SGL Carbon SE

Yes. Thank you very much.

This is Michael Majerus. And first of all, welcome to this call.

With me is my colleague, Stephan Bühler, and he will be available to answer questions after the presentation which I would start now. Now let's brief you on the agenda.

First of all, I would like to give a brief review of 2019, the major topics there. And then on the second part, walk you more in detail through the financials of 2019, then I will turn to the outlook 2020 and then talk about our midterm plan, especially our forward strategy first content-wise, and I will give you 3 important areas, cornerstones of the strategy.

And in the fifth part, I will show you how this turns into figures and then a summary will conclude my presentation. Now let's start with the overall snapshot review of 2019.

You see here the headline, light and shadow, I think this is a rather direct summary and -- which means that we had very contrasting developments, not only with regard to the 2 business units, but also with regard to short-term effect on the one hand and midterm effects on the other side. Now which was really a light was, of course, development of GMS, which reported record sales and EBIT.

Historically, high values for this division. And what is important to mention here that compared to the last historic all-time high, which was solely based on one market, the Solar market at point in time.

This is now a much broader footprint. And therefore, has a better quality, and I will come later to this.

On the other side, the bigger shadow definitely is disappointing development of CFM, where we clearly missed our expectations and also had a sharp profit decline compared to the previous year. However, looking into this and that has all too little bit with the contrasting elements I mentioned.

Those developments are related to markets which are of importance for the time being, but not so much for the mid-term growth strategy because the markets we [indiscernible] are Textile Fibers, Wind Energy and Industrial Application. I will later go to this more in detail.

Whereas going forward, the downstream component business in automotive and the excess to the Aerospace market are much more important. And here, we made substantial progress, which, however, will not turn out immediately into the figures, but I also will come later to this.

What is also worth to mention who as the EBIT accounting-wise was substantially below our expectation. The cash quality of EBIT has improved as well as the operating cash flow and will data explain this more in detail.

And as a consequence, together with the improved working capital management, we had a clear improvement with regard to free cash flow compared to the previous year. And as I always explain and will show this later, we already are structurally free cash flow positive, which means if we limit our CapEx to our depreciation, that will be already at a level which is free cash flow neutral.

Yes, another important cornerstone in 2019 was that the issuance of the new corporate bond. With this we substantially improved our maturity profile and to have no maturities of financial instruments before September 2023, anything in the current capital market environment.

I think this is also a beneficial thing. Now on the next page, continuing this new summary.

What is important to mention is that the financial performance masks strategic advantages in the key markets, Automotive and Aerospace. And important thing is that CFM, if I look 12 months ago, we were actually European player in the Automotive sector, primarily, even a German player with the German OEMs and of course, Volvo for Sweden on top of this.

And in the last 12 months, we have won orders in North America, in China and also in other European countries. So we made really a big step ahead in globalization.

And what is even more important now is our new fiber, [TIM] fiber and the cooperation with or we will have much better access to the most relevant market strategically here for CFM, which is the Aerospace market. And what was very important GMS is that we concluded the new contract with Hyundai, for their fuel cell cars, which will be a important new growth driver -- sorry, for the Battery and Energy segment of this division.

And to conclude this also the Supervisory Board have appointed a new CEO, Torsten Derr, who will join us on July 1st. So far, the summary now, let's have a more detailed look into the financials, starting with CFM first, I mean you see the headline earnings impacted by structural declines in Textile Fibers and product mix effect in Wind Energy.

Revenue increased slightly by 2%, currency adjusted was flat. We had a very strong growth in Wind Energy.

However, this was more structurally effected because in the year 2018, revenue was very small because we exited the joint venture with Kümpers, which was primarily selling fabrics into the German Wind markets, which is a declining market, as you might know, given these changes in the German Wind Energy environment. And we are now selling in international market, but only fiber.

So volume-wise, this is a much bigger business, and that's the reason why the revenue increased. However, profit margin here is much lower than it was with previous business or that is a fundamental structural change here, and that's the reason why on the revenue side, it supported growth rates on the profit side year-over-year, this was a decline.

Aerospace. We had simply an effect due to the postponement of invoicing a major order.

So this order is not gone, but the final billing and the invoicing has shifted from 2019 to 2020. That was the reason here, where we had a slight decrease.

Textile Fibers. This is another area where we struggled in 2019, there's essentially 2 reasons.

One is coming from the supply side. So the capacity utilization of the suppliers has increased.

Therefore, the pricing power on the supplier side and this business has increased, which has a little bit effected the purchasing side of this business, primarily in the first half year. And the second thing is on the demand side, on the customer side.

We had been impacted by substitution effect primarily to polyester cooling fibers, this was more effective, showing up in the second half of the year. We have, of course, put countermeasures here.

As you might know, we have reduced the workforce, and we have reduced the number of spinning lines in the Textile Fibers business from 9 down to 6 now. We have switched one line out of precursor.

From February onwards, we are now working with 2 lines for precursor [indiscernible]. And we have idled temporarily another 2 lines, and that are our main measures.

Of course, improved in earnings situation, cost reduction, the volume reduction and, of course, also some new products bringing to the market. And that's the application here.

We selling a lot of different markets. This is a more commoditized part of the business unit and that was to somewhat effected by the overall economic slowdown.

The Automotive overall is doing well. We here its only effect is a slight decrease in the full year due to some lower demand for single car in the first -- in the last quarter.

The sales revenue of Ceramic Brake Discs was stable despite downturn in the Automotive industry. And the negative EBIT, I already alluded to, was primarily affected by the developments in the Textile Fiber business and the structural change in the Wind Energy sector.

And as you know, the profit decline in the CFM division has triggered a noncash impairment charge of almost €75 million. However, here is important to mention that this is not related to this whole division, CFM because that impairment tests are done on a smaller basis on so-called cash-generating units.

We have 3 of them. One is the former joint venture with BMW.

The second one is the former joint venture with Benteler. And the third one is, so to say, all the rest, which is primarily our manufacturing site in Portugal and the carbon fiber site in Scotland.

And this impairment is only related to research division, and this is the effect, of course, of the development of Textile Fiber business, which is located in Portugal and our carbon fiber site in Scotland is primarily serving the Industrial Applications and the Wind market. Yes.

That's the situation of CFM. Now let's move to GMS.

As I said, completely different picture here. Historic record here in sales and EBIT, based on strong growth primarily in Semiconductors and Automotive.

And Automotive here is primarily electric vehicle driven. And electric vehicle is not only the graphite used in batteries, graphite parts also here used in other parts and applications, one is in the cooling system.

And due to the effect that the material doesn't need lubrification and it's not corroding, it's in the rotating piece, for example, in the water pumps. For cooling the batteries, and we have built a completely new hall just for these applications in one, and this is already fully equipped and fully running.

So this is a fast growing business, and which is also a very pleasant development in Semiconductors. So here, we are benefiting really from both in Semiconductor.

What is also important here going forward is that they are not only semiconductors based on silicon wafers, but also semiconductors based on silicon carbide wafers. And these have higher bandwidth, and they're used in high-voltage, high-temperature applications.

And for us to speed processes are primarily used in, for example, electric vehicles and 5G mobile phone, telecommunication, Internet of things. So a really future-oriented application.

The good thing is that those, as I see, wafer technology, even it's more of our graphite products than the normal silicon wafer business. And the other pleasant thing is that despite the fact that CMS has overall very good margins, Semiconductor is really here the top segment with regard to profitability.

So the above-average growth in Semiconductor is not only helping us on the revenue side, but even more on the profit side, and that's also one of the reasons where you see that the EBIT growth was more than proportionate to sales. In Battery, Energy, LED, chemicals, Industrial Application, we had what was a stable development, of course, already on a high level because already in the year 2018, we had achieved high levels.

And again, we have -- we stick to our business in the Solar market. So it's not that we're limited here by the market.

The reason is that the so-called isostatic production [indiscernible] is serving the segment Semiconductor, LED and Solar. And since we have the strong demand in the -- primarily in the Semiconductor market with much higher profit margin, we, of course, intentionally reduced our business in the Solar market.

Now EBIT, I already mentioned it, this more than proportionately increased to sales by 13%. I think the reasons I already mentioned.

Now let's move to corporate on Page #9. The sales revenue slightly declined from €35 million to less than €33 million.

The main reason is to the classification of our gas diffusion layer business, which is the fuel sale related business from the central innovation to GMS. Given that this is now in a advanced commercialization phase, we decided not to stay any further in the central innovation, but to put it now in the business unit to GMS.

And so this was retroactively done with effect of the 1st of January 2019. In 2018, the revenue was included here in the corporate function.

So that's the main reason for the revenue decline. On the EBIT side, you see a strong improvement from minus €32 million to minus €29 million despite the fact that we had a positive onetime gain in the amount of €4 million in 2018 due to land sales in Canada for our former PP division.

And the main reason is here is the management incentive plans. As you know, we not only have for the Management Board, but for a lot of our management team.

So the first, the levels of management essentially we have a management in [indiscernible], which is essentially pretty similar to those of the Management Board and it relates on the STI in the short-term incentive and long-term incentive plan. And the short-term incentive plan is usually related to achieving financial figures of the current year's budget.

And since we, of course, clearly missed those budget figures in 2019, of course, the payout for this incentive as those are low, so we reduced, of course, the provisions for this in the year end closing, and that has a positive effect on the result and that was overcompensating even delayed sale effect of the previous year. And central innovation, we increased here our research and development effort due to several topics like 3D printing and development of composite materials for medical technology.

Now on the Page 10, that is what I briefly mentioned before. Accounting-wise, yes, the EBIT decreased in 2019 to 2018.

But the cash quality has improved. And why is that?

That has to do with the IFRS 15 standard, revenue recognition standard, you know we had to adopt this in 2018. And this is related with a customer-specific product where the customer has a obligation to take this, and we had a substantial positive effect here in the amount of more than €17 million in the year 2018.

In the old accounting system, we only showed revenue and profit when the good was in the hands of our customers. So at the end of the production process, once we ship to the customer.

So it was a completed contract approach. But, yes, IFRS 15 is forcing us to do this now proportionally over the time, starting with the production process, which means is a percentage of completion measures.

So of course, this is now reflected accounting-wise, but the money, of course, from customer is not flowing faster. So therefore, we reported here revenue and profit in 2018, which was not yet cashed in.

So -- and whereas, in 2019, it's the other way around. So we had a negative effect of IFRS 15 of almost minus €3 million.

And that is what I meant the cash quality of profit is higher in 2019 than it was in 2018. That's also one of the reasons of the improvement in the cash flow.

I will come later to it. Or in other words, if you would have stayed in the old accounting system, yes, even or despite the disappointing developments in CFM, we would have had, in total, increased EBIT in 2019 compared to 2018.

Now let's move to the next slide, group income statement. EBIT and revenue, I already explained.

Now next slide here is nonrecurring items, minus €82.7 million. Main part here is the already mentioned impairment of part of CFM, primarily the Portuguese and Scottish assets in the amount of €75 million.

Another effect is the depreciation on the purchase price accounting related to the acquisition of BMW shares in our joint venture. And this was onetime positive effect in 2018.

And it's now for 3 to 4 years, a negative effect because we're depreciating this gain. And this is amount of close to €9 million, which is just imbalance and not cash relevant, and that are the main topics in the €82.7 million.

The net financing result. This change from minus €30 million to minus €39 million as expected.

Main reason is what I already mentioned, the issuance of the new corporate bond and of course, therefore, IR interest expense. The other reason was that the early repayment of the convertible bond, which originally would have been due in 2020 and both had effect, of course, on higher net financing expenses in the year 2019.

Now -- and that leads to a result from continuing operations before income taxes of minus €73 million. And then the income tax of minus €17 million.

You might wonder how much tax we are paying with such negative result, but this is primarily also accounting related because this is also an effect of the reduced profitability of CFM, which means that we had reduced deferred tax assets in the amount of roughly €10 million. So the effective tax is only €6 million.

€10 million is accounting effect, which is not cash relevant. And that leads to a consolidated net loss of €90 million.

Now let's have a look on free cash flow on the Page 12. You see here what I already mentioned, cash flow from operating activities strongly improved from €24 million to €62 million.

And besides the higher cash quality of the result, the main effect this year, to reduction in the working capital. This is an area where we still have room for further improvement.

And we started, of course, here doing activities also in 2019. And the cash flow from investing activities is almost on the same level, a little bit less than the previous year.

We had minus €82 million in '18 at minus €79 million in '19, despite much higher CapEx in property, plant and equipment. You see this increase from €78 million to €95 million.

But this was a little bit balanced by the fact that in the prior year, we had a cash outflow of €23 million for the payment of the purchase price for the German facility of the joint venture with BMW. So free cash flow in total, you see strongly improved from continued operation from minus €59 million to minus €17 million.

And here, you see what I mean was structurally already positive. If we would have reduced our CapEx at the level of depreciation, which was €72 million, that would have been already positive, slightly positive free cash flow figure.

And as I said, we are flexible here. And we -- our necessary CapEx is somewhere in the €30 million to maximum €40 million.

So anything above this is discretionary and in our hands. So the cash flow from discontinued operation, minus €9 million.

This was a settlement with the buyer of our former Aerostructure business in California. This is now settled, but this is the last thing from this one activity.

So there's nothing to be expected anymore. In the previous year, you see the plus €58 million.

This was the final outstanding payment for the sale of our former performance product activities. Now let's talk to balance sheet on Page 13.

Equity ratio has decreased from 33.5% to almost 28%. Main reason here is, of course, the loss of the period of €90 million.

But in addition, with effect here in the pension provisions in the amount of €27 million. The reason is here the lower interest rate environment because we are here, of course, calculating net present value.

Of course, also this is not cash relevant. So the amount of pension to be paid over time has not changed, but the accounting net present value has increased due to lower interest rates and a few accounting effect.

And as a consequence of those 2 things, our equity ratio is slightly below our target rate of 30%, but nevertheless, on a very solid level. Total liquidity is €137 million, which is, I think, a good position.

Net financial debt has increased, but as expected to a level below €300 million, €288 million. Gearing is a little bit above our target of 0.45.

This is, of course, a combination of the expected higher net financial debt and the reduced equity. And leverage ratio still stays in our target rate of below 2.5.

So far, the detail on the figures of 2019. Now let's move to the outlook for 2020.

And I think as most companies today, I have here on every chart now a disclaimer, including any potential impact from the coronavirus. I mean, I have to say, so far, we do not see any significant influence of our figures.

So in the month of January and February we, overall, here -- our revenue and profit was according to our budget levels. We had, of course, some affect in China in the month of February because we had to send our colleagues in our Shanghai site because of this most of them.

But so therefore, we have a little bit missing production for that month, but we are now fully equipped again. So people are now to come back to this manufacturing site again.

And as I said, accumulated, we are here on track. And what we can foresee, as I say, we don't expect this defamation influence.

But of course, no one can predict the future. And of course, if the countries will be completely shutdown, this will be a different topic.

But as of what we know today, we see a little impact on our business. Yes.

We expect with regard to sales revenue at CFM side, approximately prior year's level. But here, we have to look a little bit deeper.

In essence, we have here a growth in our market segment, but this is compensated by our decision to reduce our activities in Textile Fibers business. And I already mentioned that we have decided to switch 1 line now away from Textile Fibers because of temporarily idled another 2 lines.

And as a consequence, we expect here in sales revenue a decline of approximately 25%. And having said that, in total, we expect similar revenue means, of course, the other segments will show growth.

Important growth we will see in the Aerospace segment, despite the fact that it's a small segment. And that's not only related to the shift of the invoicing of the orders from 2019 to '20, but also to other business in the year of 2020.

For the Wind Energy, we further grow. We were successful in increasing prices in January here, which is, in my view, a good sign because it shows that this supply-demand, a ratio in the heavy tow fiber business is slowly changing in our favor.

And that's, in my view, the good thing was the volume-wise big demand in the Wind Energy sector. Industrial Applications is also expected to show growth.

And the sales revenue in the Automotive is expected to be at approximately on prior year levels because we acquired, I will come later to this, a lot of new projects also, a very big project. But this will not impact the figures of the current year, but only show effects in the subsequent years to come.

And on the EBIT side, we expect a turnaround towards slightly positive, which is primarily, of course, based on the improvement measures we've initiated but also based on selective price increases and as I mentioned at the start of the presentation, Energy sector, we have already started in executing those. Now let's move to GMS on the next page, as I mentioned, we had a record high year in 2019.

So in 2020, we expect not to achieve this figure again, but still have overall a good year here. The main reason why we are not, whereas, continue that record level is the development in our battery segment.

Here, we have a shift in the supply chain, which means that customer here has changed a little bit supply parts and has increased shares of other suppliers, and we are affected by this. So that we expect temporary lower business here for the current year.

But midterm, we don't expect this to be of very big importance, for 2 reasons. And the most important is that the new growth on the fuel cell business will compensate for this, not in 2020 because, as I said, we're ramping this up.

But in the next years to come, because we will, and I will later come to this, see a significant growth here. So that this -- the growth in this segment were driven more now from the fuel cell business than from battery.

But in addition, we are, of course, working to develop our anode material for other customers. This was anyway our intention.

As you know, there are a lot of projects going on in Europe, and we are primarily focusing on battery projects in the European Union. And we already are pretty much advanced in these development activities.

And I think we will have industrialized this at the end of the year, and we have then to evaluate what business opportunities we might pursue in the European market. But as I said, for 2020, this will be a decline compared to the respected level.

And to -- as in the other segment we expect here a solid development. And especially in the Semiconductor, further growth to be seen.

And due to the development in the battery segment, we expect the recurring EBIT to decline by approximately 20%. But excluding this effect, and looking at the development in the other segment, we would still have improved EBIT in 2020 compared to 2019 because, as I said, the fundamental growth drivers at GMS, they are intact.

And despite the fact that we will not achieve the record level in 2020 again, EBIT margin will still exceed the 10%, and will once again underscore that the business model of GMS is stable even in a weak global environment. Now let's move to Corporate on Page 17.

Here we expect a substantial deterioration recurring EBIT. But this is, however, related to the expected development in the already explained management incentive plans.

Because, as I said, for short-term incentive the financial targets are according to the budgets. And of course, we've planning-wise expected to achieve the budget.

So usually in a plan, we always assume 100% achievement of those incentive plans versus 2019, of course, the achievement level was much less. And this expense is different.

And by the way, this expense, also the fact that we guide for a lower EBIT in 2020 compared to 2019. If you would take this effect out, we would have a lower EBIT in 2020 compared to 2019.

Now on Page 18. The group outlook 2020.

We confirm the guidance we already gave in October and reiterated in January. Now we can -- in March, we expect for the group sales, slight decline and the group recurring EBIT to be 10% to 15% below prior year levels, however, mainly affected by those effects of the management incentive plans which I mentioned.

Now Page 19. A further look at the group outlook.

The net result is expected to substantially improve to low double-digit loss compared to €90 million in 2019. CapEx to decrease at a depreciation level.

So somewhere around €70 million to €80 million. That has 2 aspects.

One, as I said, a shift in the Battery and Energy segment away from the more capital-intense battery to the less capital-intense fuel cell business. And the other is, of course, that we conservatively manage our free cash flow in the light of the anticipated decrease in consolidated EBIT.

And as a consequence, we expect also the free cash flow this year to be at a breakeven level mainly due to working capital improvements and to reduce CapEx compared to the previous year. Net debt, despite the fact that free cash flow will be at breakeven, will, nevertheless, increased by a mid-double-digit million amount at year-end.

And the reason is that the payment of the purchase price for the SGL Composites is always in the United States. So the carbon fiber side, we won together with BMW and those late in Moses Lake state of Washington has to be paid in the amount of $62 million.

Now on the Page 20. A sneak preview on the first quarter.

We expect the first quarter to be the weakest quarter in the year with regard to sales revenue as well as return EBIT. And especially, of course, related to the first quarter of 2019, which was the other way around, a very strong quarter, especially in GMS due to the development here.

At that point in time, it was also led by some IFRS 15 effect in that quarter. We expect here, of course, substantial different development in the first quarter.

In essence, we expect sales to be in the range of €222 million -- €240 million. And CFM, we expect to be below the Q1 previous year level primarily due the already mentioned lower sales in the Textile Fibers business and on GMS.

The main reason is, as I said, to reduce supply for the battery value chain compared to the first quarter in 2019, where this was a very strong quarter. The group recurring EBIT is expected to be approximately mid- to high-single-digit million Euro amount positively.

And CFM, approximately at the quarter 1 level as the earnings improvement measures to start benefiting following quarters. Of course, we implement those measures step-by-step, not all of them are yet fully effective.

And GMS to be substantially below Q1 level due to lower capacity utilization and a positive IFRS 15 effect we had in the first quarter of last year. So far, the guidance for 2020.

Now let's move to our forward strategy. And coming back to, as I said from very beginning, so light and shadow, despite the fact that in some of our current markets, we are facing some headwinds, the growth driver of our business, they are in intact and they are primarily driven by e-mobility, fuel cell components, as well as the already mentioned trend towards silicon carbide semiconductors for high-performance applications, which are amongst others, the Internet of Things, autonomous driving and 5G mobile communications technology.

Content-wise, we have to adjust our strategic direction to compared to previous. Yes, one is the acceleration of the market and into the Aerospace, based on our own large-tow intermediate modulus fiber and through the joint development agreement from Solvay, this as a change to the previous stand-alone strategy, and I will later allude this more in detail.

Hence the other thing is, as I already mentioned, that we switch here. It goes in the Energy segment, now mainly to the less capital-intense fuel cell components activities.

Now let's move to next Page 24. As you know, GMS is with 16.3% return on capital employed, already above our growth target of 9% to 10%.

So this is doing well. And despite the fact that will be somewhat lower this year.

It's still, of course, above our targets and in a solid range. So to achieve, as a Group ROCE target of 9% to 10%.

In essence, that means that business unit, CFM, has to increase its profitability substantially. And this requires an improved product mix and above all a high capacity utilization of our capital-intense integrated carbon fiber value chain.

And that's very important to understand. If you look into those companies who run fully integrated and if there are not many.

We are the only European player. There are 2 American companies, 1 is Hexcel and the other is Zoltek which Hexcel belongs to.

Solvay in Belgium, and we have 2 Japanese players, which are Toray and Teijin. The difference between us and them is they are all in the Aerospace, we are not.

And as you will see on the next page, this is not only the largest market this is also the most profitable market. So therefore, it's strategically the top priority to get CFM into that Aerospace market, and that is what we see on the next page.

You see here a split up of the carbon fiber-based composite material market. And you see that the Aerospace market was more than €14 billion.

It's by far the biggest market, almost 3x the size of the Automotive market, which is #2. But not just the size of the market, it's also the price level and the margin level of those business, and that is indicated by the figures on the website.

You can see here. Those are the 4 companies I mentioned.

As I said, Zoltek is part of Solvay in the Aerospace business. And those are the figures of the annual report 2018 primarily.

And you see here that we're talking about absolute EBITDA figures in the amount of €200 million to more than €300 million and EBITDA margins of 25% to 30%. So in nutshell, that's the place to be in the CFM business.

Now let's have a look at the next page. If we have a deep dive now in the Aerospace segment.

It's safe to say that by far largest segment here is the segment for commercial aircraft and regional jets. And that is exactly the market we want to target now with our own fiber and our partner Solvay.

And that leads us now to the next page. I mean, now you might ask, since those fits are very obvious, why haven't you gone first into this segment?

There are 2 reasons for this. And 1 reason is, of course, what we learned from our first attempt with -- towards company HITCO in California, yes, was that you have to go with your own fiber in to that market, because the first attempt we did years ago was to do this with a fiber bought from competitors.

This was not economic, very meaningful business model. So the lessons learned from this was we have to develop our own fiber.

This we have done. And what is very important to understand is those fibers for the primary structures of an airplane, which is primarily fuselage and wings, the so-called empennage.

In the modules, fibers, they are until today based on low tow carbon fibers. As you know, we are not a low tow carbon fiber but we are a large tow carbon fiber.

So far, large tow fiber was not able to provide the physical properties needed for the use in the fuselage and wings. And what we have really achieved is, for the first time to develop 50k large tow fiber, provides the physical properties for the use in the wing and fuselage, it is so-called IM fiber.

And that does not emit [indiscernible] because it's too offers the similar properties, the same properties. Its essentially lower the cost and with more efficient production process to be used.

And that is, of course, a fundamental advantage for our customers. However, airplane producers like Airbus and Boeing, they're not buying usually to fiber, they're buying prepregs.

And those prepregs are then baked into special organs, so-called autoclaves, to form this in the parts there for wings and for the fuselage. So what in the end need is prepreg.

So we do have the fiber, but we do not have yet the capabilities and expertise with regards to resins, the prepregs and the qualification process related to this. And that is what exactly Solvay brings to the table.

On the other side, they do not have the IM fiber. They have a lot type of fibers, but not the IM fiber.

They're also buying this from competitors. So we have what they are missing, and they have what we are missing.

Together, we have everything which is needed to be successful in the business and the customers and potential customers like that very much because we are targeting to develop and offer a very competitive and advanced carbon fiber composite material for primary structures, and this addresses the requirements of modern aircrafts, lower cost and CO2 reduction as well as higher efficiency in production and fuel. Now on the next Page 28.

What was interesting to see is that the highest growth to be expected is less in the wide-body airplanes, but in a single aisle airplanes. And here, of course, the numbers are much higher than in the larger aircrafts.

And that, of course, means that also production process have to be faster and more efficient. And that is another advantage of our fiber.

As I said, on the one hand, it can be produced at lower cost on the other hand it's also suited for more highly automated production processes, which also supports this market development. On the Page 29, as I said, there are different fibers going into an airplane.

Is, on the 1 hand, the standard modulus fibers, which together with glass fibers are predominantly used in secondary structure. These are material, like, for example, the floor panels and the other.

The intermediate modulus carbon fibers are predominantly used in the so-called primary structures like wings or empennage. So our joint venture with our joint development activities with Solvay is addressing, as I said, the IM market is, of course, the -- also economically even more attractive market.

And we, on the other hand, also do have a standard modulus fiber, which is suited for interior application, but that is not part of this Solvay activity. That is something which we are running independently and is not yet qualified, but also we are in a process here of qualifying all the secondary and standard modulus fiber.

But the main market, as I said, is the -- in the more attractive market is the intermediate modulus, and that is the scope of the joint activity with Solvay. Yes.

On the next page, I mean, I already mentioned, it's -- Solvay materials are used in current Aerospace boarding, they have a high degree of expertise in resin systems. We do have, as I said, our newly developed 50k intermediate modulus fiber, which is unique in the world.

So no one else has this. And we, together, will develop your first materials composite, prepreg based on that fibers with the target to improve cost with the efficiency of the production process will reduce the CO2 emissions and leading to a higher fuel level.

This is a first step in a long-term partnership, of course. And the status is we have started project in November '19, and we are currently working, as I said, specifying the parameters for the material for our customers and, of course, starting its joint development activities.

And on the Page 29, this is also very important. The thing is that via partnership, the time to market can be much accelerated, you see it here.

And typical introduction phase when new materials require 5-plus year, which via partnership can be pretty much accelerated. So we are currently expecting somewhere 3 to 4 years' time range, once we're ready to go in that market.

Now on the page, so to just to complete it. We are if an overview as I said, there are different market in the airplane, the biggest markets here is on the left side.

Those are the commercial aerospace. This is something which we target with regard to primary studies with the Solvay.

There are also other markets we are running by ourselves. This current smaller markets where we, however, are already active by components for urban air mobility and other smaller airplanes.

So far, the Aerospace. The other important topic is the electro mobility.

As you saw on my previous chart, the automotive market is the second largest market for composites materials. And different from the aerospace market, we already are a big player in that market.

However, what we had to see is that the initial high expectation with the launch of BMW i3 with an entire carbon composites chassis, the number and scope of carbon composite automotive project developed more slowly than expected. Reasons are lots, among others, of course, cost-benefit analysis, serial production competence issue, and there's still a young and for traditional carmakers, unknown material.

What we currently experience, however, is a clear market acceleration in a number of composite projects driven by e-mobility. And the main reason is, of course, the weight topic.

Batteries are, as you know, very heavy. So the weight of electric vehicle is much higher than comparable car with a combustion engine.

So therefore, the topic of weight reduction of lightweight construction get much more significant than a classical car. That's the 1 reason.

Another reason is that on the e-mobility side, you see a lot of newcomers in that market. So start-up companies, and they have higher degree of autonomy regarding the selection of materials production.

So they do not have a commercial production which is based on metals. So they are much freer in the decision to do it.

And the third reason which will come later, and this is also in some applications, electric vehicle, our material can even leverage more on its substantial advantages compared to alternative because the known advantages is lower weight and higher stiffness, higher strengths. But here, other factors are coming to the place like a thermal conductivity and I will come later to this more in detail.

And that is especially relevant for the application of the battery cases, which you see on the next page. Battery case is based on composite materials address weight aspects as well as specific requirements.

And those includes, amongst others, not only the highest stiffness to support driving dynamics, but also under body protection for the battery against external impact, optimized thermal management and protection against fire. So -- and especially, the optimized thermal management if you compare it to aluminum, which is 1 of the most important alternative materials in this area.

Aluminum has a 200x higher semiconductivities than carbon fiber based composites. And what does it mean is it's hot in summer outside, so the high-temperature has led to the battery and you have to cool it.

And winter, as it's cold, the coldness has led to the battery you have to heat it. So you need thermal management and the thermal management cost, additional weight and also consumes electric power, which is not there anymore to move the car.

So therefore, having higher thermal innovation as beneficial with reducing the weight as well as extending the reach of the car. That is what I meant was additional benefits, which our material can leverage as compared to the situation in the classic car.

And due to the combination of advantages composite battery cases are perfectly suited for the demanding and highly flexible skateboard platform provides for a wide variety of electric vehicles. And what is important is that we won here all the concretes -- contracts with customers and a very important one in the United States, which is a very large contract.

So we expect over the lifetime, to be in a 3-digit million dollar range. And the good thing is that this is also a light [indiscernible], which is something which is of interest for a lot of other customers, and we can offer our customers tailor-made solution which can be serially produced in large quantities due to our integrated value chain.

Now on the next page, and I think that's all nothing new for you. So the market of electric vehicle is to be expected a substantial growth market here, also the fuel cell market.

I will come later to this. What you see here growth rate in electric of roughly 18% CAGR per year.

Now on to Page 37, coming back to the weight topic. You see this is calculation for type of a comparable car.

And you see here the way of a conventional car is somewhere about 1.6 tonnes, hybrid is close to 1.9 tonnes, whereas the fully electric car has a 2.2 tonnes, which is 36% higher than the conventional car. And as I said, therefore, lightweight production for electric vehicle has much higher.

Important thing you see here a quote from a person of a car producers, "we invest in affordable lightweight construction instead of expensive battery cells." I think this is a trend which is positive.

Now on the next page. This is, I mean, currently, until the new CEO is done.

I'm responsible for everything, despite, of course, my colleague, being you engaged in the legal and compliance. So our cost supporting the order included under management, but I'm also personally engaged in the sales side of this that is now a 1 pager I'm using to sell our battery stuff into the car industry.

So we have tried to put everything together on 1 page. And I will not go through everything, but you see here really the advantages of the material.

You have excellent fire protection, to optimize thermal management, which I already mentioned, but also attractive lightweight cost, also this is an important factor, depending on how we can design and produce. It can be up to cost-neutral substitution of aluminum with a superior product, who can, in this case, offer at the same price, a much better product that's, in essence of situation, and we see that is of high interest for the producers of electric vehicles.

On Page 39, another thing is that for those composite battery cases, we are able to fully leverage our carbon fiber value chain starting from our own precursor, via our own fibers, via own textiles, stacking, our own component production and then the assembly. And so that the customer really has a one-stop shopping on 1 hand and that we can also develop via all of the steps of the value chain, the optimal product for our company.

On Page 40, as you see that this is not a dream. This is just the expected volume of battery cases based on our contracts, we do have.

And you see that it is ramping up from 2,000 to 120,000 in 2024. And what is even better is, as you see, this is just based here on primarily the 3 car projects we have won in the last 12 months.

But there are more projects going on. Overall, there are 500 new electric vehicles models to be expected until 2025.

Of course, not all of them will have carbon fiber-based battery cases and amongst of this were not all of them win. What you see, even if it would be a small share, there is substantial potential more to come.

The good thing is also that we have globalized our business, I already mentioned this. And so we have people, not only in Europe but also in North America.

And in Asia, which have close contacts to all the major players in the car industry, so we really have a good insight into development with regard to battery cases in all of the regions. And also, we are not standing still, but we are increasing our capabilities in the predevelopment, in the simulation, in calculation, automated production capabilities and our lightweight center and lightweight application center in [indiscernible], which is a unique worldwide is, of course, helping us very much here.

And of course, we are also working together with the customers in the selection of materials and design for the next-generation of battery case. So we are pretty early involved in those projects.

Now on the page -- on next page, you see the number of projects we do have in our books. And when the start of production is expected.

And the -- and that are, of course, not only battery cases. This is a lot of things like leaf springs, like preforms, like stiffening elements, but you see that in the last 12 months, we have 1 additional 6 projects here and that we are active in more [indiscernible], of course, currently which however are contracts and orders, but 6 are already contracts and orders.

And as I said, this is especially 1 very big contract amongst those. And another big contract, by the way, is with regard to leaf springs.

This is also related in the U.S., where we supply an automotive which was leaf springs positive to the large extent. So far, with regard to E-mobility, let's move to the third area I would like to cover for today, which is the fuel cell components.

Now the -- which is, for us, a new and important growth driver in our market segment GMS. The global sales revenue of the entire fuel cell market is expected to double to more than $7 billion until 2025.

We were successful in the extension of a long-standing cooperation with Hyundai Motor Group in long-term supply agreement, which was signed in 2019. We, in total, supply approximately 200 customers with our gas diffusion layers.

And the industrial scale, we are now in the phase of scaling this production of this high-quality component. The gas diffusion layer is a highly decisive part for the performance of the fuel cell.

I will come to the next page. On this, and we expect that sales revenue for this fuel components of our business were more than quintuple in the medium term to approximately €100 million per year alone from this product.

Now on the next page, a short overview what is a gas diffusion layer. As I mentioned, they are critical for the power density and efficiency of the fuel cells.

Fuel cells require only hydrogen and oxygen to produce electricity and the inflow of the H2 and O2 via bipolar plates and GDL. You see it in the picture on the right side, this carbon fiber based GDL acts as a buffer between the -- those bipolar plate and catalytic converter.

GDL regulates the transport of gas as well as the removal of water and heat. And we possess the competencies to manufacture GDA industrial scales.

We are 1 of the 2 market leader in this segment, the other Tokai, the company, which I already mentioned in the context of aerospace. And of course, the largest players with regard to fuel cell cars are Japanese and Korean companies.

It's Toyota and Honda in Japan. And it's Hyundai in Korea.

So on the Page 45, you see, and this is now not the overall fuel cell market. This is alone, the GDL market.

And you see also here that this market is expected to develop to the size of €500 million until 2025, with the further potential to maybe in a range of up to €1 billion in 2030. And of course, this is driven by the trend to zero emission vehicles and the transformation to renewable energy.

This is, of course, alternative technology to electric vehicle but especially for heavier cars like trucks and buses, battery might not be an alternative. But other for class groups, passenger car, this will be an alternative with regard to the reach of the car and the time to refill it.

The fuel cell production today is driven by the already mentioned the Asian OEMs and most relevant markets today are in Asia and in California. So in Europe, it's more to -- more starting up.

But also meanwhile European and especially German OEMs are closely looking to it. They are also cooperating with other companies in this, and you see that also BMW, Audi and Dialer are, of course, developing activities in the fuel cell car technology.

Now on the Page 46. In summary, as I already mentioned, we now focus here on the less capital [indiscernible] components, the strategy on [indiscernible], whether persons, of course, of course, we will not go out of this business.

As I said, we focus here and we're still delivering the existing supply chain despite it was lower volume, but we are focusing currently on technology advancement, our [indiscernible] with U.S. European Battery projects.

And I said, we are putting advancement with that -- to those development activities. And as you know, there are many activities going on in Europe and some names here mentioned, and we are participating in a second alliance or whether you say production in Europe, to so-called Autumn, IPC to receive subsidies for the technology advances of graphic materials in Europe.

So far, now with [indiscernible] coming to our new [indiscernible], the growth pick is intact in our new term plan despite the fact that we have a lower starting point due to the setback in CFM and textile fiber business and the wind market, as I mentioned, and the temporary decline in GMS in 2020 to development in the battery supply chain. We still see that the growth driver intact and still expect that we will achieve ROCE target of 9% to 10% in the midterm.

And of course, the other targets are unchanged leverage ratio of below 2.5%, equity ratio of 30%, sales growth rate is -- we expect to be in the mid- to high single-digit and with regard to net result of free cash flow, of course, we expect positive figures, and we expect for both business units to achieve return on sales of at least 12%. New growth drivers, RGD and aerospace and there's some [indiscernible] as of this midterm plan.

Now on to Page 49. What is now evaluating plans, it always makes also sense, we have to also look back in history, and that are the figures back to 2013, which is the EBIT.

However, if you look into our annual report of 2013, 2014, this will not be the group EBIT because the reason is those historic figures are without distort performance product activities. So it's only the CFM and GMS and corporate-related activities, and you see that in the structure, we have increased the EBIT from minus €67 million in 2013 to plus €65 million in 2018.

So there has already been a substantial growth. Yes.

We have this decline or dip in the year 2019 and the year 2020, based on the reasons which I already mentioned. But our growth driver are intact and we therefore,expected growth trajectory will resume from 2021 onwards.

Now this leads me to my summary, which is now my last slide. 2019 was a decisive year for the execution of the long term goals of SGL Carbon and despite the disappointing development in Textile Fibers, Wind Energy and Industrial Application at CFM, we had a record year in sales and revenue.

And in GMS, we have formed a joint development agreement with Solvay, which potentially grants us the fast access to the most decisive market in the CFM business, the aerospace, the largest and most popular fiber market, we have won major contracts for the composite battery case for EVs and we position our graphic and [indiscernible] material business. It's a temporary dent in GMS development.

However, we expect strong growth in gas diffusion layers for fuel cell cars, which will allow GMS to assume the growth path. The growth path is in fact a new midterm plan based on stronger product pipeline than 12 months ago or back was a lower starting point in 2019, 2020.

So far, my presentation and my colleagues [indiscernible] are happy to answer your questions. Thank you for listening.

Yes.

Hello?

Yes. So then I will start.

One clarification, please, on this change in your strategy with the battery business, I'm not sure if I got it right. Is it because you want to avoid the additional huge investment, obviously, necessary to push on your position in this?

Or is it more from the customer side that there was a kind of reluctance to get more contracts in fact and that therefore customers walked away from you. I'm not sure if I got this right.

What really was a driver for this decision? And the second point, concerning the Automotive-related business, your joint venture, Brembo -- with Brembo, which is, obviously, strongly related to Italy, what's the situation there?

And what should we expect for the current year? Wouldn't you see the risk of a significantly lower earnings contribution from this site as this has been also in the last year a major contributor to your EBIT line?

Yes. Richard Schramm, thank you very much for your questions.

So coming to your first question with the [indiscernible] side. No, this is not related to reducing the CapEx side.

This has to do with the customer, coming back to your point. To be more precise, it's more between Hitachi and Panasonic because we are -- this as a business part where we said to Hitachi and Hitachi is saying to Panasonic and Panasonic reached the way volume from Hitachi to another supplier from China.

And since we are delivering to Hitachi, we are affected by this. So that is the reason, coming back to your point.

It has nothing to do with the overall strategic chain. But the good thing is that we now have a second growth driver with the [GDA] business, which can maybe not in that year, but in the medium term, first of all, compensate for this.

And secondly, anyway, we wanted to develop new materials for new customers in Europe. However, this will not bring us revenue now in 2020.

But it's, of course, the chance for later years to come. Now the other question with regards to Brembo.

I mean we have 2 manufacturing sites. One is Meitingen in Germany and the other one is indeed in [indiscernible] larger, one is here in Germany, which, of course, is not affected.

And the manufacturing Northern Italy is still running. And of course, we have taken some precautionary measures regarding, of course, travel between location, which has stopped.

We also have some precaution measures initiated with regard to the transport of materials from Northern Italy to Meitingen. So we load this from the Italian trucks to German trucks and not change this.

But so far, the supply chain is fully working.

Yes. So can I just ask you -- thank you for the longer-term outlook.

Just back to maybe a bit more short term, 2020. Obviously, the rotation into some of the markets that you've outlined, I think, it sounds very good, very promising, but is a longer-term issue.

So 2020, where do you think you'll come out, ultimately, I think, cash-wise at the end of the year. And that's ignoring any coronavirus troubles that we're having, but maybe you can give us some more idea of your CapEx plans and maybe the working capital this year?

Okay. First of all, Mr.

Felix, thank you for your questions. I mean we have ended last year with a cash position of almost €140 million.

We are still stable at that level. And as I already mentioned, we expect also a stable free cash flow, so therefore we should stay overall with the cash level.

The only thing, of course, which I mentioned, we still have to pay at the end of the year, the purchase price for our -- for the joint carbon fiber manufacturing side in -- at the West Coast of United States, BMW, which is, I think, $62 million or is something million euros. Of course, this can be paid.

And of course, this would reduce then correspondingly our cash position, but still would be more than sufficient. In addition, of course, we have taken measures in place to further optimize our situations, where we have [indiscernible] working capital task groups with both business units with purchasing production to further optimize this, to gain additional cash, which is not included here in our cash flow guidance so far.

We are also in the process of selling nonbusiness related. As [indiscernible] frankly speaking more [indiscernible] because we have some important real estate, which we have tried to sell for a long time.

Now we have interested buyers for this, so this is another thing, which could get us a small [indiscernible] in [indiscernible]. So -- and of course, we are flexible in monitoring the whole situation.

As you already mentioned, no one can really predict how corona will affect the economy. So far, as I mentioned in the very beginning, sort of first 2 months according to budget with us.

So far, we do not see here important respect, but of course, this might change. So we want to be on the cautious side.

And of course, we could also further reduce the CapEx. That is also important to understand.

We have necessary CapEx level of somewhere €230 million, €240 million. And of course, if we can reduce CapEx further, if needed.

As I said, we work on working capital optimization. We are selling noncore assets.

So therefore, we are working to sort of -- to refinance the purchase price for this carbon fiber factory, I'm not sure whether they can 100% refinance it, but of course the target is to at least to majority refinance this. And I said, we still have, of course, also a solid cash position, and we have more measures in place if economy would further weaken down.

Okay. Sorry, just back to the -- to your anticipated at least CapEx level.

And would I be a million miles off assuming €75 million sort of for the year?

Yes. That's somewhere the range we are looking for.

€70 million to €80 million. Yes.

Of course, cannot predict.

And do you expect any major shift in working capital over the year?

So far, I mean, the plan is with a more stable, slightly improving development. That is what our cash flow position is based on.

But of course, we are working on doing better, but I'm currently reluctant in giving more precise figure on this, but of course, we're doing what we can to further improve it. We have planned it not too aggressive, but of course, we want to be in actual figures better than that.

Yes. First of all, it's concerning [indiscernible].

You said that you temporarily idled the 2 lines. So why is it not -- do you not totally reducing the capacities there?

Are you preparing for further reorganizations here? So what is the midterm plan for [indiscernible], maybe you can elaborate more on that again?

And then also coming back on CapEx, so it's sort of a very interesting long-term ideas, of course, fuel cell, battery cases, Aerospace. But on the one hand, you just explained a little bit how you can run down CapEx.

So can you give us an idea to achieve maybe the first and second step in the fuel cell business and the new orders for battery cases, in the development of the aerospace fiber, what kind of CapEx do you need to come to step 1 or step 2 in 2021, 2022, 2023? So I don't believe that with the current CapEx, you can fulfill all of these ideas you have or you presented here.

Okay. Mr.

Obst, thank you for your question. Starting with [indiscernible] first.

While I'm not idling more lines, of course, we are looking in all alternatives. But as I said, we have certain infrastructure costs at the site.

So idling all the line would be economically worse and the case [indiscernible] worse than what we are currently doing. And that is, of course, not the only measure.

We've also reduced headcount. We are renegotiating contract with [indiscernible] the cost of the steel supply.

We have introduced new products. We are trying to optimize our purchasing.

We have also [run] our supplier bases and made some achievements in getting better purchasing prices for the materials. So there are a lot of activities, of course, going on, improve the situation.

But of course, exiting the whole textile fiber business is not an option that because that's the point, but I'm optimistic that we can really improve with the situation on the Textile Fibers business and it is already improving. Of course, this will never be a highly profitable business.

It's clear. As I mentioned, it's not our strategic business, but we get the things under control there.

So can you achieve some kind of breakeven in 2020 on the profitability side and on the cash side in [indiscernible]?

In [indiscernible] alone, I think it still will be somewhat negative. But of course, overall, as I mentioned, we will achieve a turnaround situation.

Okay. And now with the other [indiscernible] with regards to CapEx.

I mean yes, in essence, it's always a trade-off, between being conservative on the CapEx side, and I think your [pre-speaker], which I think knows, if I would tell you, now we want to heavily expect for CapEx. So everyone has a different views with regard to that, and of course, I have to draw a fine line.

We've seen being on the safe side was our cash and balance sheet raise on one hand and, of course, take as much opportunity on the growth on the other side. And that is something where we are working on.

But the good thing, coming back to your point, GDA. So one expansion step is roughly €10 million.

So that is the magnitude we are doing this year. And so it's not amongst the 70 million to 80 million.

So this is only [indiscernible] related to this, and that's, of course, we'll kick out. And with regard to the Aerospace.

The Aerospace, there is no CapEx related to it. The good thing is, the production equipment is already there.

So on our side, it's just the fiber [indiscernible]. And the fiber, we do have the assets and the preclose activities are on service side, they also do have the assets.

So we do not have to invest in new assets. We simply have to develop and you [indiscernible] break based on our fiber instead of a purchased fiber from [indiscernible] before.

So that is not CapEx related at all. And I think what was -- Yes.

Battery is closure also this high CapEx. This is also somewhere high single million digit, up to €10 million, somewhere maximum this range accumulated over the time.

But I think in the first step, it's a high single-digit million euro amount. So -- and that's a good thing, especially with the CFM side.

The bad thing is that we do not have yet an optimal business. But the good thing is, the expense of equipment is already there.

So therefore, it's not so much so much CapEx related. The only business which would be CapEx-intense if we really could go for an aggressive forward strategy in the Battery segment, and that could become expensive.

But as I say, here, we really have to see what we can afford. But I think besides that, I would say, we can manage it to execute here our projects, whether this is battery case, whether this is [indiscernible].

And since we also have a strong position with regard to customer, because both in the battery case and in the GDL there, we are the only supplier, the exclusive supplier, in some cases, we even can negotiate some prepayments from customers for some type of equipment. So we are able to manage this.

So coming back to the temporary dent in GMS, what gives you the confidence that this is only a temporary dip and Panasonic will not further reduce the risk business with Hitachi and shift it to the Chinese supplier? That would be my first question.

Then the second one, you mentioned automotive revenue should remain flat year-over-year, given the newly acquired project will only gradually impact -- have an impact on sales. Can you share your underlying assumptions for the global car production you have baked in for 2020 and beyond, please?

And the last question, going back to a question on CapEx. So according to your midterm plan, you target positive free cash flow.

Can you share your thoughts on the annual CapEx requirements and midterm? Is there a scope to reduce the CapEx further from the current level or from the target level in 2020 as you mentioned only kind of limited investment requirements in some specific projects?

And what should we think about working capital requirements in light of the project [indiscernible]?

So you were very fast and a little bit lost. Maybe coming back to your first question, what was that, once again?

So basically, what gives you the confidence that it's only a temporary dent in the lithium-ion battery business? And why should Panasonic not for as reduce the business with Hitachi going forward?

Yes. Of course, they can reduce it.

And frankly speaking, we already are very conservative in planning. Because my planning assumes that this will go down to 0, which currently is not the case.

I cannot get more conservative, frankly speaking. But actually, we do have still business and the question whether they will completely change to only 1 supplier, we have to see.

But as I said, planning-wise, we are as conservative as we can. And as I said, the growth driver here in this new midterm is primarily coming from the GDI business, the fuel cell business here.

We are very confident to shift their targets, so -- and for me, the battery case is more upside in that. So lesser downside to us.

As I said, there could be further -- still more business from Panasonic to come, which would be add on the new plant. And secondly, which is also not yet pretty much alluded to is the potential in European projects here.

That is something we can today, of course, not yet fully evaluate. I think we have very good discussion, especially with [indiscernible] in Sweden.

And our material is pretty much developed. So -- and the properties seem to be physically very good.

We're now in a phase now to industrialize the thing in the course of this year. So my expectation is that we will have finished this end of the year, then you have to evaluate all case on the batteries.

So there could be upside case in the battery, but I see a little downside for battery case in that [indiscernible].

Yasmin, just to clarify, maybe. We said the temporary dent was in the micro segment battery and other energy, and that includes both lithium-ion battery business and GDI.

Okay. And in terms of profitability, it's comparable?

Yes. I'm very reluctant.

Because, as I said, I'm doing the sales shop, and you know, and I had to negotiate a contract with Korea. And my Korean sales force instructed me a day before, they said, Michael, you should never smile because if you smile just a second, the customer would think you can further reduce the price.

And so I will not discuss the profitability. We are, so to say, it's okay.

Sorry, and your other question. And in the overall car production, precisely, I do not have this in mind.

But this is, for us, less relevant with the BMW. As you know, we have a take-or-pay contract.

So anyway, we're not depending on the volume and the growth drivers going forward are anyway in new projects. And with new cars coming into the market, and if we look at the chances of the cars, we see them very hard to be successful.

Unfortunately, I cannot be very precise on this. But if you would know the names of -- because that start up, we have -- we are supplying in U.S.

has already achieved an order of a customer of 100,000 vehicles, 100,000 vehicles as a first order. If you want one idea about what makes we are talking, and if you would know the name of the company, we'll not be afraid if this will happen.

So I think what is, for us, relevant is less the overall car development. That's the good thing that we have not been successful with our materials in the classical car, we also not affected by the development in this.

So it's our [indiscernible] will the project materialize we are serving and here, we do not see any negative impacts on the current overall development in the car industry. Then the next question was I think with regard to free cash flow.

Yes. And again, on CapEx, sorry.

So basically, just to get an idea what your positive free cash flow target is based on in terms of CapEx assumptions and working capital requirements in light of the project ramp up?

Yes. Of course, coming back to this.

As I said, we already are structurally free cash flow positive. So the question of whether the free cash flow is positive or negative in the current profit situation primarily depends on the level of CapEx we're running.

But of course, the more profit growth we do have, the more degrees of freedom we do have taking that decision, coming back to the discussion, we had to [indiscernible] before drawing a fine line between on the sales side was the cash and taking growth opportunities. So of course, our plan is assuming that in some of the next 5 years, we will have somewhat higher CapEx and depreciation, not on average.

But as I said, this has to be flexibly managed because this assumes, of course, also increasing profitability. So if the profitability comes, of course, we will also follow this CapEx plan, if the ramp in portfolio is not as high, we will also be a little bit more reluctant with the CapEx.

So therefore, I think we cannot give you general CapEx target here for these figures. As I said, of course, on the range we are somewhere at the depreciation level may be on the shorter side, a little bit higher now because we need to have some preinvest.

But as said, we are flexible. And coming back, of course, those are the targets here.

Other for the 5 years plan. And of course, in the later period of the time, we expect, of course, to be here on a free cash flow positive situation even if we would invest more than the CapEx -- than depreciation.

Yes. Two small ones.

One, just come back to your free cash flow guidance for the current year. To clarify, this does not include this payment you have to make for this [indiscernible] [USA], right?

Yes. That's right.

So that is the operating free cash flow, as such, is around 0. But of course, we then have to pay the €60 million.

That is what I said before. So if you look at our roughly €140 million cash, it would be then €140 million at the end of the year.

But then you have to [indiscernible] €50 million, €50 million-something for the payment. So then it would be somewhere at €80 million to €90 million.

And as said, this then depends also on further measures to improve our cash position. On the other side, market development.

So of course, we cannot entirely predict this, but your statement is right. So this free cash flow breakeven does not include the payment for [indiscernible].

Okay. And second question concerning your supply chain.

We hear a lot about concerns that these might be interrupted in the current situation, how do you see the risk for your company, are you so far prepared that you have certain increase in your inventory, for example, or what's the situation on your supply side?

Yes. I mean so far, we see no negative effect on this.

But coming back to the coronavirus, of course, if other companies follow the example of Italy and completely close the countries, this of course would then affect us. Currently, this is not a situation because Italy, we already alluded to the situation was [indiscernible].

China is not of that importance for us as a market. You -- of course, if, for example, the US would completely closed any goods going out and in the country then, of course, our BMW business will be affected because the carbon fiber is coming from United States and going then to various.

So in this case, we could not deliver BMW anymore. Do I think this as likely that no goods will go out and go in, I think U.S.

would have more problems than just us getting our carbon fiber out. So yes, no one can answer this question, of course, Mr.

Schramm. So -- and we cannot solve any hypothetical risk by building endless inventories.

Coming back also to our case, I think, of course, we are -- what we had done last year, and that was also one of the reasons to improve the situation, we -- why the working capital was higher before that we had built up some inventory for the Brexit situation. But of course, we cannot now work on the assumption that in every manufacturing location, we do have the supply chain will be stopped.

And this would also physically not impossible to safeguard this with inventory buildups.

Just one question. I think I know the answer, but in light of your guidance for breakeven free cash flow and the commitment to purchase joint venture by the end of the year, and in the context of debt markets where secondary prices have fallen dramatically, I'm just wondering what appetite the company has to consider repurchasing bonds in the secondary market with a pretty significant price drop that has occurred, and in the context of the liquidity we've been discussing on this conference call?

Yes. I think, economically, it is a good combination.

But as I said, I have the general philosophy rather to sleep well than to dine well. And so therefore, I'm more conservative and know where to spend our cash flow.

And so therefore, despite the fact that economically you're right, this could be a good deal, this we currently do not have any intention to do.

Yes. Ladies and gentlemen, thank you for the discussion and for participating on our call.

Wish you a nice day, and keep well, and thank you once again. And also, in the name of my colleagues, goodbye.