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Edited Transcript of STM.DE earnings conference call or presentation 3-Feb-20 9:30am GMT

Q1 2020 Stabilus SA Earnings Call

LUXEMBOURG Feb 7, 2020 (Thomson StreetEvents) -- Edited Transcript of Stabilus SA earnings conference call or presentation Monday, February 3, 2020 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Mark Wilhelms

Stabilus S.A. - CFO & Member of Management Board

* Michael Büchsner

Stabilus S.A. - CEO & Member of Management Board

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Conference Call Participants

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* Akshat Kacker

JP Morgan Chase & Co, Research Division - Analyst

* Alexander Wahl

MainFirst Bank AG, Research Division - Analyst

* Philippe Lorrain

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Sabrina Reeh

UBS Investment Bank, Research Division - Analyst

* Santiago Domingo Cebrián;Solventis S.G.I.I.C., S.A.

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Welcome to the Stabilus S.A. conference call regarding Stabilus financial results in the First Quarter of Fiscal Year 2020. (Operator Instructions)

Let me now turn the floor over to your host, Mr. Mark Wilhelms.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [2]

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Yes, good morning. From the Stabilus team, we have got here Michael Büchsner, our CEO; Andreas Schroder, Investor Relations; and myself, Mark Wilhelms, CFO. We will now take you through our Q1 results that cover the period October 2019 through to December 2019. We start off with operational highlights. As you see on the agenda, which is Slide #2.

And I will hand over to Michael Büchsner who will talk to you about organizational adjustments we have made in the last couple of days.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [3]

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Thank you very much. Hello, and welcome also from my side to our quarter 1 call. First of all, I would like to talk about the operational highlights as stated starting with an organizational adjustment, which will be effective for a complete year 2020 for Stabilus. We streamlined our regional split and our business unit split globally, focusing with this change on the industrial side. The operating segments in the future will be Americas, EMEA and APAC. So we clustered all the activities we have to those 3. That means on the Americas side, also included will be Latin America, and the Latin American market. EMEA side, including Middle East and Africa in the future. And then for sure, APAC, which is center of our activities over there, in the future as it was and very important for our business as well. So those 3 elements or those 3 operating segments will be then rolled out along with business unit reorganization in terms of putting capital goods and Vibration & Velocity Control together in one -- into one industrial business. This one industrial business is very important to us.

We then will have 3 automotive -- 3 brands or 3 business units, Automotive Gas Springs, Automotive Powerise and the Industrial business. This is important because -- and logical because in the past, we split the Industrial business, mainly in capital goods and V&V activities in the time when we did acquire all the different brands. And now it's time to put them underneath one umbrella. And why that's -- in detail -- is necessary, I'll explain on the next page, on Page #5.

On the industrial side, we have plenty of brands with all the acquisitions we did in the past years. We have ACE, we have Hahn, we've Fabreeka/Tech Products, General Aerospace, Piston, Clevers and then for sure, also future industrial acquisitions that'll be in this industrial segment. What we experienced in the past, and also during the time when we acquired the different brands, is that we are kind of -- need to work in terms of one voice to the customer offering all products out of one hand in all markets. And this is what we want to do with this change.

We when we acquired these companies, for sure, grasped the whole low-hanging fruits, we did streamline our product portfolio, went out to the market and got great benefit from acquiring these companies. However, now it's time to cluster them under one umbrella to make sure, for example, that one salesperson out of our business walks to the customers with all the products in hand. Because, for example, in the past, it was that the ACE person would sell mainly ACE products, the Hahn person would sell mainly Hahn products. And there will be great benefit for our business, combining all these businesses under the industrial business umbrella of Stabilus to take one step ahead in terms of streamlining the touch point to our customers. And we'll have fruits not only in terms of efficiency in our business, but also in terms of further increasing our sales. Having all these brands under one umbrella is logical and good next step in our business and will foster the Industrial business. And you know that we, at this point in time, have 40% Industrial business versus 60% Automotive. We further want to grow on the Industrial side. And this is the right way to do so.

Another action we are taking is we did increase our share of direct sales for the independent aftermarket, and this is shown on Page #6. In the past, we did sell in North America via a mega distributor with all kind of the side effects you would expect that means, for sure, the communication chain is longer. That's what you see on the upper left on this chart. With a mega distributor in between, for sure, a mega distributor did cost money. And also, there can be improvement in terms of direct touch points to the customer. And this is what we did change late last year. With our independent aftermarket reorganization, we're kind of taking out the mega distributor and are now in direct contact with our distribution channels, on the independent aftermarket retailer side. This allows us to be closer to the pulse of time in terms of our customer touch points on one side. And as I said, it also leads us to efficiency when it comes to overhead costs and costs for distribution channels. That's what we did materialize as well on in the last month.

Therefore, the operational highlights, I summarize again, we reorganized our footprint in terms of clustering business units and operational segments by the different regions, streamlining our business further, striving for excellence in terms of how we talk to our customers on the Industrial side, capturing all the different brands under one umbrella and allowing our sales force to be more effective out there with our customers on the Industrial side. And the second change, as I said, independent aftermarket, streamlining, taking out the mega distributors in order to gain from the efficiency side and further increase our sales. Those activities are important countermeasures for us to further grow our business in the close, mid and long term.

Aside of the operating highlights, I would like to lead you through the cover page of the financials, the highlights for the first quarter of the year 2020 for Stabilus you will find on Page #8. Revenue. We did increase versus prior year, year-on-year, 2.8% coming from EUR 225 million. We are now at EUR 231.4 million revenue year-over-year. That's an increase of 2.8%. However, organically, we did grow with minus 1.3%. You see that effect in the market in many different businesses. Acquisition effect was 2.5% positive, currency effect also 1.6% positive.

On the EBIT margin side, we came in with EUR 30 million versus EUR 30.8 million in the first quarter 2019, which is year-on-year 2.6% negative. However, the EBIT margin, we could achieve or be in the range of first quarter last year, which was at that time, 13.7%.

Now we are in the range of 13% and Mark will talk, Mark Wilhelms will talk about that in detail. Important effect to be considered there was we had to further improve our operational effectiveness, did change in our logistics center here in Koblenz some rules and did work or are working now with the external provider. Which on a short run, yes, it cost us some money, on the long run will save us a lot of money. That's one effect. And then for sure, as I said in the operational highlights, we had to set up our independent aftermarket strategy that also did cost us some money late last year, but was definitely needed in order to further increase our profitability short, mid and long term.

Talking about profit. The profitability was EUR 16.4 million in the first quarter 2020 versus EUR 17.7 million in the year before, same quarter. That means profitability is in the range of 7.1%. Free cash flow is at EUR 7.8 million versus EUR 12.4 million prior quarter. Net leverage ratio remains with 1.0. Net financial debt, EUR 184.3 million versus EUR 189.1 million year-end 2019. The outlook remains unchanged. Our guidance is still on with EUR 970 million to EUR 990 million for the full year, and an EBIT margin of 15%.

With that, I hand over to Mark Wilhelms to go in some detail.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [4]

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Yes. Thank you. So let's now flip over to Slide #9, where we essentially see what Michael had been talking about in the bar chart format. Important to note is when we take a look at the revenue side, as mentioned, 2.8% growth, EBIT down by 2.6% in brackets, that is chart on the right-hand side, profit now at 7.1% margin versus 7.9% last year, and free cash flow slightly reduced versus last year.

We have continued to work on our purchasing efficiency by taking advantage of early settlement discounts. You see that effect here, plus in this -- closed the quarter, we've seen a number of customers actually stretching out their payment terms from December out to January in order to help their own balance sheet management and on top of that, we had a small glitch in our factoring program, since we had a lights out approach between Christmas and New Year. Certain, like EUR 3 million worth of factoring was not actioned in December but rather spilled over to January. So that will not have a long-term effect on us, but it's clearly impacted this very first quarter.

Now coming via Slide #10 to the results by operating segment. I start on Slide #11 with the European details. European sales are down by EUR 2.4 million or 2.1%, as you see on the chart, on the left-hand side. The European vehicle production, that's Europe, Middle East, Africa as we define this region EMEA, is at 5.6 million units, which is 6% down versus first quarter of last year.

And as you see on the third bullet point here, EMEA Gas Spring production is down by 8.8% and Powerise by minus 3.7%. So there, we see a shift between products the customers are ordering; clearly Powerise is getting more attraction, more attention from the customers. The end consumer as well as car manufacturers, like to see that sort of convenience product installed. That is why Powerise is behaving slightly better than the overall market. Of course, as we show on the bullet point 3, we get some benefit from the acquired entities.

The entities we added in Europe are all in the Industrial segment, that is EUR 1.6 million more revenue we have here, clearly helping us. The margin, however, came down by 160 basis points, lower fixed cost absorption, one-off costs, for example, for outsourcing of the logistics process, as Michael had already mentioned. Besides the financial impact, this also -- this outsourcing of logistics also makes us, call it, a better citizen here in Koblenz. With smaller and smaller lot sizes, we had more and more different carriers coming for the so-called milk runs picking up goods, which significantly increased the traffic at our distribution in the plant. But outsourcing this process to (foreign language) at one of the motorways not far away from here, we can actually simplify the logistics process and have larger fully loaded trucks leaving the plant to this logistics center thus dramatically reducing the traffic here at our Koblenz plant. This one-off cost will kind of disappear going forward because, of course, it's a more efficient setup. In our Q1, we still had our own internal costs as well as the cost of the external provider.

And now changing over to Slide #2 (sic) [Slide #12], we talk about Americas. Americas, we see a revenue increase of almost 6% plus to EUR 90.4 million. Good growth is visible in the industry, that is a kind of yellow color here from EUR 24.9 million to EUR 34.1 million (sic) [EUR 31.4 million] turnover with a total organic growth of 1.2%. As we say on the right-hand side, in the comments, light vehicle production in NAFTA, 4.6 million units is almost 9% down versus last year. Clearly, also impacted by the strike at the GM plants, as some of you will recall.

Talking to the third bullet point. Organically, Americas' Gas Spring revenue came down by like 10.8%, primarily less Federbeins. And Powerise is up by 4.1%. You may recall that with the Explorer, fairly large platform was changed from single-sided to double-sided Powerise, which, of course, has an impact on the Federbeins. And also with the GM strike, we had a pretty decent impact on our Federbeins sales as GM typically uses a single-sided system.

Talking about Industry, which is the second bullet point. Industrial business came up quite strongly, a little bit helped by the acquisitions of Clevers in Argentina. Yes, this is small. And the main positive impact is actually the solar business that you see on the fourth bullet point. Overall, margins in our Americas business were held at 13.9%, so above the group average. The downside on the American margins was the startup cost of the automotive independent aftermarket business that was discussed by Michael early on.

Going forward to Slide #13. We take a look at Asia Pacific. Asia Pacific revenue grew by 14.1%, quite sizable step forward. A lot in the area of Automotive Powerise, which is the light blue color, with last year's revenue were EUR 4.9 million, and we are now at EUR 6.8 million. Overall, light vehicle production in Asia Pacific in Q1 of our fiscal '20 was 12.4 million units, which is 3.9% lower in 2019. Essentially, we see a growth in all segments of our Asian business, very strong is the Automotive Gas Spring with 10% and Powerise with almost 40% increase. So this clearly shows product is getting traction. The downhill movement we've seen last year came to an end and this now should set the base for the quarters to come.

Overall, EBIT margin in Asia Pacific was clearly helped by the better loading of the plant, and we are now at 13%, which is flat on group margin average versus 10.9% (sic) [11.9%] last year.

Going forward to Slide #14, we now take a look at the revenue by business unit. As mentioned, Industrial business unit comprises of our formerly 2 business units, Industry as well as Vibration & Velocity, they are showing in the year-over-year, 2.2% growth rate. Powerise on a global level, 0.3% and Automotive Gas Spring is down by 5.7%. Industrial share in Q1, 39%, better than the entire year, where we stood at 36%. Overall, global vehicle production came in at 22.6 million units, i.e., minus 5.4%. In euro terms, this really mirrors what we see in our Automotive Gas Springs unit.

Automotive Powerise unit is up by a small EUR 1.6 million. However, still nicely outperforming global vehicle production organically by 570 basis points, and it's really driven by the stronger Powerise business in Asia Pacific.

Industrial revenue up by EUR 8.3 million. Large chunk of this improvement comes from our Americas region; North America, their very strong solar damper business, clearly showing our leadership in that product segment area.

Then we flip over and come to the outlook. Outlook pretty simple, as already mentioned, no change to what we had stated before. We are clearly aware that the coronavirus issue in China may have some impact, but potentially, we get to some details in the Q&A. As such, we now open the floor for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Philippe Lorrain of Berenberg.

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [2]

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Two quick ones from my side. Just want to clarify on the outlook. I think you mentioned at the back of the presentation, the production forecast that you are using for the underlying guidance is 88.3 million vehicles produced in fiscal year 2020. Could you remind us what's the change year-on-year versus the fiscal year last year for those who just have the calendar year numbers? That's the first one. And then I have a follow-up just on the Automotive Gas Spring Europe.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [3]

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Just 1 second please, the calendar year numbers, that is 88.8 million for '19 and 89 million for the calendar year 2020 which...

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [4]

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Yes, yes, I read that. But I was asking in a fiscal year because your fiscal year is going to be the basis for actually the forecast.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [5]

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Yes, that's what we...

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [6]

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Just to clarify, you wanted to know what we had planned for last year. It's the basis for the last year for the year, which we clarified.

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [7]

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Yes, yes, exactly, the last fiscal year. So we get the plus/minus number, if you want, on the basis of your fiscal year and not the calendar year, which is not really helpful.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [8]

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Yes, just a second we'll find it.

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [9]

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Perhaps, I can ask the second question then. That was more like in EMEA, when we look at the development that you have in the Automotive Gas Spring, the question is whether there is kind of a trend besides the fact that Auto Powerise has been outperforming. And hence, there is a bit of a mix shift from Gas Spring away towards Powerise. Is there any further trends playing into that kind of performance in Q1? Or is that just like the way the quarterly performance comes in, which means lumpy?

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [10]

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Yes. While we are finding the numbers you were asking from the last year, I'll touch on the second question you had. First of all, yes, actually, the automotive industry and our end users, they need the Powerise. That means we see that the Powerise benefit from the trend and that we sell more and more. However, this is kind of not in a direct conjunction with the down we saw in the first quarter of the year with the Gas Spring. The first quarter this year, kind of, was, especially in Europe, kind of towards that more and more OEMs just reduced their volumes in the 4th calendar quarter of last year because -- and that's our assumption we also got from different points in the market, the total industry, automotive industry said, well the year 2019 is gone. We don't kind of focus too much more in the fourth quarter, trying to push sales. So that's why we saw softer sales in the automotive industry in the fourth quarter -- calendar quarter last year, which is our first business quarter, which had this extraordinary effect on the Gas Spring.

For -- just to give you an example, for the next coming 4 to 6 months, we already see the market coming back a bit, which goes towards the direction of the budget. So it's an effect, as I said, fourth quarter calendar quarter last year, our first business quarter which is or was pretty much driven on the Gas Spring side by lower demand as forefront in Europe because the car manufacturers said, well, year is over anyways, and the numbers don't look too good. So why don't we want to push? Or why do we want to push the sales ahead. And that's the effect we saw. And that's why the Gas Spring sales were lower in that quarter. So now I will hand over to, yes?

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [11]

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Just one follow-up on that. The follow-up was just like as follows. Does it mean that actually, typically, your customers in automotive might overstock basically the Gas Springs ahead of them producing in a certain quarter, i.e. they will restock and then destock actively, which is why perhaps your Automotive Gas Spring sales do not perfectly correlate with the production volumes?

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [12]

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There is -- it's -- especially in the fourth quarter, the calendar quarter, that's a tricky thing to say because typically, the car production is pretty much in line throughout the year with the production of our Gas Springs, sure there is a small delay in there. However, that rule in case of uncertainty in the market, which we saw in the last quarter, might impact, for sure, the sales. That means towards Christmas, majority of the OEMs kind of did change their order behavior. Some of them did extend their shutdowns for Christmas. That's why they did order less and that in the specific case of the last quarter, then doesn't perfectly tie for sure to the car produced -- cars produced. I would see that as an effect for the last quarter, driven by the extraordinary circumstances in the market.

Thank you very much, and I would hand over to Mark for the first question you had concerning the car volumes.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [13]

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The car volume we have in our planning for last year was 88.7 million. So there is like 0.5% down in the year-over-year with IHS data we use as a base. And that is total number of vehicles produced globally. In essence, 0.5% is a flattish assumption.

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Operator [14]

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The next question is from Alexander Wahl with MainFirst Bank.

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Alexander Wahl, MainFirst Bank AG, Research Division - Analyst [15]

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I have 2. The first one is basically on your margin development. Q1 was rather weak. I understood that there was roughly 0-point -- or 30 basis points impact from this change in your logistics in the EMEA region. And you also said that there was an impact from the realignment of your aftermarket business in the U.S., maybe you could also put a price tag on the impact here? And then related to the question, when we look into Q2 and the remainder of the year, I think the indications we received from other suppliers are that European production in calendar Q1 will still be very difficult. So what thoughts or expectations do you have for the margin here? Any -- yes, any major improvement we should expect here from that slide?

And then the second question is related to your Industrial business. When I look at the organic growth rates that you provided, Industrial business, specifically in the Americas was very strong on the back of this solid development. I remember in the last conference call, you said there will -- there was a regulatory change and some pull forward effect. So my question was basically, is there a risk that those strong growth rates in the Americas Industrial business will reverse and turn into a headwind later in the year?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [16]

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Yes, to your margin question, yes, we see a 0.7% margin deterioration at group level, there's like EUR 600,000 for the effect for the logistics service concept that I have mentioned before, we have like EUR 400,000, EUR 500,000 for the setup costs in the U.S. for that revised distribution system. For what is it we rented warehouse, an external warehouse, started to stock it, started to do initial test runs on packing off the products. Because in the past, we did send to this mega distributor, parts like automotive prices, packed in batches of hundreds and sometimes even thousands, whereas now in the new concept, we pack the parts individually, add to that installation description for the DIY shoppers advice from companies like O'Reilly, NAPA, etc. And we have to test or we had to test our internal process there. And last but not least, little changes in the FX also impacted certain currency valuations. At the end of September, the dollar was very strong, and it had since then given in a little bit. And also the cost rate between peso and euro -- peso and dollar took a certain impact there. We have not specified that in the data we have provided.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [17]

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And in terms of the volumes of the car industry for the second quarter. Here, we see, compared to the first quarter, we had that the oil has come back a bit. And as I said, that's kind of driven by that many OEMs said, the year 2019 is anyway gone. So why won't -- why don't we focus on calendar year 2020. So that's why some of the orders went down in the -- our Q1. And actually, the numbers we see currently in our releases support our guidance for the year.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [18]

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And on NEXTracker, probably to elaborate on that one, there is a safe harbor arrangements set up in the U.S., that basically, when solar park installers get all their parts stored in certified storage areas, they don't have to pay import duty on those things. And as they need to store everything they pull our parts along, there's one customer that is clearly using that one. This benefit of the safe harbor arrangement will spread out for us till the end of March. And during that time, other solar park customers are kicking in that use a slightly different technology and also use a different process in terms of taking advantage of those safe harbor arrangements.

Additionally, we will see in the next couple of quarters, the benefits of the already described automotive aftermarket distribution kicking in. With this one, we are almost doubling our revenue per Gas Spring we sell to the industrial aftermarket. But to the independent aftermarket, thus providing a far larger service for our distribution partners as described packaging, packaging one by one, providing installation, guidance information on those parts and shipping them one by one to certain distribution centers.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [19]

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I think to add, it's important to know that this NEXTracker solar business, it was planned in that way in our business. So we knew it well in advance. It's part of our operating plan for the year, but this shift because of safe harbor from NEXTracker to another set of customers is kind of planned on our end and is developing on track.

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Alexander Wahl, MainFirst Bank AG, Research Division - Analyst [20]

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Okay. Maybe a short follow up. As you said, that your revenues could double in this aftermarket division here? Could you share with us what that could mean in absolute terms?

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [21]

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When you talk about the aftermarket, if you're probably mentioning what I said at the beginning of the presentation in operational highlights, right? So when we say we -- or when I said we kick out our mega distributor and are focusing on our independent aftermarket retailers in a direct way. That's what you mean, right?

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Alexander Wahl, MainFirst Bank AG, Research Division - Analyst [22]

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Yes, exactly. As Mr. Wilhelms said, you are basically doubling the content of Gas Spring in the aftermarket business. So I just wanted to know what that could mean in absolute terms.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [23]

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Yes, yes, for sure. The absolute number is EUR 5 million to EUR 6 million for the year '20 -- of our year 2020 driven by that direct touch point with the independent aftermarket retailers and our straightforward sales initiatives to support them.

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Operator [24]

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The next question is from Akshat Kacker of JPMorgan.

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Akshat Kacker, JP Morgan Chase & Co, Research Division - Analyst [25]

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One for me. Can you just explain in detail the organic decline of 7% in the Industrial business in Europe? What exactly happened there? And how do you expect that to progress going forward?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [26]

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Overall, this stems from the softer industry in Germany, in Europe, you may have seen truck manufacturers in Europe reducing their outlook. You may have heard that a lot of German machine makers are reducing their outlook, reducing their production and this essentially follows suite on that overall market movements there.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [27]

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And to add, as I said before, also, the automotive industry, many of the OEMs said, the year 2019 is gone anyway. So they did not take a stand on pushing the sales for the rest of the year '19. They wanted to have a focus on 2020, and that's the effect we saw in the past quarter. Some of the OEMs extended their winter shutdowns and this contributed also to that effect.

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Akshat Kacker, JP Morgan Chase & Co, Research Division - Analyst [28]

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Do you see some of the industrial growth improving in the second quarter already? Or is the downturn similar to the first quarter numbers?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [29]

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I would expect that to continue because there's still a certain level of uncertainty in the overall kept goods market, with people being very careful in committing to further purchases whether it is machinery, whether it is trucks, buses, agricultural equipment.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [30]

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And to add on that, that's why we took immediately the countermeasures to execute our independent aftermarket strategy as well as reclustering our business units to make sure that we gain as much sales as we can. We're pushing that sales to the 5 million or 6 million additional sales for independent aftermarket. And then also in terms of improving our touch points to the direct -- to our customers on the Industrial side, we execute our plan, which I mentioned in the operational highlights that we are now in a direct or more direct contact with the industrial businesses, which help us in the short term.

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Operator [31]

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The next question is from Santiago Domingo of Solventis.

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Santiago Domingo Cebrián;Solventis S.G.I.I.C., S.A., [32]

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The first one is related to the Capex. I would like to understand that what CapEx do you expect for this year 2020? And if you could break down between maintenance and growth CapEx? And the second one is related to APAC. We saw a quarter where APAC is booming. It's true that it doesn't represent too much for you. But my question is related to the coronavirus. What do you think about the shutdowns of some factories of your customers there in Asia, and what effect could you have?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [33]

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The CapEx in the quarter came in at EUR 12 million. Going forward, for the full year, our estimate for CapEx is like EUR 55 million to EUR 60 million. But clearly, we need to keep a close look at what we need in terms of capacity, product expansion. Very generically, 2% of sales are needed to keep the plants in a proper operating condition with our revenue guidance that's like on a full year basis, like EUR 20 million (inaudible). During hard times, part of that can be shifted by a year or 2. But overall, we want that one should not assume that doing no maintenance in the plant is a good thing going forward. We generically need capacity expansion for doing more sales. Additionally, we have a number of new product launches that in essence require additional investments, whether it is for our electric door opening system or us doing certain control modules for customers for the Powerise. Those things require investments in order to get additional orders in.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [34]

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And I would like to touch on the second question, which is kind of an open question in terms of the development on the Asia Pacific side, driven by the coronavirus. This is an effect we see in the Hubei area, as you know, forefront in Wuhan. We take this situation very serious, protecting our people where we can in terms of limiting travel to that region, and also in terms of supporting guidance in case of somebody has visited that area in the past. We, with our plants in the greater area of Shanghai so not directly affected. Our customers are mainly centered outside of Wuhan. Our impact at this point in time is maximum 2 million to 3 million sales for the year. However, to be monitored. So for now, we have the situation under control. We protect our people as much as we can. We extended the vacation there as everybody else did, are providing sufficient support. And for sure, get in the next couple of days and weeks, as the situation progresses in that region, more input -- more information. The impact for now is estimated on our end with 2 million to 3 million sales maximum.

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Operator [35]

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(Operator Instructions) The next question is from Philippe Lorrain of Berenberg.

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [36]

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I actually thought that there is a bit of an uncertainty that needs to be clarified. What was exactly the number that you were mentioning in terms of old forecast that you had for 2019 also of 88.7 million produced vehicles? Because I assume in the guidance that you have for this year, the 88.3 million or so of produced vehicles that you have is probably going to be a decline of more than 0.5% versus what actually really happened to be produced in 2019 fiscal year?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [37]

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Vehicle outlook quite clearly -- production vehicle outlook is a number that per definition will change a bit up and down. Now overall, whether it is now 88 million to 89 million or 86 million units, does not currently have an impact. What you need to remember, within the cars being produced, there are certain body styles that are more relevant for us than others. The underlying trend and body styles that are helpful for us, what I refer to as boxy cars or also called SUVs, crossovers, et cetera are more helpful to us. Those body styles globally are still moving forward. Other body styles are coming down. So in our detailed analysis, we, of course, take a look at relevant body styles and not on everything being produced. The IHS forecast we are getting provides that sort of detail. But on the other hand, in my eyes, it's not helpful. It's not part of our agreement with IHS to share that with a wider audience. But to still give you here on the call, a good understanding where we are starting off with, we are showing the total number of vehicles in the forecast from that service provider we are working with.

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Philippe Lorrain, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [38]

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Yes. But you're taking basically what they give you on a calendar basis and you restate that in your own fiscal year format because, of course, here a quarter with weak development or not might have an impact.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [39]

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Yes. And we don't take what they give us full year, we actually get the forecast from them in a quarterly and in certain chunks, even on a monthly basis. So that's fairly detailed. It's not simply full year divided by 4 times, 3 or times 1. There's more behind it. And it's production schedules of the car manufacturers, and we use a certain sector for the ups and downs from our production point to their call off point to their vehicle production data.

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Operator [40]

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(Operator Instructions) Next question is from [Joshua Derrish] of StockViews.

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Unidentified Analyst, [41]

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This is [Darren Joffe] from StockViews Just a quick one from me. Would you be able to give a bit more color on what type of demand you're seeing for the door opening systems? We've obviously know Tesla, I think the Model X is quite content heavy car for you. Have you seen any other manufacturers or models showing an interest in that system, please?

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [42]

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Yes. Thank you very much for the question. I'll take it, actually. It's a nice feature to have, right, DA.90, the door opening system, is a system which we developed in the past years. And at this point in time, there are customers interested, a customer in North America, customer in Europe. Also strong interest on one customer on the Asian side. And they kind of will develop in the next couple of months. And in terms of the concrete volumes. So we are kind of in contact with them, supply the samples they need. It's a -- the good thing is, it's in all 3 regions, a customer we have on hand, including a good and solid forecast. And there is more to come, mainly concentrating on those who also work on the area -- in the area of autonomous driving, right? And that's what we elaborated on before. Because on the automotive driving side, it's vital and good to have such a feature in the car to open and close the doors automatically, in case of the car maneuvers on its own in parking lots, for example. So there are 3 customers, 3 main customers in the loop. And as I said, they will develop throughout the year. In terms of concrete numbers due to the fact that they're in ramp-up phase, we don't have the clear numbers at this point to share.

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Unidentified Analyst, [43]

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Great. Thank you. So just to confirm, that's 3 separate vehicles in 3 different regions?

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [44]

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Yes. And 3 from the main panel OEMs.

And it is...

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Unidentified Analyst, [45]

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What is main panel...

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [46]

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Because it's difficult to mention concrete numbers because it's a fitment rate at this point in time, and this pretty much develops as we walk. So the numbers will kind of materialize in the coming months and years, and we are quite in an early stage in terms of that -- getting that number.

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Operator [47]

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The next question is from Sabrina Reeh of UBS.

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Sabrina Reeh, UBS Investment Bank, Research Division - Analyst [48]

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Sabrina Reeh from UBS. Just a couple of follow-ups from my side. So you lowered your outlook for light vehicle production just slightly, but you left the guidance unchanged. And I know you said it depends on the body styles also. But would it be correct to make the interpretation that you expect a higher outperformance in the next quarters, and hence, also higher organic growth and an improvement in the margin? Or would you say that your guidance was rather conservative given in November, giving some room for lower light vehicle production? That would be the first one.

The second one regarding profitability improvements for the rest of the year. Do you have any additional programs planned to improve profitability in order to meet the guidance? And how much cost savings do you assume with the outsourcing of the logistics processes that you've done in Koblenz?

And could you also, a third question, provide us some information on how your development is with the door actuator, how much of an impact does that have on the growth in Powerise in the first quarter?

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [49]

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In terms of IHS, it's 0.5% down. That is what we had estimated last November. So there's no change overall. So it's not correct to say that now we see more dark clouds, more relevant dark clouds on the horizon before. But of course, we are all aware the year has just started -- the calendar year has just started. And a lot of things can happen. The relevant body size, as I mentioned earlier, for us, crossovers SUVs as a whole are still in the focus of the end-consumer interest. So there's no generic outlook implied, outlook reduction, et cetera.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [50]

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In terms of profit improvement measures. The profit improvement measures we are taking are the following: we have an overall efficiency improvement program, which we did roll out that means on a weekly basis along with the management team, we are tracking our efficiencies in the plants. We are kind of limiting on the expense side, managing pretty much down the business to the bare bones. That means in terms of managing travel, managing expenses in the offices, managing the different expenses we have in the plant. So very tight and narrow management of our expenditures, they're effective.

And then we have, for sure, programs which run on top, and one was the logistics process improvement we did. Yes, it did cost us some money in the first place in the last quarter. But that's definitely needed because it was an important thing for us to materialize that activities right away. That's why we turned on the logistics improvement late last year. And see the benefit in the coming months and quarters.

And then also in the mid-term, short and mid-term, the independent aftermarket, in the independent aftermarket, we, as we speak, are starting to save money with kind of canceling our mega distributor between us and our customers. And then for sure, the organizational clustering, focusing on the business unit. It's a very effective method of boosting sales and improving our efficiency out there with our different customers forefront on the industrial side.

That are the measures we are taking. As I said, we review them every week to make sure that we have the right counterbalance for the uncertainties we still see in the market and everybody else sees in the market.

In terms of your DA.90 question, door opening system. There is, in the first quarter, no sales reflected in terms of the DA.90 and the reason being, we have these 3 customers on hand, 1 customer per region, which is a positive thing because we see that the interest in such a feature is equally balanced in the 3 regions. That's important. On the other side, it's a new feature in the market. There is kind of uncertainty about the fitment rates in the first place, we are convinced and everybody else should be, because it's a feature you need for autonomous driving. However, the kind of -- it would be not appropriate to have a prognosis for the coming months and quarters to really see -- we'll need to really see how the volumes progress throughout the year when it comes to the DA.90. Hope that answers your questions.

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Operator [51]

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There are currently no further questions.

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Mark Wilhelms, Stabilus S.A. - CFO & Member of Management Board [52]

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Okay. Thank you for participating in our Q1 call. Early May, we will have the call with our first half numbers. So see you all back in May. Goodbye.

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Michael Büchsner, Stabilus S.A. - CEO & Member of Management Board [53]

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Thank you very much. Goodbye.