps coming year.

Michael Roeg here. First of all, you started to resume your divestment program again. Do you think you can complete that program in 2021? And then on the other hand, the end of January, beginning February, you made a very tiny acquisition. Will you start of making new acquisitions again in 2021? And the bracket of size of companies, will it more or less be similar to what we have seen in the past?

I think as far as the divestments, we still have indeed some divestments on the agenda. We have mentioned before that we are starting to reactivate them. We are working on them. There's good hope that this might be concluded in 2021. But guarantee, I cannot give you, of course. But the fact that we are working on it shows that it's back on the agenda. I think on the acquisition side, indeed, we had a very small one. We continue to look at companies, technologies, et cetera. But as we have been mentioning in the past, we are very much focused on organic growth. And that will also, I think, remain in 2021. It does not mean we will not do anything, but the focus definitely is on the organic side and completing all the actions in the Simplify & Accelerate program.

Yes, we announced also in November that the proceeds from the divestment that we will be looking into investing that in TKH share buyback. And that is a higher priority than looking at acquisitions.

I think there's an online question. Go ahead.

Can you hear me?

Yes.

I've looked into my model to what happened to the Industrial Solutions activity in the crisis of 2009. And in that year, in both half year periods, sales went down by about 40%. And the year thereafter, it recovered immediately by about 30%. And at the top, I'm -- and if I look at what's happening today then, Industrial Solutions activity is different because you divested something. So I cannot track the entire performance relative to the previous crisis. But would you say that today, the downturn is also about 40%? And do you expect the recovery trajectory to be just as steep as last time?

Difficult to answer that, but I believe there is a realistic option that it will return quite fast, yes. But I cannot give a confirmation that it will happen in that way.

Okay. So except for the pace, your guidance suggests that quite good recovery is on the cards for the second half of the year, right?

Yes.

Based on the order intake and so on? Your profitability in the current downturn in that activity is much better than it was 10 years ago, 13 years ago. If you look at the reason for that, is that solely a more critical mass or also a product portfolio that is different today and healthier today than in the previous crisis?

Now, I believe it's a combination of. It is also the way we have organized our cost. Perhaps we are a little bit even more flexible with cost than that we were at that point of time. So we had a lot of temporary employees. And so it's not completely comparable. Part of it is mix and part of it is also the more -- the higher flexibility in cost. Any other questions?

Trion, from your side?

Yes. It's Trion here from Berenberg. Just a quick follow-up, actually. On the question around acquisitions and maybe this impacts also your divestments. Have you seen any impacts from COVID-19, potentially on the demand for the businesses you're trying to get rid of or acquisition opportunities? I'm thinking in terms of companies that maybe are struggling or an impact on pricing. I'd be interesting to get your thoughts there.

The -- let's say, impact on the divestment activities is hardly anymore there, but it was there in Q2 and Q3. So private equity, for instance, was not there to be ready for investments. So their appetite is back now. They can also get it financed. So that's good news. And again, I mentioned earlier that the operational result of these companies are also on track. So no hesitation from our side to wait. And yes, with respect to acquisitions, of course, some companies are struggling and you see profits coming down, but you also see some areas that multiples have increased. So yes, the question then is, is it worth investing so much goodwill in comparison with the option of yes, focusing on organic growth. And we have chosen in the last quarters and also, I believe, in the coming quarters, to focus on organic growth and buy back shares. Okay. I believe we have to close the meeting. Thank you very much for your presence here, also in the webcast and through Teams and the questions. I hope to see you back healthy in the coming quarters and certainly, at the half year figures. Perhaps the whole COVID is gone then and we can celebrate and be a little bit more positive and not having a third or fourth wave. Thank you, again, and stay healthy.