Hapag-Lloyd Aktiengesellschaft
Q1 2022 Earnings Call Transcript

Published: 15 May 2022

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Hapag-Lloyd Analyst and Investor Q1 2022 Results Conference Call. Hapag-Lloyd is represented by Mark Frese, CFO; and Heiko Hoffman, Head of Investor Relations. Throughout today's recorded presentation, all participants will be in listen mode. The presentation will be followed by a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Heiko Hoffman. Please go ahead.

[Heiko Hoffman:]

Thank you very much, Corrine. Also from my side, hello to everyone, and thank you for joining our Q1 call today. Unfortunately, Rolf Habben can't be with us today due to unforeseen circumstances. Therefore, Hapag's represented by Mark and myself. Marc will guide you through the presentation, after which we will be happy to take all your questions, as already mentioned and explained by Corrine. Now I would like to hand over to Mark to part us through the presentation. Please go ahead, Mark.

[Mark Frese:]

Yeah. Thank you, Heiko, and good morning. Welcome to everybody to the Hapag-Lloyd Q1 '22 results call today. And let me start with a couple of opening remarks. As we all have experienced the first quarter was characterized again by ongoing disruptions on the global supply chains, where we have seen first signs of recovery at the beginning of the year with the Russian invasion of Ukraine, but also the strict COVD-19 control measures we have seen in China with further strain on already the disrupted global supply chains. That light spot rates ex-China has soft boost since the beginning of the year due to usual seasonality, but certainly also due to the first times of lower demand in some regions like Europe due to the circumstances we are now. Our Q1 '22 earnings increased further above expectations, we have to say as peak freight rates have more than offset the significantly increased operational costs we have reported about even over the last quarters. Overall, financial KPIs remain on an exceptional high level. Looking at the market data, we see that volume growth is expected to be lower than previously anticipated due to the high inflation and the geopolitical risk, which weigh on consumer sentiment as we all feel it. Newbuild order activity continued in Q1, pushing order bulk to fleet ratio of around 25%. And regarding the expected timing of supply chain recovery, we would say that we do not expect it to improve until the second half of this year. Based on the currently favorable business performance in Q1 and Q2, we have updated our previous earnings outlook for 2022 at the end of last month, even though we expect spot rates to fall in the second half of the year, our newly concluded long-term contracts should offer some downside protection. Our midterm targets remain valid. We will continue to implement our simplified strengthen and invest measures in line with our strategy 2023 targets, and I will talk about that in a minute. As already outlined at the beginning, port congestions worsened due to the Russian Ukraine war and due to the COVID related restrictions, especially in China, the class in port congestion index increased strongly to really all-time high. And in contrast, the SCFI index declined since the peak in January. However, the quarterly average was still slightly above compared to the quarter before the preceding quarter and substantially above Q1 2021. Yeah. With the next slide, I would like to give you now an update on our simplified strengthen and invest measures that we have introduced to you at the Capital Markets Day in November last year. As an instant measure to reduce our CO2 footprint, we have started with our fleet upgrade program, retrofits like, for instance, the new propellers, will further reduce the fuel consumption of our vessels and contribute to our CO2 reduction goals. To cater for the high demand, we are seeing right now, we have purchased five second hand vessels. In that time, we have resolved to equip all our dry containers with tracking devices. These devices will be able to transmit data on a real-time basis from each container. They can supply location data based on GPS, measure temperature and monitor any sudden shocks to the container. Additional sensors will be added through Bluetooth. This will make the supply chain more transparent and efficient in the future. Overall, we have extended our position in attractive markets by launching new services, but also via the acquisition of the South African Specialist Deutsche Africa Union, a transaction, we plan to close end of Q2. We have also received final regulatory approval for participation in JadeWeserPort in Wilhelmshaven, which was announced in September last year. With this closing of the transaction, we will now take over ownership of 30%, both in container terminal within Wilhelmshaven and a 50% stake in rail terminals in Wilhelmshaven, while Orro Gate [ph] will continue to hold the remaining share as it was planned. Furthermore, we have announced on Tuesday that we will, together with our partners, develop and operate a new container terminal in Damietta in Egypt. The new Terminal 2 is expected to start operations in the quarter of '24. We'll have the final total operational capacity of around about 3.3 million TEU and SURF as an important Hapag-Lloyd -dedicated strategic transshipment hub in the East Med. Both participations are key part of our strategy 2023 to invest into strategic assets to strengthen the quality of our ocean product for our customers. Now before we go into the financial details, I would like to address the topic, I guess, which moves all of us right now. We are deeply worried about the current war in the Ukraine and the well-being of our colleagues in Odessa. We at Hapag-Lloyd are working closely with international organizations on multi measures and with our logistics partners to support the Ukraine people and the Ukraine abroad in Ukraine and abroad. This includes donations transport relief goods, as well as the support of refugees and for sure of our local employees there. So after a brief summary of key events in the last quarter. Let me now go into more depths concerning the financials. While volumes remained flat, we continued to benefit from rising freight rates, which have boosted our earnings to new record levels. As a result, all financial KPIs improved further. Revenue grew by 83% to US9 billion in Q1 and EBIT more than tripled to $4.8 billion. This resulted in an exceptional annualized return on investment. Despite strong demand, transport volumes were only more or less on previous year level because of the congestions and global operational challenges in the whole industry. Now before you ask about our volume development in comparison to the market development, which declined by 1.8%, according to container trade statistics. I would like to point out, once again, we talked about that, that the market statistics are not entirely comparable to the way we account our competitors do that. While we count volumes at the end of the voyage container trade statistics are based on volumes at the start of the voyage. This has, however, nothing to do with revenue recognition its simply about counting containers and something like a timing effect for the statistics. As you can see on the next chart, freight rates increased strongly by over 84% year-on-year, while bunker costs were also considerably up by 60%. In the light of the development we are seeing overall on energy prices. The ongoing operational challenges and the rising oil price have also contributed to much higher transport cost, especially handling in the haulage and equipment and repositioning expenses increased due to higher storage hinterland and spot transport costs. Vessel and voyage expenses increased due to higher operational expenses for chartered vessels and driving slot charter costs on third-party vessels. Depreciation and amortization expenses were primarily up due to the rise in percentage of vessels. Chartered in - on a medium-term basis as simultaneously higher charter rates. So a phenomenon we have talked about over the last quarters. And I have to say, nevertheless, our high rate of ownership and our program, which you might know less for longer at the beginning of the pandemic also pays off now. So quite a good position we are seeing here despite the overall market development. The strong cash generation continued in Q1 2022 despite higher investments in ships, in ship equipment and new containers leading to an increased liquidity reserve of US$13.6 billion. Part of this liquidity will be redistributed to our shareholders after the AGM as we have proposed to pay a dividend of €35 per share or €6.2 billion in total to our shareholders. Our balance sheet and credit ratio continued to improve. Equity increased to US$23 billion, which is a very healthy equity ratio of 66%, while net liquidity increased to US$6.9 billion at the end of Q1 '22. As can be seen in the chart on below left, we have used the currently favorable financial position also to increase the volume of our revolving credit facility and extended the tenor. The RCF volume is now at US$725 million, which remains undrawn at the moment. Due to the very healthy credit ratios, Standard & Poor's has once again raised our company credit rating in Q1 '22 by one notch to BB+ and this is the highest rating Hapag-Lloyd ever had, and it's only one notch far from investment grade, I think, overall, a very positive development. So I think with that, I can close the view on the financials, and let me now jump over to the current market conditions. As said already, order activity continued on a high level because of the tight vessel availability, the order book ratio is now at 25% or even slightly above. This shows that we, as an industry, are really determined to resolve the current vessel shortage, and we will see what the consequence in future will be of that. Demand growth is expected to slow down to more sustainable levels, while capacity influx will increase in '23 and onwards. At the same time, we expect prepping to go up due to strict environmental regulations after that phase we are in right now. And it's the simple fact that there is a growing fleet of old and inefficient vessels which continues to be deployed because of the vessel shortage. Once the situation normalizes, we have to expect that vessels will become obsolete over time. In the years to come, the demand supply balance should become more balanced. And now let's have a look at our guidance for the financial year '22. Very short term, we expect the exceptional profitability level to continue. Based on our business performance today, we have upgraded our earnings outlook for the current financial year. EBITDA is now expected to be in the range of US$14.5 billion to US$16.5 billion and EBIT to increase to US$12.5 billion to US$14.5 billion. While spot rates are expected to decline further, our long-term contracts, which account for roughly 50% of our business should safeguard our earnings at least to some extent. So our priorities for '22 and beyond remain unchanged, in line with our Strategy '23 objectives, we will double down on our efforts on quality and for sure, customer satisfaction, and that is needed. Invest in our fleet and competitive cost base ensure a seamless integration of Deutsche Afrika-Linien after the closing and strengthen our sustainability effort. And to whatever happens, we stick to our prudent financial policy and last but not least, take care of our people, as well as invest in their development and in our capabilities. And with that, I would hand it back to the operator for your questions. We are happy to take them. Thank you very much.

[Operator:]

[Operator Instructions] The first question is from the line of Sathish Sivakumar from Citigroup. Please go ahead.

[Sathish Sivakumar:]

Yeah, Thank for the presentation. I got three questions. So first of all, to start off with the China situation. If you could actually clarify or at least just give any color where is the production output part of China today versus, say, last year? Just to get a sense like how much of the capacity is being impacted from China lock down? Secondly, on your contract volume, how much of your targeted volume that you've covered so far in the contract negotiation. So just to understand with that the rates that your have seen is actually there is some more upside in terms of contract rates as we go into the Q2 and Q3. And where do you see the split for 2022 on spot versus contract? And what is the average duration of the contract volumes? And the third one is around the bunker actually. If you could give any color on your split or exposure to adjust for versus LSFO are [indiscernible]? Thank you.

[Heiko Hoffman:]

Sorry, I missed that on that. China.

[Mark Frese:]

Yes. Yes. Sorry. Yes. First of all, concerning your question on China. We see now that volumes are down by around about 20% up to 25%, especially when we talk about Shanghai. So that's not the total market. And in respect to that, we see strongly for sure, that effect focused on the lockdown situation there. And both it's the conjection to our are imports, but also in the Intelenet business as especially the factories are more or less closed. Concerning the contract volumes, we are - when we look at the total volume, what has been negotiated and where we are right now, when we look at our QP product, we are a little bit ahead of target overall for this year. So slightly above the targeted 10% for the QFP volumes. Longer-term contract assets in total, somewhere around 50%. And we are, in some regions or in most of the regions more or less final with that. So the effect on this year can be seen with that. Your question on spot rates. Overall, our perspective is, as said, that in second half, we will see beginning stronger reduction of that. Maybe over time, we will see even in changing between long-term and short-term rates at spot rates are going below that. So overall, our perspective, especially on the basis of our guidance is the spot rates in the second half somewhere in the third quarter stronger will go down. Lastly, exposure on concerning the bunker shares. And a question was on low sulfur share is, let me - the actual number, I'll concern - approximately 75%, 76% currently. So a little bit above 10%.

[Sathish Sivakumar:]

Okay. Got it. Thank you. Can I...

[Mark Frese:]

That will change over time concerning due to the installation of scrubbers. So then we will see and I think we have explained that over time, we will see slightly development on that share.

[Sathish Sivakumar:]

So I've got two follow-ups, actually, if I can. Firstly, just on the scrubber itself, what percentage of your fleet do you expect it to be with the scrubber by end of this year? And where is it actually today? And on China, you said 25% production cut - output cut, is it gotten worse as we came into May? Or is it like - just trying to get a sense of that in fact, have you seen inflection or is it likely to get even more worse as we go into later part of May? Just wanted to - any color on that should be is helpful. Thank you.

[Mark Frese:]

Yeah. First, on scrubber. So the, let's say, completed scrubber installation is somewhere around - today, somewhere around 15%. Over time, we will increase that to north of 25%, somewhere between 25% and 30% in total concerning our total fleet. And on China, for our perspective, for sure, the actual situation we are having right now, we see that, that will, over time, normalize. And situation is coming back in China, and that is also built into our perspective on guidance for this year.

[Sathish Sivakumar:]

Got it. Thank you. Can I just ask another question, maybe if I can. On the quick coats, right? So any color on quick coats, what percentage of the volumes are actually going through that platform. I promise this is the last one from my side, sorry.

[Mark Frese:]

Yeah. Yes. So where we are coming from, I think, over time, that has strongly increased and we can say that especially the situation over the last couple of quarters have supported that strongly. So we are now above 25% of total bookings.

[Sathish Sivakumar:]

Thank you. Thanks, very much.

[Operator:]

The next question is from the line of Sam Bland from JPMorgan. Please go ahead.

[Sam Bland:]

Thanks for taking the questions. I've got two, please. You mentioned spot rates on sort of Chinese exports softening. Can we have a bit of info on what you're seeing on spot rates in other regions? Have they gone up to compensate or kind of spot rates generally down everywhere. And the second question is on this sort of piece around market situation not expected to improve until the second half. Is that - I guess, by market situation, do you mean sort of congestion disruption and those kind of things? And should we view the sort of disruption and congestion as being the same as freight rates. And so if there's a lot of disruption, that also means freight rate is very high? Or can you have disruption and congestion going on for a while, but actually spot rates still coming down, which I guess is roughly what we're seeing around China today. Thank you.

[Mark Frese:]

Yeah. First of all, spot rates, for sure, there are regional differences. But overall, the trend is the same. So we are seeing a softening of spot rates nearly globally. On the market situation, the question where that is coming from, if that is all based on the assumption that congestions go on, I think it's the mixture of demand, softening of demand and of congestions. And yes, we even would anticipate that even if congestions stay at the level or there are maybe even new reasons for that, that due to the overall sentiment we are seeing right now that demand is softening. For sure, I'm not talking about a new wave of COVID we are all not seeing right now. So taking that apart, I think we would say that it's both demand and congestions to some extent.

[Sam Bland:]

Understood. Thank you.

[Operator:]

The next question is from the line of Anders Karlsen from Kepler. Please go ahead.

[Anders Karlsen:]

Yes. Good afternoon. A couple of questions. In terms of your long-term versus short-term contracts, if you can give a split on that, if I understand it correctly, you have around 50% contract coverage. The second question is if you have any expectations around the upcoming negotiations on the U.S. West Coast to the port workers? And also, if you can shed some light on where about what rate level are your average contracts being entered into?

[Mark Frese:]

Yeah. Long-term share of total is around about 50%. That's question number one, negotiations for employees have put it that way, we have no insight to be very honest. So no deeper insight than you might have or we can read. So therefore, very difficult to predict and will also differ yes, they will - let's put it differently. The negotiation will evolve over time and the effect is difficult to predict right now. And the contract rates and especially when we talk also about QFP rates, there are overall somewhere around our average freight rate of today, the longer-term contract rates. And to my note for sure, QFP rates longer term are higher than that, but average is close to that.

[Anders Karlsen:]

Okay. Can you - your 50% long-term contract portion, can you say anything about the duration? Is that like two, three, four years or whereabouts...

[Anders Karlsen:]

Everything above one year is slow term. Yes, there is an increasing share also due to our Q3 product, which is normally a 3-year product also for sure, contract with a longer duration, so duration of 3 years. So in total, if I may add to that, it's slightly above 10% currently. The longer term so it will be 6 years piece. The majority of the long-term contracts, which Mark was referring to is around about 12 months. But as I said, slightly above 10% is longer term to two to three.

[Anders Karlsen:]

Thank you.

[Operator:]

The next question is from the line of Mark Frese from Stifel. Please go ahead.

[Mark Frese:]

Thank you for having me. A couple of questions. First on spot freight rates. And you said that on average, you see a softening. But if I look at the slides, you put up skide there and say the SCI to the U.S. West Coast, it's pretty stable, I would say, transatlantic from Dru [ph] or other providers says that transatlantic trade Europe to U.S. [indiscernible] quite a bit. And it's only, let's say, Shanghai, North Europe and Shanghai, Latin America, which is really weak. Could you elaborate a bit on what is driving the divergence on spot rates for both those trade lanes? That's my first question. Thank you.

[Mark Frese:]

Yeah. Referring back to the question right at the beginning, we had, so what we are seeing the softening of spot rates is, for sure, especially focused on everything what is outgoing from China, but we are also seeing that it's softening on non-dom which then also has an effect on average rates on the different trades.

[Mark Frese:]

Okay. But for, let's say, for the U.S. trailer for transpacific [ph] it's still strong. So I see the SCFI interrupted to put up on Page 20 or so it's still roughly 8,000 for container. I would just – just a touch below peak levels.

[Mark Frese:]

Yes. I think, first of all, there is also a little bit of timing effect for sure our, let's say, information we are seeing what's incoming right now. So there is a softening, but it's slightly - or it's for sure, lower, especially on these trades you are mentioning. That's absolutely right.

[Mark Frese:]

Is it - same question would be with the Far East trade softening and, let's say, transpacific rather stable? Is it considerable or possible that some of those vessels that currently serve the price rate are diverted to the Transpacific maybe not from your from the Asian companies? Or due to the length of the journey and doesn't it make sense to go with Fareast vessels on Transpacific?

[Mark Frese:]

Yes. A couple of points concerning that. First of all, the basis for all of that and that's why we see the differences is that demand in North America is still relatively strong. So the slight downturn of demand is not the same everywhere, and that's why the trades to the North of America are still stronger. To redeploy assets to more questions, so to say, or more asked trade. Yes, we have done that over the time of the pandemic, for sure, to be of service for our customers, and that is still our guiding principle. So if there is freight and if we have contracts for sure, we will keep our vessels indeed trade to serve our customers. It's all about right now being reliable and delivering quality. Some ships, you also know that cannot be deployed everywhere due to nautical issues, let's put it that way. But yes, for sure, we are also looking to optimize our asset allocation to network and the demand not taking or not taking away the customer satisfaction aspect, which is quite important for us.

[Mark Frese:]

Thank you. Then I'm afraid just another one. You mentioned that the order book to current capacity is somewhere above 25 [ph] Do you have like - could you give an estimate what this figure, the percentage might look like if you deduct replacement, scrapping and new regulation that comes in, in 2023. Would it be more like 20%? Or is it just a...

[Mark Frese:]

Yes. To be very honest, no, it's not possible to say that because that's so heavily dependent on the behavior of competition for sure, also of ourselves. So that's very difficult to say. And it's for sure, the most dominant influence has the demand. So when everybody needs the vessels right now, everything is running right now. So there is nearly no scrapping that from our point of view, strapping will increase, but not tomorrow, it will take a little bit longer when regulations are kicking in and it's not efficient anymore to use the ship, then there will be put out of service. But to really do a calculation there is very difficult and something which we do internally, but it's not - and we discuss internally strongly to have a good number here, and it's really not possible to do process on that.

[Mark Frese:]

Okay. Thank you. Operator [Operator Instructions] Our next question is from the line of Daniel Won [ph] from JPMorgan. Please go ahead.

[Unidentified Analyst:]

Hi, thanks very much. I have a couple on your credit rating and financial policy. As you said, you've been upgraded to BBB+ at S&P. Do you have any desire to be investment-grade rated or are you happy in the BB category or any targets there? I know you had a three times leverage target previously, but any update on that, considering your net cash position at the moment? And then just linked to that on uses of cash. You've already communicated on the dividend, but any plans beyond that relating to debt pay down potentially? And any particular type of debt that you'd be looking to target?

[Mark Frese:]

First question, no and yes, no means, no, we are not targeting inter rate level. And yes, we are happy with BB+. So we are feeling very comfortable there. And that guides us into your second question on cash levels and what we do with that if we would like to do more debt paydowns and what our overall target is for the leverage. So over the cycle, we still keep the target intact to be between 2.5% and 3%, somewhere around that, maybe more to the 2.5% position. That will mean something over time for sure, both investments and structuring the balance sheet. But over the cycle, we see that as a good ratio, a good ratio for us and the good use of proceeds and capital

[Unidentified Analyst:]

Thank you.

[Operator:]

The next question is from the line of Gimora Mari [ph] from HSBC. Please go ahead.

[Unidentified Analyst:]

This is Dipak from HSBC. I had two questions. Firstly, when we say that 2Q could exceed expectations, how we meaning that 2Q could be as strong as 1Q? And my second question is that when you say demand is softening, is it because of the delays of the supply chain issues, which we are seeing out of China? And then - or is it that once the issues are resolved in Shanghai, we could see some pent-up demand bounce back during are 2Q or 3Q.

[Mark Frese:]

Yes. Q2 performance higher than expected is, for sure, referring to our perspective at the beginning or before the second or the upgrade of our guidance. So yes, concerning that or related to that, we think Q2 will be better than that. Difficult to - and it's not possible to guide the Q2 single right now, but should be somewhere slightly south of Q1. And demand and if we could see a rebound, so to say, after China is opening again and everything is normal, yes and no, yes, we will see, for sure, when China is reopening, we will see that. But overall, I think we have to accept that demand is going down over time slightly. And that starts in different in different regions. You can see that consumer sentiment is changing over time. Consumer behavior is changing. Inflation is going up. So disposable income is pressured a little bit. So therefore, we will see a general trend from our perspective on demand. But yes, when China is reopening again, there will be also some rebound, so to say.

[Unidentified Analyst:]

Okay. Thank you. And then maybe if I can follow up on that. Since we are mentioning about softening of freight rates and possibly demand also softening and this would possibly lead to some congestion easing as well. Do you think that you will be able to bring down the costs back to where they were before basically unwinding of the congestion and the network rated extra costs, which you're incurring at the moment because of the delays in other aspects. Of course, the fuel price is something which is out of hand, but the network and congestion-related expenses, would we see those unwinding back in line with the softening of the freight and demand? Some of it is like more sticky in nature and it would remain...

[Mark Frese:]

A very operational question we are asking ourselves for sure. First of all, I would say a big part of the cost development we have seen will be or will change again when overall situation changes. That's quite natural because when you don't have to store your container, you don't have to pay for. Now storage is up handling and haulage is up. So everything which is really a result of congestions will, for sure, go down again. That is quite a big part of the overall cost development. I would assume it's more than two third, maybe up to 75%, which is or will go down over time. That will not happen overnight, but it will go down over time when situation is easing. But there's also the risk that part of the cost will stick to the system. And our target and what we are constantly doing, you know that we have initiated a strategic cost program and that is addressing absolutely these points to be sure that after that period where you had to accept higher costs per TEU, that we bring them back to a very competitive level where we have invested into these cost positions, but it will take time for sure.

[Unidentified Analyst:]

Okay. That's it from my side. Thank you so much.

[Operator:]

Our next question is from the line of Christian Cohrs from Robert Research. Please go ahead.

[Christian Cohrs:]

Yes, hi. Thanks for taking my questions. Just two left from my side. First, when will you start to include the other [indiscernible] into your network? And does this actually mean that you will transfer cargo or that cargo will actually be transferred from Hamburg to Williamson question number one relates to, yes, these questions about the globalization, et cetera, in light of all the supply chain disruptions we have experienced over the past 2 to 3 years and also the change geopolitical climate, do you observe among your customers any intention for some near-shoring of production, different sourcing strategy, localization of supply chain, et cetera, which could hamper or harm your business in the longer term? Thank you.

[Mark Frese:]

First question, we already have included William Haven [ph] into our network even before the transaction was concluded due to all the congestions globally. So therefore, William Haven is starting to be, let's say, an important part of our hub strategy. It's not so much about transferring from Hamburg to William Haven. It's much more about creating new products, which then will have to win soften over time. So therefore, yes, there might be some shifts. But overall, it will not have a major effect on Hamburg. It's more, as I said, creating very competitive products for Germany overall. Second question will be globalization. I think it's much more what we are seeing right now is based on derisking and therefore, we will not only see niche near shoring, but we will see more differentiated, yes, sourcing strategy, let's put it that way, so that you are not so dependent. And I think we - you could really say we all - even as a state, we're learning our lessons right now quite hardly what that means. So this derisking overall will be an effect and is important that will lead to more differentiated networks of our customers that will have an effect in a sense. But I think overall, will not have a strong effect on volumes. And on the other side, we have to see that growing global population will also lead to growing global demand over the cycle, for sure. So therefore, I think the effect on especially our business will not be dramatic. It might be strategic, and we have to cater for that for our customers will not have - from a volume perspective, a very strong effect. I think there's even a counter tendency that customers have learned as we have learned it overall, how crucial running supply chains and in that ocean freight and ocean long-haul legs are. So therefore, I think we will see a little bit a change in the relation we are having in building reliable networks for our customers.

[Christian Cohrs:]

Understood. Thank you.

[Operator:]

This was the last question today. Please direct any further questions to the Investor Relations team. I hand the conference call back to Heiko Hoffman for closing remarks.

[Heiko Hoffman:]

Yes. Again, thank you very much for joining today and for your interest in Hapag-Lloyd and also in our industry. In case of further questions, as I will be just said, please reach out to either myself or the entire IR team. As always, have a nice rest of the day. Stay safe.

[Operator:]

Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Good bye.