Contl Ag S/Adr

And welcome everyone to our Q1 2023 results presentation. Today's call is hosted by our CFO, Katja Dürfeld. Small reminder that both the press release and presentation of today's calls are available for download on our Investor Relations website. Before starting, we'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please kindly disconnect now. Following the presentation, we will conduct a question and answer session for sales side analysts. To provide a chance for all to ask questions, we would ask you please to limit yourself to no more than three questions. This will help us conclude the call on time.

With this, let me now hand you over to Patja. Thank you very much, Anna, and a warm welcome from my side also. Despite a continued challenging environment carried over from 2022, we have set a good pace for our Q1 result and we are confident that we will deliver as guided for 2023. Let's look together at the details starting on slide three with the most important KPIs of quarter one 2023 and group highlights. Group level Q1 2023 sales came in at €10.3 billion, 11.1% above the last year's comparable quarter, and organic growth was 10.1%. Adjusted EBIT margin was 5.6%, 100 basis points higher than Q1 2022, with all sectors positively contributing. Adjusted free cash flow came in strongly negative at €949 million, inventories continue to remain high and receivables weigh on working capital march being the strongest sales month in the quarter is reflected in the receivables as well as the latest price agreement which are not cashed in yet with our actions on working capital we are confident to achieve our guidance here also on adjusted free cash flow let's have a look at our highlights in q1 an automotive Ongoing price negotiations are progressing, and at the end of the first quarter, we've already first sustainable agreements in place, while improvement measures show also good effects. We see also benefits from supply chain stabilization, less premium rates, and efficiencies from R&D. Building on our strong automotive order intake in 2022, Q1 2023 continues the trend at 6.6 billion euro lifetime sales, reinforcing that we bring the right solutions to meet our customers' future needs. And tires, an adjusted EBIT margin of 13.5%, just above our margin corridor, has had a good pace for the year, with strong prices and mixed overcompensating, decreasing volumes and inflation. Despite this positive start, we do expect market dynamics to become even more challenging. In Contitech, the combination of actions undertaken last year to improve operational efficiency and a favorable price portfolio has contributed to the improved adjusted EBIT margin of 6.4%. Overall, I am pleased the measures we are running to improve our plant operational performance are already sequentially impacting the bottom line. Additionally, now the strategic side, we have news from two of our sectors. Firstly, in automotive, where we have entered a strategic partnership with Aurora, which I will highlight on the next slide. And in Contitech, we have achieved the next milestone in the acquisition of Trello Box printing technology business, with the closing on May 2nd, further strengthening our industry focus and supporting our midterm targets. On personal note, Firstly, we have the great news that our supervisory board has extended the appointment of our CEO, Nico Zetzer, by further five years. And secondly, Nico and I are handing over the automotive management to the new CEO for automotive, Philipp von Hirschheit, and sector CFO, Claudia Holtkemper. This will free up time for Nico and I to focus even more on the group. On slide four, I would like to highlight in more detail this exciting partnership with Aurora. We combine our Continental systems expertise with Aurora's industry-leading autonomous technology for our common goal to jointly realize the first commercially scalable autonomous trucking systems. Continental will deliver the entire hardware set as well as a new fallback system. The partnership is based on a completely new business model for Continental. hardware as a service. Different to traditional supplier business, we will generate revenue for every truck mile driven. With Aurora, our planned start of production will be in the United States in 2027. Here we will bring increased safety, reduced fuel consumption, and faster delivery times to this important industry with a total U.S. address in the market of approximately 700 billion U.S. dollars. Together, we will realize the first commercially scalable autonomous trucking system paving the way for broad adoption of autonomous mobility in the commercial trucking sector. As another autonomous mobility partnership update, I am also pleased to announce that we have now confirmed a first delivery for our jointly developed stack with Umbrella as a complete level four fallback system. Let me now move on to the Q1 performance by group sector on slide five. In automotive, we see a strong increase of 17.1% in the year-on-year organic sales growth and margins improved by 490 basis points to positive 4.8%. Both effects were supported by the first signed price contracts and focused operational efficiency actions also supported the EBIT margin improvements. And tires, organic sales growth of 4.9%, as mentioned, underscored by the price mix overcompensating volume reductions. The adjusted EBIT margin decreased by 360 basis points to 13.5%. At Contitech, the organic sales growth of 7.8% and adjusted EBIT of 6.4% show that our actions deliver results. Now, Let's look into the automotive from slide six. Automotive sales have started strongly, with a total of 5.0 billion euro, and as mentioned, a strong 17.1% organic growth. The effects of the first new price agreements in place and increasing volumes were the key drivers for the solid organic growth, as well as the adjusted EBIT margin of 0.8%. Although we are not without challenges, especially in inflation, where headwinds totaled approximately 250 million euros. For further insight into our results, let's look at the organic sales performance of automotive versus regional vehicle production in Q1 on slide 7. Segmented by region, automotive organic growth significantly outperformed vehicle production again, prominently in our important European market, which was supported by our pricing activities, as well as in China. Our development in North America in Q1 was below the market, mainly driven by lower customer call-offs, which we anticipate will recover during the year. Overall, in Q1, automotive outperformed its regionally weighted average by around 7%. Again, a very solid start. On slide 8, we confirm our competitive market position by finishing the first quarter with another strong order intake at automotive of €6.6 billion lifetime sales. Major contributions came from autonomous mobility, valued at €1.7 billion, including awards for 360-degree radar coverage consisting of front, rear, side, and long-range radars. They ensure a holistic environmental perception of vehicles and thus greater safety in road traffic. Further, our user experience team continued their success, achieving 1.6 billion Euro lifetime sales, of which almost all was attributed to new awards in innovative display solutions. Furthermore, the first augmented reality head-up display was awarded. to meet our customers' future corporate needs. Another strong result was also achieved by our safety and motion team, who locked in new business totaling €1.9 billion lifetime sales, mainly deriving from awards for integrated safety, sensors, as well as hydraulic brake systems. In addition, we achieved business and air supply systems, which will increase our stable market leader positions. Moving from automotive to tires on slide 9. The start to the year confirmed our expectations that 2023 would be challenging, and although volumes declined by 8.6%, our tire sector was still able to achieve 3.5 billion euro in sales and an adjusted EBIT margin of 13.5%. Our sales performance was underscored by our strong price mix with more than half of the increase attributed to mix, which overcompensated for the volume reductions and the inflation of labor, logistics, and energy costs of approximately 85 million euro. Raw material remained a headwind in Q1. However, for the entire year, we expect these headwinds to reverse. Tyres has had a good starting pace. However, as I mentioned before, we do expect market dynamics to become even more challenging during the year. And now let's review our final sector, Contitech, on slide 10. As we have seen in the other sectors, volume volatility also played a role in our Contitech business. However, for Contitech overall, we saw positive effects from pricing that compensated volume changes and inflation impacts of approximately 75 million euros. Our price improvements were mainly from carryover of 2022 agreements, while we continue on new price agreements for 2023, which we expect to see the effects from Q2 onwards. On this basis, Contitech delivered an organic growth of 7.8%, leading to 1.7 billion euro sales and adjusted EBIT of 109 million euro, or 6.4%, a 110 basis points increase from Q1 2022. Our targeted measures, including our key focus on improved plant performances, begin to deliver results as seen here in Q1, highlighting our ability to deliver in this sector on our commitment. Now let me continue with the overview of adjusted free cash flow for Q1 2023 on slide 11. Our adjusted free cash flow came in at negative €949 million. This reflected the higher inventory levels needed to secure our supply chains and a higher level of account receivables, mostly due to stronger sales in the final month of the quarter, as well as price agreements concluded in the last minute of the quarter, both of which could not yet be cashed in and therefore still weighed on working capital. The investing cash flow of €355 million in property, plant and equipment supports our product mix needs and capacity expansions, for example, to meet new business volume demands. We are confident that through our key focus programs in 2023, we will achieve our guide. Looking now to our market expectations for 2023 on slide 12. Our expectations are based on current foreseeable effects. assumptions, we confirm our guidance across all industries and regions. For our final topic today, let's review together our outlook on slide 13. We can keep this short as we confirm our guidance without changes. That is not to say the road will be easy, but the combination of our strong team and our deliverables to date, we are confident that we will achieve our guidance for this year. This was my part of the presentation. Now it's your turn. Operator, would you please open the line for the question and answers?

And the first question comes from Sanjay Bhagwani from Citi. Please go ahead with your question.

Hi. Thank you very much for taking my question also. So I've got two questions. My first one is on pricing pass-throughs. Hello? Yes, we can hear you. Okay, okay. So first one is on pricing pass-throughs. Could you maybe explain a little bit on the mechanics of these price increases? So all I'm trying to understand is, let's say, when will the majority of these price increases be effective from? And when do we see these some payment for the Q1 under recovery? That is my first question. So if you can provide some color on these mechanics around the timing.

Okay, so I'm sorry, but I have some breakups in the line, but maybe I think I understood that you would like to understand a little bit about the mechanics on our price pass-through and how much the effect was in the first quarter. I think that kind of was it. Maybe first of all, with regards to the mechanics. So just to make that clear, there is no real mechanic. So it's not that we have, especially for the electronic components, some price adjustment clauses in the contracts. That is not the case. We do have some contracts more on the metal piece where this happens. But in general, on the automotive side, we do not have any pass-through mechanisms, which means we do negotiate with our customers. To do these negotiations, we create the necessary transparency on the price developments that we are facing or the cost developments that we are facing here in Continental, which comprise more than pure material prices, by the way. We also have effects from wages and salary. We have logistics and energy costs, for example. So all that is part of the negotiation, which we have with our customers. So no price through mechanics. And We have deviating from last year, we already were able to conclude some of the negotiations during the first quarter. which is great. And in general, what we try to achieve with each and every negotiation that we have is to achieve a sustainable and also retroactive price adaptation. So we are not running for one-time payments. What we are looking for are real sustainable price adjustments that we negotiate with our customers, which means if we would enter into new agreements in the second quarter, our target is to have them retroactively applied to January 1, 2023.

Thank you. That's very clear. So coming on to the second question, that is if I extrapolate that to understand the sequential improvement in the automotive margins into the coming quarters. So quarter two could have additional pricing and some retrospective payment for under-recoveries in Q1. And then in H2, you also see a step up in the margins. not only from the pricing but also from the product launches and from R&D. Is that correct interpretation?

That is perfectly correct interpretation. So we are looking for a sequential improvement on automotive quarter by quarter during the course of this year to also be able to meet the guidance that we have laid out. And this does not only include the improvements to not only rely purely on price negotiations, but we also have initiated multiple measures in-house, like our R&D Excellence Program, the Transformation 2019-2029 Program, and we have It also has effects from more stable supplies, supply chain, which means we have less disruption in the plants and therefore better operational performance.

Thank you. That's very helpful. And I just have one follow-up on the outperformance, if I may. Yes, sure. Yeah. So when you look at these outperformance of 7 percentage points over and above the region elevated, is this fair to say maybe somewhere around 500 basis points comes from the product and mix? given that you have all these new launches and SOPs coming into 23. So if you could provide some more color on that, it would be very helpful.

So in general, the outperformance is A, on different products, on the product mix, which is clear, and it's not necessarily only linked to start of production, but also due to the change in the product portfolio that is required and requested by our customers. Another part of the outperformance comes from the regional mixes. I think that's also a very important part of it is also pricing.

Okay, thank you. That's very helpful.

The next question comes from Julio Pascato, BNP Paribas exam. Please go ahead with your question.

Thanks for taking my question. The first one on the trajectory for margins in automotive. Some car makers are suggesting that they want to pay as late as possible this year when it comes to pricing negotiations and they want to pay in one-off payments. You clearly said that you're asking for sustainable prices. But if you think about the margin trajectory for the coming quarter, should we expect similar margin for the first three quarters and then a big step up in Q4 or you think more of a gradual improvement quarter after quarter? Thank you.

Thank you for the question, Julia. So we are looking for sequential price increases. When you remember our, I'll call it, journey during the course of last year, we had nothing in Q1 last year. Then we had something in Q2, the majority in Q3, and a smaller amount in Q4. So for this year, we've started stronger compared to last year. So we already have some price agreements now in Q1. And we do expect that to continue to improve during the course of the year. Our Q4 usually is quite strong just due to the fact that we do have R&D reimbursements mostly in the fourth quarter. That was not driven by price increases.

Okay, that's clear. Concluded. Okay, sorry. Perfect. Now, just moving to tires briefly. Very good results. I'm just wondering, are you seeing any pricing pressure in the market? The pricing mix was very strong, but the pricing was a bit softer than I'd expected. I'm just wondering, are you taking advantage of some of the relief on the raw material side already? Are you seeing pressure in the market that would suggest that you will have to do more of price staking in the coming quarters? And then maybe just a breakdown of the components of mix would be very helpful because mix was obviously very, very important. Thank you.

So in general, on the pricing side, I mean, for sure, we are observing the markets at the moment quite closely. We currently do not see any price falls that have started, especially on the premium side so far, but maybe some selective price adjustments are not. included during the course of the year Europe and North America were quite low in demand in the first quarter on the replacement side or lower in demand on the replacement side. There are multiple reasons for that. Pricing is not necessarily the main driver here, but it's because we still have some stocks at the dealers. And we have some of the dealers expecting some movement on the pricing. So this is why they are not pre-buying or stocking up early this year. But we will have to see how this goes with regards to pricing. But we currently don't feel a lot of pressure on that side, especially on the high-performance piece. Yeah. And with regards to the mix, I think it's fair to say that we still feel very strong on the UHP tire side, so that's what also helps us a lot. We had last year our value over volume strategy, so we're looking for the high-value tires instead of the high-volume budget tires, and this is what we still feel quite comfortable with on the UHP side.

Okay, thank you.

The next question comes from Horst Schneider, Bank of America. Please go ahead with your question.

Yeah, good afternoon, Katja and Anna, and thanks for taking also my questions. The first question that I have is number one on these pricing creatures again and how sticky they are. So is the assumption right that when you now agree new prices, they refer them to the rest of the contract lifetime so they're also valid for 2024 or basically they're going to be a setback again in 24 and you have to got to renegotiate everything i think my suspicion is when we talk about semiconductors these should be sticky price increases but correct me if i'm wrong then the other question is related to the order intake because we see that now for some quarters that you report actually a pretty strong order intake So therefore, a question from an analysis perspective, how should we look at that? So it's lifetime sales. That means we divide the number times seven and start of production is something like three years. And then you now basically agree on these new contracts. Is there a high level of competition or have you got a general return hurdle that is higher than the contracts that you have got at the moment in place?

Thank you. Okay, let me start with the price increases and the question on the sustainability or stickiness, as you called it, Horst, on the prices. So as we said, we were also last year looking for sustainable price increase, which also means that we have some carryover effects from 2022 to 2021. in 23 nevertheless we were we are facing new um price increases especially on the electronics part and those we address again with the same understanding that we are looking for sustainable price increases and in case prices for electronic components will someday go down again yeah this will probably then trigger new new negotiations but for the time being As long as pricing stays solid on the procurement side, also prices on the sales side should stay sustainable. On the order intake in general, your assumptions are right, just as you described them. So on an average, probably seven years of lifetime, probably start of production around three years. Yeah, that can be different from product to product, from product group to product group. But on the average, I think that's kind of a fair assumption to take. And your third question was, Return hurdle? About the competition, right? So you asked if the competition is more aggressive on the new order intakes, right?

Correct.

Yeah. I think as we try to describe and also with setting up automotive, the way that we have decided to set up automotive, we are quite well positioned. We address the needs of our customers also with the new technology that we have developed during the course of the last years. We were always challenged a little bit because we invested quite some amounts into the R&D side. But I think we've done it at the right points. also at the right product levels, and this is why we are currently able to win in some of the new technologies quite nicely.

Can I sneak in just the last one, Katja? That is basically the tech day that you host on the 13th of June that has got no CMD character, I presume. So is there going to be a second event, the kind of CMD that you're going to host after the tech day?

I kind of expected someone to ask the question. So the tech day is a tech show. So we will present our latest technology at the tech show. And it's a first or a second event. So we started at the Consumer Electronics Show, our journey to bring our technologies closer to our investors and analysts. It's the second event in that row. And you can stay tuned for a capital markets day, which has not been announced yet.

Okay. Thank you.

The next question comes from Jose Amundi. J.P. Morgan, please go ahead with your question.

Thank you very much. Hi, Katia. A couple of questions. I think on the auto side, I would love to understand a bit better the level of our performance to global production you are expecting through the year or you're seeing through the year. That would be great. And also, maybe a little bit your thinking in the light of the strong first quarter, Why did you not think about upgrading the automotive margin guidance for the year in the light of the strong start? The second bucket will be on tires, please. Do you think volumes can turn positive in Q2? And also, how do you think about pricing for the tire revenue bridge for the second quarter? I believe you had about 7% in Q1. So should we expect a similar level of pricing in Q2 and Q3? Thank you.

Okay. So let's start with the automotive performance or the outperformance of the sales. You know that we have guided for 2% to 4% automotive production increase for the year 2023, and you also know What we have laid out as a sales guidance, this implies an outperformance on the automotive side, which we still definitely think that we will be able to deliver. This is why we have also confirmed our guidance again. I think that's a fair point. The second part was about volumes and the difficulties on the tire side, so to say. Volumes and tires had been a headwind during the course of the first quarter. So as I said, replacement volumes in Europe and North America were weaker. But what we did see on the other side were quite positive OE volumes. So on the tire side, we also do think that China should recover, which you can also see when you look at our guidance, that we do see a strong improvement on replacement in China, which also is a quite relevant market for us on the replacement side. So overall there, we also do see that volumes will come back or should come back in the second half of the year. And about pricing, as I as i tried to say so so far we don't feel the need to adjust pricing in general we are looking at selective markets and i do not exclude the one or the other price adaptation in the understanding of the um of the uh of the raw material price development thank you very much

So we still have some questions in the queue. Maybe for those who have joined later, the combination to raise a question is nine star on your telephone keypad. And the next question comes from Philip Koenig, Goldman Sachs. Please go ahead with your question.

Yeah. Hey, Katja, and thank you for taking my questions. First one is just a very basic one on the automotive guidance. I guess when you set the 2% to 3%, At the beginning of the year, you sort of had some cost recoveries in mind to reach that level. Now that the first quarter is over and we are in May, have the recoveries sort of tracked in line for you to reach that margin level? Or are we better or are we slightly below where you aim to be? That's my first question.

So in general, I would say that we are on track with our cost recovery. So you know that we are facing the one billion on the automotive side. So we have to work hard on the cost recovery side. We are again in positive negotiations with our customers. But so far, I'm satisfied with what we have achieved so far.

Okay, and then my second question is on the R&D efficiency that you mentioned earlier. I guess is there any sort of absolute level of R&D spend we can expect for the automotive business at some point where we can see a leveling off of the investment? Because clearly in absolute terms, the R&D spend in the automotive business continues to increase. Is there any sort of guidance you can give us for this year?

What we always said is that you should not expect them to go down on absolute levels, but what we also said is that the level and percent of sales will definitely decrease despite the fact that we are investing so strongly into the new areas there. And I think that is what you will also see during the course of the year.

Okay, thanks. That's very helpful. And then lastly, just on the free cash flow, clearly a big step up in the receivables. Can you ever sort of describe the dynamics? Is that more driven by later payments from the OE? Is it tire dealers? Maybe sort of a bit more color on those dynamics and what makes you confident that you can sort of reach a guidance with a reversal of that by the end of the year? Thank you.

Yeah, so I think with regards to the receivables, I'm sorry, there are three driving factors, or there were three driving factors at the end of the first quarter. First, a positive one, we had really strong sales on the automotive side in March, which are not due for payments yet, but which have increased the receivables for sure. Second, We have concluded negotiations, different from quarter one last year, 2022, regarding the price adjustments, which are also not due yet, and both are not cashed in yet. So that is a way on working capital. And last but not least, exactly what you said, so we are also experiencing our delayed payments from our OB customers, so on the automotive side. And I know that we are not the only ones facing this development at the moment. And I think some others have also spoken about it before or talked about it before. That's the second point. And what we have done really is we've also set up a project team also during the post-flate last year from the learnings of the last quarter that we are really tracking and following up much closely on these sites that we are definitely managing our overdues very strong and strictly, trying to really get it down. And I'm positive to see further effects there.

Okay, and maybe just a small follow-up on that. By the end of the year, do you generally expect an improvement in working capital compared to last year, or do you still expect an increase, just given how the dynamics that you just laid out?

I would say... and improvement in the working capital. Just look at the guidance, I would say. I mean, we are guiding 0.8 to 1.2 billion positive cash flow for this year, which is better than what we have delivered during the course of last year.

Okay. Thank you very much.

The next question comes from Thomas Besson, Capital Sherbrooke. Please go ahead with your question.

Thank you. I don't get enough Starting with your comment on TARs and listening to what you've said afterwards, I'm not sure I understand. So I think you said you expect market dynamics to be even more challenging during the rest of the year than what they have been in Q1. Can you elaborate on that? Because you had basically a high single digit decline in volumes, which likely doesn't repeat in the rest of the year, and you don't seem to expect pricing to explode. So it would be helpful if you could clarify what you mean here. Second, on automotive, I understand R&D in absolute terms is not falling, but do you have a percentage of net R&D for automotive in mind for this year, or a number of bips of decline, or is that dependent on automotive revenues? And then thirdly, could you remind us your combined exposure to two automakers, which are Tesla and BYD? And I have just a side question because I'm French. I never understand what German companies do. Could you explain why you did not pre-release this time? Because your adjusted debit was largely above expectations. Your free cash flow was worse. So that would be interesting for me, George. pure interest to understand why this time you didn't pre-release. Thank you.

Okay, those were four questions in total. I will try to help as much as I can. Okay, first question on the tire side. You know that we said that we are in a challenging environment and that we also do see the challenge to continue to a certain extent. So far, we are still on the sales side. We are still within our guidance. This is also what I said. So we feel still quite comfortable there with the assumptions that we have taken when we laid out the guidance at the beginning of the year. But the market is is tight and is difficult. Why is that? As I just tried to explain, so we did see the dealer topic and we do see more competition from the Asians coming back. And I would like to say coming back because it's something that we are not really used to see. So they are coming back and they are putting more pressure, especially on the quality and the budget brands. So that It does not affect our major brand, Continental, and it also does not affect us on our ultra-high-performance tires, for example, or the EV tires, but on the quality and budget, that definitely is a topic. This is why we're observing the market and why maybe selective price adjustments during the course of the year might happen. When you look at last year, you saw that last year we had a very stronger sales in the first half of the year and then weakening sales in the second half of the year. So this year we expect that to turn a little bit around. So just in general. On the R&D and percent of sales for automotive, I have to say I'm sorry, Thomas, you know that we don't guide on the R&D and percent of sales. And I also will not give you a figure that I expect for the end of the year, but I expect the figure to look different. I call it better, yeah, and clearly better than what we saw last year. That is what I can say. With regards to our exposure to Tesla or to BYD, sorry, we don't openly talk about specific sales with one or the other customer. Just let me say that we are doing business also with these new – I don't even want to call them new anymore – with these new – new customers worldwide. And the question on the pre-release, I think that comes back to my visit in France when we try to explain why this is. We received some feedback from the market that we were... maybe issue the one or the other ad hoc too often yeah um and we are learning in general and i think when you look at the reaction um usually you should say something when you expect a very strong reaction of your of your share price due to the due to the release of your of your figures and we thought that the release of all this would this would would not overly drive the share price of um this time and this is why we decided not to not to do it and i think when you look at the share price development today our assumptions were correct. Yeah, positive surprise on automotive and tech, some negative on the free cash flow, and in total, we were okay.

Yeah, thank you very much, Katja.

The next question comes from Christoph Lascavi, Deutsche Bank. Please go ahead with your question.

Thank you for taking my questions as well. Three quick ones, I would say. The first one, and sorry to come back to that, on the pricing in q1 and auto tech um sorry if i might have missed it but are there any lump sum payments uh that you booked in q1 and could you quantify them in case there were and then um second on the momentum that you see in q2 you already highlighted that you need better volumes a bit better efficiency from better call off uh from the oems is this already something that you see in q2 now you're trending sequentially up with regards to utilization and on better call loss and efficiency. And then lastly, on the underperformance in North America, could you just roughly outline what was driving that and when do you expect that to improve in 2023? Thank you.

Okay, first question was on the pricing for for automotive again, and it was if any of the effects included lump sum payments. I'm personally not aware of any bigger lump sum payments because this would also not fit to our strategy to really have the price increases sustainably into our systems. So I'm not aware of any major lump sum payment in the first quarter. So for the Q2 question, I have to admit that I did not really understand, get your Q2 question too well. I'm kind of in between call-offs. So if the call-offs are increasing or going down, or if you asked about the efficiency of our operations.

Yeah, I can repeat and rephrase. Sorry if I was unclear. Thank you. So essentially what I'm trying to get to is, do you see that the customer callers are becoming more reliable and that allows you to manage the operations more efficiently? And are you, in general, seeing the volumes trending up in a way that you described that you needed to meet the targets?

Okay, now I have it. Thank you, Prissel. The challenge was not necessarily also during the course of last year, the customer demand and the customer call-ups. It was more the supply side that was really putting a lot of issues on us and on the operational performance. So the availability of semiconductors and therefore the changes also our customers had to make in their operations. purchasing behavior. Because it was not only continental where there were some issues in the supply chain, but that was more or less a general industry topic. So with the better, and I just tried to say really carefully, better availability of semiconductors, we also do see there less interruptions in the supply chain. And this is across the entire supply chain from our suppliers to our customer side. So there we do see some improvements. But please do not think that we are already at a normal mode. We are not. We still have impacts from semiconductor shortages. And personally, we do not expect that to be fully normalized yet. all semiconductors until the beginning of 2025. We will still see some selective shortages in the one or the other chip family. But we do see a more stable possibility on the production side, which is also due to the fact that we have built up inventories to stabilize our supply chain internally. And I think the last question that you had was on the North America's performance. So we saw selective customers where we saw some volume drops, but we think that these were just really on short term. That was really an unhappy mixed event for us. Yeah. So to say in North America, but we don't expect that to be a sustainable topic. And this will come back during the course of the year.

It seems Katja has answered all the questions. So thank you so much, everyone. for participating in today's call. As always, should any further questions be left, please do address them to your investigations team. And with that, we'd like to conclude today's call. Thank you, everyone, and goodbye.