Kuehne + Nagel International AG

Ladies and gentlemen, welcome to the full year 2024 results conference call and live webcast. I'm Sandra, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. In the interest of time, please limit yourself to two questions only. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stefan Pohl, CEO of Kühne Nagel. Please go ahead, sir.

Thank you very much, Sandra, and good afternoon and welcome to the presentation of Kühne Nagel's full year 2024 financial results. I'm Group CEO Stefan Pohl, and once again, I'm joined today by our Group CFO, Markus Blankergraf. Let's go into page number two, full year results. We delivered a solid financial result in 2024 as volumes improved in the second half of the year. Thanks to this uptrend and our ongoing effective cost management, we returned to a year-on-year EBIT growth in the second half. We also returned to a more typical high-end free cash conversion by the end of the year. In 2024, we fulfilled several strategic ambitions that have prepared us for continued improvement in 2025. We expanded our customs offering, streamlined our organizational structure, further pruned our C logistics portfolio, and seamlessly migrated our in-house operation system to the cloud. These achievements have put us in the position we envisioned at this time last year. To remind you, we shared our view that we could expand our share of recovering market by reviewing our customer portfolio, managing yields, and adjusting our cost base in the post-pandemic period. Page number three, Seafreight. Stage set for market share gains. Volume on the left side, GP per container unit in the middle, and EBIT per container unit on the right side. ZLogistics produced EBIT of 198 million in Q4, which is an underlying improvement of 23% year over year, excluding one of costs booked in the prior year. Overall volumes were down 1% for the year, but up 1%, excluding the effects of our choice, to begin deselecting unattractive volumes in Q4 2023. Looking at Q4 alone, organic headline volumes also declined by one year over year, but expanded by 4% excluding deselected volumes. This compares to estimated market growth of 3 to 4% in Q4 and marks an acceleration from 2% underlying growth in Q3. Average yields across the year were down by 10%. The yield in Q4 of Swiss francs 464 per TU was down 6% sequentially, but still up plus 8% year over year. Looking ahead, we remind you that the full year consolidation of our acquisition IMC will contribute positively to the average yield in 2025. Turning to OPEX, we reduced unit costs by 5% in 2024 with a bulk of the savings in the first nine months of the year. This followed the 10% reduction in 2023. In the most recent quarter, cost increased slightly, which sets the stage for faster growth in the quarters to come. Next is air logistics on page number four. Better yields and better volumes. Volumes on the left, GP per 100 kilo in Swiss francs in the middle and EBIT per 100 kilo in Swiss francs on the right. Air Logistics achieved Q4 EBIT of Swiss francs 148 million or underlying growth of 6% excluding one-off costs booked in the prior year. Total Cunanagel volumes grew by 6% in 2024 with 5% growth in Q4 alone. This compares to estimated market growth of 6-7% in Q4 or closer to 9% including all of e-commerce. Q4 volumes certainly exceeded the expectations we had back in the autumn. The additional volume boost came from APACs and perishables. From a sequential growth perspective, the 6% uplift from Q3 to Q4 was also supported by hard cargo volume. Yields declined by 5% all year over year, but surged in the second half. The yield in Q4 rose to Swiss francs 89 per 100 kilo, a gain of 8% sequentially and an 11% improvement on prior year levels. These increases reflect both positive mix and yield development in the quarter. Unit costs were broadly flat in 2024 after the 12% reduction in 2023. A modest reduction of car and legacy was offset by an increase at Apex, weighted to the seasonality stronger second half of the year. Let's move to page number five, road logistic. Persistent headwinds in key markets. Road logistics EBIT for Q4 was Swiss francs 10 million or nearly half the underlining result from the prior year, excluding one-off costs. Order volumes increased by 5% in 2024 and 8% in Q4 alone, fueled by the consolidation of customs broker Faro and road operator City Zone Express, which we acquired in 2024. Excluding acquisitions, volume declined by 3% year-over-year in 2024. In Q4, the decline was also 3% versus an estimated 5% drop for the broader market. The 5% decline of organic growth profit in Q4 reflects negative yield developments and capacity cost pressure. While organic costs also declined year over year, the net result was negative at EBIT with a corresponding contraction of the conversion rate. Page number six, contract logistics, adding another year of record high EBIT. Contract logistics delivered a new all-time high EBIT result of SwissRank 65 million in Q4, for an underlining gain of 18% year over year. Full year EBIT reached a record high of 227 million or 229 excluding one of costs. These improvements mark a continuation of the strong and consistent earning growth trend. Constant currency cross-profit growth of 7% for the full year and 5% in Q4 alone point to consistent market share gains. These remain centered in healthcare and e-commerce with a meaningful contribution from a ramp up of the Adidas facility in Northern Italy, which fulfills all of the company's omni-channel demand for Southern Europe. The conversion rate increased by nearly 100 basis points in Q4, supported by our continuous focus on process re-engineering and automation. This concludes my comments on the performance of the business units. Typically, I would now turn to a strategic strategy progress update before handing over to Markus. But today we ask for your patience until March 25th, when we will provide a progress update as well as insights regarding our future path at our Capital Markets Day. With that, Markus, I hand over to you.

Thank you, Stefan. And good afternoon, everyone. Thank you for your interest in Kunio Nagel and taking also the time today for the full year 2024 results. As Stefan outlined, we managed an upward trend of results in the second half through our ongoing effective cost management and returned to year-on-year EBIT growth. We also returned to a more typical high and free cash conversion by the end of the year. For both, I will give more details later on. The current business environment remains volatile with respect to consumer demand and geopolitical risk. But we have successfully managed through countless economic cycles and periods of unforeseen volatility. Coming to the income statement, and as mentioned before and clearly visible on the chart, We began 2024 with lower profitability than the year before and improved the performance continuously. This resulted in a Q4 2024 performance that is nearly 100 million CHF better than the year before. Despite this improvement, The overall results for 2024 remained roughly 10% below last year, excluding a currency headwind in excess of 2%. Looking at the four quarters individually, we can see a solid operational conversion rate of 18, 19, and 20%, excluding restructuring costs, supported by active FTE resource management. The combined sea and air freight conversion rate was 35% in Q4. As mentioned, currency headwinds in excess of 2% were evident, not only on the EBIT line, but also at the level of gross profit and earnings before tax in the amount of 211 million and 43 million Swiss franc, respectively. Working capital, on the top of our agenda as always, and it has increased compared to last year. This is due to the significant rise of sea freight rates triggered by the sustained higher rate levels on the Far East-Westbound trade lane and a recent surge in charter activities within APEC's Transpac operations. The 94 million increase that you can see on the schedule on the slide is solely related to the APEX charter activities that all flows in again rather quickly as it is linked to the charter activities. DSO contracted slightly since the end of Q3 and are stable relative to year end 2023. DPO, on the other hand, have decreased both quarterly and year-on-year, mainly due, as mentioned before, to the increase in charter activities, which has now reduced the spread between DSO and DPOs to a mere 3.7%. Cash and free cash flow, looking more closely at the cash generation. The Q4 results reflected free cash flow conversion of 94%, excluding the seasonal impact of Apex that I just mentioned. This would have been 124% and therewith much closer to the comparables pre-Apex acquisition. As I mentioned on this last slide, the only driver of sequential increase of networking capital from Q3 to Q4 is the seasonal and charter effect at APEX. While much improved, the Q4 cash conversion rate sits below the decade-long average preceding the pandemic, but still within the range of a more normal outcome. Looking forward, in the absence of very large freight rate spikes or increases of demand, we expect this trend of improved free cash flow generation to continue. Dividend proposal. The supervisory board has decided to propose a dividend distribution of CHF 8.25 per share to the annual general meeting on May 7, 2025. This reflects our healthy profitability, well-managed cash conversion, and our success in balancing current and future cash needs for adapting the workforce to the markets. This dividend also represents a stable payout ratio compared to previous years and a stable ordinary dividend in absolute value versus 2023. C-Logistics and eTouch. It is with regret nearly that I have to say that this is going to be the final update on eTouch. eTouch, our digitalization and automation program, which has been running now for several years with the aim of increasing operational efficiency. The eTouch methodology addresses all aspects of operational processes and we have selected only a few workflow areas for sea logistics and air logistics to demonstrate its relevance. Man-hour savings continue to accelerate as we expand the efficiency gains through the operational processes. This has resulted in a positive conversion rate impact of 130 bps, which represents more than 6 Swiss Franc operating costs per TU. Most of you, of course, are familiar with this topic. So let's have a look at the customer portfolio management in Seafright, an important effort where we have only recently started sharing related information. You may recall, these let's call them donut charts from last year's presentation of full year results we share these slides just to illustrate the steps taken to improve our customer portfolio and to highlight that retain a very diverse mix we've expanded our share of higher yielding sme business by investing in field sales improving proximity to customers and taking other measures to expand service quality and boost retention. Another step was to stop serving certain volumes which didn't produce an adequate return. These so-called deselected volumes accounted for 6% of our total volume in 2023 and 2% in 2024 as we exited these volumes. We're now pleased with the current footprint and only call out a couple of remaining categories within our portfolio with significantly lower than average yields. These segments include intra-Asia trade and waste products. Lastly, it's important to remember the effect of a weaker US dollar on our reported gross profits and yields in sea logistics, a sector where US dollar is the dominant functional currency. On the face of it, our average yield is about 50% greater than it was in 2019. On a constant currency basis, the gap would be even wider. Air logistics. We now turn to the eTouch efforts in air logistics, which was our initial testbed for automation. Proud that we can report further man-hour savings resulting in a positive conversion rate of 370 bps representing a value of 3 Swiss franc operating cost per 100 kilo. This was the 2026 target we set for ourselves at the 2023 Capital Markets Day. We have clearly progressed faster than anticipated, and this bodes well for our ongoing efforts in sea logistics, where the initiation of eTouch began more recently. With this report, we close our specific reporting on eTouch to the public. And of course, we will continue the process optimization and harvest the positive effects on an ongoing basis. Looking at the donut charts for air logistics, the intent is slightly different here in that we are primarily focused on highlighting the diversity of the portfolio with a central focus on perishables. As you know, the unit economics vary significantly from the rest of the air logistics portfolio and providing this split allows one to better assess our progress versus the broader market and our peers. One change that you may have noticed, we will no longer break out the contribution of APEX to air logistics, cross-profit or tonnage due to some competitive considerations and the amalgamation within the KN network routing. Let me summarize. Let's close with our prepared remarks with the key takeaways. The lead headline is that we returned to strong year-over-year earnings growth in Q4. Second, we are pleased to propose a dividend that implies a high-end payout ratio and that is in line with last year's distribution from retention. Next, our intensive homework in recent quarters has now positioned the group to grow faster than the market. Two important changes will support this growth. Firstly, we streamlined the organization to achieve closer proximity to customers and enable faster decision-making. Secondly, we completed some bolt-on acquisitions, which expanded our service offering and chip coverage. We look forward to elaborating on these points and more At our Capital Markets Day in three weeks, please note that an invitation and registration link was sent out early this morning. And of course, feel free to contact Chris or Andrea if you have any questions to the Capital Markets Day. Thank you for your attention. And I would now ask the operator to open the Q&A session. Thank you.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star and one at this time. Our first question comes from Aniba Kayani from Bank of America. Please go ahead.

Yes, good morning. So first question just on IMC and how should we be thinking about the contribution from IMC to your gross profit and EBIT this year? Secondly, if you can just, you know, with all the trade patterns, potential changes in the de minimis exemption in the U.S., how do you see that impacting market volumes as well as your volumes and yields this year? Thank you.

Hi, Muneeba, Stefan speaking. Thank you for the questions. So let me tackle the IMC question on GP level first. And if I remember correctly, in our last call, we mentioned it already. To be a little bit more precise now, the contribution per container unit will be between 50 and 60 US dollar on GP level. The second question was on the minimus and the volume impact on Krunenagel and the overall market. So the impact on the Kühne-Nagel volume is, I would call it, rather minimal because the entire share of e-commerce in our air freight network is single digit. We were alluding to that a couple of times already in the past. So we have single digit volume in e-commerce in the Kühne-Nagel network. So anticipating that the volumes will come down in air freight, it will have not a huge impact from a Kununagel perspective. Overall, the market, we know we had roughly 2 million tons from the e-commerce providers, namely the two into the US marketplace. So huge volumes. And I believe that is my personal opinion. Carriers need to reroute their capacities into other markets. And that would put a little bit more pressure in terms of the pricing is concerned. But to be seen what's going to happen because at the end of the day, the consumer will decide where and how to buy. And if you buy a T-shirt of 250 and later you buy it for 280, I think that is something which we need to look at and will be shown in the next couple of weeks and months to come.

Thank you. If I may follow up on IMC, are you willing to share EBIT contribution from IMC this year?

But at the current stage, we will not do that. Sorry about that.

The next question comes from Alexia Dogani from JP Morgan. Please, go ahead.

Good afternoon. Thank you for taking my question. Firstly, can you discuss a bit your comments on the statement that Cunha Nagel has started well into the new financial year and we're confident that the positive development will continue in 2025. What exactly do you mean there? And what is your expectation for market growth in 2025 at the moment? So that's my first question. And then my second question, Can you remind us a little bit about the dividend policy and why last year you decided to give an extra capital reserve distribution, which obviously you chose not to do so this year?

Thank you. Yeah, Alexia, Stefan, I take the first one about the started well in 2025 message. In our Q3 call, I mentioned that we have done our homework in 2024 with a new governance model, with a new sales approach, with the three sales channels. And the statement is well reflecting a in-pockets good start into 2025 from a volume perspective. So we see that. we are gaining market share now in certain areas in our business. And that was reflected in the statement. So we had a reasonable good start in certain areas when it comes to the volume development. And we believe we see now the evidence that we are taking market share in certain businesses. That was the relation to the statement.

And Alexa has Marcus on the dividend policy or on the dividend level last year versus this year. So you're right. Ordinary dividend is 825 in last year and 825 this year. And last year we decided for a capital contribution, the regulatory requirement and the equity requirement around capital contribution is quite strict here in Switzerland. And we have done a repayment of capital contribution several years back already once. And we usually do that whenever there is available capital for contribution to pay that back to the shareholders. But again, it's a quite peculiar regulation, I think, in the Swiss environment so that you can do that, but you have to have it available. And this was last year the case, and this year it's not available.

Okay, thank you. And can I just have a clarification on Stefan's answer? Obviously, you didn't want to talk about what is your expectation for market growth. Is this something we should expect that the capital markets stay with the financial outlook? And could you give a bit of color of whether the financial outlook will be a more formalized annual side than we should expect every year? Or should we just see it as a CMB-related event?

No, it will not be a CMD related event. And thank you very much for following up. We will give more transparency and a regular outlook when it comes to financial guidance as of the Capital Markets Day in March 2025. So again, this will be a regular update and more transparency from Kühne Nagel to the equity market.

Thank you. The next question comes from Marco Limite from Barclays. Please go ahead.

Hi, good afternoon. Thanks for taking my question. I'm worried that this is a recurring question, but clearly there is a lot of focus on spoil rates and sea freight declining fast in Q1. So just wondering what you've seen in terms of GPQ at Cunananvel given the fast correction of spoil rates in sea freight. Second question, still related to the C48 unit. In Q4, you have shown a bit of deterioration in cost per queue. Just wondering whether we should expect a trend going to 25 or that's just or let's say special cost just for Q4 and therefore cost per queue should improve going to 25. Thank you.

Markus, let me start with the second question first because it's relating to Q4. Well spotted, yes, we have a slightly increase in cost per TU on the seafreight side. And I think that all really refers back to putting ourselves in a position, creating the base for an accelerated growth program going into 2025. So this is, I would call it investment into a faster growth path in 2025. On the sea and air freight, if I understood your question correctly, the first one, You were asking where do we see an air freight yields going into the first quarter 2025? Is that correct?

Correct, yeah. Exit rates in January and February, yes.

yeah i think at the current stage i would i would refrain of uh of answering that because there's so much volatility right now in the market that is really difficult for us to make any predictions that go beyond the current point and i would i would ask you to excuse ourselves on that on that q1 information the next question comes from mark zack from kepler please go ahead

Excuse me, this is the operator. Mr. Jack, we are receiving a bad audio quality from your end. We will remove your question. The next question comes from Morgan Stanley. Please go ahead.

Thanks very much. I just wanted to follow up on that comment on costs in sea freight. So you've invested for growth. Should we assume, therefore, that that cost base is Is now the new normal or is there a potential that costs come down from that? And then just on the details that you've given on your customer mix, it's quite helpful. Thanks for that. I wanted to ask on sea freight, one of the messages that I think you gave at the last Capital Markets Day was this idea of trying to shift to the SME customer, the higher yielding customer. And in those donut charts that you provide, there is a big, blue area, which is sort of other. I wonder if you could give us a little bit of detail on what SMEs look like in that percentage, because it doesn't really look like it's shifted. But I don't know if there's more granularity that you could provide so that we could get a little bit more visibility of if that strategy to go to those higher yielding customers has actually come through. Thanks so much.

So let me first do the sea freight costs question. So I think that is a cost base for the fourth quarter, agree. We would now expect that we can harvest on accelerated growth and higher TU numbers. And then of course, our operational efficiencies, name it for a moment, but there's many other efficiencies initiatives behind that as well, we would expect that these costs will then fall back in line where it was pre Q4. So it's really kind of a ramp up and then with the additional volume, it will it will, we will expect that to reduce.

And Stefan, on the SME share, so overall in Q4, SME picked up again back to the prior year level between 48 and 49%. So roughly 50% comes now from SME and this focus will continue into 2025 and 2026. We will open additional CCLs, customer care locations. We were speaking about that during the last year as well. And this is something which is going to continue. So we will further focus on SME growth. And we will grow, as Marcus said, within our cost base. So the unit cost should improve.

Can you just clarify what the SME number was in 2019? So it's helpful to have that 48% to 49% now, but I don't know what that number was in 2019 off the top of my head. If you could remind us, it would be helpful.

the sme number share oh that was 79 of the uh of the tus no can't be 79 gp gp that uh

We have now 48 and come. Let us check, right? We come back to you on the GP. Perfect.

Yeah, just to get some, basically just to try and understand that customer mix journey that you've been talking about. So some numbers around that would be really helpful.

Noted for the upcoming capital markets day, we will prepare that.

Brilliant. Thank you so much. The next question comes from Gianmarco Verro from ZKB. Please go ahead.

Good afternoon. First question on the profitability in air logistics. I think it's an impressive step up there, considering also that you grew meaningfully in the low margin perishable volumes. You mentioned there positive mix drivers and also yield developments being helpful. Can you tell us also, is that mostly trend related or is that really sustainable development that you could observe now there in the fourth quarter. And the second question is related to the put option that Partner Group has on the 25% stake in APEX. As I'm aware of this put option became valid by the 1st of January. Can you at least tell us for how long this option is valid? Do we need to consider that this can really be executed every day or are there several defined dates when this put option can be executed? Thank you.

Hi, John Marker. It's Marcus. So I take the purpose group adoption question. So indeed, as of 1st of January, it is exercisable. At the current stage, there is no fixed date or there's no predefined exercise date. So as such, it is exercisable at any point in time. Then I would say from a process point of view between exercise date, if you like, to a closing at that point in time, we would still talk about a couple of months to verify then obviously what are the values and so on and so on from a process perspective. But in principle, and as it is written, it is as of 1st of January, no specific exercise dates, so exercisable at any time.

Stefan, Gianmarco, the question was the profitability drivers, and that is purely vertical related. It was healthcare, aerospace, and the semiconductor industry, which helped us to grow the yield significantly.

Thank you. Is it only the growth in these industries, or is it that you increased meaningfully your exposure in these industries?

meaningful exposure increase in these industries. And remember, we started Simicon only one, one and a half years ago, not hours, years ago. And it was meaningful extension and expansion into these three verticals.

Great. Thank you, Stefan and Markus.

Thank you.

The next question comes from Andy Chu from Deutsche Bank. Please go ahead.

Stefan Marcus, you're both well. Just one question from me, please. Maybe a bit strange, but just wondering if you could give us a flavor operationally in R&C, how your conversations are trending with your customers in terms of maybe sort of intensity of discussions. Because I guess maybe big picture, the more intensive discussions, the discussions are the better it is for orders for Kuna Nagel. I'm kind of thinking around COVID, where obviously there was big profits, but obviously came with a lot of work and a lot of, you know, maybe a bit of internal disruption. So maybe a flavour, please, of the uncertainty. What's that doing between Kuna sales and your customers and clients, particularly new customers?

Hi, Andy, it's Marcus. Let me just reflect quickly on the question. So the question is, after our restructuring internally, obviously, then what is our gains on the customer proximity? How intensified is the way how we communicate with customers? Did I understand that correctly?

Yes, that's correct, Marcus. the level of intensity given all the sort of turmoil or the uncertainty, obviously the more that you're connecting with your clients typically would be maybe a good indicator of success of the business and therefore profitability.

Okay, I think now we understood. Thank you.

So basically, let me start with the first question or with the first tip of the question is what has changed basically, right? So what is new to us now is that a global account manager is really responsible globally for the account relationship and every account has an executive sponsor. So that is different from the past and that has helped us to intensify the discussions with the customers big time on a global scale. And we take decisions now in the center here on behalf of the customers or together with the customers when it comes to service issues, quality stems or pricing from the very beginning when it comes to RFQ management or I'd sort of bid decisions and collaborations with these customers. So that has increased significantly. And based on the volatility in the marketplace and the uncertainty on the geopolitics, the terrorist structures with certain customers, especially in the high-tech arena, of course, right, in the semi-con, but as well in the consumer, we try to help them a lot with our knowledge just to give you one glimpse of information. We have started four or five weeks ago. with customer advisory calls in the US, leveraging our customs team, including Ferro. And in the first call we offered to the marketplace, we had to close the call after 2,000 registrations of customers. So you see there is a lot of demand coming towards us when it comes to customs consultancy services. So I would say the relationship and the in-depth discussions with our larger ones have increased significantly with the new structure.

That's helpful. Thank you very much.

The next question comes from Johannes Braun from Stiefel. Please go ahead.

Yes, thank you for taking my questions. Also two for me. First one would be on free cash flow. You said that the working capital headwind that you still saw in Q4 was mainly driven by the Apex chartering activities. I'm just wondering, does that mean that without Apex, working capital was already a tailwind? of a headwind in q4 given by the falling yields and therefore do you expect this to be the case in q1 also uh so a networking capital being a tailwind and therefore if we cash flow to pro potentially also with a normal conversion in q1 um and the second one um just on contract logistics and the ramp up of the adidas facility can you give us an indication of how much of the full EBIT contribution was already in the 2024 results and what will remain for 2025. So was it 50-50 or rather 40-60 or any indication would help.

Thank you. Hi, Johan, this is Markus. Free cash flow, absolutely, you're right. I mean, the moment when the let's say the number of the charters is reducing in Q1 for whatever reasons, then obviously that will give a tailwind on the networking capital. So clearly the cash will come back into the cash box. For the second question, contract logistics ramp-up cost added us and how well we started, I think one of the large successes in the contract logistics development. And we have been extremely successful, I think, with such a complex operation to bring it up to speed. From a cost perspective, We can probably say in 2024, we have, and it's a, I would say a professional estimate with all the knowledge that I have. I have not calculated it right now, but it is somewhere between 15 and 20% in 2024 that we have already ranked it.

And Stefan here, I have a number on the SME share. So I can give you the number in 2019. The share of SMEs in Seafreight was 45% of the total volume.

That is the answer to Cedar from Morgan Stanley. Thank you.

The next question comes from Sebastian Vogel from UBS. Please go ahead.

Good afternoon. The first question is maybe a tricky one, but nonetheless, I'll try my luck here. With regard to the Red Sea, what is your working assumption for the rest of the year? Do you see a sort of a full reopening taking place at some stage over the course of 2025? That would be my first question. The second question is with regard to your net cash position, more on a sort of overall view on it. What sort of level do you normally feel comfortable around in that sort of market backdrop in which we are currently in?

So I take the Red Sea and I don't have the crystal ball. The question was, what is our planning? And we plan for the time being unchanged with the Red Sea channel closed. So we are not planning any different scenarios at present.

Net cash position, I think important to say that we prefer a net cash position, obviously in absolute terms, when there might be a situation during the year that we will encounter a certain short term debt situation for good reasons like on an M&A basis but in principle we would always prefer a net cash position from a balance sheet perspective that is one of our main pillars how we how we operate the conservative balance sheet, I would call it.

If I may follow up there, does it mean, for example, if you have the choice, something like 500, 600 million net cash position is something that you would feel comfortable or would it be higher or lower?

Well, I think it's probably somewhere in that area. That is probably the liquidity requirement that we need, but I would say somewhere there.

The next question comes from Ingo Stössel from UBS. Please go ahead.

Hi, thank you for taking my question. Just a quick one from my side. You have a bond maturity in June this year. Can you give us any indication of what your plans are for this? Will you refinance to keep easy access to the Swiss capital market?

Thank you, Marcus. We are currently under discussion with the supervisory board exactly what to do. Clear, the bond expires, the current bond expires on the 18th of June, and we will see what we are going to continue to do.

All right. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. And I hand back over to Stefan Pohl for any closing remarks.

So thank you very much for listening in and your good questions. We see each other hopefully in three weeks during our Capital Markets Day in London, March 25th. And stay tuned and looking forward to a very open and fruitful discussion. Thank you.

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