thyssenkrupp AG

Yes. Thank you very much, operator.

Hello everybody. Also on behalf of the entire team, I wish you a warm welcome to our conference call on our financial results for Q2.

As always, all the documents are available on the Investor Relations section on our website. The financial numbers have already been released this morning at 7:00 AM CET.

As always, also the presentation of our management team will be followed by a Q&A session that will be moderated by the operator. And now, I would like to hand over to our CEO, Martina Merz; and CFO, Klaus Keysberg.

Martina, please the stage is yours.

Thanks, Claus. Ladies and gentlemen, good afternoon from Essen and a very warm welcome also from my side to our conference call on thyssenkrupp's Q2 and hence first half year results.

Before we begin please allow me to say that our thoughts continue to be with all people suffering from the war in Ukraine. This war has now been going on for more than two months, bringing death, destruction and violence to uncounted innocent people.

It is against this background, that we today report our financial numbers, as well as our progress in performance, portfolio management and transformation. Before I will provide you with some more detailed information, let me briefly give you a status update on current rating and geopolitical conditions for our businesses.

This next slide, quite a bit of information, which is why I would like to pick out just two or three specific examples and show how we specifically tackle the challenges we face. So as a direct impact of the war, we are terminating step by step all our sourcing activities from Russia, including crucial raw materials we need for our steel production.

We are able to leverage our strong and diversified supplier base and are now sourcing these raw materials, for example, from North and South America. Yes, this means some additional efforts for us, but the upside to ensure stable supply and independence from Russia weighs in a lot more.

As another example, we have to deal with higher factor costs across all our businesses. Therefore, it is of great importance for us to pass those cost increases on.

I'm happy to say that the salespeople in the businesses are doing a great job. For example, at Materials Services and Steel Europe the margins are clearly going strongly in the right direction, of course, also thanks to the very favorable trading condition.

In our components businesses, Industrial Components and Automotive Technology, a large portion of the cost increase will be compensated already in the current fiscal year, but also less predictable call-offs by our customers from the automotive industry due to supply chain shortages have to be considered. Looking forward, accumulated auto demand will push production after the relief of supply chain constraints.

In order to mitigate financial impacts, we put direct counteractions in place with temporary short-time work, cost savings and rigorous CapEx management amongst others. Regarding the longer-term consequences of the geopolitical situation or economic conditions in Europe and on a global scale, it is today by far too early to make an assessment.

However, it has become obvious already that a push for renewable energy supply and the multiple market transformation trend is arising and that is including the green trends where we are well positioned to have a meaningful stake. I will come back to those in the course of my presentation.

Looking back now on the first half of the fiscal year, we can certainly say that our performance further improved and even exceeded our expectations until the start of the war in the Ukraine. All those key financial figures show a positive quarter-over-quarter and also a positive year-over-year development as promised; with free cash flow before M&A being the exception, of course, for clear reasons, as you will hear later from Klaus.

Order intake is standing out plus €3.2 billion increase. This step increase being mainly related to a large submarine order at Marine Systems and the very favorable development of Materials Services and Steel Europe.

For EBIT adjusted, we recorded a very strong result with a six-month figure of €1.2 billion and a margin of 6%. However, we also have to clearly point out that we did not meet all our previous expectations.

For free cash flow before M&A this means that the Q2 result of minus €0.8 billion is below our prior expectations. The main driver here for this development is the rise in raw material prices and thus a significant temporary net working capital buildup currently a challenge for the entire industry.

Now on the next slide let us jointly take a look where do we currently stand with our transformation program. As you know and as we explained in previous calls, we like to use the simple framework of the sideway view as an illustration for our plan.

Focus is about ensuring that we concentrate on a portfolio of businesses for which we believe to be the best majority owner. This is about structural changes, changing existing structure and creating new ones.

It also sets the structure in which performance improvements can happen. We are well on track having fixed our balance sheet by selling the elevator business for an excellent value and we streamlined our portfolio with the sale of AST mining infrastructure carbon components and the closure of heavy plate.

We've improved. We concentrate on clear performance improvements for all our businesses as the overarching goal and bring them to their target KPIs, while at the same time, decentralize the organization.

We can already see the significant progress by looking at the development of EBIT adjusted and free cash flow before M&A figures over the last year. Let me clearly state with these achievements thyssenkrupp has significantly gained in resilience.

And last but not least, we will scale up proven and performing concepts and add new pockets of growth bonds, solid performance levels have been achieved. Looking ahead we will even stronger focus on our customers enhance and enhance our competitiveness by pushing the quality of our technologies and services we offer, which finally create additional margin opportunities.

At the same time, we will relentlessly continue restructuring, while pushing performance and striving for selective growth. And we will continue to actively manage our portfolio and crystallize value.

For example, as you know for TK nucera, our world-class electrolysis business an IPO remains our preferred option. Alongside those actions, we will keep our balance sheet in shape.

And in essence, we are further enhancing the structural fundamentals for our businesses so that they can capitalize this profitable growth and generate attractive value perspective for our group of companies and thus for our shareholders. And last but not least, we will continue to execute our well-defined decarbonization program in order to meet our stated climate targets.

Next, I want to provide you with more granularity why we are despite the current challenges well set to make use of the potential opportunities and also cope with prevailing market uncertainties. Let me guide you along the five key buckets on the slide.

Firstly, strong balance sheet. We continue to have a strong equity ratio and net cash position.

The closing of the signed M&A transaction for Multi Tracks AST in January and mining most likely towards the end of the fiscal year will have a significant positive effect on our net financial position, and additionally decrease pensions. Also our stake in the elevator business represents sizable value on our balance sheet.

And next, our value options from continuation of portfolio management. As already mentioned, the IPO of our hydrogen business remains our preferred option to crystallize value and support the development of the business.

At the same time, we are in preparation for M&A processes for further units for Multi Tracks namely automation, engineering and Springs & Stabilizers. Concerning the planned steel spinoff.

As we told you already in our ad hoc statement in March, the current economic conditions do not allow for final decisions at this moment. We always said that the main prerequisite for implementing a stand-alone solution for Steel Europe is clarity on concrete funding commitments from government and the framework for green transformation.

At first, we were promised that clarity should be reached for the end of last year then for February. And in other words, we still have no clarity.

Moreover, with the beginning of the Russian war in Ukraine, it was clear that this would have significant negative impact on the group's cash flow including Steel Europe. Against this backdrop, we decided to remain cautious and put the further implementation of the standalone solution on hold for the time being.

However, we see good -- we see very good prospects for the future in the standalone solution for the steel business, even though the concrete form of implementation remains to be resolved for the moment due to the geopolitical situation. The integrity of this process is also underpinned by the fact that we appointed independent members to the Supervisory Board.

Looking at performance now, portfolio management and restructuring, our largest restructuring progress is strongly progressing and Klaus will tell you more in his presentation. The same goes for our progress with the Multi Tracks segment where we already sold or exited more than 50% of the businesses.

Now leading technologies. engineering.tomorrow.together is our claim and we are proud that this claim underlines more than 200 years of engineering excellence.

And let me say again thyssenkrupp truly is a tip-top company and there are numerous impressive examples. Many of them have been high licensed by the leadership team of our segments at our last Capital Markets Day.

With this expertise, we see our first as a key enabler also for the green transformation. And I will come back to that in a minute.

Last but not least, ESG. Strongly connected to our technology position and ranking high on our priority list is our ESG focus.

And this is why the responsibility is with me as the CEO. Now, before coming to the end of my presentation let us look at the aforementioned green transformation including decarbonization in a little more detail.

At thyssenkrupp, we are firmly committed to shaping the green transformation as an opportunity rather than managing climate change. And we are determined to use and contribute our competencies in our several businesses along the green value chain accordingly.

For us this is not just about becoming climate-neutral ourselves, we want to be and we can be part of the solution for the entire systems. thyssenkrupp owns clearly key competencies for the green transformation of our economy.

And because we as a group of companies have something to offer at these three crucial points of the green transformation; demand, supply, and infrastructure. Let me start with demand in this famous triangle.

By converting our steel production, there will be a large and reliable consumer of renewable energies and high return. The decarbonization of the steel industry is a very big lever to quickly achieve significant progress towards climate neutrality and to consequently also achieve the national and international climate targets.

To give you an idea about the dimension, Steel Europe alone is today responsible for 2.5% of Germany's CO2 emission, being Germany's largest steelmaker. And another figure being important in discussions around the globe the hydrogen demand of thyssenkrupp's steel unit represents in terms of energy consumption 25% of German households.

And this demand of hydrogen plays a key role in Germany's negotiations for energy partnerships around the globe. Now, coming to the second crucial point of the green transformation supply.

With our hydrogen business, nucera, we are one of the few suppliers in the world able to offer already today technology for the production of hydrogen on a gigawatt capacity scale. We see significant lever fast movement in commercially feasible business cases right now.

And last but not least, in this triangle, we are also active and own key competencies on the infrastructure side. Our plant engineers at Uhde are experts in the construction of ammonia and methanol plants, most likely the future transport medium for importing green hydrogen from other regions of the world to Europe.

And with our innovative slewing bearings, we are enabling the further expansion for wind energy in the first place. Wherever new wind farms are built, there is a high probability that thyssenkrupp technology is involved.

These different competencies in forward-looking technologies and different perspectives on green value chain make us a unique partner for green transformation. Nevertheless, we are of course aware that we cannot solve the challenges alone and we need strong support from politics, businesses, sciences, science and society as a whole.

Only then, we altogether, we altogether can successfully finalize the green transformation story. Be cautious on time.

I will keep my remarks on this last slide. Apart from the big overarching topic of green energy and decarbonization, also play a significant role into other transformational trends, advanced mobility and digitalization.

Since Klaus presented those two topics and provided some detail in the Q1 call, we will skip those today and will instead now quickly hand over to him. Thanks to all of you from my side and happy to take your questions later on in the Q&A session.

And now Klaus, over to you.

Yes. Thank you, Martina.

Ladies and gentlemen, also a warm welcome from my side to this today's conference call. So let me now guide you through our financial figures and give you additional background information on this.

So, as you can see here overall, on group level, we achieved the best EBIT adjusted in over 10 years with a result of €1.2 billion for the first six months, constituting an increase of almost €900 million compared to last fiscal year. We even exceeded our expectations until the war in Ukraine broke out.

The subsequent serious increase in material prices and the effect from already strained supply chain temporary burned our working capital and thus our free cash flow before M&A. Now, looking at EBIT adjusted for our individual business segments.

At Materials Services and Steel Europe, we see year-on-year increase of more than €400 million and respectively more than €500 million, also supported by favorable market conditions and the strong market positions of our businesses. At our component business segment, Industrial Components and Automotive Technology, we noticed the sharpened supply chain constraints and higher input factor costs, leading to year-on-year decreases of €77 million for Industrial Components and €143 million for Automotive Technology.

At Marine Systems, we see a slight increase of €2 million, whereas we recorded a significant improvement of €156 million at Multi Tracks, mainly driven by AST and the closure of heavy duty -- Heavy Plate. This shows that once again our transformation is further progressing and we are taking the right actions.

And let us now leave the six-month perspective and come to our Q2 figures and on the next slide here. As you can see, across all segments order intake has grown significantly by 57% year-on-year, mainly driven by MX Steel Europe and Marine Systems.

For the latter, particularly to mention the big-ticket submarine order of €3 billion which further grew the already recorded high order pipeline. Concerning EBITDA adjusted, we have been able to lift our result by €578 million year-on-year to €1 billion and mainly driven by strong margin expansion at our materials segments, Materials Services and Steel Europe.

At Steel Europe, as announced in previous calls, we start to see a ramp-up pass-through of increased market prices to our customers. In Material Services, we profit as well from overall very positive market conditions.

With regards to free cash flow before M&A, we recorded a year-on-year decrease of 3% resulting in a total figure of minus €172 million, mainly due to temporary negative price-driven effects on net working capital mentioned before. As an outlook, we expect net working capital conversion into earnings and cash flows and thus an improvement of our free cash flow in Q3 and Q4.

The next slide depicts and summarizes where we stand with the restructuring plans of our businesses. As you know, we extended our restructuring initiatives to a total reduction of more than 12,700 FTEs, which we marked the largest restructuring program in thyssenkrupp history.

As of today, we already achieved roughly 70% of our target, which means in absolute terms, a reduction of more than 8,900 FTEs; the majority therefore with 60% in Germany. Until the end of this fiscal year, we plan to further reduce 900 FTEs, which leaves us with a remaining number of roughly 3,000 FTEs to be reduced until midterm.

Looking at the respective restructuring expenses and cash-outs, we expect a full year fiscal year 2021/'22 cash-out figure on a broadly similar level to the previous years. As the vast majority of the provisions has already been made with a total amount of roughly €900 million, we will no longer see sizable negative impact on our P&L figures in the next years.

Based on these restructuring efforts, we have already realized sustainable savings in a low to mid three-digit million euro range during the past fiscal years and expect that figure to rise to a sustainable high three-digit million figure in the midterm horizon. Let me now walk you through each of our business segments and briefly highlight some major developments of Q2 2021, 2022 in the following starting with MX the segment accounting for the largest share of our TK Group of company sales.

Compared to Q2 of the last fiscal year, we have seen nearly unchanged shipments mainly driven by supply chain constraints in Europe. However, sales clearly benefited from increased prices in all product groups and geographical regions, showing a strong year-on-year increase of 55% and now amounting to roughly €4.4 billion.

EBITDA adjusted shows a strong development in line with sales increasing by €208 million year-on-year to a total of €368 million with an additional margin expansion to a record ratio of 8.3%. This is supported by ongoing restructuring efforts with the closure of four additional locations.

High cost inflation, especially for freight did only have a partial counter effect to the aforementioned cost savings. As a market forecast for 2022 S&P Global and CRU shows for carbon steel broadly stable to slightly softer volumes in Europe and growth for North America while tonnages for stainless will grow in both regions.

As a fundamental trend in industrial materials supply, we expect increasing demand for supply chain and processing services for which MX segment is especially well positioned through its materials as a services strategy. Now moving on to Industrial Components.

For order intake we observed an 8% year-on-year increase leading to a total of €707 million. For sales we also saw a strong performance with 13% year-on-year increase and the total figure on the same level as order intake Looking at the sales drivers for our two businesses in this segment in more detail.

We noticed continued growth in industry businesses for bearings offset by temporary lower wind energy demand in China. For Forged Technologies, we also saw growth in the industry business as well as the continued high demand at truck components.

As a counter effect, we saw a softening demand for passenger cars components. EBITDA adjusted shows a year-on-year decrease of €30 million to a total Q2 figure of €91 million.

Regarding margin we saw us decrease to 12.9%. The drivers behind this on business unit level are increased factor costs and higher competition for bearings which could be partly compensated by operational measures.

And for Forged Technologies we observed increased factor costs in a similar way partially compensated by continued cost cutting measures and price performance Fundamental market trends for this calendar year show an ongoing temporarily flattened wind energy demand in China for bearings, especially due to prior pull-forward effect caused by subsidies. However, overall wind market outlook was recently increased and political discussions on energy independence in Europe might potentially accelerate a trend towards renewable energies such as wind.

Forged Technologies continues to face high demand for construction machinery and heavy-duty engines. Next up is Automotive Technologies.

Here we are experiencing two factors that negatively affected our performance. First, the ongoing supply chain, especially semi shortage; and second OEM production stops due to the Ukraine war and lockdown in China.

Also important to notice. Positive FX effects had only a partial offsetting effect.

That is why in a year-on-year comparison both order intake and sales are down in the low single-digit percentage range. Simultaneously, EBITDA adjusted is substantially down year-on-year with a decrease of €70 million in the total figure of €58 million.

This is mainly due to increased factor costs for logistics and materials as well as lower plant capacity utilization, partially offsetting factors with performance and price measures. Concerning future transformational trends we continue to be well positioned for the main drivers.

Just to give you two short examples. Our electrical steering solutions and rotor shafts are tailored for the e-mobility and automated driving trend and our car body solutions and safety critical parts go directly in line with the demand for lightweight solutions.

Continuing with Steel Europe. We noticed a year-on-year decrease of 6% in shipments to a total figure of roughly 2.54 million tonnes.

Main driver behind the decline was lower demand from OEM customers again related to supply chain shortage situation. However, Steel Europe is up quarter-on-quarter due to higher call-offs driven by auto client seasonality until the start of the war in Ukraine.

As already forecasted, in the last conference call sales are up with 52% year-on-year driven by significantly higher selling prices also from renewed contracts. This was partly offset by lower shipments.

EBITDA adjusted is also significantly up by €479 million year-on-year to a total now of €555 million. Looking at EBITDA adjusted per tonne, we see a value of €218 per tonne, which is more than five times the value from last year.

Another factor contributing to the steep EBITDA uplift apart from price increases is the accelerated restructuring program of Steel Europe here almost 1600 FTE has already been reduced and this was now quicker than initially planned. Now let's move to Marine Systems.

For order intake, we saw an extraordinary steep increase year-on-year to a Q2 value of more than €3 billion, with a total order backlog of roughly €14 billion being at a record high. Main driver behind the Q2 year-on-year increase is a large submarine order for Israel.

Moreover, existing service vessel contracts have been extended. And we noticed further large orders in maintenance service and marine electronics.

Despite being down by 31% year-on-year sales volume is well on track here. I would like to point out that the previous year Q2 figure was elevated due to a handover of the service vessel for German Navy.

EBITDA adjusted, is up by €2 million year-on-year, with an EBITDA adjusted margin expanding to 4.2%, backed by the optimization of administrative costs and a clear focus on performance improvement here. We already successfully managed to stabilize margins of our backlog of orders.

Last but not least, let me come to our Multi Tracks segment. Concerning order intake we saw a decrease of 5% year-on-year due to the closing of the AST sale to Arvedi.

Yet, a majority of our businesses in the Multi Tracks segments: mining, Uhde, nucera and Automation Engineering show a significant increase in order intake. Sales are down year-on-year by 30% to €993 million mainly driven by, the closing of AST and decreases in two of our plant engineering businesses.

For EBITDA adjusted we see a significant improvement year-on-year by €41 million to minus €14 million further guiding towards breakeven. The performance increase is mainly coming up from AST and the closure of heavy blade, partly offset by planned engineering and Springs & Stabilizers.

Furthermore, ongoing restructuring of assets and cost cutting measures show additional positive effects with a total of 2,600 FTEs already reduced. And now looking at the M&A transaction at Multi Tracks, I am pleased to report that the closing of the sale of AST had a positive effect of more than €600 million on tk's net financial position in Q2.

Finalization of the sale of the mining business is subject to one last merger control approval. Closing is expected to take place shortly before the end of this fiscal year, and will have also a positive effect in a low-to-mid-three-digit range number.

After this, deep dive into our business segments, I would now like to briefly comment on the current situation for materials and input factor costs, without going into the detail too much. As you will have noticed, this is a topic that I already mentioned various times during my remarks today.

If you look at the diagrams on the left-hand side, of the slide you see a particularly high volatility in prices for raw materials and energy in Q2, that challenged us throughout our businesses. Most pronounced at our components businesses: Automotive Technologies and of course Industrial Components, because there for contractual reasons the pass-through can always take place in let's say, in a certain amount and with some time delay, and will not be entirely possibly this pass-through in the current fiscal year.

At Materials Services and Steel Europe, the situation is more favorable as discussed before. Going forward, and as a base assumption for our guidance for the remainder of the fiscal year 2021/2022, we expect, low visibility to continue going forward.

Energy prices will most likely stay high, mainly driven by the increase of European gas and electricity prices. Regarding raw materials and factor costs we assume, a broadly average Q2 level.

And as a last point, we assume unrestricted availability for fossil fuels in the short-term. Before I come to the last slide of today's conference call, let me comment on our updated view of the current fiscal year 2021/2022.

We consider low visibility for potential relief, in customer call-offs and supply chain disruptions. And we will also continue to closely monitor ongoing geopolitical disruption as well as COVID-19-related lockdowns, such as most recently in China.

And as a group CFO, for me, the most important statement is, at year-end we will see significant improvements across all KPIs compared to last year and that's been despite the challenging market conditions we currently face. However, and as you will know, our initial forecast for free cash flow before M&A was more aggressive as we are planning -- as we were planning a result around breakeven.

In March, however, we had to suspend that forecast, due to rising raw material prices and therefore price-driven temporary negative impact on the net working capital. Now, we are expecting a negative mid-three-digit million figure, for free cash flow before M&A for the full year, which will still be a significant improvement compared to last year's figure of minus €1.3 billion.

For sales, we now expect a low-two-digit percentage growth coming from the previous year sales volume of €34 billion. Here, we will continue to have ongoing strong contribution from our Materials Services and Steel Europe businesses.

Initially we expected a mid-one-digit percentage growth. Also for our EBIT adjusted, we raised our forecast and expect the full year number of at least €2 billion.

We expect this positive development to carry through to the bottom-line with a forecast value of at least €1 billion for net income. This compared to last year's loss of €25 million.

On thyssenkrupp value added we also be significantly positive in comparison to minus €622 million in the last year. This shows we do not only generate significant earnings but also managed to earn our cost of capital and earn value for shareholders.

Concerning our net cash position, we expect a value of more than €3 billion at year-end due to positive effects from M&A transactions. At the end of today's presentation, I would like to summarize the key aspects before we start with the Q&A session.

We have seen the best EBIT adjusted for the first six months in more than 10 years with particularly strong contribution from Steel Europe Material Services outweighing softness in components businesses. Our largest restructuring program in tk history is well on track with more than 8,900 FTEs already reduced.

And for nucera we continue with an IPO as the preferred option to crystallize the value of the business. As mentioned on the previous slide by year-end, we are expecting a net cash position of more than €3 billion due to positive effects from M&A transactions.

Our pension liabilities will see a year-on-year decrease due to rising interest rates and thus higher discount rates. The equity ratio will remain larger than 30%.

We raised our forecast for EBIT adjusted to a number of at least €2 billion, representing a significant uplift to our previous forecast of €1.5 billion to €1.8 billion. Free cash flow before M&A is now expected to come in around a negative mid-three digit figure.

Having said that, I would like to thank you for your attention and we will be happy to receive your questions.

Thank you very much Klaus. Thank you very much Martina.

And now we can hand over to the operator for the moderation of the Q&A session. Operator, please take over.

Good afternoon. Thanks for taking our questions today.

If I can start out please with a couple of questions with regards to your raw materials cost position. I wonder if you could give a bit more color by division on the ability to pass an elevated input cost to customers.

Starting in steel back in March your team talked publicly about efforts to actually renegotiate annual contracts in light of the surging raw materials environment. Was that successful?

What are the implications for margins as we look forward to Q3 and beyond? And then secondly in the components businesses autos and industrials.

In your prepared remarks, I think you said that you will not be able to fully pass on input cost pressures in this fiscal year. How should we think about margin progression in H2 and looking ahead to fiscal 2023?

Thank you.

I'll start with the first question. So regarding the -- of course we see raw materials increase, heavy raw materials increase in every kind of our businesses.

I think this is very clear. But if you differentiate between the businesses we are looking at, I mean if you look at Materials Services business, we are not talking about fixed contracts.

So we are able to in every point of time can set the price and then let's say pass-through any material -- any raw material cost increases. For Steel Europe, it is -- in this kind of market circumstances we are, it's also that we are able to do so.

I mean you mentioned these long-term contracts. I mean, it's very clear that we have these contract negotiations for April and we will have some for July.

But I can tell you we are quite successful with bringing on higher raw material costs into our prices, especially for the contracts, which are not closed but I can also tell you that we are talking with every of our customers regarding this. And we are quite happy with the development on this, which you can read in the figures here.

And we are quite optimistic that regarding the margins you can see here that we will see it on a similar level during the year the remainder of the year. If you look at the components business, I mean this is a bit different.

I mean components business you are always working in fixed contracts more or less. And if you then now face higher material costs or energy cost.

In the components business it is somewhat usual to pass-through material cost increases, but energy cost increases and other costs are a bit more different. So you have to go to every kind of customer and renegotiate.

This is what we are doing. And -- but our let's say thinking is that or it is from our point of view at the moment, we do not plan to be 100% successful to pass over all of these effects.

This is what we are saying.

Maybe Klaus you allow -- maybe something, which you already can read in news tables. It's pretty visible to what Klaus said that we see different profitabilities from OEMs in certain business segments versus sales supply base Tier 1s as we call it the component suppliers.

And this may lead to let me say to a strengthening of the innovation capabilities or non-capabilities in certain business segments. So, if you look forward, I'm sure that is let me say, this segmentation will source suppliers to strengthen their individual market positioning, because the network between OEMs and their customers is what at the end of the day create sustainable markets.

And so these different profitabilities will I would say over a certain time will come back -- will get closed, again, I'm sure. Instead, we would face significant disruptions in certain industries.

Thank you very much. I guess just a follow-up with regards to the components businesses.

When we think about your margins in the second half of the year and looking ahead to 2023, do you feel more confident that perhaps looking into the next year you'll be able to pass on these raw materials costs, or is your view that essentially for the foreseeable future, those margins will remain under some pressure? I recognize you just gave some mid-term guidance several quarters ago.

Does that still stand in light of this current market dynamic?

If I got the question right, because you're a bit interrupted. But when I heard the question right, you were asking about the margin development for the second half year but also on the mid-term outlook.

So, this is what you're saying. So, I mean, it's clear that when we make new contracts, over time we make new contracts then we have to pass-through these cost increases.

So, this is the daily fight we are in. And if you look at our Components businesses here, we are in good discussions with our customers in passing over these cost increases.

It's never an easy story. But when we talk to our customers, we are -- let's say, we, at least have a year on this.

So we are quite optimistic that we will come to a quite good result out of this. I mean if you look at the second half year, if you look for instance for automotive technologies, this is not only a question of factor costs.

It's a question what will be, let's say, the demand of the OEMs. If you look at the OEMs, the good message is they still have a big order intake.

They still have a big order intake but there are three issues, which you face when you look at the OEM business. The first issue is, of course, the Ukraine crisis.

We talk about this wiring harness. To be honest, this wiring harness is not so much an issue any longer.

We saw this in Q2, but we do not see so much issues about this in the second half year. The COVID situation is still has something to do with local shutdowns.

We do not -- where we are not in a position to really say how long this will last. And the second and the third thing is the still ongoing problem with supply chain in the semiconductor.

So what we see on what our customers are saying is that we see in maybe some problems in our Q3 regarding the volumes, but coming up in the second half of the calendar year. So this is what we're expecting regarding the volumes.

So -- and then coming back to your question regarding the factor cost and the pass-through, we are working on this. But we see, let's say, in -- for the overall fiscal year, of course, of this effect, we see lower margins than originally expected.

And -- but to be also very clear, if you look at this margin, we are expecting we do not have to hide behind our competitors. If you look at their, let's say presentations recently, we are on a good way.

Every kind of, let's say, Components business, automotive components business is in the moment in the situation that there are some problems with factor costs. We are working on this with the results, which are coming out.

We definitely think that we do not have to hide behind our customers, also in the mid-term.

Okay. Thank you very much.

Thank you very much. Two questions from my side.

The first one is on steel, which has quite an outstanding quarter. Could you shed a little bit of -- sort of a little bit of light on how much the renegotiated order contracts contributed to the results, and whether you were able to redirect some of the lower auto call-offs to other customers?

And if so, to what magnitude please? That's the first kind of question.

The answer to the first question, of course, it is now the time that we are able to transfer the spot price increases to the long-term customers. And this is what you're seeing over the margin.

I mean you saw the EBITDA per tonne of €218. And if you look at the March figure, it was even higher.

And this is definitely what we always said. Now, it's coming to terms here.

And this is clearly what we're seeing. Yes.

And the second question, the answer is, yes, we were able to shift some of the volumes to industry customers. The volume we will not provide such kind of figures.

You know this. I mean you saw in our presentations, what kind of -- at present what kind of shipments we had.

And if you make the calculation you see that in the shipments we are let's say a bit behind of what we originally planned. This is very clear.

But I mean we have a higher sensitivity on margins on spreads than on volumes here. And therefore, you can see the good result we are reporting to this quarter.

Okay. Perfect.

The second one I have is on pensions. I've seen that you have adjusted the pension discount rate by about 60 basis points.

However, we have seen since the end of 2021 that the AA-rated corporate bonds moved up by about 150 basis points. So my question is, do you think there is still scope for further adjustments here in the pension discount rates in the next quarter?

In the next quarters to come? I mean, if you ask me for a feeling I would say yes.

I would definitely underline what you are saying, but I cannot give you let's say an indication of how much this will be. But I think in your direction yes.

Okay, perfect. I will just jump back in the queue.

Thank you very much.

Thanks everybody. Two questions from me.

First one is perhaps for Martina and maybe the second one, well maybe for Martina as well. Firstly, just on the hydrogen IPO.

Given the volatility that we're seeing in markets near term, if you decide that the IPO market isn't open what is the plan B? So that's the first question.

Second question is just on the portfolio and particularly Materials Services. You framed the future of thyssenkrupp as an industrial technology business.

So steel is out Industrial Components is in Automotive Technology is, in hydrogen is in. How do you think about the suitability of Materials Services for thyssenkrupp version 3.0?

Is this a core business?

So first the hydrogen IPO and your question that there is a plan B. So first nucera of course benefits from the overall market environment.

The market environment for hydrogen is still very positive and nucera's results are very positive too. So we do not see actually and I hope I do not sound too overconfident, but for the time being the pushing out of the IPO possibly, does not mean that we see any let me say any negative impact from that to us.

As I said markets are developing positively. The asset is developing well.

So that means that we can easily afford a discussion of what is a good time for an IPO. So we do -- we are very committed to develop the asset.

And as said we are evaluating what's the perfect time for this IPO and we owe our shareholders to you that we weigh this very carefully. And we do not assess the asset is developing very well.

In well-developing markets we are strengthening our position honestly. And all this discussion regarding energy partnerships between Central Europe or Germany and other countries is definitely strengthening the hydrogen -- the demand for hydrogen.

So I would say that this -- there is no plans to be needed. We prepare for IPO.

Secondly, the question what is our view on the Materials Services business. Actually Materials Services is -- the second word is service.

So here the value proposition within this business is driven by the businesses' capability to serve the customers with first services in a trading -- typical trading business, but you know that the additional value proposition comes from the digitalization of our, let me say, value chain within the Materials Services business. So based on this statement, I would say, Materials Services is an industrial business because if you compare it with other industrial businesses it shares the same key enabler for value -- for shaping the businesses going forward and increasing value to all of us.

So I think we often see materials, but it is Materials Services and in the services is the value proposition. And by that I consider it an industrial business.

Okay. Thank you very much.

Thank you very much. Based on the current condition and everything being equal what is your view on when you'd be able to report a neutral free cash flow?

Is it sometime next year or is that further away?

Yes. Thank you for the question.

So, I waited on this. I mean if you look at the response of our guidance today, we got let's say positive remarks on the EBIT but negative regard on free cash flow.

Let me explain the free cash flow. We always guided to free cash flow on a breakeven level for this year.

And we always said we have structural effect on this and the structural effect is the invest -- the CapEx is higher than the depreciation is the one. We do this by intention because we want to develop this company.

The other thing is the cash-out for restructuring which we still have and which we still see. And the other ones is that, we still have loss-making companies in the Multi Tracks business which we are going to solve.

So all of the structural effects are temporarily. So now coming in a situation where we see this kind of increase of working capital on inventories and as you can imagine also on receivables because you know what the sales -- what the price is doing with the sales.

So, we see price-related effects in the inventories and price-related effects in the receivables. And this is something when a CFO is talking about free cash flow, I'm very much alerted to this.

But this development now in this year taking into account this kind of price effects we see here, I have to say knowing that we do not have any additional structural effect the thing we see in the cash flow and the thing we see in the working capital is only price related. And everybody of us knows the price-related increases in working capital is at some point of time converting to cash flow.

So -- and therefore it is not good. Yes.

I would have wished to have it this year. But it is not coming to a big surprise, if you look at this development here in the prices.

So -- and of course, it is our clear intention and we do also we do not have to plan but we do see good chances to have free cash flow next year positive. Yes, of course.

Okay. Great.

That's very clear. And second question is, in fact what you mentioned Multi Tracks.

In the quarter we still had a bit of turn in the Multi Tracks performance, EBIT performance. Looking to the second half, I assume that without EBIT we're going to see more losses in Multi Tracks.

Could you just say, which are the areas which are more loss making? And again here whether you think that we'll be able to go back to a neutral EBIT at some point?

Yes, that's right, yes. We will see more loss contribution in second half year not having AST on board.

This is clear. We do still have some bad orders in our, let's say, order in our chemical plant technology business, which are running out.

And therefore, the perspective in the future is definitely going into a better way. And with the Springs & Stabilizers business, we do also have some issues and this is -- but this is -- the restructuring is ongoing there.

So we clearly, are working on this. So we know the problems, but we are working on that.

But which part of the business, is more loss making? Could you guide us on, which part is perhaps more suffering right now, from the cost environment?

As I said, so this is the chemical plant business and the springs business. These are the businesses, which are at the moment suffering.

Okay. Great.

Thank you very much.

Good afternoon. Thanks so much for taking the questions.

I have two. I'll tell them one at a time.

So the first one Klaus, you just mentioned you're investing more or structurally you're having CapEx above D&A. But obviously, you brought the CapEx guidance down quite materially for this year.

Could you just touch on, which areas the savings are coming from? And whether or not we should think about this lower CapEx, as a change allocation policy, or you're simply just pushing that CapEx out, maybe to 2023 or 2024.

That's the first one.

I mean, yes, it's clear that we also reduced CapEx and the amount, we are let's say we think that we could reduce is something about 20% or something roughly from that what we had originally planned for this year. We do have of course our rules, how to do this.

And it has also something to do. I'm not talking too much into details, because then we would go into really a project level.

But it also has something to do simply companies who are not fulfilling their free cash flow plan they are not allowed to invest, so in a way they originally planned to. And this is of course, one first guidance you can consider for yourself.

But at the end of the day, as you said before is it something that we will see in the next fiscal year, again? Some of this, yes, but not all of this.

Okay. That's clear.

And then the second question, please just on Materials Services. Clear numbers from the quarter over the last 12 months.

I think it's more than €1 billion EBIT. But if I compare that to sort of your medium-term 2% to 3% EBIT margin, if I took that margin target it implies EBIT more like €300 million to €400 million.

So there's quite a big gap there. Could you just help me or help us explain the difference, how much is windfall gains, or how much is maybe your midterm guidance being too conservative, or if there's, anything else that was sort of missing there.

Thanks.

Yes. I mean, this question with the windfall gains is always a difficult one.

I mean, it is very clear that market conditions now is – they are very good. So, and for us it is clear that our midterm targets are the right targets.

And if you consider now, the uplift we see at the moment comparing to the midterm targets, if you consider this a special market effect then I would not, let's say, say that you are wrong yes. You know, what I mean?

So over the cycle over the cycle not over the cycle in the normal business environment the midterm targets are okay. So, now we and also our competitors are really benefiting from the situation we see at the moment.

Okay. So just to confirm the €600 million to €700 million EBIT difference, if you imagine that steel prices went back basically to where they were sort of pre-COVID, you would expect to have sort of €600 million or €700 million to reverse alter Materials Services earnings.

That wouldn't be too far off.

This is not too far off, but this is a very theoretical observation here. So it always depends on timing and the situation on the cyclicity and something like this.

But in principle, it is right. But as I said before, it's always a question of timing and cyclicity.

Okay. That's very clear.

Thank you.

Yes. Good afternoon.

Thanks for taking my questions. My first one is actually marine...

Bastian we could hardly hear you. Sorry.

Speak up a bit higher.

Sorry. Is it better now?

Yes.

Yes.

Perfect. Sorry for that.

I've got two questions left please. And the first one is on marine where I think you changed your mind on the plan to find the strategic solution.

What could obviously, are you now is the time to crystallize the value in here as well and to find a strategic solution here? Could you please just maybe give us your updated vision and whether this could be a business, which could do maybe a few hundred million EBITDA in a few years from now?

So maybe I know, it's early obviously but just would like to get your views here maybe if that is possible. That's my first question.

Bastian you answered already your question almost here. It's a bit early.

Yes, of course. Like all the other players in the industry I have to say and it sounds almost cynical but yes of course this extra funding this €100 billion package in Germany and the 2% goal for defense expenses going forward changes the landscape significantly.

And in a changing landscape, we as a first question update with the business opportunities lying in front of us, we update our business plan. And then we weigh what's the best to do with the business.

We always said, and we are still underlining that we are committed and we are good citizen to the country and that to Europe to the world. So we support now number one, our defense industry with new vessels, new summaries and others.

And we for that increase probably our capacities in order to serve our customers and this leads to an updated business plan with which we then assess how to go ahead.

Okay. And you still have a timeframe when you plan to update?

We planned – our regular update is as you know typically before the end of the year, with our annual press conference. But here we depend also on the finalization of the negotiations, with of course our customers because they – we need to get more visibility on the orders to come.

I would say, there is significant progress and significant speak – the speed in the negotiation, but we need more visibility. But I think I'm not going too far by saying that, for the business itself, this is obviously – this is beneficial to the value of the business.

So I think there's no doubt that this is helpful to the value crystallization of the marine business. And it's hard to say this because of all being beneficial to a business development is not so easy to say.

Okay. Understood.

Thank you. Then my next question is on cash flow before M&A.

So here I guess, if we look at the situation it took basically three times, of I mean admittedly very significant raw material price volatility to basically undermine your free cash flow guidance. And the reason for that is working capital and I think you've built I think something around like €2.5 billion, €2.6 billion in working capital in the first half.

That number may come down in the second half, but working capital will always be a massive impact on your free cash flow given the current group structure. That could change maybe, when steel is gone, but still Materials Services is obviously in there.

I appreciate that, these are unprecedented times but the reality is that the announcement on the cash flow side obviously destroyed a lot of value on the equity. Well, in reality your underlying performance has actually trended much better as we could see today.

So there's a big disconnect between the impact of the press release and basically how the operating reality looks like. Is this something which you are thinking about as well?

And is there maybe a way how you could frame the working capital assumption for us in the guidance to basically avoid such a situation in the future? I guess it's not a surprise to anyone looking at the sector here that working capital just goes up when raw material prices go up.

But I guess you're the only company out there with the free cash flow guidance. And I guess one could have run this in a positive way if we adjust for working capital.

With €4 billion market cap you're basically on a 50% free cash flow yield. Anyone would like that, but I guess here it's been taken negatively.

Yes. You're absolutely right.

So in the first moment I thought you would recommend not to guide the free cash flow, but this is definitely not what you were saying here.

I think that's a key number so don't get me wrong.

Yes. Yes, it is a key number.

Don't get me wrong either. So this is also the key number for us.

And yes this is -- we know this. And I mean we have to -- this is also -- we also discussed what kind of guidance do we give for the free cash flow now.

So already also knowing that we still have volatility in the raw materials, but we wanted to give you, let's say, some kind of transparency here and give you an indication of what kind of assumptions we do for the rest of the year to guide this free cash flow. And of course, this -- we think this could help, and also you can make your calculations on that kind of numbers we have.

We can be more precise, yes. But we at the end of the day it is, let's say, having this kind of raw materials and price increases and interruptions, this is something which is very immense and also then of course very difficult to explain.

And let me -- thanks Klaus. Let me add one thing Bastian.

thyssenkrupp, it's really this transformation requires trust from your side into our capability to turn this company sustainably in the right direction for this transparency has a value in itself. So providing you with transparency creates and builds.

This is what we believe a certain trust in our capabilities to really transform this company. And this is via -- in all these discussions these providing transparency to our markets remain important to us.

We had this year-end measures. We had other activities which had always an impact and were overshadowing the real transformation and improvements in the company.

And by providing transformation we see a value in itself.

Okay. Understood.

I think that's all fair. Maybe one very quick last question if I may.

If we look at the guidance obviously now I think you guide for a flat EBITDA -- EBIT in the third quarter. So basically that takes you to like around €2 billion potentially already after nine months and then leave you with one additional quarter where you can obviously generate more earnings.

So I guess the bottom line is it seems like that €2 billion-plus guidance here at least at the lower end is still very conservative. Would you basically subscribe to that as well?

And would you say that the free cash flow guidance here is absolutely bulletproof and actually maybe a little bit conservative as well?

If we come to the EBIT numbers, we think for the third quarter, we say, broadly in line. So this is broadly in line, nothing more, nothing less.

And then, I mean, the visibility for the third quarter is not that high as you can imagine. So we are in a very volatile environment, and of course, we set some guidance we set some assumptions regarding the main input factors, and that's the reason why we said at least.

Nothing more to say on this, and the free cash flow also volatile. So, I mean, you can make your own calculations.

Okay. All right.

Thank you. Thank you for the answer.

Hi. Thanks for taking my question.

Two from me. Just following up from the earlier question around Multi Tracks, but I just wanted to focus a bit more on the mining business that's obviously being sold.

Can you just give a bit more detailed granularity on its performance in the quarter and maybe relative to Q1? And then -- that's my first question.

I'll start there.

Well, I mean, we are not disclosing this kind of numbers behind the Multi Tracks reporting units. So this is something we are at the moment not disclosing.

So if you ask about the actual development.

I would just add absolutely fair. So since we have already sold the business and somehow we are not the owner of the business anymore, we want to be here.

We are a bit hesitant to provide detailed information, Luke. I hope you understand this.

And I mean we won't be an owner of this business for much long time anymore. We have said that we believe it's very likely that we can do the closing before the end of the fiscal year.

This is a clear plan to do so. So and -- so this is what we are planning.

So we will have the business for at least five months or something.

We have gotten in also all the merger control approvals or let's say the vast majority it's only one meaningful merger control pool that we need. We will get it.

Nevertheless, it will take until let's say early -- late summer. So surely within the fiscal year.

Okay. No problem.

Thanks, Claus. And then secondly, just I suppose plus your comments around a good chance or probability of being free cash flow positive next financial year.

We sort of have I suppose the moving pieces in terms of the cash requirements. You've in the past given some good detail on CapEx and we know sort of pension outflows and things like that.

I suppose one area that it's a little bit tougher is just on the conversion of P&L tax into cash tax, particularly given the sort of the -- where the profits are regionally generated relative to where the deferred tax assets sit. So can you give any flavor around how sort of cash tax could move relative to P&L tax, I suppose for this year into H2 and then maybe into FY 2023 as well?

Well, it's probably too -- it's for sure we cannot yet give a guidance for next year to talk about line items in the P&L or the tax statement for next year. What we can say for this year is that, if you want to make your free cash flow bridge or your free cash flow calculation, you can include about €200 million for the cash for the tax cash line, if this helps.

Yeah. That's helpful.

I mean as you can -- I mean also, if you then work the P&L, yeah I have model the P&L. And with the information you've gotten from us, in terms of net income, in terms of EBIT and also an indication for the interest line then you can make the calculation and derive the difference between cash tax and P&L tax.

Okay. Thank you.

Yes. Hi, good afternoon, everyone.

Most of my questions are already answered. But maybe can we talk a bit more about cash flow?

The first point is on your year-end net cash guidance. You were saying you expect at least a €3 billion figure.

So when I look at what we can expect for the second half you see the €300 million or something like that in terms of cash in from mining, you expect a reversal from the working capital, which could be a significant figure. So in a way this year-end net cash looks maybe relatively conservative to the EBIT guidance.

Is there anything I need to put into the equation why you give that number? That's the first question.

Yeah. I mean the explanations you did.

So the first remark on this if you consider this proceeds from the mining transaction which is something we of course report, not in the free cash flow before M&A. This is something is in the free cash flow after M&A.

So this is not included in our free cash flow for M&A three digit. So this is the first thing.

The second thing is you have to think about the working capital. So I mean, if you look at the materials businesses and also the steel businesses, you know that inventories are coming in and also receivables are coming in.

And it takes a little time. So when this is converting to cash, this is something we are looking at it and the numbers are as they are in this constellation.

So that's the reason why I said it is turning out to cash flow, but not to the respective time. We all want to wish it, but it is coming.

This is very clear. So having said this, the mining issue I think if you consider this then it makes it maybe a bit more understandable for you.

Right. From -- as of today, would you consider after the first half build in working capital that it's more likely to issue another smaller build in the third quarter, or are you already anticipating some sort of a release in Q3?

You mean in the Q3?

In the Q3 working capital.

Or for the half year? Let's talk about half year.

Okay.

So what we definitely see is that of course working capital in volumes is going down. Yeah.

And if you talk about values, it is in a way that we see a more flippant development here.

All right. And to understand all the bits and pieces a bit better, can you indicate whether the prepayment for this Israel order has been already received in the second quarter?

And are you planning to get the prepayment for the big submarine order from Q4 already in the current fiscal?

Of course, we are talking about prepayment. Yes, this is something I don't know what kind of prepayment in detail you are talking about, but we did not receive a prepayment so far in Q2.

We are expecting it for let's say the second half.

Okay. And for the big submarine order Germany Norway?

For the big submarine order Germany, Norway we received already one prepayment in Q1.

Okay. Okay.

Got it. Good.

And then finally on the CapEx cuts, you mentioned before you were saying that all those businesses where the free cash flow hasn't been that good there will be maybe some CapEx cuts. What kind of businesses shall we think about?

Because if you're cutting those who were suffering from searching raw materials, maybe you could argue this is an external factor not necessarily or to the individual plant performance. What kind of structural free cash flow weakness or which businesses would be those where you see the biggest gap to your expectations today?

I mean, if we talk about this rule, I just described here this was a very let's say, top-down rule, I explained to you. Of course, in reality it is much more detailed.

It has something to do with projects on the one hand and it also has something to do with the working capital performance the working capital performance before price effects. So, we still see a big connection between cash flow performance and the cash flow performance is very much dependent on the working capital performance.

And here as you said, here we are talking about working capital performance without taking too much into account these price effects. So, you can calculate working capital performance without price effects.

And it is of utmost importance that if some working capital performance is not running quite well then you see some effects on the CapEx. But this is not the only one.

This is not the only one to really say it this way. We are looking at several projects here and are discussing with the businesses that this is not open.

And to be honest in this environment here when we think about reducing CapEx so more or less in every segment, we will use something.

Right. And maybe as a last.

But more or less in every segment we are investing more than depreciation still in spite of Multi Tracks. So this is you also have to bear in mind.

So we are not let's say hindering the development of the business too much.

Of course, sure. And then finally on auto.

It feels like you're pointing to the earliest time point improvement in the call-off rates from your auto customers to happen in your fiscal Q4. How strong is your conviction in that, or how strong are the signals from your customers that after the summer it might get better?

They are very strong. But we are talking about -- if you look at for instance at the normal predictions you see from IHS and...

Market Intelligence.

Market Intelligence companies they are predicting this after the summer. If you talk about with the OEMs they are clearly saying after the summer it is going up.

As I said before order intakes are very high at the moment and this is what they are saying. We are prepared for this.

Okay, that’s great. Thank you very much.

Thank you very much I just wanted to come back on the cash flow. What we have seen this quarter is that the steel business cash flow was surprisingly strong compared to what we have seen with peers.

And looking at the raw material prices and where steel prices went that looks odd. But looking at the klutzy [ph] production compared to the shipments it kind of makes sense, but that would hint that you would actually need to up your volumes in the third quarter compared to the second quarter.

Is that the reason why you actually are getting a bit more, net working capital increase in the third quarter and why you're a bit more cautious?

Well, this is a very detailed analysis. And I cannot say that you are totally wrong with this.

Okay. Good.

Now then, I understood. I was just a bit puzzled because you said from a volume perspective, you do not expect an increase, but that's not what I saw in steel.

Okay. Good.

Thanks.

Hi guys. Sorry to keep coming back to working capital here.

But you have had several years now of big working capital outflows. And I guess we did have the normalization of the distortions that you inherited from the previous management.

But I mean, ultimately, we have seen several billion euros here of working capital outflow. So the question is, how do you think about the absolute magnitude of working capital today maybe in billions of euros?

And then, how would you think about a normal level of working capital for the business? I guess I'm thinking about once things normalize, are we talking €2 billion, €3 billion, €4 billion of working capital that could come out at some point?

Well, yeah, it is a question what is the normalized value if you talk about euro numbers. I mean, this is something we are not so much looking at.

So if you look at, what we are targeting for is more percentage value. And if you look at the right percentage value I think this is something, we already released in previous quarters.

But I look to my colleagues here whether we did so.

We have not yet really given here a commitment or so. Not yet at this time.

Yeah. Okay.

So we are more talking about ratios. And then, if you see, what I mean here.

And maybe this is something we are better in the COVID. I mean, it should go into the direction that we have a 20% operating net working capital from sales.

Maybe this is helping something to you.

Okay. And is that -- do you think that's fairly consistent across the businesses, or would you look at something like Materials Services and say well that's a much more working capital-intensive business?

And just as an aside, do you happen to know what the working capital number would be in Materials Services today?

This is definitely something which is not precisely the number for all the businesses here, but we would not disclose it at this point of time here. So...

Okay, very clear. Thank you so much.

You're welcome.

Hi guys. Just one quick one from me, within the Steel Europe slides you've sort of downgraded your European steel demand forecast for this year by effectively seven percentage points.

I mean, I guess, part of that is also but I suppose that was already sort of known the semiconductor issues back in your Q1 results. I was just wondering, if there's anything that you're sort of sensing on conversations with customers that caused you to downgrade those forecasts, or is it just some conservatism as we get into H2 given sort of inflation everywhere in Europe?

Thanks.

I mean, it's more if you look at the actual present shipments if you look at the actual shipments you see what we already achieved in the first half year. And then, you see we are below our original forecasted numbers.

And of course, if you look at the rest of the year the Q3 numbers will have let's say we do not see really a big improvement in automotive numbers. We do not see them.

Maybe in Q4 but this is too early to say. So this is where we are looking at why we -- how we look at it.

Okay. But I suppose with conversations with customers you're not sensing any sort of panic yet or real pressure on their side?

No. No, no.

No, no. No, no.

Good, very clear. Thank you.

Yeah. Thank you very much, operator.

And thank you very much all for being interested in our conference call today, for your questions and for your lively interest. And as always, after the conference call the IR team is available for you.

So we look very much forward to staying in contact with you. And if you have more questions, please contact us.

Thank you very much and bye-bye.

Thank you all. Bye-bye.