Durr Ag Spon Adr

Welcome to the DUR conference call. Dr. Jochen Weihrauch, CEO, and Dietmar Heinrich, CFO of DUR-AG, will present the DUR Group's figures for the first quarter of 2023, followed by the Q&A session. I will now hand you over to Adriel Schaller, Head of Investor Relations of DUR-AG. Please go ahead.

Thank you, Sergei, for the introduction. Ladies and gentlemen, good afternoon and good morning to those of you in the U.S., Welcome, everybody, to our Q1 earnings conference call. With me on the call today are our CEO, Jochen Weihrauch, and our CFO, Dietmar Heinrich. They will present the results of the first quarter, as well as the outlook, and we'll be happy to answer your questions afterwards. As always, our earnings presentation is available on our investor relations webpages, and we assume that you have it in front of you. Please be aware of our disclaimer regarding forward-looking statements on slide two. And now it's my pleasure to hand over to our CEO, Jochen.

Please, go ahead. Thank you, Andreas, for the short introduction and a warm welcome also from my side to all participants on this call. As usual, I will start with a review of our performance in Q1. After that, I will briefly comment on the performance of our divisions before Dietmar will go into more details regarding the financials. At the end, we will have a look at the guidance for 2023 before we enter our Q&A session. The highlights of Q1 are on slide four. After the record order intake for the full year 2022, we achieved a new quarterly record in Q1 2023 with just under 1.5 billion euros. This was driven by several factors. First of all, we received large orders for automotive and immobility production equipment. The demand from OEMs to refurbish capacities is strong and newcomers are expanding their capacities. Order intake for environmental technology has increased significantly in North America as investments are being done for industrial infrastructure. In addition, we received the first order for solvent recovery system for battery production in the USA. Last but not least, the order intake of HOMAG recovered after week Q4 of 2022. As a result, the order backlog grew to 4.4 billion euros, which is a new record level, too. The composition of the backlog is shifting more towards automotive and environmental. The backlog at HOMAG is declining, but coming from a very high level. Sales revenues are up 12% year-on-year to more than 1 billion euros. The book-to-bill ratio stands at 1.44. EBIT before extraordinary effects reached 42 million euros, and the related margin was 4.1%. Q1 is seasonally the slowest quarter in terms of earnings. Compared to the first quarter of last year, Profitability was impacted by a lower service share and the German inflation compensation payment for tariff employees that was done in January. In addition, last year's Q1 benefited from lower material costs as we could still work from stock that was purchased in 2021. We expect margins to improve in the coming quarters as projects with better prices or higher margin backlog are executed. Free cash flow was solid in Q1, supported by the strong order intake and corresponding prepayments. Based on the results of the first quarter, we confirm our outlook for 2023. On slide five, we see the key financial indicators for Q1. Order intake increased by 5% compared to the old record level achieved in Q1 2022. Sales revenues grew by 12%. Both order intake and sales revenues include small negative foreign exchange rate effects that were not relevant. EBIT before extraordinary effects dropped by 6%, and the margin declined from 4.9 to 4.1%. I already explained the reasons for the decline in the highlights. Net income was lower by 22%. The larger decline is due to the fact that last year, we had a positive extraordinary effect of roughly 5 million euros related to legal case at Hikuma that was decided in our favor. Finally, free cash flow was solid at 44 million euros. Last year, we had an extraordinarily high cash flow, reflecting lower inventories and high prepayments. With the 44 million euros in Q1, we are well on track to reach the full year guidance. Let's look at the order intake on slide six. We already mentioned some timing effects when discussing the lower order intake in Q4 of last year. Some automotive orders moved and were realized in Q1. Customers of Hallmark were very cautious in Q4 due to the uncertainties around the potential recession. Sentiment has stabilized and order intake grew compared with Q4, however, compared to last year's record figures, it stood at a lower level. On the margin side, we can see a clearly positive development in order intake with improved margins, especially for services. On slide seven, we see the geographical distribution of order intake. We received large automotive orders in Germany and the rest of Europe, as well as in the US. The declines you see in China and North America are due to a base effect. Order intake was very strong in both regions in Q1 of last year. Demand in the rest of Asia was mainly driven by India, where we received the larger automotive-related order. All in all, we had a strong start for order intake, and we clearly benefit from our global setup. We would typically show a slide on sustainability at this stage of our presentation, but we have shifted that to Ditmar's sections when he will talk about the green shul shine that was issued in April. Our sustainability report will be published in June, and I will present some highlights, some of the highlights to you during our half-year earnings call. Now, let's have a look at the divisional development. We start with paint and final assembly systems on slide nine. order intake reached a new record level with more than 600 million euros. This was driven by large orders in Europe, China, and North America, and the pipeline continues to look strong. Sales revenues came from a low previous year level and grew by 16%, but still have upside potential when looking at the full year guidance. A lot of projects are currently in an early phase, and we expect revenue generation to increase over the coming quarters. Projects in an early phase are also part of the reason why the EBIT margin before extraordinary effects was still muted into one. In addition, the service share was low, but the order intake for service looks quite strong, which should support the coming quarters. Backlog margins further improved. All in all, we are on a very good track based on strong demand and improving order backlog margins. Let's turn to application technology on slide 10. Similar picture here. Order intake reached a new record of well above 200 million. Revenues grew at a comparable pace, like at PFS, and the service share temporarily declined after a strong Q4. EBIT margin before extraordinary effects declined due to weaker service share, but in absolute terms, EBIT showed a slight growth. In a nutshell, Also at APT, we have seen a seasonally weak start that was impacted and that is valid for all divisions by the inflation compensation payment in January. However, demand is strong for equipment and service, and we expect a solid improvement going forward. Next is clean technology systems on slide 11. We experienced high demand in Q1, especially driven by orders for air purification technologies. We also received the first order for solvent recovery equipment for battery production in North America. Germany and the U.S. were the main contributors to revenue growth in Q1. Service sales were growing stronger than equipment sales. Margins improved year on year as higher material costs are now better compensated by price increases. Still, there is upside potential. At the moment, some project delays and temporarily higher R&D costs due to our investment into battery production technology have an impact on the margin level. With strong demand and a focus on solid project execution, we are in a good way to improve results over the next quarters. On slide 12, we can see the summary of developments at the measuring and process systems divisions. Order intake was close to the high level of the prior year. Demand was driven by Europe and US, while the start in China was slow. Sales revenues recover, but are still impacted by restrained availability of electronic components. The procurement processes have been accelerated to further improve the situation. The EBIT margin came down a bit due to a temporary lower service share. All in all, we see a very solid demand environment and expect revenues and margins to continue to recover. Last but not least, let's take a look at HOMAC on slide 13. Water intake reached 353 million euros, which is an improvement compared with the 288 million euros of Q4 of last year. The comparison with the first quarter 2022, of course, displays a major decrease given the extremely high record order level back then. Demand for new equipment and services was still low in China and Europe. We look forward to the trade fair Ligna that will start on May 15th at Hannover in Germany. It is the largest trade fair for woodworking equipment in the world. We'll present our latest machines and systems and talk with customers about our ideas for the next innovations. At the end of the zero COVID policy, we expect the Chinese market to pick up during the coming months. Revenues remained at about the high level of the past quarters of around 400 million euros. Compared with Q1 2022, EBIT grew in absolute terms while the margin before extraordinary effects came down slightly. This was mainly due to a lower service share in revenues and higher R&D costs as we were preparing to present new equipment at the LIGNA trade fair. After a solid start into the year, we expect margin improvements over the coming quarters. At the same time, we're carefully observing the development of demand and work on improving the flexibility in engineering and production between furniture and wooden construction. Now let's move to the service business on slide 14. The first quarter, service sales were just about at the same level of last year. Due to the overall higher revenue level, the service share of revenue came down by three percentage points year on year and reached 28%, like in the last two quarters. Service margins were better than last year, and the order intake for service looks quite strong. mainly driven by automotive. At HOMAG, we still see upside with respect to service orders. And now, Dietmar, hand over to you for the financials. Thank you, Jochen, and a warm welcome to everybody also from my side. I start with slide 16. In the first quarter, we saw a strong order intake, revenue growth in line with the guidance, still muted margin development, and a solid free cash flow. Let's have a look at the financial details on the next slide. On slide 17, we can see the revenue development over the last five quarters. You can see the typical seasonal development, which is very well visible when you look at 2022 with a weaker Q1 and a strong finish in Q4, when many projects typically come to an end. Q1 this year reflects still some constraints from the supply chain and a relatively low service share. Both should improve as we go forward. Regarding the geographical contribution, we can see that the Americas gained share, which is not surprising as auto intake has improved a lot during last year. China and Europe gave away a bit of share. The overall distribution reflects a solid geographical diversification. Let's move to profitability to EBIT on slide 18. Again, you can see the seasonal development in 2022. However, with a dip in Q2, mainly due to the lockdowns in China. This year, the Q1 EBIT before extraordinaries came in below last year. Jochen already mentioned the most important factors. a lower service share compared with last year, a higher material cost level as we could still consume cheaper material bought in 2021 in the first quarter of 2022, and the inflation adjustment payments in Germany that were done in January. In addition, we had higher overhead expenses due to sales commissions and research and development spendings. However, sales growth outpaced the overhead cost increase. We expect earnings momentum to improve going forward as we will increasingly execute higher margin projects from the backlog. Nevertheless, we will stay vigilant regarding the demand development, especially at HOMAC, and have prepared precautionary measures in case that demand turns out to be lower than expected. On slide 19, we can see the free cash flow development. Last year, we had a very strong contribution from net worth and capital improvements to free cash flow in Q1. This year, the net working capital improvement was much lower and as a result, we see a negative contribution in the bridge. This is somewhat compensated by a higher level of provision that is included in the other line. All in all, we had a solid start into the year and we will continue to focus on a disciplined management of net working capital and CapEx going forward. The latest developments of networking capital in more detail can be seen on slide 20. Networking capital declined slightly and reached €407 million at the end of Q1 2023. On one side, inventories continue to increase, but the rate has come down a lot, and we expect that we have seen the peak in this quarter. On the other side, contract liabilities also grew due to the strong order intake. However, for the rest of the year, we should expect a reduction as order levels will normalize and projects will be executed, meaning that prepayments will be consumed to a larger extent. Days working capital were, once again, better than our target range of between 40 and 50 days. So you can be assured networking capital management will remain high on the agenda in 2023, as we seek to partly compensate a lower level of prepayments expected with lower inventory levels. On slide 21, we can see the positive impact of the free cash flow on our net financial status. Net debt declined to €4 million at the end of Q1 2023. This includes €92 million of leasing liability, so leverage stands at about zero. We are actually very pleased with our solid balance sheet. Nevertheless, we are prudent with our financing and approach and prefer to get prepared early for future financing needs. As a consequence, we issued, as you can see on page 22, a €300 million green shield shine last month, and I would like to mention some of the details on this slide. The proceeds are earmarked for sustainable product innovations and climate-friendly investments. for example, into additional photovoltaic systems and modern low-energy buildings. We issued tranches with fixed and variable coupons and maturities of four, five, and seven years. By that, the volume-weighted average duration of our financing instruments was increased by about a year. The average coupon came in at 4.76%. This is higher than the 2% we reported in December 21, when we issued our last Joule Chime. But I hope you agree that the interest rate environment has changed quite a bit since then. The coupon is tied to our sustainability rating at ISS. In order to stay with the agreed coupon, we need to achieve and maintain a prime status at ISS from 2025. Proceeds were collected on the 20th of April, and I will show you the updated maturity profile in a second. For us, the green should shine was a great success. Demand was very high, and this is best proof that our sustainable finance framework meets the requirements of the market. And now let's have a look at our liquidity headroom on slide 23. We show this on a pro forma basis, including the effect of the 300 million Euro green Schulzstein, but also including the repayment of a 50 million Euro maturity in April. Available funds amount to 1.65 billion Euro. The next financial instruments will be maturing in January 2024. On the right side, you can see the timing of the new maturities of the green Schulzstein. The profile looks nicely balanced over the next year, and as such, we feel very comfortable with our liquidity headroom, which leaves us flexibility to further grow our business. With this view from the financial side, I'd like to hand back to Jochen for the outlook. Thank you very much, Dietmar. Now let's turn to the outlook. On slide 25, we can see the fundamental demand drivers for our business. These have not changed since the last presentation, but we keep them in here as a reminder that demand for just technologies and services is driven by some fundamental trends that we believe are quite resilient. In detail, these trends include the decarbonization of production, the transformation towards immobility, and sustainable construction using wood, the automation of production processes, and the further tightening of emissions standards. All these trends should provide a solid support of our business over the next years. This does not mean that our business will not show any demand cycles anymore. This will still be the case and can be seen in 2023 when we expect a lower demand from the furniture industry. But the swings in order intake should be less pronounced for the group as the dynamics of different business areas balance each other. We believe that we are well positioned with our leading and resource efficient technologies to supply attractive solutions to industry and craftsmanship. On slide 26, we can see the expected growth rate of battery electric vehicle production volumes over the next years. More and more new models are coming to the market Technologies are getting better and the prices are coming down. This should attract additional buyers and continue to spur demand. Let's look on our guidance for 2023 on slide 27. We confirm our targets for 2023. After the first quarter, it's still too early to give more indications where we will end up within these ranges. A lot will depend on further demand development in the coming quarters. On slide 28, we can see the breakdown of the guidance by divisions. There is also no change to these targets. Let me also remind you of our midterm strategy for profitable growth on slide 29. We believe that we can grow with a compound average growth rate of 5% to 6% and reach more than €6 billion of revenues by 2030. We target an EBIT margin before extraordinary effects of at least 8% and a ROSI of at least 25% by 2024 and thereafter. The strategic levers are defined and we focus on execution. Now, let's summarize on slide 31. We achieved a new quarterly record for order intake in Q1, driven by strong automotive demand. Revenue growth is on track. The EBIT margin was impacted by business mix and inflation compensation payments in Germany. Nevertheless, we delivered a solid free cash flow due to strong prepayments. We confirm our guidance for 2023 and expect margins to improve over the coming quarters. Thank you very much for your attention. Now we're happy to answer any questions you might have.

Thank you, sir. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered and you would like to be removed, please press star two. Again, please press star one to ask a question. And our first question comes from Marianne Bullock from Bank of America. Please go ahead. Your line is open.

Thank you very much. Good afternoon, everybody. So I was just wondering if you could come back on China and give a bit more details on the development that you've seen throughout the quarters and maybe as well in April and what you're expecting for the rest of the year.

Marianne, this is Jean. Could you just repeat the very beginning of the first sentence? I didn't get it.

Oh, sorry. Can you hear me okay now? Is it better?

Now it's good, yes.

Okay, sorry. I was just wondering if you could give a bit more details on China and the development you've seen throughout the quarter and in April and going forward for this year.

Yeah, okay. Now I got China. Yeah, we are quite confident for China. Overall, we... We had a little bit of a weaker start. We assume the business to pick up more also on the woodworking side as we have a good pipeline. Overall, in automotive, we expect more business coming in the next quarters. So I would say overall for the year, if you take the year in total, we remain quite positive.

Okay, thank you. And a follow-up, if I may. I saw that the research and development cost in OMAG and in clean technology were quite high and impacting the margin. Is this the new normal, or are you expecting it to go down? And could you give maybe a bit more color on where you're spending exactly?

Yeah, thanks for asking. At HOMAG, it is to a large extent driven by the trade show LIGNAH, as this is a trade show that happens every, what is it, three years? Every other? No, you caught me. I think every other year during the pandemic was probably different. So we have more spending also on the R&D side in order to present the innovations as I was mentioning during the speech. So it's not the new normal. Also at CTS, we talked about this for a little while, On the battery side, we currently have, in percentage of sales, still higher spending for R&D around our solutions in lithium-ion battery. Also there, at least in percent of sales, it's not the new norm.

Okay. Okay, very clear. Thank you very much.

Pasha?

Thank you. And as a reminder, to ask a question, please signal by pressing star one. Now, our next question comes from Sven Weiser, the buyer from UBS. Sven, please go ahead. Your line is open.

Yeah, good afternoon, gentlemen, and thanks for taking my questions. The first one is actually with regards to order intake. I was a little bit surprised that you didn't at least qualify the range a little bit after such a strong first quarter and the pipeline being so strong, maybe no further deterioration on the HOMAC side also with the trade show. So what's different maybe compared to the previous years where maybe at the stage of Q1 we might have seen some qualification at least?

Thanks, Sven, for the question. I'm just wondering whether we had narrowed after Q1 before In order intake, at least for this year, we're saying we stick to the guidance as, you know, there's a few larger orders out there. And we had, especially on the automotive side, pretty good larger orders also in Q1. Even though we have still a very good pipeline, I think it's too early to to say, you know, to which end this might go more. So I think we might have a better grip after the half-year figures. At this point, maybe still a bit too uncertain. Now we're seeing a recovery or stabilization at HOMAG. Let's see how this continues after LIGNA. We have a good pipeline in automotive, but sometimes timing is relevant. All in all, we're confident with the guidance, but I would not be very confident in narrowing it down at this point.

Well, that's fair. And regarding Wigner, can you just remind me, is that typically also a big ordering show? So should we see a tangible impact sequentially on the Hallmark order intake from the show?

There is typically some impact. How big it is, difficult to say at this point. Here we will have to see how the new normal looks after COVID, whether customers come back to the fact to say, look, either I wait for formal signature at Ligna or I go to Ligna to see is there any new innovation coming like we had seen this pattern in the past. Still hard to say. Nevertheless, we're quite optimistic for Ligna. How much the extra income will be from there needs to be seen.

Okay. And then just final question on the order intake before I have one more on the service side. You said you were more selective on the automotive side and you continue to be selective. When you look at the order intake margins that you receive now, Are they consistent where you want to be, also then to be in line with your midterm targets, or is there still some way to go?

No, they are pretty in line with our midterm targets. Even though the order volume looks good, you might think, have they been selective enough? And I can assure you we have.

It's good to hear. And just the very final one on the service. I'm not sure if you mentioned it in the prepared remarks, but you mentioned the weakness relative was probably roundabout stable in absolute terms. Why was it relatively soft on the service side across the board? I mean, was it a tough comp or why didn't service grow as much in Q1 this time?

It's, you know, honestly, we don't have a perfect answer to that. We had a pretty good last quarter last year. Maybe, you know, sometimes timing also plays a role. I wouldn't, you know, there is not really a strong conclusion we can take from that. What we see, though, is Looking forward, we expect the service business or the share to stabilize compared to our equipment sales.

Okay, that's it. Thank you very much. That's it from my side. Thank you, Sven.

Thank you, Sven. And ladies and gentlemen, as a reminder, to ask a question, please signal by pressing star 1. We will pause for just a moment to allow you to signal. And we have a question from Christian Kors from Warburg Research. Please go ahead. Your line is open.

Yes, good afternoon. One question left for me. You mentioned in your remarks the inflation compensation bonus you paid to your employees. Can you maybe quantify the impact it had on the first quarter? Can you provide a specific amount?

Yeah, this was around 6 to 7 million euros.

Okay, but then it is also fair to assume without this special payment and also with a more normalized R&D expense line, your operating profit would have developed more or less in line with your top line. Is that the right conclusion?

That's right, and this gives us the confidence actually to achieve the guidance for this year.

Okay, understood. Thank you.

Thank you, Christian.

Thank you, and it seems there are currently none of the questions in the queue. As a final reminder, to ask a question, please signal by pressing star 1. We'll pause for another moment to allow you to signal. And it seems we have a follow-up question from Marianne Boulot from Bank of America. Please go ahead.

Yes, thank you very much for the follow-up. I was just wondering, I think it's on the slide you mentioned some delays in CTS projects. I was wondering what's driving the delay, and does it mean that there is a risk of orders cancellations, or is it just one project that gets delayed?

Thanks, Marianne. Where we are facing current delays in decision-making and projects is in the chemical industry, especially in Europe. So everywhere where energy prices have significantly risen, Customers, in some cases, are revisiting their investment plans. That's one area of CTS, and it's mainly focused on Europe, especially Germany. So we're not seeing, I'm just wondering, real cancellations. We're seeing delays in decision-making of customers who have invested in phase one of a project now wondering whether at all, or with the delay, they invest in phase two, and that very much relates to the chemical industry here.

Okay, okay, that's very clear. And if I may ask another question, on the pen and final assembly, the impact from early stage project on the margin, do you expect this to continue as well in Q2, or is it now behind you?

I expect that to normalize already in Q2. But if you look traditionally at the earnings profile, especially of PFS, you will see that in many cases we're a little bit backloaded. So Q3 and then finally Q4. And I would expect a similar pattern for this year.

Okay. Thank you very much.

Mm-hmm.

Thank you. And we have a question from Peter Rothenbacher from Baader Bank AG. Please go ahead.

Yes, hello, gentlemen. I have a question on the financial results. So you mentioned in the report that in the first quarter there was some burden related to the HOMAC profit transfer agreement. Can you give here some details? What amount was this? And secondly, with the new green bond, what is your expectation then for the financial result in 2023 and going forward? I think with the higher interest rates, this will likely have a negative impact compared to 2022.

Peter, let's start with the financial result. This was in conjunction with the assessment on the interest rate for the – Guaranteed dividend that we are paying in the compensation when finally the matter is being handled by the court. The amount was between 2 to 3 million euro.

And this will not occur anymore?

We settled actually something that has been outstanding from the past and was being caused by the increase in the interest rate that has to be applied on this as well. So what's being caused actually by the increase overall of the interest rates in the market, and that is applicable as well to this compensation that needs to be paid when then finally the transaction in face of the court is being settled. And we increase the provision accordingly.

Okay. And coming then to the green bond and then the outlook for the financial results.

Basically, first of all, yes, on one side, the interest rate is significantly higher. The coupon, as you can see on the other side, we have the interest rate environment as well when we are actually doing our asset management allocation. So what we see finally is basically... Yeah, the markup that we paid in regard to the green bond, which is in the range of around 170 base points.

And can you give a calculation what amount of net interest results we should expect now for 2023 and 2024? Is it then around minus 20 million or even higher?

Andreas is just looking up. The increase from the bond is around 4 to 5 million euro per year, actually. But it's also from our point of view, and we have been very successful with the transaction. It caused much more interest than we expected. We still see some uncertainty in the overall market coming from the banking situation that we had in the US that we could see also here in some European cases. So we actually prefer to be a bit more on the cautious side and to have a bit more cash position right now.

And we said also that the tax rate was higher due to this HOMAC effect. For the full year, is it still fair to assume 30% tax rate or will it be then higher?

No, that's fair to assume the 30% for the full year. When we see also the 2 to 3 million impact compared to the whole year, it's not significant in regard to the 30%.

Okay, thank you. And our next question comes from Hugo Mas from Sycamore. Please go ahead.

Yes, hello. Thank you for taking my question. My first one is regarding your free cash flow. So you released a very strong free cash flow in Q1. So could you help me to understand why do you keep the low hand of your guidance, given it means basically no free cash flow for the rest of the year? So could you tell me a bit better how we should see free cash flow in the coming quarters, please?

Yeah, it was an outstanding quarter in regard to the order intake. And as such, the initial payments have been very high. And we expect then also more, let's say, not such an outstanding result quarter by quarter to be repeated towards the year end. And that's why we expect lower initial payments on one side, when we expect also on the other side, consumption of the existing contract liability so that at the very end, the cash position and the cash will be influenced by this. So that's why we're sticking with the 50 to 100 million euro target, but we are also confident that we will achieve this for the full year.

Okay, very clear. Then on the inventory, you stated that you wanted to keep the inventory level at the same level than Q422. Is it correct?

Sorry, I was trying to interrupt briefly. Could you please repeat?

Yes, sorry. Now, on the inventory level, should we expect to keep the level of inventory at the same level than Q1 2020, than this quarter, basically? Or do you expect to further reduce this inventory level over the course of this year, please?

We expect a reduction over the course of the year. We expect, actually, that the inventory levels have peaked in the first quarter, but we do see a stabilization in the supply chain market. As such, we are reviewing the safety stock levels. We are also looking at what is in the pipeline, what we ordered, and we are looking to what extent we can extend the delivery to us. And we are also looking into where we can further reduce the inventories in line with optimizing the inventory allocation. So I clearly expect that the levels will go down in the remainder of this year.

Okay, perfect. Thank you. And our next question comes from Heuger Schmidt from Diesel Bank. Please go ahead.

Hi, good afternoon, everyone. Thanks for taking my question here. Yeah, the low margin projects still burden the profitability in paint and final assembly in the first quarter. How much longer will it take until the lower margin contracts are fading out completely? And then also in one of your earlier answers, you were not able to get more specific for the order intake expectation and to narrow your guidance. Are customers getting more hesitant or do you see an increasing level of competition for potential orders in your pipelines?

Thanks for the question on the order intake. No, we don't see at this point a softening of the pipeline. We have booked orders in the first quarter. There was, for example, one order that was around 200 million as one example. It's sometimes difficult to time when we get those orders. And there is more orders like this in the pipeline for the actual year. And sometimes it's hard to guess by one or two months when those orders come in. This is where overall it makes us confident on the one hand. On the other hand, it's very difficult to say even by 100 million, where we will end up at year end. Because either we get the order, maybe one, either in December or in January, that makes a big difference. And this is why overall, we are still confident, especially on the automotive side. However, too early to narrow down our guidance. And you were also asking about The lower margin orders. There is still one or two in the pipeline which we are executing, but compared to a year ago, a much lesser amount of projects. The impact in the first quarter was more due to the fact that even newer orders with higher margin were still in an early phase in engineering. And we are typically... relatively cautious in the beginning of a project. And of course, there is not, during an engineering phase, there's not so much POC, positive POC coming. That's the reason why Q1 was expected. This will be better in Q2, better in, and then again, better in Q3 and better in Q4. But there is very limited amount of flow margin volume still in the books of PFS.

Okay, excellent.

Thank you. Thank you. And since this was our last question in the queue today, I'd like to hand the call back over to our host for any additional or closing remarks.

Thank you very much, Serge, and thank you everybody for attending and for asking the questions. We will have some conferences and roadshows coming up during the next week, a month, and maybe have the opportunity to also speak then in person. And we look forward to give you an update then in August with the half-year figures. Have a good day, and thanks a lot for your participation.

Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.