In the first half of 2024, SGL Carbon experienced a mix of ups and downs in its financial performance. While sales dipped slightly by 4% to €538 million, the company's EBITDApre margin rose to 16.1%, reflecting improved profitability. The Graphite Solutions unit enjoyed a sales increase, particularly from the semiconductor and LED sectors. Conversely, Carbon Fibers and Composite Solutions saw declines in sales and profitability, with the latter affected by the loss of an automotive contract. Despite these challenges, SGL Carbon's net result improved significantly, and the company maintained a positive free cash flow. Looking forward, SGL Carbon is banking on a resurgence in the electric vehicle market, which is crucial for its semiconductor segment sales.
Key Takeaways
- Sales decreased by 4% to €538 million, adjusted for currency and portfolio measures.
- EBITDApre margin improved to 16.1%.
- Graphite Solutions sales grew by 1.3%, with semiconductor and LED sectors driving growth.
- Process Technology sales increased by 8.5%, achieving a 22.9% EBITDApre margin.
- Carbon Fibers and Composite Solutions segments experienced sales declines of 12% and 16%, respectively.
- Net result improved by approximately €40 million, with positive free cash flow.
- Net financial debt increased slightly to €119 million, with a leverage ratio of 0.7 and an equity ratio of 44.3%.
- The company anticipates a recovery in the electric vehicle market.
Company Outlook
- SGL Carbon expects a recovery in the electric vehicle market, which could boost sales in the semiconductor segment.
- The company aims to achieve sales at the previous year's level and stay within the guidance corridor for EBITDApre, albeit at the lower end.
- Management is focused on maintaining a positive free cash flow for the full year.
Bearish Highlights
- Sales in the Carbon Fibers segment declined by 12%, with a negative EBITDApre of €4.4 million.
- Composite Solutions sales decreased by 16%, with a 34.1% drop in EBITDApre.
- The company is cautious in its full-year guidance due to a slowdown in the graphite parts segment.
- SGL Carbon is gradually stepping out of the graphite anode material business due to a decline in European battery manufacturers.
Bullish Highlights
- The semiconductor segment within Graphite Solutions grew, especially in silicon carbide, with a 23% increase.
- The company's expertise in hydrochloric acid and phosphoric acid equipment compensates for slower growth in the chemical industry.
- The luxury brake disc business for the automotive industry is not experiencing a slowdown, with increased sales.
- Automotive-related businesses in Graphite Solutions are performing as forecasted.
Misses
- SGL Carbon lost a profitable project in the Composite Solutions segment but expects compensation payments.
- The company had to repay customer down payments of around €10 million in the first two quarters.
Q&A Highlights
- The company only invests in necessary business ramp-ups and expects stronger investments in the third and fourth quarters.
- The Process Technology segment's growth is bolstered by equipment for lithium-ion phosphate batteries.
- SGL Carbon is conducting a strategic review of the Carbon Fibers segment and will disclose developments as they occur.
SGL Carbon (SGL.DE), a key player in the carbon-based product market, has presented a nuanced picture of its financial health and strategic direction during its first-half 2024 earnings call. While the company grapples with challenges in some business units, it remains optimistic about the potential for growth in sectors tied to electric vehicles and semiconductor technology. With a focus on maintaining financial prudence and a positive cash flow amidst market fluctuations, SGL Carbon is positioning itself to navigate the evolving industry landscape.
Full transcript - None (SGLFF) Q2 2024:
Operator: Ladies and gentlemen, welcome to the SGL Carbon Conference Call First Half Results 2024 Conference Call. I am Maria, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Claudia Kellert. Please go ahead.
Claudia Kellert: Yes. Thank you. A very warm welcome to our conference call about the first half 2024. As always our Board members, Dr. Torsten Derr and Thomas Dippold will give you more details about the business development and our expectations for the upcoming months. Now I hand over to Mr. Dippold, our CFO.
Thomas Dippold: Thank you, Claudia. This is Thomas Dippold. Pleasure talking to you and a pleasure to introduce our H1 figures and share this with you. What you can see here is a summary and how we phrase our H1 figures which we are about to present to you. Our development in the first six months of the year is very much in line with what we guided when we presented the full year figures 2023 with you when we shared this. So we are very happy with the development we saw in the first six months of the year. And overall it looks like this on a group level. Our sales went down by 4% last year €560 million and now reaching €538 million. This is a decline of €21.5 million or 4%. If you adjust it for currency and also for some portfolio measures, you remember that we sold Gardena in the United States and also Pune. The two businesses or legal entities in previous times, and we had some remaining sales which we put into corporate at beginning of the year 2023. So if you took this out like-for-like and also took out the currency adjustment our sales dropped by 22%. However, our EBITDApre went down by 1.7% or €1.5 million now reaching €86.5 million compared to €88 million the year before. That shows that our margin went up. So when the result declines are lesser than the sales that helps that we increase the margin. We now have a very healthy 16.1% EBITDA per sales margin and we're very happy with that development. And what contributed to that are two things. It's mainly the product mix change that we continuously see in our Graphite Solutions business which has a positive effect on the EBITDApre margin, but also the decline of the loss-making entities that also helped very much that our portfolio gets more and more profitable. When we come to the business units what you can see here on the next slide, slide number 5 for those who don't -- can follow the presentation online but have it on paper or on their laptops. Graphite Solutions has significantly improved the profitability. And this is mainly because of -- the main driver is Semiconductor and the LED business as it used to be also in the quarters before. However, the increase on a year-on-year level slowed down to 13%. You probably remember in Q1, the year-on-year comparison was 34% increase and this has significantly declined in H1 or with Q1 and Q2. But we are still up 13% compared to last year. And we have a separate chapter on that and Torsten will present a little bit our assumption -- our view on the silicon carbide development in particular. In total, Graphite Solutions went up by 1.3% reaching now €284.2 million in sales in H1 2024 compared to €280 million last year. The other businesses besides Semiconductor be it fuel cell components, be it industrial businesses, but also graphite anode material and other businesses that are here they are really burdened with the economic development that we see. So there we saw even in some of the business a slight decline. So in total the sales went up by 1.3%. The profitability which we measure in EBITDApre on a business unit level however went up in double-digits now reaching 10.9% up. And the total is €72.2 million what we achieved in the first six months of the year compared to €65 million the year before. Where does it come from? Again mainly because of the growth that we see in silicon carbide, but also the product mix and the higher volumes that we see and also the shift from solar business and the conventional or classic semiconductor business into silicon carbide. We reached a very healthy 25.4% EBITDApre margin there. However, Q1 was 25.9%. The next business unit which you can see on Slide number 6 is Process Tech. And in Process Tech I think this is really a fantastic achievement what you can see here from the management. Sales went up to almost €70 million, reaching €69.9 million and this is an increase of 8.5% compared to last year. And where does it come from? We still see a very, very good order book in our project pipeline. We still see a lot of demand from parts and service business. And we are standing on three legs on a regional perspective with the United States with Europe, but also with our Asian sites. And they all contribute in the project business in the equipment business and also in the parts and service business. And if one of the businesses is a little bit weaker or one project is delayed or pushed out, then we just continue pushing for sales and services. This is a very balanced portfolio that they have, this is a very balanced development, and we see a lot of success in being awarded with this new project. When we look at the profitability we -- I know exactly that we always told you that 18% might be the top of the top line and that the margin can't be increased any further. We saw 18.5% in H1 2023 and we now see 22.9%. Now, if you ask me can this be ever topped and increase any further? Now, I really say this is the end of the story and beyond that, it's very hard to achieve something. But it's a fantastic development what we see here. Our EBITDApre is €16 million flat what we achieved in the first six months of the year. And when you compare that to last year where we not even have reached €12 million, I think this shows a strong development on both sides on growth, but also on working on the profitability. The business unit which worries us continuously is Carbon Fibers. There we don't see any further development which is good. So, obviously, sales decreases in nearly all Carbon Fiber markets not only the wind market but also other fiber markets, which we serve and we see a very slow demand in almost all aspects. We also see negative price trends, especially for commodity products wherever we are competing with others and we have some overcapacity in the market. That also is reflected in our sales development, which went down 12% compared to last year now reaching €110.1 million compared to €125 million last year. And this is also reflected in our profitability and the EBITDApre. This went down as we expected, I have to point out, by €10.5 million, now reaching minus €4.4 million compared to €6.1 million positive last year in the first six months of 2023. Where does it come from? In this you also have to bear in mind, there's a certain equity contribution from our joint venture BSCCB. Last year, it was roughly €10 million, rhis year it's €7.7 million which is in there. So, if we deduct the €7.7 million then the real operative performance of our Carbon Fibers business unit would be minus €12.1 million, which is not good, but exactly in line with what we planned for 2024. Why is there a certain decline in the loss-making compared to Q1? Because in Q2 we started some more -- yes, some stronger restructuring measures. So, we had some major layoffs in our Scottish side and also some other cost aspect where we idled some other lines. And all this contributed that the losses did not develop as it was in Q1. So we could limit that a little bit. And we also see a little bit of stronger H2. Coming to the last operative business unit which is Composite Solutions. Composite Solutions, we see a negative impact on both on sales and also on our earnings, thanks to the termination of automotive contract. We have already told you in our Q1 call that project was about to be terminated in the United States with a US American OEM, which was very beneficial and very profitable for us. And as this contract has been terminated by the OEM prematurely, we also expect maybe a compensation payment in the second half of the year. But this hit our top line with 16% decline, now reaching €66.9 million compared to €79 million last year. And also, the profitability, it took a major hit on that where we went down by 34.1%, now reaching €8.1 million. There will be a certain recovery in the second half of the year, especially when we talk about this kind of breakup fee, which we are about to negotiate on -- because of the premature termination. But this hasn't been decided yet and we are just discussing on that. Still we reached a healthy 12.1% EBITDA margin on a six months business level in 2024, which is not too bad but definitely not reaching the old heights, which we've seen last year where this project was still included where the margin reached over 15%. On the next page, here on slide number 9, you see how our other major key figures have developed. Our net result is roughly €40 million better than last year. But if you bear in mind that in our H1 2023 figures, there was a €44.7 million impairment last year on our Carbon Fibers business unit. So, if we exclude it then the minus €10 million, which you see here in H1 2023, would have been plus €34 million on a like-for-like basis. If you take out this one-off impairment, then it's very much in line what we have achieved in the first half of 2024 than apparently with the previous year. Also free cash flow is positive as in so many other quarters. We are really making money, making profit and we continuously show that to our shareholders. Last year, our free cash flow was €20.1 million after the first six months of the year. And this year it's €12.4 million. It's a slight decline, but it's a positive quarter one. It's a positive quarter two that we see here. And in that €17 million customer down payment, which we collected last year was quite a bit more that we collected in the same period. However, we also have to see they had invested a little bit more than last year and we also had to pay back the first customer down payments in the first two quarters already, which also sums up to roughly €10 million. And last but not least, you can see here that our net financial debt went up slightly or you can also say it remains stable. There's just a €4 million difference between the €116 million and €119 million that you see there. It's very much in line with our conservative and also very healthy spending activities. We see now a leverage of 0.7. We see an equity ratio of 44.3%. Som our balance sheet is very healthy. And the ROCE reached 11.3%, which is unchanged to the quarter before. And with that, I would like to hand over to my colleague Torsten Derr, who will guide you through the SiC development and also the outlook for the remainder of the year.
Torsten Derr: Yes Thomas, thank you very much. Also, good afternoon from my side. My name is Torsten Derr. I'm CEO of SGL Carbon. And I would like to go a little bit deeper with you in our largest business unit GS, how we call it our Graphite Solutions, which accounts for 53% of the total turnover. Now on the left-hand side, you can see the GS markets split into segments and the total sales of GS reached €284 million in the first half year, and roughly 50% can be accounted to the business segment Semiconductor. And if we dive deeper into the Semiconductor segment, you can see how nicely we have grown the business. And if you compare half year by half year you see €83 million total sales in semicon in 2022 €125 million in last year and this year €142 million. And this is a growth of 14% in Semiconductors. And if you look specifically into silicon carbide, it's a growth of 23%. You can also see that the major growth driver in our business are graphite parts for the silicon carbide segment, and they have grown from a share of 61% in the last year to 66% in this year. So which trends are we observing in that market? And for this it's very important to know that 70% to 80% of the final destination of our sales goes into electric vehicles. So we deliver graphite parts to the wafer manufacturers. They produce chips out of it, and they go for 70% to 80% into EVs. The other applications are renewable energies and industrial, but the main applications is electromobility. And this is depicted here on this slide. These are the cars, the electric vehicles sold by quarter. And you can see in the first four bars, which represents the quarters in the year 2023, very nice growth, which was double-digit. We started with 4.3 million in the first quarter and ended at 6.5 million in the fourth quarter. And everyone expected a continuous growth of this market. But what we have seen, especially in two countries and the two countries are UK, and especially Germany a little bit of a decline to only 4.8 million, which was somewhat unexpected for the market. Fortunately, we have seen a recovery already in the second quarter to 5.9 million cars. And to be honest, we believe that the market will fully recover. And this is driven by a tightening of the CO2 regulation. From 2025 onwards, the OEMs so the car manufacturers have to go down with the CO2 emission to a value of 93.6 grams CO2 per kilometer. And to get there, the OEMs have to reduce the sales in combustion engine cars and have to drive it to EV. This is the only option they have, and this is why we are somewhat positive with the midterm development of this market. What is the effect for us? And as I told you, we and also our customers, which are the silicon carbide wafer manufacturers, expected a continuous growth of this segment. But the growth slowed down, a little bit for us, and also for our customers. And our customers the wafer manufacturers reacted in two ways. Way one is, a slowdown of the growth expectations. So I don't talk about the decline. It just go down or lowering of the growth rates, this is effect number one. Effect number two is, that we're equipped with pretty healthy levels of inventories. They are going to reduce their inventories according to the growth rates. This is a global effect what we are seeing. It goes from US to China. All markets are following the same trend. But the good is our customers talk about 6 to 12 months a reduction of growth speed. None of our customers and we are supplying almost the whole market, revised their midterm planning. And Thomas and me also talked to one of the big OEMs in the field of electric vehicles, and they said, they are bringing so many new models in 2025 on the market, and all models are equipped with power electronics based on silicon carbide. So a slowdown -- growth expectations slowed down a little bit, but megatrends and our markets are intact. So having said this, yeah, we stay in the same growth markets and we think we follow the right strategy. Our growth markets are semicon electromobility and renewable energy. And our main growth driver are graphite parts for the semiconductor industry which goes in a slowdown a little bit. And this is why we are a little bit cautious with our full year guidance. Thomas already addressed our business unit CS. We lost the project which was quite profitable for us. But I'm very happy about the growth pipeline which we have seen. We have five to six projects in the pipeline. And within the next 18 months, we will compensate this. And PT Process Technology runs just fantastic. So we are at record sales, record margin, record EBITDA level. And together, I'm very happy that I can confirm our guidance. We will achieve sales on prior year's level. And we ought to stay in the guidance corridor for EBITDApre, which I gave you between €160 million and €170 million, but at the lower end of the corridor. And with this, I would like to hand back to Claudia for the Q&A session.
Operator: The first question comes from Julia Winckelmann, Stifel. Please go ahead.
Julia Winckelmann: Hi. Can you hear me?
Torsten Derr: Yes.
Claudia Kellert: Yes.
Julia Winckelmann: Okay. Thanks for the presentation and thank you for taking my question. So my first question is on the down payments. You mentioned that the down payments were €17 million in H1 and then the effect from the deliveries were €10 million, so the net impact was €7 million. What do you expect for H2 which net impact?
Thomas Dippold: I understand your question and this is very fair Julia. But unfortunately, I can't answer that. We are still in negotiations with our customers on that. You perfectly summarized that we have a net effect of €7 million in the first half. You also have to bear in mind, this money is meant to be invested. And now we invest more or less the money which we collected last year and we are continuing with that. As we see this little slowdown in -- as Torsten has pointed out and described, so more or less a delay by six to 12 months in the development. But however, we all believe same with our customers in the story. There might not be the immediate need for further down payments on a level of magnitude which we've seen last year, where we collected up to €60 million €70 million also net at that point of time. So let's assume, it will remain on a much lower level, how much it really can be in the six months. Also it depends a little bit maybe also on the outlook when this market is about to catch up. Everybody knows that whenever they give us down payments, it takes some one to two years until the capacity is really installed. So you have to take a deeper look also into the outlook and the forecast. But sorry for that, we don't disclose any expectations beyond what I've just say now for the second half of the year and I hope for your understanding.
Julia Winckelmann: Okay. Thanks.
Operator: The next question comes from Andreas Heine, Stifel. Please go ahead.
Andreas Heine: I would like to start with this Graphite Solutions segment. With what you said with these six to 12 months delay, is that something where after we have seen strong growth and still double-digit on a year-on-year basis that this will sequentially down for -- in the second half and maybe first half of next year? Or is it now getting on a plateau which is protected by your contracts? So what do we have to expect from graphite? That's the first question. I may ask a second one after.
Torsten Derr: Yes. We expect the total sales in silicon -- graphite parts of silicon carbide segment, a little bit softer than in the first half year. And we have very good and strong contracts because it is protected by the down payments. We only pay back the down payment the customer gave us in accordance to the sales they make with us. And we are currently very happy that we made this kind of contract. I hope Andreas this answers your question.
Andreas Heine: Yes. Just on the time horizon so you were talking about six to 12 months of this delay. And this six to 12 months exactly what you will see then in your graphite development. So the slower trend in the second half does that -- from what you see right now and how your contracts are is that also what we should expect for the first half of 2025? Or how do you see that?
Torsten Derr: Yes Andreas. And the answer is different by customers. We have everything heard from a very fast V-shaped recovery to a duration of 12 months. So, it's very different by customer and by region what we hear.
Andreas Heine: Okay. That was the first question. The second I would like to have is your free cash flow. If I take not the free operating cash flow, but the free cash flow to shareholders then it was slightly negative after financial expenses. Now they are not half-half in the first and in the second half. But in the second half you have the heavy weight of the CapEx. So could you describe how much CapEx you will have in the second half? You said more than €100 million. But as the trends are slowing maybe you have some flexibility in CapEx and whether even after financial payments financial expenses you will have a positive free cash flow on the full year basis.
Thomas Dippold: Andreas, this is clearly the goal. And you know that especially with CapEx, you can -- I wouldn't say play a little bit, but of course, you can just put it in the right way that you also pay in the right quarters. So, if the -- we definitely target for a positive free cash flow also on a full year basis that's for sure. And we only invest what we really need to do in order to make sure that we also can continue with the ramp-up once the business is catching up again. But will it be €150 million? You see how much we invested in the first six months of this particular year. Normally CapEx is always when you look at the full year a little bit more back-end loaded. So, Q3 and Q4 are normally the stronger quarters for investments. But we also have not just on the working capital development, but also on the CapEx a very close eye on that that we -- as in the years before. You know us for over four years now. We take care of our cash and we make sure that we have a positive free cash flow at the end of the year by all means for sure.
Andreas Heine: Thanks a lot. And then I'll go back to the queue.
Torsten Derr: Thanks.
Thomas Dippold: Thanks, Andreas.
Operator: [Operator Instructions] We have a follow-up question from Julia Winckelmann, Stifel. Please go ahead.
Julia Winckelmann: Hey, thank you. So my the next question is on the segments. You mentioned that Composite Solution was considerably down in Q2, but the EBITDA guidance for the full year is only that the segment will be slightly down. So what are the trends for the segment? What should improve in H2 compared to H1?
Torsten Derr: Sorry, we didn't get it Julia. Can you rephrase the question? Which segments do you mean? Segments of Graphite Solutions?
Claudia Kellert: No, I think -- sorry, Julia to interrupt you.
Julia Winckelmann: No, the composite.
Claudia Kellert: I think you mean the development of the business units. What we expect in the second half for Graphite Solutions for Process Technology. Is it right?
Julia Winckelmann: No, for the CS segment. So, the Composite Solution segment.
Torsten Derr: Okay.
Julia Winckelmann: You mentioned that it's only a slight decline, but then the H1 decline was rather strong. So, do you expect any improvements in H2? And where should they come from?
Torsten Derr: Julia this business CS is a Tier 1 automotive supplier. We produce automotive parts. And we lost I think the biggest project, which we had. And we lost it in the second quarter this year. And this cannot be compensated that fast. But as it was canceled before the contracted ending of the business we will receive a compensation payment for it and this will go into the second half. The project...
Julia Winckelmann: So this is factored in with the – because you gave these outlooks for the segment. And then the compensation is factored in the just slight decline instead of – okay.
Thomas Dippold: Yes. And you also have to bear in mind – and this is exactly in line with auditors what they always told us. When you get a kind of a compensation payment for a terminated contract in automotive, they consider that as operative because it happens often. And therefore, it's not a one-off, which we consider a pre result. But a breakup in a fee like that is considered operative as it happens so often. So it is in our EBITDApre, and this is exactly what you said. In sales we expect a significant deterioration of our sales but only a slight decline in our EBITDA. And this is exactly thanks to the effect that Torsten has just described. We plan for a breakup fee and we negotiate that already and we are quite confident that we get something in the second half of the year in this range as we anticipate.
Julia Winckelmann: Okay. Thank you. And then on Process Technology, you mentioned that you expect the margin to come slightly down. Now Q2 was maybe a bit stronger than initially expected. But now this should be the peak. Do you expect the margin to be flat from here on? Or do you expect it now to slightly normalize?
Thomas Dippold: Well, I told you so many things in the past and they always surprise me in a positive way, which let me look a little bit yes, bad and I don't like that. In the end I like that we keep our promises. However, you have to – and I really admire them because they're really doing a very good job on the operative level. I personally think that you can't exceed the margin that we see here and we have reached 16% in the first six months. So I know how you calculate. You just take it x2. Maybe this is a little bit too much but we certainly see a very good development in Process Tech. They might be close to 30%, yes.
Torsten Derr: And Julia maybe this helps. You usually for PT, the chemical industry is our bread-and-butter business. And chemical industry is down right now. They try to avoid CapEx. And to be honest, this part, so the bread and butter of PT is not running that well. But we are a world market leader in hydrochloric acid equipment and phosphoric acid equipment. And this goes into a special kind of battery, lithium ion phosphate batteries. And even regions like India and China are ordering equipment from us because we are a quality leader and this compensates for the lower growth rates we enjoy currently in the chemical industry business. So these are one-timers or battery projects but this is a very good and very healthy compensation right now.
Julia Winckelmann: Okay. Thank you.
Operator: The next question comes from Sven Sauer, Kepler Cheuvreux. Please go ahead.
Sven Sauer: Yes, hello. Thank you for taking my question. I was wondering if you could provide any update on the strategic review of the Carbon Fibers segment. Are you still in discussions? What's the current dynamic? Is the demand still there? And are – yes, is there still interest for this asset? Thank you
Torsten Derr: Yes, Sven, thank you very much for the question. Two questions, in one. First of all, the market is rather flat. We see a little bit of light at the end of the tunnel and the business performs as planned. And for the second part of the question, I'm sorry, I can just repeat, what we said in the last call. We are checking all strategic options. I can tell you that we are quite busy, with checking all the options. And as soon as something happens, we come immediately back to you and disclose this to everyone. Okay. Sven. Any other question?
Claudia Kellert: Okay. Sven maybe…
Q – Sven Sauer: Thank you. Thank you. That’s – thanks.
Operator: We have a follow-up question from Mr. Andreas Heine. Please go ahead.
Q – Andreas Heine: On automotive, I would like to add a question. So you described that graphite is affected by the EVs and Composite Solutions by the contract. How is the business of Brembo developing? You see only the EBIT number, which was sequentially down. And also in Graphite Solutions, you have an automotive business. And do you see and experience the slowdown, we hear all about in the automotive industry in these businesses as well?
Torsten Derr: Andreas, not a slowdown in this part of the segment. These are luxury brake discs for cars, which are usually above €300,000 per car. We don't see a slowdown there and the number of brake discs, which we sold went up. This is a seasonal effect, which will not -- a negative seasonal effect, which was affecting the EBIT and expansion-related costs. You know, we are almost doubling the capacity in Meitingen and these are expansion-related costs. So everything is still very healthy.
Q – Andreas Heine: And in Graphite Solutions, the automotive part there which is not SiC related the more traditional.
Torsten Derr: There's only one part which -- or maybe two, which go into automotive. These gas diffusion layers for fuel cells and they perform as forecasted. Still Hyundai (OTC:HYMTF) is our largest customer and this runs as planned. The second business is graphite anode material, so graphite powder for EV batteries. And we always kept this business in our portfolio, because we expected three years or four years ago that there were quite some battery manufacturers in Europe. Currently, everyone is leaving Europe. I don't know many of the projects. Most went bankrupt or left the country to Canada or US. So this is the reason why, we closed down the laboratory in Meitingen. So we will gradually step out of this business.
Q – Andreas Heine: Thanks a lot.
Operator: [Operator Instructions] There are no more questions.
Claudia Kellert: Yes. Thank you. Thanks for your participation. Have a fantastic late summer and I hope to see some of you on the upcoming conferences. Thank you and goodbye. Bye-bye.
Torsten Derr: Good bye, everyone.
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