Kongsberg Automotive New

Good morning, everyone, and welcome to KA's Q4 earnings call presentation. My name is Mats Langård, responsible for investor relation. With me today, I have KA's president and CEO, Mr. Jørg Bochheim, and our CFO, Mr. Frank Hefter.

Welcome you all to the Q4 2022 earnings poll. And I would like to have a look with you on the agenda first. So I would like to give you together with Frank an overview about our results, starting with the executive summary. going via the market update to the financial figures. Would like to give you a little bit more insight about our shift gear performance. And then I would like to move to the outlook and then following by the Q&A session. So Mats, let's go to the executive summary and I would like to start with our performance in the Q4. So the revenue from continuing operations amounted to 215.3 million euros in the quarter for 2022. That's actually 9.6 million or plus 4.7% higher than last year's quarter for. This includes positive currency translation effects of roughly 6.6 million euro. And the moderate growth in Q4 was mainly driven by the above market performance, in particular in the commercial vehicle market in all regions, but as well as the passenger car market in Europe. but however, was partially offset by a significant decline in the Chinese passenger car market, as everybody speared with the open up of the COVID restrictions. In addition to that, this quarter revenues did not include the revenue of the divested Canada power sport business anymore, and that's a consequence of the complete sales transaction to VRP executed by end of Q3. Looking on the adjusted EBIT, this amounted to a solid €11 million, exceeding Q4 2021 by €2.8 million or 25%, and as well here without the divested Canada Power Sports business. And here I would like to point out that some special effects uh headed in as we were benefiting certainly from customer price increases booked in q4 2022 in particular in our powertrain and chassis division while on the other side we booked additional provisions for customs claims in north america which we reported already in q3 So the lifetime revenue business wins in the fourth quarter was very strong. It came in with 224.3 compared to 61 million in Q4 2021. Or if you're going to look into the annualized new business wins, we're talking about 73 versus the 28 of last year. So a strong booking, which is encouraging towards the future growth trend. A very good result as well in the free cash flow on a level of 84.5 million euro fueled by the Canadian BRP power spot divestment. Very good news as well. The adjusted gearing ratio in the LTM basis for continuing operations improved to 0.8 compared to 4.2 in Q4 2021. And we will elaborate on that on the financial figures a little bit more. That's a very good figure. And it's a result from all three recent divestments. So let's go, Mats, to the next slide. And this is giving us an outlook or a view on the 2022 full year performance. And here I would like to point out, despite ongoing multiple challenges in the industry, which is continuously going through, KR could achieve respectful results with 905.6 million on revenue, which is an 8.9 percentage growth compared to the previous year. And if you're looking in the EBIT performance of 35.6 million, I'm glad to share that with both of the figures, the company and management delivered on the revised guidance. So the company and the employers did a great job during this rough times. And therefore, I would like to take here the opportunity as well to give my thanks to all colleagues who generated value each day for Kongsberg Automotive. Even more, based on the domestic, we couldn't significantly deliver our company reflected by the high amount of cash flow, net interest bearing and a healthy leverage ratio, which is important for a company's credit rating and security. So good news on this as well. When it comes to the new business wins, we mounted up for the entire year of 760 million respective lifetime revenue, which is 81 million more than the previous year. But with Q4, back on a very encouraging book to build of above one. So looking into... The next slide, and this is giving us a typical glance into our segments, into our major two segments of powertrain and chassis and speciality products. Here we're going to see the 8.9% overall growth as well as the new business wins were in this year majorly fueled by P&C. While the SPP comes out with a very solid performance on revenue, considering the fact, again, that the Q4 2021, in comparison, still included power sports revenue, which isn't considered in the Q4 2022 number anymore. Both segments had a great Q4 new order intake, so which is actually you see that on the new business wins columns on both sides, which actually mounted is three times higher than in the previous year, equal quarter. So that's a very good news. When we're looking into the, let's say, sustainable profit or EBIT margin, then we see here we need to point out two special effects. You see a great 7.8% on the left side at the powertrain division. As I've mentioned here, we're heading in some growth. special effects, and this was the price increases which we got in by our supporting customers, which was valued of 6.7 million compared to Q3 2022. And we had some release of smaller provisions in a magnitude of 3.4 million, which offsetted some time negative effects majorly on the supplier side. So the shift gear one performance negotiations here with our supporting customer base, we had a great success, which we booked partly into the Q4 result. And that's why you see here in 7.8% performance. If we're looking into a normalized performance here in P&C, it's compared to Q3 as well normalized performance. getting better, and we're seeing here a good trend towards the next quarters. When it comes to the specialty products, we saw actually outstanding performance in Q3. We had dropped in Q4 as well here to give you a little bit more flavor into that. We had in Q3 certainly positive effects from customer reimbursements. So price increases, reimbursement for raw material price, This came in a month earlier in SPP. This is what you see now in powertrain and chassis, but that's what we booked into Q3 already as it came in earlier. And we certainly had some positive variances here in Q3. In Q4, the return had some negative effects when it came to inventory cleanups. As you may remember, the industry is pushing out certain inventory levels, and we took here in Q4 the opportunity to clean up some inventory in the specialty product segment. So overall, certainly, we will see a more stable outlook towards the next quarters. But the industry, I have to admit, is still very volatile. And we will report about special effects as you are well known and used to it over the next quarterly revenues. Looking a little bit in the next page, that's in the market update. And when it comes to the Q4 car production performance, we saw a 1.7% increase in the quarter of four. So compare year by year in the passenger vehicle area. So 1.7% increase, which is a very, let's say, stable on flat number. And we saw even a decline of 6% in the commercial vehicle market. And the China market was here the major differentiator as the Corona open up politics significantly slowed down industrial activities within December. But we saw that as well continuing in January and February, combined with the Chinese New Year season. So that has slowed down. strongly the global commercial vehicle production as China is at the end of the day here traditionally the engine when it comes to growth. Yeah looking into the next slide and here we'll see the current ongoing global market challenges so energy prices coming off highs global inflation still on a high level So, as well here, the KA, the group, has been exposed to market fluctuation in the price and availability of mainly the following raw materials, the steel, copper, zinc, aluminum, and resins, polymer resins, which we are using in particular in our FCS area. So, sudden fluctuations in the market conditions could therefore always impact the group's financial positions, revenues, but as well profits and cash flow. And raw material sourcing costs are also exposed to customs and duties. So in 2022, prices of the above-mentioned raw material as well as electronic components have reached new all-time high levels, which together with the rising transportation costs created an insecure situation. We know that and we reported about that, especially for all the overseas deliveries. Komsberg certainly, and I need to point that out, applied a variety of countermeasures here, ranging from commercial negotiations, which we reported, and I will elaborate on that a little bit later, to, let's say, implementation of raw material price clauses in contracts. We had launch of benchmarking RFQs. We did resourcing, nearshoring activities, and sourcing on lower costs. But we're looking as well to adjust our supply base towards the macroeconomical and geopolitical circumstances in order to increase our independency and being more flexible and reacting better in future on those crises. But summing it up, we see the energy price and inflation still ongoing. We saw that in Q4. We saw that we're going to see the effect as well in Q1. We see still certain semiconductor shortage. In general, it's getting better, as reported as well in Q3. But we see still volatile fluctuations here when it comes to certain specific semiconductors. There, it's really a limited capacity versus an overarching demand. And if it comes to supply chain, what we saw as well, but we could manage that. We saw the first companies did their business model testing and we saw as well the first bankruptcies here. Looking a little bit into macroeconomic performance here, so the overall on the next slide, the overall performance, how Kongsberg performed in the global perspective in the passenger vehicle, as you know this slide, and the commercial vehicle, but as well as a quick look in others, we see certainly that the commercial vehicle market in Europe has increased. Sales to Volvo in particular or Scandinavian customers has increased by 12.4%. So we see here a good performance when it comes to the commercial vehicle in Europe. We see in America as well certain increase when it comes to our commercial vehicle segment. So the commercial vehicle segment here outperformed in Europe, but as well in America our performance. When it comes to the passenger vehicle, we see here A huge drop continuously in the particular in the European market for Kongsberg. That's just simply the demand for manual shifters, which is a big portion in particular in our P&C business area, is going to get reduced with the transformation. That's actually nothing new or surprising for us. But you see it now as well in the figures. But as I said in the return, this could be compensated by outperforming commercial vehicles. And that's underlying as well our strategic pathway to moving more and more out of passenger vehicles in certain areas in particular and moving more to commercial vehicles. So on the highway and off highway. So, this trend you see here, when you're looking on the market, versus Comspect performance is certainly confirming again, is going to be the right choice. Looking then on the next slide, and this is looking forward here, our new business wind performance. And in particular, the green line is here, the line which we should look into it. So as reported in the opening already, good bookings in the fourth quarter, in particular in P&C segments, on-highway business unit, and here in North America has raised the book to build back to our clear growth path. So we are here on the 1.0 or above 1.0, and with our newly centralized sales and business development organization, we feel to laid out the right pathway for the exciting new business wins on our way forward. So this is looking encouraging in particular towards the outlook over the next quarters and years. And I would like to resist to hand over to our financial update. And I would like to hand over to Frank. All yours.

Thank you very much, Jörg. Also, welcome from my side. I want to. Give you more details on the financials, starting with the revenue development. Again, Q4 came in at 215 million without the contribution from BRP sales from Canada. This is obviously the highest number in the last four years. The contribution of BRP sales in 2021 Q4 was around 16 million, so a comparable base would be 190 million revenues, not 206. The increase was supported by positive currency development in the amount of 6.6 million, notably less than the quarters before as Certain currencies now have changed in the development, and we will also see this going forward. The biggest uplift on the quarter-to-quarter comparison came from more than 20 million of achieved price increases in the quarter, of which 75% are sustainable. The underlying volume was thus in line with prior year. When we look at the quarterly adjusted EBIT development, we came in at 11 million, also here, excluding any contribution from BRP sales in Canada. The margin was 5.1% for Q4. And you might remember in the last Q3 earnings call, we indicated a quarterly margin target of around 7%, which we could not achieve as we had on one hand the additional warranty customs accruals that we built, as well as negative outcome of our yearly inventory counts, especially in the fluid transfer systems business. But also here, corrective measures have been implemented, so this should be a one-time impact. When we look at the earnings bridges, then it's good to note that both operating segments have contributed positively In the quarter-to-quarter comparison, P&C very strong with 2.5 million on the back of the significant price increases, but also SPP was able to nominally increase their adjusted EBIT despite the negative one-time impacts. Smaller items than other and FX then led to the 11 million. On the net income side, Obviously, a significant impact in the quarter resulted from the divestiture of the Canadian manufacturing site to BRP, 30 million, including related taxes. We had some additional restructuring costs in the amount of 3.6 million that we accounted for and that are not part of the adjusted EBIT, but of the net profit. In Europe, we looked at the recent development of our driveline product programs and noted that despite our efforts to increase the prices to compensate for raw material increases, energy cost increases, we were not able to bring certain projects into profitable territory and were thus related. We were forced to account for onerous contracts and also impaired assets related, dedicated to these projects. Total amount, 3.2 million euros. Positive development on the interest side as we have reduced our bond, also the interest amount paid was reduced by 800,000. Other financial items also positive here as we are continuously increasing the share of excess cash that is generating interest. So this is also positively contributing in the quarter to the net profit. The currency development in made currencies like US dollar, RMB was unfavorable and led to currency loss of 8.4 million. Finally, the tax position, 5.7 million. Here also certain adjustments had been made, special adjustments, impairment in Switzerland. as the divestiture of the BRP plant resulted in the loss of a significant contributor to the Swiss principal model. And we therefore impaired goodwill for future losses in order to be conservative and not overstate the potential recovery of tax loss carry forwards. All in all, it resulted in a positive net income of 13.2 million, a 14 million increase versus the same quarter prior year. When we look at the cash flow, we also had a very strong quarter, obviously, again, majorly impacted by the divestiture of the Canadian plant, but also in the operating activities We saw 50 million positive cash flow, mainly driven by a significant decrease in net working capital. The investing activities include the proceeds of the asset sale to BRP in the amount of 63 million netted with investments in capex of 9.4 million. And the financing activities resulted in a cash outflow of 16.9 million, mainly attributable to the share buyback program in the amount of 9.4 million and payment of interest on the bond of 5 million. So in total, 74.5 million. Cash flow, if we were to exclude also the share buyback as a special item and a small repayment of a bank overdraft, then the free cash flow amounts to 84.5 million. When we look at the cash position at year end on a quarter to quarter development, we see again that the operating activities contributed 52.1 million mainly on the proceeds for inventory and other networking capital sold to BRP and only a small fraction still related to the discontinued operations business where we're still collecting receivables that remained with the company. On the investing activity side, again, the proceeds from the sale and the capex led to the 54 million contribution. And we had a true up on the sale of subsidiaries with a sub budget that added another 1.2 million to the cash flow. Financing activities, as mentioned, share buyback and bond main items. The FX effects I have mentioned as well already. So total balance at year end, cash wise, 212.9 million, very solid and very strong. When we look at the cash flow development on a yearly comparison, quarter four 2021 to quarter four 2022, then we see mainly the same big effects from the divestiture. We see as well that the total investing expenditure for CapEx amounted to less than 30 million. So we tightly managed the investment in our tangible assets. And for the full year, you can see on the year over year comparison, you can see that the FX effect is significantly smaller compared to the quarter three to quarter four comparison. It's actually a positive 3.8 million. When we look at our overall liquidity position, then we note that with almost 300 million, we are still in a very comfortable position. 230 million of cash. We still have the 25 million unutilized securitization facility and the undrawn rolling credit facility, revolving credit facility of 50 million. From last quarter, Obviously, the biggest contributors to this increased or strengthened cash position are again the change in total net working capital, the significant reduction, as well as the proceeds from the sale of the BRP business. When we take a final look at the key financial ratios, then we see a positive development in the adjusted gearing ratio that now amounts to minus 0.3, excluding IFRS 16, so basically debt-free. Taking IFRS 16 into account, we are at a very strong 0.8 at Q4 2022, coming from a 3.8 a year ago. So as we mentioned, we have significantly deleveraged the company. At the same time, the divestment above book value led to an increase in the equity so that the equity ratio was strengthened from 27.1% a year ago to currently 35.2%. On the right side, we see that the adjusted ROSI amounted to 4.4%, which is lower than a year ago, despite the fact that the capital employed was reduced by 140 million. Obviously, the lower earnings of the last 12 months also impacted by no contributions from BRP in the fourth quarter. resulted in a decrease of the ROSI. With this, I conclude and would like to hand back to Jörg for the shift gear update.

Many thanks, Frank, for sharing with us these, let's say, encouraging financial KPIs. And yeah, I would like to come to the shift gear update prior we are heading to the outlook session. And I would like to look here into our gear shift gear one, our in performance improvement program. So when it comes to this improvement program, shift gear one, our company's program to counter the negative market impacts, so KA's worldwide teams could once more deliver solid performance. So the company increased its cost saving initiatives further from 52 million Euro for the full year outlook reported in the last earnings call to grade 63 million Euro of today in the year end view. You see here as well, 60 million of the 63 million has been successfully ultimately implemented. So to judge this performance a little bit better, the Swissbee could fully offset supplier direct one-to-one material increase impacts and up to 87% of the total direct and indirect crisis-related impacts in summary. so allow me here many things as well to every single employees involved and we certainly will continue on this as a part of our company dna so with this much i'm heading over to the outlook session and here i would like to take the opportunity to summarize on a one page all the divestments which we successfully in our team effort executed in 2022 So overall, we divested business with a combined enterprise value of €316 million and turned that into net proceeds of almost €300 million. We took out here roughly €423 million revenue. And if you're going to look in, just to recap and recall again, we sold our and closed our divestment of our interior comfort system division on the left side. We sold that to Lear Corporation and closed this deal in February 28th. This is divested, let's say, core business, non-core business for KA. And we follow a clear trend in the industry of our seed customers for vertical integration. And we were glad to upgrade here our customers and took for us a non-core business and very investment incentive business out of our scope. With the sale of the light duty cable to SuperJet transaction, which we closed on 6th of April, just to recall again here, we took out here for us a certain kind of non-focused business anymore. And we were glad to divest that and give it in good hands of SuperJet. On the right side, we have the mentioned and already in the previous slides here stated divestment of our Canadian power spots planned to bombardier, to BRP. This wasn't divestment. which, let's say, was on strong request. I would like to re-emphasize again on strong request of our single customer. This plant was dedicated to one customer, to BRP, and BRP was on a course of vertical integrate this technology in order to execute their transformational plan towards electrification of their powertrain. So this was a pulled divestment of our customer and certainly we had to support that and we supported that and we could successfully close this in October 3rd of last year. So overall, flawless divestment. And with the next slide, I would like then here share two major items in our runway or pathway to transforming the company and these divestments just to prove the support of our runway to our vision to become a bigger player less in passenger vehicle more in commercial vehicles so on highway and off highway and certainly in the very prosperous industry area and you see this divestment has support in a certain extent you see that on the left side cake diagrams With these divestments, KA exposure to non-automotive business increased from 55% to 67%, so a clear confirmation of our targeted pathway to a more profitable and sustainable business. On the right side, another good KPI, and Frank elaborated on that already. We got our financial structure much more healthy, and we see net proceeds laid out in the slide before. We could significantly deleverage our company, and you see that we moved from a 3.8% net interest bearing debt per EBITDA to a 0.8, which is a very good and encouraging number. So with this, Mats, please head into the market forecast. So what is 2023 in the outlook bringing for us? So if we're going to look here on the global passenger car production in million units, so 2022, an 82 million euro global production. So the market expect here an increase when it comes to 2023 of 4%. So 3 million on a global perspective here. more units are targeted for the industry. And if you're going to look here, excluding China, which certainly provides a big portion, you see here as well, a 5% growth, so more and more in line, 4% with China in passenger vehicles and 5% excluding China. So that's certainly encouraging. So the growth and recovery is going to go on, but in a muted and still carefully way. When it comes to the commercial vehicle production, just to recall here again, it saw this significant drop from 2021 to 2022, which has been as well affected our results. If you're looking into 2023, we see here a 6% global increase. And if you compare that on the right side, excluding China, you see that all these goals coming majorly out of China. So the recovery of the market in China is going to be precise when it comes to commercial vehicle and the entire construction business. So we see the 6% on commercial vehicle, which is as well muted. And if you're going to see the 2023 figure, compare that to the 2021, there is still a way to walk. And the industry just expecting the commercial vehicle business being on a performance of 2021 towards 2025. So looking into the outlook slide in the next, so how does it looks like, what is our expected continued revenue and our EBIT grows when it comes to 2023? So here I would like to warm up the expectations by sharing, I mean, as mentioned, we've seen First signs and continuous signs of relaxing market conditions or supply conditions, but they are still very volatile and still the global inflation is still going to be at a high level as we could see just the recent announcement. So, and that's certainly to a certain extent affect KHA's profitability in continuously in the short term. So the market still, seeing signs of improvements, but stays tensioned and sensitive. And when it comes then to the QA situation, this is a very good news. We still have very healthy order books and we experienced increased customer interest for our most profitable products, which you could see in the new business wins. So the mid and long-term outlook is still positive. And we're certainly working here further to counter the market and external impacts by our shift gear program. But we're staying sensitive and we're staying careful here. And that led us as well to a guidance for 2023 to an revenue and an adjusted EBIT guidance of 880 to 900 million euros. Euro on revenue and the ABIT outlook of 25 to 30 million respectively. So looking into the next slide, to better value this guidance, I would like to share with you our 2022 revenue and EBI2 key numbers adjusted for divestment, in particular by the sale of the Canadian Power Sport plant to our customer. So taking that into account, we expect to grow from 817 million euro normalized revenue to 880 or respectively 900 million euro corridor in 2023, which is a 7.7% to 10.1%, if you want to be correctly here, as a gross number. And when it comes to EBIT from 21 million euro normalized, so 21 million euro normalized without the Canadian Power Sport plant business, which we had to divest to our customer, We are growing from a 21 million euro normalized EBIT in 2022 to 25 to 30 million euro. And this is a 19% to 43% increase on EBIT. So you can weigh that 7% to 10% growth on revenues versus a 19% to 43% growth on EBIT. And this is showing our runway towards, let's say, new restructuring of our company. So with this, I would like to go to another item. And this is certainly coming back to, as I've mentioned, the transformation of our company and looking always in opportunities, how we can generate additional shareholder value and structure the company and prepare the company for performance in the future. And therefore, KA, the management, together with the board of directors, has decided to initiate a dedicated strategic review of the company. So the aim is to unlock the full potential of the business beyond the current performance. So as mentioned, looking into the next level of development of the company. And yeah, this is as well, in my opinion, the clear right strategic move. So with this, we are at the end. Thank you very much. And Mats, I think you're going to take over and lead us to the Q&A.

Thank you very much, Jörg and Frank. We have some questions. And we can start with the first one. What do you mean with the statement in your recent release this year, K.A. and the board of directors had decided to launch a strategic review? I think you touched upon it, Jörg. Maybe you can just make a quick comment, additional comment.

Oh, for sure. As I said before, In our transformational process of the company, we did the divestment so far. As reported, we are having our performance improvement. But we're seeing as well that, let's say, the crisis and certain market circumstances are, let's say, slowing down our activities. So with a strategic review decided between the management and the board, we're looking now into how we can accelerate in certain extent our activities. strategic roadmap again. So that's meant with a strategic review to really look dedicated into the next level of development of our company in order to generate additional shareholder value.

Many thanks, Jörg. Another question. What can we say about our plans for further growth and M&A?

So we're certainly looking into growth and you see that and that's why I was so positively seeing and reporting always book to bill ratios above one. So this is clearly stating our growth perspective, but as well the capability of the company. confirming the capability of the company in continuous growth, which we need and which we are heading to. And it's showing us all the customer confidence in this company management and in each of every of our employees. When it comes to M&A, certainly M&A, as we reported always, is part of our strategic review. And this is certainly what we are now kicked off as a dedicated initiative, as reported before. So it's a holistic overall picture.

Many thanks. Frank, a question for you. In the current interest environment with increased interest rates, are KAs interest-bearing liabilities mainly based on floating or fixed?

Yeah, obviously, our biggest liability is the bond, and that is based on a fixed coupon, so no impact whatsoever. on that from a increasing interest and also the the rcf has a fixed percentage so at least in the short term no negative impact to expect and another question uh what are the plans uh for the loi with the swedish chassis autonomy

I mean, as reported, we are continuing with our close cooperation is just autonomy. We are, let's say, motivated and excited in their capabilities and in a combination of this, our strong skills in mechatronics, this could potentially be a good move. But as I stated, we are from both sides still in the evaluation phase. It's currently too early, what at the end of the day, this cooperation can develop on full impact. But certainly, I'm more than glad to keep each and everybody informed about this exciting opportunity.

Thanks. In 2022, KA opened two new sales offices. What are the expectations for new contracts in 2023 for those offices?

No, I mean, you're pointing out a very good item. We opened up our sales office in Korea But we as well opened up an office in Germany. So we are expanding. And as I said, in particular, due to the consolidation and centralizing of our sales activities, we're thinking we are able to boost our activities when it comes to market growth and company growth. So our expectations are this is high and we're seeing already in particular in the Asia-Pacific region, in particular in Korea, very good and encouraging new business wins. So we are pretty confident that this is paying off and we are encouraged to continue to expand our sales and business development network.

What are your plans for the capital structure given net leverage below one?

So short term, I would say we are opening opportunities in many directions with a strong balance sheet and that is i think what is needed in also in order to also execute whatever the strategic review unveils and therefore it's currently not an intent to say, significantly deleverage further, we will keep the war chest for the time being.

Yeah, I think that question answers pretty many of the other questions we have here. Any plans for the spread out manufacturing footprint optimization is another question.

Yes, certainly. This is part of our ShiftGear 2 program optimization of footprints. And this has, let's say, two views out of the Kongsberg's perspective. One is certainly to optimize and consolidate footprints from terms of technologies, but as well in terms of capabilities and profitabilities. So we found here for ready for execution a quite good model. The other topic what comes the second view or angle of view on this is certainly the geopolitical situation, which we need to consider here as well, how we keeping our, let's say, footprint more stabilized and more independent and more preventive for every, let's say, geopolitical crisis. So both of these are forming our new footprint strategy and we will report to that during execution of the next quarters.

Frank, you answered probably a lot of this question priorly, but I think um what are the plans regarding dividends for ka uh um that's one and uh will it be relevant to continue the share buyback maybe you can make a quick comment on that as well yes um on the dividend policy the the policy is unchanged

And you can read in the annual report that the board of directors will propose to the AGM not to pay any dividend in 2023 for the year 2022. Also here, I think it adds to what I said earlier. Let's look at the strategic review and then decide what is the best for the company. And what was the second part? This was a share buyback. We have concluded the share buyback as announced and will ask also for redemption of these shares as indicated at the next AGM and at the same time. Just in order to have additional flexibility, we will also ask to get authorization again to buy back up to 10% of the outstanding shares. But at this point in time, this is only a precaution.

And then do the 2026 financial targets remain unchanged?

No, that's certainly not, because as I elaborated and showed in the slide, we have AB jumping currently from a reduced drop base. When we're looking into 2022, let's say this forced divestment on the PowerSpots Canadian plant has pulled down our EBIT performance, and this has slowed down certainly our previous ambitious investment EBIT runway. But that's why I wanted to underline, that's why we are increasing our efforts in business development and in sales and revenue development in new business wins in order to gain back speed here on our pathway. And on the other side, certainly mentioned as well, that's one of the reasons as well why we decided between the CA management and the board to explore further strategic options to accelerate back on this pathway.

Now that China has opened up, how will that affect CA? You have elaborated on that earlier, Jörg, maybe just a quick follow-up.

So what we saw and certainly a case, not an exception, that's the overall market. So certainly in December, January and February, a significant drop because, I mean, China opened the doors and did a 180 degree turn when it came to their economy. COVID policy, we saw here an impact on the economy, on industry production, and certainly on outputs. That's what we saw in total. We need to see how quick China is going to catch up again. when it comes to getting the industrial and economic engine restarted. Normally, they can be very quick. But I think in my opinion, it's a little bit too early how quick is quick. But overall, we're expecting that China is, in particular in the second half, increasing their speed on recovery. This is, at the end of the day, at the level the global industry is expecting or hoping. I mean, we have to wait how the Q1 looks to be better in the position to give here, from a market perspective, a better view.

Many thanks. The battery thermal management system, what is the status? How is KA positioned compared to competitors? What are plans and expected revenues going forward from this?

Yeah, we are continuously we're going to support in particular in the next quarters about the BTMS. So the exciting news is certainly we are in development products with two major customers that looks very promising. um i have to admit the market is a very cloudy market as i've reported when we set up our concept for btms and that's what has been confirmed here it's a cloudy market um but our competitive advantages here or we are developing our competitive advantage that we with our fluid control system know how we bringing a unique selling point to the competition or against the competition So we are hopeful and we are confident that BTMS is still going to be or going to be at all enjoyable business for us. But it's competitive and it's, let's say, requires a certain dedication and support. And we are on that, but confident.

Regarding the newly launched air suspension system how was the revenues from this in 2022 how does it look going forward and the same goes the same question goes for actuators to evs how is the sale proceeding

So we see strong interest. Thanks a lot for this question because we see strong interest on both sides. We had significant bookings and encouraging bookings in particular on the high-power coupling sites, which are feeding exactly into the air suspension application. Encouraging is not only bookings in, let's say, the so-called Western world, We want an interesting entrance contract into the biggest Korean car manufacturer. So we have high expectation on this HBC high performance couplings. And it looks like always carefully addressed here, but it looks like that's really hitting well into the market. When it comes to the electric actuators, that's an even more advanced area. We see a lot of interest of OEMs, but as well in particular tier one customers. so who are in particular delivering e-exels or e-transmissions into the OEM customer base. So we have intensive talks here, and we are here in very encouraging application discussions, how to integrate and package our sensors as a certain kind of platform concept into the Tier 1's future transmission. This is certainly ongoing, encouraging, but just to give you a little bit of flavor and development of a transmission goes over six to seven years. So that's not what we're talking about EAC traders, but this is an ongoing process and we are confident that we will see in the next quarters as well the sales bookings accordingly.

Many thanks, Jörg. We're approaching nine. We have a lot of questions and we still have some to be answered. But I think that we can every questions you might have, you can feel free to contact me and we will make sure that they will be carefully responded. And I would also like to thank Jörg and Frank for the presentation and for all the auditors listening to us today. And with that, I think we will conclude today's. earnings call presentation and we wish you all back to the Q1 the 9th of May. Many thanks to all of you and feel free, of course, to send questions to me and I will make sure that we will respond to all of them.