Norma Group Ag Name Akt

Ladies and gentlemen, welcome to Norma Group's Analyst Conference 2022. Last year, March Analyst Conference, we mentioned that an exceptional crisis here is behind us. With 2021, we had another crisis here. And I'm, of course, very happy to welcome you all to our today's conference, not in person, unfortunately, not in person, but remotely. What was Norma Group's development in I refer to page two of our presentation that we distributed in terms of key figures. Our sales in 2021 were at roughly 1.1 billion. This is an organic growth of 16.2%. And based on this 1.1 billion of sales, we increased our adjusted EBIT significantly versus last year, 2020, to €113.8 million. These €113.8 million reflect an EBIT margin of 10.4%. And out of that EBIT, we generated an adjusted earnings per share of €2.27 per share and reported earnings per share of €1.76. Our normal value added increased to $16 million, while the normal value added in 2020 was at minus $46 million. On the next page, page three, we have a couple of key figures relating balance sheet and finance structure. So equity, based on that profit development, increased to 44.6%. versus 41.7 the year before. And based on a strict cash flow, cash focus, and cash collection, we decreased our net debt to 318.5 million, nearly minus 20 million versus 2020. Based on that cash development, leverage is at 1.9 times EBITDA. which is far better than any covenant level that we currently have. And this is based on an increased net operating cash flow of 100 million in 2021 versus 78 million in 2020. We will have a dividend proposal of 0.75 euro for the fiscal year 2021, which we will propose to the annual general meeting on May 17th, these 75 cents per share in relation to 70 cents per share in the year 2020. Key figure as well, based on our ESG focus and ESG criteria, we reduced our CO2 emission in 2021 by 12.8%. Besides these key figures, some business environment aspects on page four. In 2020, 2021, we had scarcity of raw materials and severe cuts in light vehicle production. You all know all of these developments, which then resulted overall in global supply chain disruptions and lowered production rates, which led to a price inflation, especially in higher logistic and energy costs and overall in a material cost inflation. We saw a delayed economic recovery with a strong H1 2021 with good recovery, but a challenging environment in the second half of 2021. Unfortunately, from our point of view, We still have an ongoing corona challenge, ongoing corona related costs in production and health, and even more important, a high sick leave of staff and quarantine development in 2021. A few details on the top line starting on page six of our presentation. Looking into the top line, we increased our sales in 2021 versus 2020 by 14.7% with a very strong Q1 in 2021. And this increase by 14.7% to 1.1 billion of sales is mainly due to the economic recovery in the last year. Organic growth, as mentioned, 16.2% with a good recovery in all regions, especially in EMEA and Americas, so that EJT sales increased to 620 million, showing an organic growth of 13.2 percent. And we had, in the standard joining technology, a strong organic growth of nearly 20 percent in 2021, which is mainly driven by EMEA and Americas, with a very strong water management. Looking on page seven, segments in terms of regions. If you look into the America sales, these America sales increased by 18.5% to 457 million. We also increased in EMEA sales from 410 to 462 million in 2021. And in APEC, we increased nearly 10%, 9.9%, so that we ended up at 173 million in 2021. So that's a split based on this sales development. It's 42% of our sales is generated in EMEA and Americas, each 42%, and 16% in the APEC regions. If you have a look into the regions on page eight, we saw a high single digit growth in EMEA EJT business based on this very good recovery, especially in the first half of 2021, and a strong double digit organic growth of the SJT business of 20% due to a good business development and even a restocking effect in 2021. Americas, as mentioned, a good rebound in the first half year, which led to a double-digit recovery, EJT plus 22.3% in fiscal year 2021, and standard joining technology with a strong double-digit organic growth, 22.6%, driven mainly by the water management business, showing another really record organic growth of more than 20% in 2021. APEC region, a double-digit organic growth 10.6% for EJT and 6.7% for the standard joining technology. If you look on the long-term perspective on page 9, we see that In a 10 years perspective, we have a sales CAGR of around 7% and a sales CAGR of around 3% in average organic development over 10 years. With the 1,092,000 sales in 2021, we are nearly at the 2019 level, but could not completely reached that 2019 level. On page 10, we see the sales mix that we have. We have a balanced sales mix with focus on water management and industry business in terms of industry applications and industrial suppliers. So that water management, meanwhile, has a share in our sales of 24%. Industry applications of 19% and industrial suppliers of 24%. We have light vehicle business of 23% and heavy vehicle OEM business with 10%. So this shows a balanced sales mix with the focus for Norma Group on water management and industry business. And coming from sales to the margin development, On page 11, it generated an EBIT of 10.4% in the fiscal year 2021. It shows a very good increase versus 2020, although we did not reach our targets in 2021 in terms of margin, but a double-digit EBIT margin, 10.4%, and 11.2% in terms of EBIT A. With that overview, I hand over to my colleague, Annette Stieve, our CFO. Annette, it's yours.

Thank you. Hello, all together, first of all. Well, let's have a look together to the profit and loss development, all in all, looking to our material cost. Material cost increased by 19.8%, and the material cost ratio increased by 200 basic points, mainly due to higher costs related to global supply shortages all over. Our gross profit ratio only decreased by 30 basic points, mainly due to increase in inventory. Always keep in mind we are in the total cost or total expenditure method here. Personal expenses, there we have a strong improvement we could improve from 31.3% to 26.1%. This is even better than our comparable year 2019, where we had a level of 27.5%. Our OPEX, we had higher OPEX, which are absolutely in line with our sales increase, mainly due to the increase of temp workers and the economic recovery in this case related to business recovery leading to a stable OPEX and to a stable OPEX ratio, which is equal in this moment. We could achieve an adjusted EBITDA of 11.2% and an adjusted EBIT by 10.4%. This is mainly due to sales recovery and lower get-on-track costs, which we do not adjust. Referring to the next page, our operational adjustments and the outlook to the outer years 22 and 23. You can see in our P&L scheme here that on operational level, on ABDA level, we have no adjustments anymore, get on track. We do not adjust as our major recovery program. Our adjustments here are mostly dedicated to prior acquisitions and only related to prior PPAs. So if we look to the earning per share, it's 1.76. Our adjustment for that in 2021 was 51 cents. and we come to an adjusted EPS of €2.27. Looking then to the outer years, you can see really a linear development that remains under these conditions by €0.51 or €0.50 in this month. Seeing our EPS and dividend development, we can see here again our €2.27 and our reported EPS of €1.76. Our net income in 2021 of €72.3 million and reported of €56.1 million. Our dividend per share, as Michael already mentioned, we will propose a dividend of 75 euro cents to the AGM, which is a ratio of 33% of our adjusted group net profit of the fiscal year 21. Referring to the profit and loss statements, I think we already had a look to sales gross profit EBITDA. What is new here is that our financial result could improve significantly from 14.8 million in 20 to 12.4 million in 21. We have a tax rate of 28.6%. Coming now to the balance sheet and referring there to our working capital development, we can see that our working capital ratio slightly increased by 50 basic points due to higher inventories mainly, which we only partly compensated by higher payables. Our factoring programs increased by 10 million towards 2020 to 62 million euro in order to optimize our financial flexibility. Equity ratio, net debt, and debt ratio on the next slide. In this moment, we can see that our net debt decreased by 20 million or by 5.9% due to a strict cash collection and cash management. We show a strong improvement in our leverage, which amounts now to 1.9%. We could further improve our equity ratio to 44.6, which increased to 669 million euro. Looking to our maturity profile, you can see that we have a very strong maturity profile here, solid, no potential cross default risk anymore. With long-term financing strategy, which is established, our next larger refinancing is due in 26. So I think we have a strong balance sheet and a strong maturity profile in this case. Balance sheet wise, you can see that we increased our assets, equities, and liabilities. This is major on the asset side due to our increase in inventories and the recovery of the business. And on the other side, our equity gained by 79.1 million to 669 million euros. New now, we have a look to the cash flow, the normal value added, and then we have a new page which leads us to the EU taxonomy. So cash-wise, we still provide a very strong net cash flow. We could increase our net cash flow to 100 million euro. Our working capital outflow of 20.4 million euro is mainly due to higher business activity and growth. We increased our capex due to investments in our actual and future business growth and our cash is amounting to 100 and could increase from 78.3 last year, which means We finance future business recovery. Normal value added, our normal value added increased from minus 46.4 to plus 16 million euro. And our ROC, our adjusted ROC increased from 4.6% to 11.9%. Let's come now to the EU taxonomy and this new reporting. So I think everybody in all these companies took a lot of time in order to develop together with the European Commission these, I would say, hot-needle printed legislation. And we all did our best in order to really solidly show that in our figures. So it's the first time adoption of EU taxonomy in the fiscal year 21 required by the EU Commission. The preliminary step in this moment is that the EU taxonomy reporting of 21 covers the so-called eligibility reporting. And from 22 onwards, we need to come to eligible economic activities which fulfill, finally, technical criteria in order to get classified from eligible to aligned. So, the EU tax runway focuses mainly on three performance indicators, which is revenue, capex, and opex. And in these two boxes under it, you can see that normal groups, eligible economic activities, out of the EU taxonomy refer on the one hand to our water management products. They are referring to the economic activity 5.1, construction, extension and operation of water collection and treatments and supplying systems. And on the other hand, on the pure e-mobility products, this refers to economic activity 3.6. There we refer to the manufacturing of other low-carbon technologies. In the right box, you can see what we achieved there. So normal groups, eligible revenue, CAPEX and OPEX. Our revenue amounts to 24%, our CAPEX to 5%, and our OPEX to 7%. Having said that, I give back to Michael to have a look to the Get on Track status.

Yeah, thanks, Annette. Get on Track. We described our scope for the Get on Track program in the last years. We defined this Get on Track program end of 2019. And also in the year 2021, this Get on Track program developed excellently. We saw, and I'm on page 27 of the presentation, we saw a net effect out of Get on Track of 25.9 million. in the EBIT-A. So we expected to have 25 million net effect. It's 25.9 million. So Get on Track program comes as expected, helping us and further improve in 2021 and even in the future. And the future means also that in 2022, we will expect a net impact then of 30 million based on around 40 million of benefits accumulated and 10 million of costs of one-time costs. Coming to the outlook and to the guidance 2022, we of course have to mention that this forecast is made under the assumptions that no significant negative impacts in connection with the pandemic situation and even additional impacts coming out of the Russia-Ukraine war is done. We expect organic sales growth medium to high single digit in 2022, also for the EJT business and for the standard joining technology. Region-wise, we expect medium single digit organic sales growth in EMEA, while we expect Americas and APIC in the medium to high single-digit development. Overall, we expect an EBIT margin of around 11 percent, a normal value added between 20 and 40 million, and a net operating cash flow of around 100 million. We, of course, have additional guidance components. I think we do not read through everything, You see it on that page, the most important ones. I mentioned medium to high single-digit organic growth, EBIT margin around 11%, 100 million in net operating cash flow. And this also fits into our strategy, and I'm on page 30 of that presentation. We expect in 2022 growth, medium to high single-digit. We expect that global growth in water management and industry applications. and even selective expansion in mobility and new energy. We continue with the dialogue in M&A activities, focusing on water and industry business in 2022. Especially for our standardized joining technology business, we will further expand and strengthen the e-commerce channel. And of course, we will go on with the execution of the different measures in the Get on Track program so that the Get on Track projects also will contribute for further profitable growth of Norma Group. And of course, it's more important than ever, we have to see the volatile market environment. Of course, we have a handling of that market environment with a close monitoring of the market dynamics and even from the geopolitical conditions and tensions. So a clear growth strategy 2022 in a very volatile economy and volatile geopolitical situation. Thank you so much for listening. And of course, we are happy to take your questions.

Our first question is here. It's from Ingo Schachel, BNP Paribas Exxon. The line is now open for you.

Yes, thanks for taking my question. And the first one would be on your guidance for 2022. I mean, you're making the caveat that there should be no major Russia-related disruptions. And during the last weeks, we've seen a very massive spike of raw material prices. Could you clarify a bit how much of those raw material price increases already baked into your guidance? It looks like you're implying a stable raw material cost ratio that really and if you think it's realistic, maybe you can explain a bit more to what extent and how successful you've already implemented price increases.

Yes, Ingo, thanks a lot for the questions regarding the guidance 2022. We included all these issues we could include so far, so that also means that we, for example, included the direct impact from the Russia-Ukraine situation. So our direct business with Russia and Ukraine is around eight to nine million sales per year, which we included as a risk in that guidance with sales, direct sales and margins. We anticipated the high level of material costs, and we also anticipate that the increase of material costs will be transferred can be transferred to our customers in terms of price increases. We are changing, or we changed our price increase systematic. It is more direct. It is quicker to the customers, especially also in the EJT business. So that we work with monthly price adjustments for prices that we also fix for one month, so that we have a direct price roll over to our customers. Of course, this is in tough negotiation, but it runs very well. And this was your last part of your question, how does this go on? We also had that price increases already in Q4, and we are very well on the way with these price increases also in 2021, especially Q4 when we, or let's say half two when we started.

and also in the first two months of 2022 where we had a good development of that pricing increases to our customers okay do you already have full visibility on the magnitude of price increases that were accepted let's say for the second quarter for example or or is the margin that you see for achieving the second quarter still still very much dependent on whether clients accept what you've announced or asked them to do

Well, we had very good development in Q2, Q3, Q4 last year. And we also have visibility on the first two months of pricing. And of course, we have our budget for 2022 with the referring pricing effects. But this is volatile. We have to be flexible with that price increases because we have to make sure in the volatility of these price, material price developments, if you check the nickel price, which is volatile, 10% changes within a few days. We have to be flexible in transferring that, and this works very well.

Okay, understood. And maybe just on your inventory level, which was, as you said, quite elevated at the end of last year, also included a lot of work in progress and semi-finished products. Can you give any guidance on how quickly you would expect to release that? I'm guessing probably not on the first half because of the ongoing... part shortages but maybe let's say at some point this year or is it more let's say a mid-term perspective that you would get back to previous inventory levels?

At the end it's a question if we for the time being even want to get back to the original ones because on the one hand we have their safety stock which is clear on the other hand we utilize still cheaper prices which are I would say transferring to gold for the time being And for sure, we are in a seasonal, as water business is getting more and more in our balance sheet and in our economic activity, there is for sure a seasonal stocking, what we need in the season. So therefore, we don't feel too bad with our inventories there.

We could say we will optimize our inventories, which does not necessarily mean minimize.

Yeah.

Okay, thank you. Welcome.

The next question is by Nikolai Kempf, Deutsche Bank. The line is now open for you.

Hey, thank you for taking my question. It's Nikolai Kempf from Deutsche Bank. My first question would be on supply chain. Many OEMs have already announced some production stop days due to missing parts from Ukraine. Can you just highlight if you're also impacted by this and if you're missing some parts, if your production is hampered by that?

We also see that customers have some production stops temporarily in March, one week reducing shifts, etc. So this is what we see. This is also where we are impacted and this is what we put into our forecast. So I can I can also follow that view. We also see that from our customers.

Okay. And then just to follow up, what we also hear from the customer for the OEMs is that demand is still quite good. The consumer confidence is quite good, especially in China and America, which are probably far away from this. But do you also see demand still good in Europe? Or has there been a higher rate of cancellations recently?

No, from our point of view, the demand is in the market. The question is, how do our customers, especially or very concretely, get cable channels and cable parts from Ukraine, for example? So from our point of view, demand is in the market. The question is, from where do our customers get the parts that they typically get from Ukraine, especially in that area of cable parts? Okay, understood. Thank you. Welcome.

The next question is by Jürgen Pieper Metzler. The line is now open for you.

Yes, hi. Gentlemen, or sorry, ladies and gentlemen. I have two quick questions here. The one is on, you mentioned you're out of your guidance program. is based on today's situation, which is absolutely fair. But just a what-if question. If we decide to stop, in the end, all imports from Russia from, let's say, one week to the other, can you just give a rough picture what this would mean to you as an additional burden on the cost side or maybe followed by some shutdowns or whatever? And the second one is more concrete. You mentioned the get on track that you expect more higher net effects this year than last year, so around about 30 million, but that should be made with a constant personal cost ratio, which is a little difficult to understand. I mean, last year, this went down by more than 500 basis points. The total net effect was 20-some million, and now you expect a higher effect a constant material cost ratio and a constant personal cost ratio. How does it work out?

Maybe I start with the imports top of Russia. So at the end, we are only in brackets impacted indirectly. We have no direct big supplier connection to Russia. What we already suffered with everybody was a bit the fear around the nickel price. But that is also the question of psychologically this is driven or really driven by impact. So at the end for us, we get all our material elsewhere and we are not endangered at any kind of time. in terms of our production. For sure, that might have then again a pressure on material prices. This we need to confront with different measures, like Michael already said, like everybody's doing that upfront by markups, by whatever.

And I think what is important also is these are the direct impacts from imports from Russia, but we also have to see what are the indirect impacts conclusions out of that for the whole economy. And this is, from our point of view, far too early to see on a concrete picture. For the direct part, it is like Annette pointed out. And your second question, get on track, higher net effect, not sure if I got your question correctly, but if you look on the get on track charts of the accumulated benefits and net effect, So this is the accumulated impact that we show in the chart on page 27. So it is 4.1 million additional impact in 2022 versus 2021. So the accumulated amount over the years is accumulating then in 2022 to 30 million.

Okay, understood. But isn't it normal that you make this program you would use your headcount and still, I mean, the average headcount in 2022 should be slightly down year over year, shouldn't it? And then you, in the end, would have still a small effect on the personal cost ratio. Isn't that the case?

Yeah, you have to see that we have a reduction of headcount on the one hand side and we also have an impact coming from sales growth on the other side. So if you take, for example, the 2021 headcount figures, spot December versus last year, we have reduced around 586 people in 2021, December versus December. But we have to make sure that we, for example, reduce in Germany by closing a production location in 2022 with a constant reduction over 2020 and 2021. And on the same journey, we increased our headcount in Czech and in other areas. So we are transferring from high-cost countries into best-cost countries. And it's not just reducing the headcount as absolute figure.

Okay. Okay. Thank you.

Welcome.

The next question is by Peter Rotheneicher, Baader Bank. The line is now open for you.

Yes, hello. Firstly, on your sales guidance. So you're guiding for mid to high single digit organic sales growth. Now we have a significant effect from price increases. So what is your expectation then on volume growth in the current year?

Peter, that's a very good question. If you assume a high single-digit growth, I would say that's half-half volume and price. Okay.

Then in terms of material costs, last year one burdening factor was also the strong increase in material costs for NDS. How is the situation now? Has this somewhat normalized? Do you see here still headwinds? And with that, what is your expectation then on profitability for NDS in the current year?

Well, we see NDS on a very good level regarding sales and even margin. Of course, NDS also has headwinds from the material cost side. uh but especially at nds we are also familiar with our pricing policy so uh over a period of a year one and a half years we are confident that we have good price increases also for nds so overall can we expect for for nds and margin improvement in the currency

NDIS has already pretty strong margins. So at the end, if we would have all these margins everywhere, I would be happy like, I don't know. At the end, they are suffering by transportation. They are suffering by energy. These are things which they are confronted with. We already did a price increase this year and give the cost further. And then it depends on the product. We have products where we even can increase margins and others. We stay with a very high margin.

So NDS will grow nicely on a high margin level. Okay.

Then we have talked about material costs, but if we look into the upcoming months, we will see also, I think, strong headwinds from wage increases. And how are you prepared to pass on these burdens from wage increases, particularly in your ETH business?

Yes, regarding the wage increases, it's two steps. It's what I mentioned earlier, that we transfer to best-cost countries and overall constantly improve our cost ratios. That's one point. And we also include these topics into the necessity of productivity gains that we need per year, 3% to 4%, with the Global Excellence Programme. And part of that in terms of logistics, et cetera, also may go in the price increases to customers. So it's three areas, footprint, best-cost countries, its productivity areas, and pricing.

So you do not expect here significant additional net headwinds in the second half this year than going into 2023?

I think that's a year of inflation, no question. Everybody is speaking about inflation tracking, and that is, for me, personal costs are a part of that energy. any kind of transportation. These are the clues. And there you can see already nowadays that people are working with markup and whatever. In 12-hour OEMs, we declared already in writing that we need a compensation of that, and we are there very early in contact.

And then is it fair to assume that your profitability in the current year is more back-end loaded? I think in the first quarter this year, you might be below the full year margin target. Can we then expect that second quarter perhaps in line with the margin for the full year and then the second half hopefully considerably better?

Well, Peter, that's the plan. I can only speak under the current conditions. But to be honest, if the Ukraine-Russia crisis gets even worse, I even don't know what kind of business environment we are still facing. So at the end, under the current conditions, I think we are there on a good track. And we are, I would say, cautiously optimistic. However, for the time being, I think everybody is a bit more cautious in terms of guidance and in terms of profitability statements.

And clearly back-end loaded so that Q1 will be let's say below average of that 2022 year and beginning Q2, Q3 we see then increasing margins on a nice level.

And the last point is more the medium to long-term outlook. You always mention supported by get on track you're targeting to return to your former peak margin levels, I think in terms of adjusted EBIT margin is 16, 17%. Is this still your ambition to reach this perhaps by 24 or later 25?

Clear, yes. We are talking about EBIT A margin, 17%, so EBIT margin somewhere, I don't know, 15, 16%. But EBIT A level as we had in the past, 17%, 24%, 25% clear yes. Okay, thank you. Welcome, Peter.

Our next question is by Richard Schran, HSBC. The line is now open for you.

Yes, good afternoon. Two clarifications quickly. One, coming back to the sales growth? I'm just assuming that you achieved a high single digit rate, let's say 10% to make it easy. And you said it's half-half volume price. This would imply only a price increase of 5% year-on-year, which I found surprisingly moderate compared to the drastic price increases we have seen on the material side. I would have expected much higher price increases on average over your product portfolio. Is this really so, that you will only come out with a price increase of 5% on average?

Well, if we compare the price increases, we have to keep in mind that if we are talking, for example, about nickel prices, which are increasing significantly, there is a very, very small portion in our products defined by nickels. So our overall price increases is 5%, and we give to our customers in our products the referring material ratio for the nickel prices. So we, of course, include the high raw material price increases, but our products are not consisting of 100% of that highly increasing raw materials, but it is a mixture of nickel, of chromium, of steel, and so on, or even plastics products, et cetera. So it's a mix. And of course, we give the high material cost increases depending on the material share for our products to our customers. Yeah, interesting.

So I just must say I would have expected a much higher figure here, but okay, fine if it's only a relatively moderate increase then.

Maybe Richard, one comment on that because If you have a 5% overall, we have single products where we have 8%, 9% increases, and other products that are not impacted by these highly increasing materials. So it's, of course, a mix, so that there are products with a significantly higher increase and products with a significantly lower increase. But in an average, it's half-half if you take a high single-digit growth. Okay, thank you.

And then... mentioning on this monthly price adjustments you mentioned I'm not quite sure if I got it right but is this valid for your whole portfolio that you make these monthly adjustments because I think that especially the automotive customers might be pretty resistant to this thing or are they still changing their attitude and accept these short-term price increases for their deliveries?

Well, Richard, it is a monthly price increase where we have monthly price changes, especially if you are looking on to our OEM customers. We have a different business structure in our DS, standard joining technology business, where we are only also over the month are increasing our prices. So it's depending on the customer structure. And of course, no customer is happy about price increases. This is of course a matter of negotiation, but it's a fair play between supplier and OEM customer. having some cost increases per month depending on price increases on the material side. And so far, this works. And I think there is a good win-win strategy.

refers also for example in the automotive industry we have surcharges for example in terms of nickel and alloys we have surcharges which are mostly stable between six months three months six months twelve months and then they are charged and this we change now to really a monthly charging because the prices are running away we cannot wait six months in order and stay with a stable LO surcharge from nickel while the price is exploding. And this is mainly where we change the pricing policy to really invoice that monthly and not every six months.

Okay, thank you. And lastly on the visibility, you mentioned that you are facing these production stops from OEMs, which quite obviously makes it difficult difficult to plan ahead here for you and you said you have taken this into account, which I think is hardly possible if the visibility also for the OEMs is very limited. So what is your assumption for you in this respect on volume growth in automotive and do we have to put in a certain safety caution if these supply chain disruptions would even get worse in the second half of the year?

Well, we have a very close contact to our customers, and if they have production shortages during the next three, four weeks, we have a very good visibility and a good contact to them, so that on a short-term basis, we can plan these issues. If you look on volume increases, we are cautiously expecting volume increases in OEM businesses. But for example, if you take the latest LMC figures, they now reduce from 19% EJT growth organically volume in EMEA to 15% and the last one from 15% to minus 3% or minus whatever percent. So we also are expecting cautious volume developments for the OEM business in EMEA, for example, and so far we are in close contact with our customers.

On top, one big advantage of the Norma is that we are not purely automotive supplying, so we have 50% of our products. We can shift our product portfolio also to a certain extent between automotive and industry business. And that is one of our big advantages to shift that to standardized technologies and to give resources to water.

Okay.

Thank you very much.

Welcome. The next question is from Andres Guian, Gardner Capital. The line is now open for you.

Yes, hello. I have two questions about the cash flow and about slide 22, where you claim a strong cash flow. First about net debt. So net debt has decreased by 20 million. And is the change in the factoring program included there? Is that part of net debt? I guess not. So that would mean that 10 million of this improvement come out of the factoring. Is that interpretation correct?

That's included, sure. That is our part to breathe at the end.

That's cash.

And that's included in the cash, clearly.

OK. So if you hadn't increased the factoring program, the decrease in net debt would be 10 million, not 20. Is that correct?

That's correct.

OK. Then my second question, you show 100 million net operating cash flow after CapEx, 100 million. So why is the change in that not 90, well, 100 million? So where does all this cash go?

So if you have a look to page 22, you can see that on the one hand, We have a working capital outflow in the trade working capital of 24 million, which is financing of business recovery at the end because the year before we had COVID and co. Therefore, we invested really in active business.

Yes, I understand that. So after change in net working capital and after CapEx, you have 100 million net operating cash flow. But that's nowhere near the reduction in net debt. So where is the difference going to?

I think what you also should see is that this is an operating cash flow coming from the operating business. After that you have taxes, after that you have interest that you have to deduct. So if you take a free cash flow bottom line that is, of course, lower, because from that 100 million, let's deduct taxes, let's deduct interest, and then you see that this is a high amount, and the rest of that then goes into a reduction of net debt.

And don't forget the dividend, which we paid last year, which was 70 cents per share, so that's an equivalent of roughly 22 million euros.

Yeah. All right. So when I add up taxes, financial expenses and dividends, then I'm at 60 million, right?

Taxes, interest, dividends. That's the financial figures out of it.

Yeah. And you have to see that this net operating cash flow comes from an EBITDA development. And at the end of EBITDA, minus capex, minus change in working capital, but coming from a pure operating view and all these financial parts like taxes, interest, dividends, some other positions you have to deduct.

Yeah, but you're still pleased with the cash flow, although net debt has virtually not decreased. So that puzzles me a bit, right? That you're showing 100 million, but in the end, net debt is still beyond 300 million. So are you really pleased with the cash flow? It's at the same level like eight years ago.

At the end, we have to see that at the end of the year, we came out of two months with very low automotive volumes. So the months October and November were lowest ever in automotive business due to supply shortages. Which means we went there out of these phases and these months were transferred to sales by the end of the year. So we were at the end burdened by this lower EBITDA out of these months. And we have a growing working capital, that's clear.

And please keep in mind, we are doing 100 million net operating rating cash flow out of which we finance additional interest, taxes, dividends after such a crisis here in 2021. And so far, looking into the financial structure and taking 100 million of net operating cash flow, of course, it can be better. And you see that we came from a level of roughly 150 million in the high season years 2016, 2017. But after a crisis here of 2021, 100 million of net operating cash flow. After such a crisis here, from our point of view, it's not too bad.

Okay, thanks for the explanation.

Welcome.

There are no further questions, and so I hand back to you.

Yes, thank you very much to all participants. We wish you all personal health. Stay healthy, stay protected in these corona times still. Please keep in mind, Norma Group is very well prepared for the future. 2022 will be a growth year for us. If there is no mega impact coming from economy and geopolitical crisis like additional wars. So stay healthy. Norma Group is prepared. Let's go for growth. Thank you so much.