Norma Group Ag Name Akt

Ladies and gentlemen, welcome to our analyst call Q3 2022. Overall, we grew in Q3 and made a turbulent market environment. We had sales that increased net sales by 19.9% to 318.6 million, which reflects an organic growth of 10.3%. We generated a adjusted EBIT in Q3 2022 of 27 million, which increased by 18.3% at a margin of 8.5% versus Q3 2021 of 8.6%. We had a net operating cash flow in Q3 of minus 3.8 million, And an equity ratio of 45.7, which improved slightly versus end of last year. We have net debt of nearly 400 million, 396.6 million. And the leverage at end of September 2022 at 2.5, based on a solid maturity profile with next larger refinancing in 2026. which we will see later on. Going to page three of our presentation regarding the top-line development, we see that the increase in net sales by 19.9% to $380.6 million in top-line. The organic growth of 10.3% in Q3 shows a strong performance, especially in Americas and EMEA. The EJT sales increased to 181.8 million, and this reflects an organic growth of 16.5% due to a strong performance in all regions and mainly driven by price increases, while our price activities run very well in 2022. In our standardized joining technology, we saw sales increase to 134.6 million. This reflects an organic growth of 2.5% with a high single-digit organic growth in America and a decreased business in the near and epic also due to some restocking effects in previous years. The currency effect also impacts our sales development, and we saw a positive translation effect of 25.5 million, or in terms of percentage, 9.6% in the third quarter. Looking into the segment reporting on page four, we see that the regional splits for the first three quarters of 2022 increased the analogous to 47% of our sales in the first nine months, while we have the stake of EMEA sales at 39% and 14% in APEC. And we also see on that chart the increase of America's sales overall, 27.7%, EMEA sales plus 0.9%, and sales in APEC region plus 6.5%. We have a deeper look on the sales development on page five. For Enea, we see for the EJT business, Engineered Joining Technology, a very strong double-digit organic growth of 20% in Q3, which is mainly due to the positive pricing effect and also higher volumes. And in the SJT business, Standardized joint technology, we had a 7.9% organic decline in EMEA in Q3 2022 due to lower volumes, partly compensated by good pricing developments in the third quarter. Moving to Americas, we saw a strong double-digit organic growth of 14.6% in the EJT business, where we also see the good pricing effects in that area. And also in the SJT business, 8.9% organic growth in the third quarter, which is primarily a result of a very positive pricing effect. Coming to APEC, organic growth of 9.4% for EJT in Q3 with higher volumes while pricing have a slightly positive contribution. and standardized joining technology organic decline of 7.7% in Q3 due to lower volumes, but overall compensated by some positive pricing effects. Looking into the margin development on page six, we see that in the third quarter of 2023, we are showing a EBIT margin of 8.5% and a EBITDA margin of 13.1%. So we catch up versus Q2 to these figures. And regarding some details on the margins, I hand over to Annette Stieve, our CFO.

Yes, thank you, Michael. So let's have a closer look to the profit-loss development We can see that our gross profit ratio decreased into 322 by 210 basic points. This is mainly due to higher material costs related to global supply chain shortages and high inflation, and it is in particular in EMEA already also still caused by the Ukrainian war. We see an improvement in our personal cost ratio by 230 basic points to 24.1% in Q3. We could reduce our average headcount by roughly 260 headcounts. Looking to our net expenses, we see that our OPIS puts increased by €10.2 million to €51.6 million. This leads to 16.2%, mainly due to, on the one hand, operational inefficiencies in EMEA, on higher lease tests, in particular in URS and Tijuana, so it's Mexico and India, and higher IT implementation costs. Consequently, our adjusted EBITDA margin decreased by 50 basic points to 13.1%, and our adjusted EBITDA margin amounts to 8.5%. The next slide, there we come to our operational adjustments. So nothing happened there since the last quarter. The message is that on our EBTA level, we don't adjust anything. So our adjustments may refer to PPAs, and these are our only adjustments. They are focusing on net profit. We can see a reported net profit of 36.1 million, adjustments of 12.5 million. That results then in an adjusted net profit of 48.6 million. I go already to the next slide because the EPS, we can see they are much better. Our EPS development is visible there. So when we look to year-to-date, our adjusted earnings per share amount to €1.52, and this corresponds to a net income of €48.6. And our reported earnings per share amounts... amounts to €1.13 and this corresponds to net income of €36.1 million. Referring to our balance sheet developments, you can see on the next page that our net debt increased by 24.5%, mainly due to the dividend payment of roughly €24 million. and in May and our business seasonality. Our leverage increased to 2.5 due to higher net depth and to a lower EBITDA. Our equity ratio increased by 110 basic points to 45.7. Michael already pronounced that or emphasized that on the very first page. We look to a very solid maturity profile, and we have in the next years no significant refinancing to do before 2026. That brings us in the situation that the currently increasing interest rates are not touching the general business of the company. Coming to the next page, to our net operating cash flow development, we decreased our factoring programs by 57 million compared to the year end of last year of 62 million. Our trade working capital outflow is at 81.6 million euros. mainly due to higher inventory levels increase and increase receivables that is majorly in EMEA. Our lower adjusted EBITDA with higher working capital also leads to a decreased net operating cash flow before CAPEX of 41.3 million euros and our CAPEX spending of 35.3 million euros It's a little bit higher compared to last year of 30.6 million. This results all in a net operating cash flow of 6 million compared to last year of 70.5 million. I would like to emphasize that I described here the operational cash flow. For sure, we have also financial cash flow. The last two conferences, I've been asked to that. So therefore, we have financial cash flow. There are also minus 37 million, and this you can follow up in our detailed interim statement where all this is well published on our ER site. So having said that, we come to our NOVA. Our NOVA amounts currently to minus 4.7 million, which is a delta to last year of minus 26.3. By this, I would like to give back to Michael Schneider.

Michael, thank you very much. Following our short presentation regarding the performance improvement plan, of course, we have additional measures to further improve and just to mention here that we have three phases of that and the phase for 2022 is the stabilization measures short term for making sure that we get to our profit guidance and in the next years we have additional efficiency measures, structural measures to further improve. From a guidance perspective, And you all know that we adjusted our guidance. We have organic sales growth that we expect to be in the medium to high single digit organic group sales at an adjusted EBIT margin of around 8%, generating a net operating cash flow of 60 million, around 60 million, and a normal value added that we expect in the range of minus 20 to plus 10 million for 2022. With that, that's our short overview on Q3 and the E3 figures. And of course, happy to take your questions.

Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from Philippe Lorrain from Berenberg. Please go ahead.

Yes, good afternoon and thanks for taking my question. So a couple of ones on just like housekeeping. Would you mind sharing with us the pricing contribution to the organic growth for both Q3 and nine months at group level and perhaps as well by region?

Yes, if you look in the pricing section, Philippe, and thanks for your question, if we take the first three months of 2022, We have overall a pricing effect of 9% for the first nine months. It splits, it is 5.8% in EMEA, 14.8% in Americas, 2% in APEC. So that's for the first nine months year to date. And you also ask for the Q3 figures From a total perspective in terms of pricing, we had 11% in group perspective, which is 8% at EMEA, 17% in Americas, and 3% in APEC. So we see also what we mentioned that we catch up also with the pricing with a nice effect in Q3 2022. which shows that we are on a very good way in terms of pricing negotiations with our customers.

Yes. Would you mind just repeating for EMEA for nine months? Acoustically, I did not really get your answer.

Repeat for the first nine months?

First nine months, EMEA, yes.

First nine months for total group, it's 9%.

Yeah.

You got the regions?

No, exactly. I was just missing EMEA.

Philipp, I recommend we will send it to you. So no problem about that.

You can get the slides. OK. Perfect. 5.8% for EMEA.

Yeah, I sent it to you right away after.

Yeah. Okay, thank you. And just like second question from my side, to understand versus your guidance for the net operating cash flow of 60 million, so it's a step up of about 54 million, if I calculated that correctly for Q4 that you anticipate, what are going to be the main drivers for reaching your target here?

At the end, the fourth quarter is always a high quarter of cash generation, and we are pretty optimistic to get that. So no problem about that. I'm not worried in this case. So that's coming out of Q4.

I understand that in seasonal terms, but I was just meaning like, can you be like really confident that, I don't know, inventory levels perhaps will go down meaningfully in Q4? Or that as well, you've got like a bit less CapEx coming through because I think CapEx was a notch higher in Q3 this year versus Q3 last year. So I was just asking about the moving parts.

Sure, sure. So we expect that the realization of CapEx will be a bit lower because we have there also supply chain disruption. So we already know that a few significant investments will not be ended by the end of the year. So that is a part of that. We for sure optimize our inventories. However, as I said, we will not come back to years, 10 years ago or something like that because our seasonal part of increasing water business is there. That's clear. Anyhow, we will collect more receivables. We have a high amount, which is a kind of carryover. It's unusually high in EMEA, but that's really due to the quarters, so I expect there also a drop-down.

Okay, perfect. And a final follow-up on that topic. Should we expect, as well, increase in factoring volumes? Because so far this year, it's down a little bit versus last year.

So there's no... Yeah, you're perfectly right. We will level that out by the end of the year in order to reach our target. As less as possible. But anyhow, for sure, we can level that out by the end.

Okay. Perfect. Thank you.

So there is headroom. There is headroom to do.

Mm-hmm.

The next question comes from Ingo from BNPXA. Please go ahead.

Yeah, thanks very much for taking my question. And the first one would be a follow-up on pricing. And if you could give us a bit more background on, let's say, what share of this price increase would be permanent versus price escalation clauses and deal surcharges that will fall away. Of course, you don't have to give us too much detail, but maybe, for example, you can indicate whether if raw material prices remain at the currently lower level, whether you would expect average prices in 2023 to be higher than this year, or whether you would see incremental price impacts in Q4 as well, or whether a big part of the 9% will phase out as raw material costs and possibly energy costs decrease.

Yeah, Ingo, thank you very much for that question. We have in our contracts with our EJT customers need through clauses for the yellow surcharges. So the yellow surcharges are fluctuating depending on the London Stock Exchange rate. And so far, these are going up and down, currently going up. And even if it's going down, of course, it works in both directions. And so far, that part of The LO3 charge that we have here, two clauses, also will fluctuate if the LO3 charges are going down. This reflects the EJT business and maybe roughly half of that has been related to the LO3 charge.

When it comes to steel, for example, the way you've negotiated your price increases now in Q2, Q3. those would in principle be sticky or would be up to the OEM to then renegotiate the next year's contract negotiation, but there's no automatic price de-escalation if the steel prices remain low.

So at the end, that is always the case with automotive. If you are a single source supplier, you will never get a kind of direct pass-through. However, we are very close to that. In terms of what we keep, that's always... So if we see what we achieved this year, this is at least more than double of what we budgeted first. So that's tremendous. That is a typical volatile year, and our assumption is that in the future we will fully countermeasure our inflation by pricing. That is, at the end, what we are doing. What do we keep out of that? That's a crystal ball. At the end, in water and industry, in the past, we never gave back any kind of price increase. However, we increased our prices in the recent two years so overproportional that we need to see what happens there, but that will be marginal, so that will be not a lot. In terms of the car industry, that's vice versa. So as soon as prices stabilize on a certain level, for sure carmakers will come again and will ask for repricing, and then we need to extend as long as possible. It's the other way around. So the one who sits in the bus tries to keep the doors closed as long as possible, and this time we need to sit in the bus and we need to keep the doors closed as long as possible. But that's the typical story.

And it's always a matter of negotiation with the customers where we have, in principle, a very good position.

And you can see that now this pricing comes in. So as Michael said, LO surcharges, that's always a time delay. Therefore, we are much stronger in pricing in the second half of the year because the LO surcharges are dropping in now out of that time shift.

Okay, understood. Maybe one question on the volume growth at NDS. And I think first half has been very strong. So I was wondering how you think about the, I think, negative volume growth rate that you seem to have had in the third quarter for NDS. Is that a function of restocking in the channels in the first half? Or do you see any pockets of weakness, new construction related, or certain channels that are weaker? Or should we not read too much into one quarterly data point, which might have been a bit softer from a volume perspective?

That is, first of all, cautiousness. At the end, we don't see that we are missing real projects. But what we see is that the wholesalers, the big customers, that they are cautious in order to take stock over the winter. And that is, for sure, fully combined with the increases of interest in the states. And as our customers are typical residential customers, These customers are cautious there. We are for the time being not missing a real project that's talking of the winter of these wholesalers and distributors.

Okay, thank you. Thanks very much.

You're welcome. The next question is from Nikolai Kemp from Deutsche Bank. Please go ahead.

Yes, good afternoon. It's Nikolai Kemp here from Deutsche Bank.

my first question would be on input prices do you see material prices coming down um both for steel for plastics well currently we are still on a on a high level um that that we see in principle if you're all um discussing uh potential recession scenarios for for the next year if it's america or whatever In principle, there should then be a certain lowering of prices, but this is what we cannot see currently. It's still on a very high price level.

It's also, I would say, there are split levels currently. For sure, the commodity steel already went down, so there is a certain relaxation. We are using high-quality stainless steels. with a lot of surcharges, with a lot of alloys in it, slithers, walls down, so that are very high speciality steels. These are still on a high pricing level. That's the same for technical resins. The technical resin is still on a very high price level. There's a certain relaxation in China, in APEC, but not at all in Europe and not at all in Europe because that is... a high consumer of any kind of energy. Where we see a certain relaxation is on commodity resins, what we, for example, use for NDS. That gets better.

Okay, understood. And my second one would be on energy costs. What kind of handband do you see next there that could occur because of higher energy costs in terms of electricity or natural gas?

Well, we are mainly dependent on energy, natural gas. We have some production areas in Mainzer in Germany, but gas is from our source of energy, the lower part. We more or less are facing energy and gas as a low part of what we need in Mainzer.

At the end, our main cost driver of energy is already baked in our raw materials because you cannot produce any metal or any resins like we need without gas. So the major part of that is already the price increase in our raw materials.

You have to see that steel production is quite energy intensive. So the high level that we still see in these steel categories that we need is also driven by the energy prices.

All right, understood. Thank you. You're welcome.

The next question is from Jurgen Pieper from Metzeler. Please go ahead.

Yes, good afternoon. I have principally one question. I mean, if you look at the auto production in most regions, especially in Europe, this has strangely gone up since August, September. And I think this to a certain degree has supported your third quarter. What is your best guess? I mean, this is just a very short-term phenomenon. I think it's mainly driven by this fading of the chip crisis. Is it more a short-term thing until year end, let's say? Or is it, if you look at the delivery times for new cars, it could well last until spring, summer of next year. So it could bring you through this tough winter. So what is your best guess? Is this... very short term thing? Or is it a medium term thing? And secondly, or eight, one B, so to say, question is, on your guidance, we I think we all had the understanding that after the second quarter, it was a pretty tough target, still the 8%. Now, I think it looks more comfortable. And to a certain degree, because of this auto production, I guess, is it is it a view you share? that you're quite comfortable now with the 8% on the growth target, maybe a little less with the free cash flow target. Is it a view you share or is it an exaggerated view of an analyst?

Maybe taking your first question, looking into the automotive market development, we would expect for the full year no volume increase. What we see for 2021 two as purely price driven. And we also would be cautious in the principal market development for the first half of 2023. So it's a short-term and mid-term impact. Although we have some start of reactions next year, the overall market, we would be quite cautious based on the aspects that you mentioned.

At the end, we still observe that with a high degree of respect because it's not at all stable. So it became better, yes. Is it on the level one has been promised to us by LMC or by IHS? Not at all. So we see Each and every automotive plant that nearly every customer here and there is not picking up the last day of production. We are facing still certain shortages all around the world. Might it be in America? Might it be here? It's often the topic still special chips and so on. So it became better, but not at all stable. And this volatility will last and we expect a carryover to... the first quarter and first half of the year of 23.

Okay.

And on the guidance, have you changed in any way? These marketing companies, they are not that reliable anymore than in the recent years. You need to make certain calculations downwards. Otherwise, you don't survive.

Okay.

Okay, thank you.

Ladies and gentlemen, as a reminder, if you wish to ask a question, you may press star followed by one. The next question is from Richard Schramm from HSBC. Please go ahead.

Yes, good afternoon. My first question would refer to the supply side. Also, I think we have talked about the prices where you said there's only some cautious signs of a relief, but not trying to run to still inflated levels. But what about the real supply? Do you get the volumes you need or are there still delays and constraints which do also cause extra cost here?

What's the situation there? Well, we get the volumes that we need. This is good. But we also see the overall volatility in the supply chain. So far, it's going into the company and out of the company. And what Anette mentioned earlier, that the volatility is there when, for example, customers pick up. Also, the volatility on the incoming supply chain is there, but we get our quantities. that's okay. But of course, we are on a very high level of prices.

At the end, in the pure automotive factories, there is still a lack of volume. So this is visible. We are not fully on the volume what normally is outlined there and would be planned there. We can countermeasure much better than others, in particular in our plants where we also produce SGT on the same machinery. So we can maybe better countermeasure than others, but in pure automotive plants, what we have for example in Serbia and so on, there we see month by month here and there still missing volume. The order books are there, but at the end, there is a closing here, a closing there. Look to the UK, we had a two-week shutdown around the ceremony of the death of the Queen. So things like that, every producer is utilizing.

Okay, so the volumes caught by the OEMs are still... lower than initially expected.

That's the message, right? It's still a very volatile development, and all the work stability from the past is gone since, I don't know, two years or so. Okay.

And the second question refers to the extra costs. You also mentioned in connection with the depressed margin level you have at the moment. from the IT side where you said you have here additional investments to cope with and also with the transfer of production which was obviously more costly than expected. Could you shed a bit light on the size of these effects in the first nine months? What extra cost you had to be in here? and when we should expect that these burns fade out. Thanks.

Just to make it complete, you are referring to which cost? The line is quite bad, so we didn't get it acoustically. The operating cost in the first nine months you are referring to?

So at the end, I think you referred to, that was one of the major reasons out of our profit warning in July that we stated out that we have certain extended topics on our restructuring to close our last plant and to transfer the products either to Maintal or to Czech. And that caused, in particular in Czech, also higher IT costs. So that was... The major problem of Q3, I would say in July, July, September, and so on. So we are there in a very good way. I would say, in particular, Czech is pretty well stabilized already. We faced the higher IT costs not because we had our IT systems not under control. At the end, we had a delay in our restructuring, in our transferring products and machinery over the border that started already with COVID, that we had a certain time delay. that brought us to a delay in integrating a necessary update in our IT systems there. And for sure, if you have then not proven processes and need to implement a standard system on that, that's more costly. The good news is, I think it's becoming better and better. Check is, I would say, well off. We still face a few topics here in Mindtar, that's clear. that we meant with operational costs. And that is at the end of the statute where we are. Should be done by the end of the year.

Could you please give a figure to these extra costs? That was my question.

Well, we already had that. That's not easy to say.

Rough estimate would be true.

We estimated something around 10, 15 million, I would say that could be, but that's really because it's in each and every position. The good news is it's over. We closed Gerber 1000 by the end of the year. Our last employees are just leaving us, and the last product has already arrived last week in Maintar. So these are the last things, but roughly 10, 15 million is, I would say, the gut feeling around that. That was the figure by September. Maybe it's a little bit different now, roughly.

Okay, thank you.

The next question is from Peter Rotteneischer from Baader Bank AG. Please go ahead.

Yes, hello, Annette, Michael. I think my question refers also to the last question. If I look at the segment reporting the profitability in EMEA is I would say disastrous within the third quarter around a 3% adjusted EBIT margin. So if I look back some years ago, we had here profitability level 16, 18, 19% even. So I think this has to do also with the restructuring, but what would be your best guess in 2023 Is there a chance to come back to margins of 10% or something like that?

Well, if you look into the EMEA region, Peter, we must say that we have these operating issues purely in the EMEA region. So this margin development of EMEA is linked to these operating, let's say, challenges slash problems. As we mentioned earlier, the transfer from Gerbauthausen to Maintal will be resolved end of 2022. And when we resolve these operating issues, also the margin will be significantly better in EMEA as it is today.

And how fast can there be a recovery? I mentioned there's a 10% for the regional margin. Would this be possible in 2023 already?

Peter, step by step. So I'm really a fan of step by step, increasing margin step by step and sustainably. So what we are missing the most in terms of margin is in the EMEA region that we needed then to focus much more on automotive business in order to satisfy our automotive customers. And therefore, we are missing, to be honest, SGT volume. And SGT volume is our high volume product. our high-volume business. So as Michael said, I'm convinced that the bulk of that is done. So check is already pretty fine. Mine has failed because we have the last one that has been transferred. But by the end of the year, the major bulk should be done and then step by step. However, our own problems, we can clean like that. We expect somehow a bumpy year 23 in terms of recession. Everybody is speaking of a recession in Europe and in America. So we are cautious on that. In particular, this Ukraine war is taking place already quite a long time and has high impacts here. And this topic of inflation, how this develops, have certain clouds for everybody. Therefore, I'm cautious, but our own things, we will bring under control, and then we should float with the market development, and mostly Norma can do that then much better than others.

For these operations challenges, the measures are defined to get better step by step, and with these improvement measures, also the margin will develop.

Okay, my second question is on the income tax expenses. So you had in the third quarter, very high tax rate of almost 48%. I think you also increased your guidance for the tax ratio for the full year to more than 30%. Can you comment on this? Was this a one time effect in the third quarter? And what is your expectation for the tax rate going forward?

That is, at the end, a timely effect. So we have a tax audit in the House, and it's pretty clear that in terms of transfer prices, we need to see here a certain impact, what will be then leveled out by the other countries. That's a timing issue. We will get that back in other countries, but not in the same year. So we need to, at the end, to balance for that and expect the money back from the other states in the next year, let's say.

So this means overall nothing has changed regarding the overall expectation of 28% or something like that?

Exactly. It's a typical transfer pricing topic which carries over the fiscal year.

Okay, thank you.

But you cannot double-text, so therefore we will get it back. I'm pretty sure about that.

The next question is from Klaus Singel from Odoo BHS. Please go ahead.

Yeah, good afternoon. Thanks for taking my question. Want to get back on this pricing versus Romans cost topic and maybe a qualitative statement on looking at Q4. And when we look here, we have this 11% pricing in Q3 at group level. What's the indication here? Will we see, have we seen the peak already in terms of the pricing effect or will we, let's say with some time delay, see a maybe a higher figure for Q4, so it would be great to get your color here.

Thank you. Yes, the pricing issues with the most important impact started middle of the year, so we saw already good Q3, and we also will see a very good Q4 in terms of pricing effects for the full year.

But can you say if it will be higher sequentially or same level?

It's getting sequentially higher in the second half here in Q3 and Q4. So as Aneta mentioned earlier, we budgeted a certain amount of pricing for the budget, and we will end up nearly doubling that price, in fact, which is an impact in Q3 and especially also in Q4.

And that's the impact of these alloys surcharges. In alloys surcharges, you have to delay between three and six or nine months. So as the peak of the alloys in terms of nickel was by the end of April, these peaks will flow in now. So that's a rhythm which we fully see now, and that's clear. On top, in automotive business, you're always lagging a bit behind because you need to justify against a running contract that something changed. So therefore, you need to have something in your hand. So this is all flowing in now, what we already see in Q3, where we really overproportionately realized.

That's very helpful. Thank you.

The next question is from Andres Guyan from Canard Capital. Please go ahead.

Hello. Thank you for taking my question. Could you please explain the headcount a bit more in detail? I see a 2% increase in personnel, although volume has decreased. I see that the increase comes mainly from the temporary workers. And the second question regarding personnel cost, they have increased by 10%. I have noticed that FX effects play in here, but still that's a significant increase. Why so high? And what can we expect for next year when the salary increases come into effect? And will we see a personnel decrease once those employees have left the site? Can you describe this development a bit, please?

Andres, thanks a lot for your question. When you're looking into the efficiency aspect and operations aspect that we especially saw the last month. We also must say that we have additional temp workers where we have inefficient processes, to be very frank. And with the improvement of our operations processes, we will see also a higher efficiency of headcount and temp workers again.

You need to be a bit cautious, Andres. At the end, our headcount decreased compared to last year. And our personal cost ratio improved. For sure, our lease staff increased, and that has a typical, fully independent story. We are working with lease staff, in particular in the so-called tax-driven, I would say, marketable structure in Mexico. And in Mexico, which is, at the end, best-off country for America, each and every of our employees is lease staff. And as our volumes are increasing there, that's healthy and normal that this is increasing because we shift the work there. And it's India. So that has to do with certain structures where you have extended workbenches with low-cost countries or best-cost countries, and there you have these typical structures. So that's something normal.

Yes, thank you. Maybe look into 23. Can you give an indication what the headcount will do? Will we see any significant changes or is that it, what we see in this third quarter report?

So in 23, we closed our major restructuring. However, we already decreased in headcount and We are not shrinking. So we are transferring work from mostly high-cost to best-cost countries. So we are a growing company, which means our portion of people in best-cost countries are increasing. So it's much better to look to ratios and to look to personal costs than only to headcounts.

Yes, of course. But in the cost ratio, you have the very, very significant material cost increase. And that's why I did refer the development to the volume development. And the volume development was negative, right, in the third quarter.

Exactly. So therefore, I think we are, for 2023, we will get there on a good range. But these restructuring measures, what we realized the next three years, show them their success, I would say, in terms of numbers, without giving you a detailed plan for 23 weeks.

All right. That's fine. Thank you.

There are no further questions at this time, and I hand back to Dr. Michael Schneider for closing comments.

Yes, thank you very much, and thanks to everybody who participated in that call. And before we leave, please let me make a personal remark. As you are aware, and what we communicated, my contract, my transfer contract will expire June 2023. And as we communicated, I will not extend my contract, and I will leave the management board end of this year. So this also means that this is my last investor call at Norma Group. And I would like to thank you all for your external perspective, the professional and always positive relationship over the years, which I enjoyed very much. And this started with my time at CFO and then later as CEO. And so far, I wish you all the best. Stay healthy. And again, thank you all very much.