Ladies and gentlemen, welcome to the half-year 2022 results conference call and live webcast. I am Sandra, 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 a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Alex Waser, CEO of Bystronic Group. Please go ahead, sir. Thank you, Sandra. Good morning, ladies and gentlemen, and welcome to our half year results 2022. I'm here with our CFO, Beat Neukom, and we're pleased to walk you through our performance of the last six months. Before I start, kindly take note of our disclaimer. Let me take you through our agenda for today. Firstly, I will kick off with a business update and the progress we made in line with our Strategy 2025. Then Beat will explain to you our financial performance in more detail. To wrap up, I will elaborate on our outlook and will then take your questions from the conference call. Let's start with our highlights and the key takeaways. We are pleased to see continued strong customer activities and solid demand. In most industries, our customers are still busy. As a result, our total order intake was on last year's level, even though we experienced very strong catch-up effects from COVID last year. In addition, as a region, China was very weak because of the lockdowns. Excluding China, actually, our order intake grew by 10%. Secondly, supply chain constraints had a significant impact on our performance. Due to missing key components, we couldn't finish to install many systems and solutions. This clearly lowered our sales performance, but we still grew in all regions except of China. The performance in our service business is certainly a highlight of the past six months. The team grew sales by 11%, and this business today accounts for 24% of our group sales. This also shows the service business makes our performance more and more resilient. When it comes to the delayed sales of systems, we are talking about CHF 100 million sales. As a consequence of these delays, we are missing the volumes to cover the cost of our operations and growth investments. Hence, our EBIT margin declined to 2%. We are confident that we will manage the challenges ahead and see all of our midterm growth drivers as fully intact. Therefore, we're also convinced to reach our midterm targets. I've mentioned the supply chains, the supply chain challenges, and I will elaborate on this in some more detail. Firstly, availability of components. It has never been an issue at any of our production sites to obtain laser sources. However, it has been challenging to receive other key components at the right time, in the right quantity, mostly semiconductor related. This could, for example, be drives, motors, amplifiers. We are in close contacts with our suppliers to work on delivery times and volumes together. Where possible, we have also established alternative sources. Secondly, we experience high procurement costs. This impact both on material costs, but also on transport. Beat will talk about this in more detail. To protect our margins, we have implemented several price increases and eliminated discounts. Thirdly, we have substantially higher inventories today. On the one hand, we have increased inventories of components as a safety stock. For example, we now have more laser sources in stock than we would have in normal times. On the other hand, we have many systems on our balance sheet that are nearly finished but miss a few components. This led to the delay in sales recognition and high inventories. The situation is, of course, also challenging for our customers. Lead times have become longer in general, and they want to start working on our systems as early as possible. Therefore, we usually deliver the systems to customers even if they are missing the last components. Once we receive these components, our service technicians make a second visit to finish the installation and do the handover. This makes our processes inefficient, however, since it requires multiple visits. We are convinced that this is the best interest of our customers and also for us, since we can keep our production processes running and maintain reasonable delivery times. The last challenge, obviously, is China. The COVID-related lockdowns led to a lower economic activity and confidence. Therefore, we have seen a large drop in demand. As I said before, we are very pleased with our order entry. Compared to pre-COVID levels, as you can see on the chart, volumes in the last two quarters were around 10% higher and demonstrate our strong, attractive offering. In China, demand dropped substantially. Excluding China, our order volumes even grew by 10%. In terms of industries, we see good demand from most industries, for example, agriculture, construction, and electronics. Let me make a few remarks on our regions. In EMEA, we saw solid demand, especially as we are comparing against a very strong second quarter of last year. Since May and June, there is a slight cooling off in Southern and Eastern Europe, but the sentiment in the rest of the region is strong. We have also successfully sold our Russian operation. This accounted for around 2% of sales. We are still present and active in Ukraine. However, because of the sanctions and the dual-use regulations, our local activities are limited. Americas is a key growth market for us. We see continued good demand and sales, especially in the gold segment. Our investment in the local presence are really paying off. You can also see on the bottom left of the chart that Americas today account for almost 30% of our group sales. In China, we saw a significant cool down. Except for a few weeks in May, we kept our production facilities open. In our DNE plant in Shenzhen, we produced products in China for China, but we also served the APAC market out of China. Therefore, our plant in Shenzhen was operational at all times and delivered many systems out of China to support the growth in APAC. In APAC, we achieved very good performance, especially in the markets like Korea and Australia. In Australia, for instance, we are benefiting from the fact that many customers expand manufacturing activities outside of China, and therefore invest in new infrastructure. This is a beneficial trend for us and boosted our order intakes in Australia. Let me make a few remarks on price increases, since this is a key strategic initiative for us to protect our profitability. In our systems business, we have made several price increases and also reduced the discretion for discounts substantially. This, of course, applies for all of our new business. Our customers largely understand the price increases, and we could well implement them. However, we have also deliberately walked away from a few projects where customers did not want to accept high prices. With this, I want to emphasize that we take these much needed price increases very seriously. We have also adjusted our terms and conditions for an inflation-linked price component. In the service business, price increases have an immediate positive effect, and we also made several adjustments in the past month. Before I hand over to Beat, let me share a few updates from our Strategy 2025. In our pillar systems, it is all about innovation and customer relationships. As a part of this, we have opened our new Brand Experience Center in Korea. It underlines our commitment to the Asian growth markets and enables us to showcase our solutions even better locally. Furthermore, we have sold our first systems in the global entry market segments. In mid-range or the gold segment cutting, we have launched our new 20 kilowatt laser systems. With these new systems, customers can cut even faster and become more productive, especially when they cut thicker material. This also positions us well in the market where increased power is highly relevant. In the fourth pillar, software and solutions, we see continued strong interest. Our vision is a fully automated and integrated digital business. Therefore, our company, Kurago, develops a software package specifically tailored to the sheet metal processing market. The software is currently in test phase with several customers, and we will launch it under the name BySoft Software Suite at EuroBLECH in October this year. In the service business, demand for our modular contract solutions is strong. In line with our strategy, we hired additional technicians and achieved 11% sales growth. This also helped us to offset some of the sales delays in the system business. With this, I hand over to Beat. Please go ahead. Thank you very much, Alex, and a warm welcome also from my side. I will now walk you through the financial highlights of the first semester of 2022, and why most of our key performance indicators after six months are temporarily below our midterm expectations. On the positive side, we successfully grew our order intake at constant currency compared to the first six months of last year, even despite a challenging environment, for example, the lockdowns in China, unfavorable economic conditions, and a high basis from catch-up effects last year. Our net sales in H1 2022 reached CHF 453 million. This represents a growth of 6.2% on a constant currency basis. Our service business grew 11% and shows that our investment in this area are demonstrating success. The growth in the systems business was delayed due to the supply chain constraints. On the top line, we had an unfavorable FX translation impact of CHF 14 million, which mainly comes from the weakening of the euro, Swedish krona and Korean won, partially offset by the stronger U.S. dollar and the Chinese renminbi. Our EBIT margin is clearly below our ambitions, and I will elaborate on the driving factor behind this in a minute. Our operating cash flow turned negative because of a high inventory buildup. This also impacts our return on net operating assets, which declined to 6.6%. Now let's take a closer look at our order intake and sales development. The chart on the left shows the development of our order intake versus sales and consequently the level of backlog we increase or reduce. The light brown bar indicate order intake that was absorbed by net sales for each quarter. If order intake was above net sales, the dark brown lines show the amount of backlog that is created. The black line shows quarterly sales. You can see that the level of backlog has historically been rather low and balanced out between single quarters. However, this has changed since 2021 and the COVID catch-up effects. Our order backlog continues to grow. While on the one hand we are pleased with this as it proves our strong offering and the trend to larger solutions with automation, with longer delivery and installation times. On the other hand, and this is even more important, the supply chain constraints make it very challenging to quickly realize the sales from the backlog. In the first half this year, our backlog increased further as we experienced a strong delay in our sales recognition. I will now move on to the P&L. Net sales increased by 2.8% to CHF 453 million. A highlight is our material quote. The ratio from material expense, net of the change of inventory to sales declined from 45% last year to 43.5% this year. With this, we are very pleased that we managed to improve our gross profit margin in the current environment. There are two main reasons for this achievement. Firstly, a positive mix impact as the gold segment performs strongly, especially compared to the entry-level segment in China, where we experience some lower margins. In addition, price increases in the service business also supported our gross margin. However, we also experienced substantially higher costs for components. This partly offsets the positive mix impact and price increases. Otherwise, our gross profit margin would have been even better. Personnel costs increased by 9% to CHF 133 million, and our headcount number grew by 8% in the first half. This is in line with our growth strategy to expand, especially the service business and some production capacities. In addition to hiring, we're also experiencing some wage inflation of around 2% on average. Our depreciation and amortization expenses remain stable and account for 2.2% of net sales. As we have already highlighted to you with our full year results 2021. That the current supply chain environment has an unfavorable impact on our operating expenses. In the first half of 2022, OpEx increased by 22% to CHF 105 million. Some 4 million are variable costs and volume related, of which about half come from higher transportation costs. We already experienced in the second half of 2021 and continue into 2022. In addition, we had higher costs for our sales activities as well as resumed travel, representation, and the costs for some major trade fairs. Overall, this resulted in an EBIT of CHF 10.5 million and a 2.3% margin. We're not satisfied with this performance and have taken countermeasures, such as a strict headcount approval process, reduced travel, and a detailed analysis of some of the variable costs. We have also reviewed the attendance of some of the trade fairs given that in the fall this year EuroBLECH is taking place, the largest exhibition in our industry. As a positive note, to close our EBIT discussion, we see that the margin quality of our order book is gradually improving as a result of our price increases and reduced discounts. A comment on the tax rate. The tax rate was 19.4% in the first half and has improved compared to last year, mainly due to a favorable country mix with higher portion of profits generated in Switzerland. Our net profit for the first semester is CHF 7 million. Despite the challenge in the first half, our balance sheet remains very strong with an equity ratio of 60%. Let me point out the key changes of the past months. Well, firstly, we paid out a dividend of CHF 124 million to our shareholders in May. This is the main driver for the reduced cash position compared to December 31. I will elaborate on the inventory impact later, but you see an increase of CHF 77 million. Thereof, CHF 28 million are because of our strategic decision to increase stock for key components where possible and spare parts. The large parts, however, relates to a CHF 49 million increase in finished products. Working capital management continues to be a focus, and we consistently apply our down payment policy with our customers despite longer delivery times. With a solid order intake in H1 2022, these advanced payments from customers increased by CHF 40 million and helped to partially offset the inventory increase. In sum, our net operating assets increased by CHF 50 million to CHF 281 million, and the ROA stands at 6.6%. Well, Alex and I mentioned our inventory build up a few times now. Let me illustrate this. According to our accounting policies, we recognize our sales once systems are delivered and installed at the customer's premise. But more importantly, the system needs to function and the customer has signed a handover protocol. With missing components, we decided to deliver the finished product to the customers, but the final handover has, of course, not yet taken place. As a consequence, the systems are still on our balance sheet. You can see this as our finished product increased by CHF 49 million. This would correspond to approximately CHF 100 million of sales. Consequently, our group EBIT and margin would have been substantially higher. Currently, unfortunately, we have very low visibility on timing of when and how much of this inventory will finally flush through. We're working very hard to make this happen in the second half of 2022. Let's move on to the cash flow statement. In addition to our lower net result, the increase in inventories had a significant impact on our cash flow. Starting from our net result of CHF 7 million, our inventories increased by CHF 79 million. The positive CHF 23 million consists largely of the advanced payments from our customers. This resulted in an operating cash flow of -CHF 49 million. Our CapEx amounted to CHF 8 million or 1.8% of sales, which is in our usual range. In total, this led to an operating free cash flow of -CHF 52 million. Once we can recognize the delayed sales, the impacts from higher inventory will reverse and improve our cash flow. Before I hand back to Alex, let me wrap up with the five key takeaways from our financial results. Supply chain bottlenecks are the origin of our challenge. Due to the missing components, our inventory of finished products increased significantly. This led to a substantial delay of sales, worth around CHF 100 million. Nevertheless, as a positive key achievement, we improved our gross profit margin due to favorable mix, as well as the price increases we implemented. However, in line with our growth strategy, our costs for personnel and other operating expenses increased, which led to a lower EBIT margin below our ambitions. To improve our EBIT margin going forward, we have initiated cost containment measures. With this, I'm handing back to Alex. Thank you very much, Beat. Before we take questions, I will provide you with more details on our expectations for 2022 and beyond. We are convinced of our business model, and we are well-positioned in our markets. We believe that we generate value for our customers with our approach to offer systems, service, and solutions out of one hand. For 2022, our visibility on supply chain developments remains very limited. Our previous outlook was based on the assumption that the situation on key components clearly improves in the second half of the year. While we have seen some minor improvements, unfortunately, this has largely not materialized. Nevertheless, as a new outlook from today's viewpoint, we expect a better second half in 2022 and higher sales than in the first half of this year. Let me elaborate why we are confident to deliver a better second half. Firstly, we have a high number of systems in the pipeline that are very close to sales recognition. Secondly, our second quarter was already better than the first one, so a positive trend. Thirdly, we expect China to perform better, and with less restrictions compared with the first half year. For these reasons, and even though visibility remains limited, we are convinced that we deliver a better second half. For the midterm, we are confident to reach our targets, especially with our vast opportunities for further sales growth in systems business, the margin accretive growth in the service business, and once the price increases also take full effect this year and late next year. With this, let's move on to the Q&A session. Sandra, let's start with the first questions from the conference call, please. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handset until asking a question and eventually turn off the volume of the webcast. Anyone with a question may press star and one at this time. The first question comes from Tobias Fahrenholz from Stifel. Please go ahead. Yes. Hi, gentlemen. Let's start maybe with the delivery delays, big topic. Could you elaborate a little bit more on these, and especially about the monthly developments? I mean, speaking about CHF 100 million, I understand in theory they should all be delivered until end of the year. Maybe you can give us a feeling how this huge backlog is coming down. What was the figure in May? What was it in June? What do you expect for end of July? Maybe give us some feeling and also technically, how should we think about the margins of these products? I mean, you had all these costs already. The machine is actually already standing client-side. Do these orders have huge EBIT margins? I don't know, about 30%, 40%, 50%, or what's the technicality here? There are several questions. I suggest, Beat, do you wanna go for the financial part of that? Yes, I can do that. You know, with regards to these CHF 100 million sales that are being stuck, you know, we had a stronger second quarter than the first quarter, and that kind of makes us believe that, you know, things might improve to a certain extent. The challenge is, you know, for example, in June, it has even increased compared to May. It comes kind of in waves, right? When certain components are being delivered, and then we go and install them. You know, we're sure that these CHF 100 million can be realized, but there might be new ones with missing components. That makes us very, you know. It's just very challenging and doesn't give us the visibility, how much there will be at year-end, still stock in inventory. I think that was one of the first question, and then second question was with regards to the margin. Yes, we did have, you know, some of the costs already incurred, but what we're doing is we actually park them on the balance sheet, right? We're only recognizing them through the P&L once, you know, the sales is being recognized. That the margin will be quasi a normal one. The good thing is, you know, price increases from components, they have already been absorbed. You know, so there's not gonna be, you know, additional price increases on these products. you know, the CHF 49 million, you know, CHF 100 million sales, there you can get a, you know, an indication of the cost. Then there is, you know, variable and personnel costs to install these machines. If you know, if you wanna do the math according to that's how I would do it. Mm-hmm. What are you proactively doing there to solve the problems? Have you approached new suppliers? Yeah, what are you doing? Yeah, maybe that's an answer I can give to Tobias. Yeah, we have significant efforts in place on a daily, weekly, monthly basis to synchronize the needed components with the plants, with the suppliers, with our customers. This is a very big focus right now to support that these systems can be installed as soon as possible. As you just mentioned, that's correct. We are also redesigning systems for other components. We have done quite a bit of that already. However, often we find out that also these new other components are on long lead times and doesn't really make a big change. Maybe one last topic, if I may, on M&A. Any thoughts here? Are you just too busy at the moment to look for your operational headwinds that you stopped M&A screening completely or how does it look? Yeah. I would say that our main focus right now is not M&A. Our main focus is really our operational performance. That's where we are. We do have a few items that we are looking at, but that is not our major focus right now. Okay. Thank you. Thank you very much. The next question comes from Walter Bamert, Zürcher Kantonalbank. Please go ahead. Hello, everybody. Would you mind giving an indication of the run rate, other operating expenses in the second half and in the coming years? As you mentioned, with the trade fair, the big one coming, we have to assume probably that this will stay at the same level, and you hope to grow into more volumes that compensate for that. Or do you see any issue in there which will be lower, apart from being more cautious on new recruiting and on other travel activities? Is a significant part of that other operating expenses related to the additional visits to clients to install missing components? Then on the lower material cost, what happens to your pricing and to your order book if the material prices, in particular for steel, go down? Does that lead to additional margin, or do you feel the pressure to adjust the prices also to a lower level very fast? For clarification, you mentioned the 49 million finished products. This is finished and almost finished products, isn't it? Well, no. Yes is probably the answer. The last question is yes, it's correct. It is related to finished or almost finished products, because we really take our revenue recognition rules very, very seriously. Yes, we can see several large projects that are missing very few components that lead then to the final sign-off on the customer side, and that leads to, you know, the recognition of the sales and the cost of the project, of course. Maybe the other parts, Beat, do you want to comment on that? With the lower material quote, right? You know, we have seen, you know, spiking steel prices, and, you know, they come down slightly. You know, what we actually wanted to do is we wanted to buy, you know, more steel, you know, upfront to get commitments from, you know, from our suppliers. Unfortunately, we have not been able to do that. They really give you know, spot prices. You know, depending on, you know, what the steel price is doing, you know, this will have, you know, a direct impact on our, on our material quotes. You know, I think Walter Bamert's question was around, would we need to give better prices if steel price going down? The answer to that is no. We have no contractual obligation to do that. In fact, the new terms and conditions that we have have a price index going up, not down. Okay. Was the question to run rate of OpEx. Yeah, exactly. The run rate of OpEx. Yeah. You know, that's a fair statement that you were making. Yes. You know, our cost containment actions are, you know, mainly on corporate costs. You know, some congresses this year or trade fairs that we, you know, canceled and said we'll not participate in. You know, you shall not assume that, you know, the operating expenses will decline compared to the first half. It will be at a better rate of better percent to sales, but still, you know, at the level or slightly increasing. Because in the operating expenses, there is also some variable costs in there, you know, such as transportation, installation costs, you know, warranty expenses are booked there. You know, all these, this when higher sales come, you can also expect that these costs will slightly increase, but at a lower rate than what the sales are increasing. Any guess how much of the increase we saw this year in the first half is related to the supply chain disruption? You mean in the operating expenses? Exactly. Yeah. We know that about, you know, transportation has gone up, right? If you consider that, right? That has, you know, had a significant increase for us, about CHF 2 million, you know, compared to last, which has nothing to do with volume related. But the rest was not necessarily, you know, because the supply chain disruption, we are, you know, recording these costs once we actually record the sales, I should say it this way, the variable costs. I mean, there is a huge bulk, which is not volume-related, CHF 16 million additional OpEx. Where that, does that arise? Is that out of Switzerland? Is that everywhere a little bit? That's across the organization. There was a reduction in China, but across the organization, we had, you know, step up of activities. Okay. Thank you. Thank you very much. The next question comes from Daniel Koenig from Mirabaud. Please go ahead. Yes, good morning. I have two smaller questions. First, I was wondering when you have net sales in the U.S. up 17.5%, how much was pricing? And in general, how much is pricing up versus a year ago? And then I had a general question, like the personnel cost, you told that there was on average up 2%, but 2% is actually very little if you know that Swiss inflation, even Swiss inflation is now up +3.4%. So, I have this question, will this ramp up into the second half, the personnel cost? I'm just wondering because 2% is actually almost nothing, you know? Like, in the EU, the inflation is up 8.6% or so. I was wondering, can we expect something ugly in H2? Thanks. Yeah, let me take the second question. Sure. I'll hand over to the first question. The inflation, the salary increases, they have a time lag, and I think that's one of the challenge we have, right? The inflation adjustments are usually happening at the beginning of the year and then stay stable throughout the year. That's how we got to the 2.5% of inflation adjustment that we had, right? This will, you know, have an impact, you know, obviously then in 2023, you know, depending on what we are, you know, executing on wage inflation, you know, for 2023. Right. The first question. Well, the first question was related, if I understood it right, with, was it the sales increase? On the pricing. On the pricing. Yes. Yeah. What's that? Yeah, just like the volume and pricing mix. How much was pricing and how much was volume? In the U.S. Yes, in the U.S. especially, yes. Is this related to net sales or the order intake? Just to get this right. No, to net sales. I was just wondering. Yeah. Okay. Net sales and order intake, they're a little bit a different story. You know, most of the price increases, even though we have done some last year and then in March and in September, go basically into the order book because delivery time of the systems in the U.S. are something like around six to nine months. We're gonna see the impact mostly in the second half of this year and going forward when it comes to price increase. You know, in the U.S., we have really experienced a strong growth of larger systems or larger solutions. From my side, I think in net sales in the first half, it is more related to a true volume increase and less of a price increase effect. That we're gonna see in the second half and then in 2020 and 2023 by working down the order book. Mm-hmm. Sure. Okay. Thank you very much. The next question comes from Remo Rosenau from Helvetische Bank. Please go ahead. Yes. Thank you. In mid-April, you gave a business update with first quarter numbers. There you basically gave a profit warning for the first half of this year, but you didn't give one for the full year. You still said that you expect growth of 10%-12%, organically 12%-16% with an EBIT margin between 8%-9% in mid-April. Now, today, you didn't mention any of that anymore, which means implicitly that you dropped the guidance, which is obvious. I mean, it's not possible to catch all up what you lost in the first half in order to get to this 8% EBIT margin. Is that the right conclusion that I derive here? I would. You know, I mean, you summarized it kind of in the right way, but I would add something to that, right? That is when we talked about our guidance for the full year, we, you know, we always mentioned that if under the circumstances or under the assumption that the supply chain challenges will be released. You know, the closer we get to the year-end, the more challenging it gets. That's kind of what the situation is today. We have a strong order book. We have, you know, systems that could be, you know, recognized as sales. But the closer we get to the year-end, they won't be, you know, realized this year. Therefore, it is very hard for us to kind of, you know, give a guidance now for the remainder of the year, you know, depending, you know, because the visibility, we don't have that, you know, we don't have the visibility and, you know, at the end of the day, we will not be able to install. These systems and record the sales. Okay. That means it would still be possible if, you know, things get really better fast, and you could recognize these CHF 100 million all in the second half to still get there or not? I would say it is very hard to believe in the environment that we are currently, where we see so many disappointments from shipments from our suppliers. Even though we thought that is possible earlier in the year, we think it's very, you know, it's very unreliable and hard to predict what's gonna happen in the second half of the year. What we see is that we gonna expect a better half year in 2022 than the first half year. We know that because we see what's happening in our order book. You're right in the sense that, you know, for us to predict the second half other than it's better than the first half, depends mainly on some key components, and this has been a very disappointing ride with some of our key suppliers. That's unfortunately a key element to recognize the sales. Therefore, for us, it has been, you know, hard to give you a very exact guidance for the second half. Okay. Yeah. Because if you had come to the conclusion that you couldn't reach it, you would have needed to do an ad hoc profit warning earlier already, right? Well, we have always informed everybody about exactly the information we had available. From that standpoint, from a communication standpoint, I think we are exactly on where we truly feel where the business is. Okay. Just to be a bit critical, I mean, when you said in mid-April that the EBIT will be below the previous first half in 2021, I mean, it went from CHF 30 million to CHF 10 million. You know, it's a bit more than just lower. Let's keep that aside now. The other question, again, going back to these CHF 100 million in unrecognized sales, this is roughly around 15% of your potential sales. Mm-hmm. Still, I mean, even given the difficult circumstances, it seems like, you know, quite high. I mean, if you are self-critical, would you say that you could have done a few things faster, earlier, a few measures in order to somehow get these components? Or was it just, you know, as it was, and nobody could do anything about it? Well, you know, we can always be self-critical. I tell you that I was involved in probably most, if not in all of the escalations to the highest levels of all of the suppliers, and we have done our utmost to get to the point that we are here right now. You're right in the sense that I think what we all see here is that the killers point of Bystronic is obviously for large system, the availability of all of the key components, and that has a significant impact. That is really the first time you see that at that extent. We haven't seen this in the past many years this way. You're right that this is a sensitive point for anybody that delivers systems. If you have certain components unavailable, you basically are stuck with that system. Yeah, CHF 100 million is a high amount for us. You're absolutely right. We do everything every day and every week to work that down, but most of that is out of our control, unfortunately. Okay. My last question. On page eight, you mentioned that there is no price increases on existing backlog. How is that to be understood? I mean, did you try to increase prices retrospectively with already given orders, and that was not successful, or does this mean that the existing backlog has just no higher prices on average compared to the previous period? I can explain that maybe, Eli, because the words that you put here are a little bit black or white. We have done our first price increases at the end of last year. We had a price round in March and we have a price round in September, and we'll have another one this year, by the way. It's not, let's say, black or white, that no price increase is you know purely correct in the backlog. If there was an order with a long lead time and that order is still in the backlog, we could see some price increases on it. In general, it is correct that, you know, we had in the past no mechanism to increase prices in the backlog, that we have changed that a while ago in our terms and conditions with an index to have this ability to change also prices based on indexes in the backlog. That is what I tried to say in there. Okay, got it. Still, I mean, if you started to increase prices with new orders in fall 2021, some of those orders are in the backlog. Yes. The backlog should see a higher price level, huh? Higher margin. Yes. Yes, that is what, Beat, I think explained in one of his parts. We do see higher margins in the backlog compared with, let's say, older backlog in the past. That's the effect of less discounts and higher prices. You're absolutely right. It's steadily growing. That's correct. Okay. This inflation like, price, component you introduced, when did you introduce that? Beat, when would you say that It's in April, I think. Right? Yeah, it was April, but let's call it May, June, but certainly in all the contracts and the terms and conditions. Okay. That is across the board everywhere on the globe? That is across the globe everywhere. Yeah, we introduced it in all- Okay. of the general terms and conditions. That's correct. Okay. Very good. It works also on the downside then? Nope. No, it does not. Okay. No, it does not. Okay. It protects. You know, I would say it this way, our general terms and conditions in general, you know, have it only goes upwards, only to our benefit, right? Okay. If the customer wants to negotiate that, we are willing to talk to him about this and, you know, make an adjustment. That's kind of the policy we're having. Which will typically end up in a price increase to protect us. Right. Yep. Okay. Good. Very clear. Thank you very much. Thank you very much. The next question comes from Andy Schneider from Desk Capital. Please go ahead. Hi, gentlemen. I have another question on pricing, on inflation. Gross margin went up and when you mentioned mix, can you split that up a little bit, how positive was mix and how negative was inflation and pricing in H1? Yeah, I'm happy to do that. The large portion with mix, with stronger sales of the service business and also in the gold segment, and the U.S. also has higher prices, so the large portion of that was mix. The inflation and price increase is netting out almost. Okay. Okay. Okay. Already in H1. Yes. Yep. You handled the inflation through the price increases you've done. Yes. -earlier. Yes, absolutely. Okay. We do have some favorable country mix as well, you know, and some translation effects which are a smaller portion. That means in a normal environment where all the supply would work, inflation wouldn't cost you much margin in 2022. Inflation is not a big problem. I mean, you have to work on it, but you did the work. Yes. Yes, you can say that. I would say that. Yeah. Okay. It's surprising. It's good. Yeah, because it's very difficult situation. Yeah. Yes. Yes, it is. To just again on another question on the CHF 50 million or CHF 100 million in sales, CHF 50 million in balance sheet. In all personnel costs too, which were there for producing these machines, they are all not in the P&L. Or are they in the P&L because it's personnel costs? No, we absorb some of these costs into the material quote, so they are absorbed. Okay. on the balance sheet. Still there is another absorption in the P&L because these sales didn't go out. Correct. I mean. Correct. Probably you cannot put some of the sales rep salary also on the balance sheet. That is correct. That's correct. That is. Yes. Okay. Yes. Yep. The margin is at 2% mainly because of that and not because of inflation. Say that again. I missed it. The EBIT margin at 2% in H1 is solely because of these under absorption, because of these CHF 100 million sales missing and not because of inflation or any other stuff. Well, there is increased costs overall, right? You know, I mentioned transportation, for example, right? I mean, you know, that also contributed to a lower EBIT margin. Okay. had nothing to do with the CHF 100 million in sales. In a large extent, that's correct. Yeah. Okay. I mean, yeah, that's positive. Then we last talked in the beginning of June, and you were quite optimistic that your suppliers would deliver more. You mentioned good negotiations with them, which obviously didn't materialize that way. Can you be a little bit more specific? I don't want names, but Yeah, of course. What happened in June? What happened over the past six weeks? Absolutely. We are doing contracts and weekly calls with all of our key suppliers. While we have seen in May and in June significant improvements or some really good improvements for deliveries, when we then got to deliveries, you know, during the last many weeks, we basically got disappointed many times. It's, you know, what was told and what has been delivered was a big difference. Yes, we saw in, you know, May, June, better performance on the horizon, but that didn't really materialize, unfortunately. That's really what happened, and that was a big issue. Even the improvements that we saw, they were good improvements, but not to the extent that it would solve the problem within the next three to six months. It was just a bit better. That was good to see that we see the, you know, the silver lining, let's put it that way. You know, there are many times where we have been disappointed with what was really then achieved, and that's why I mentioned that in my earlier slide. They tell you one week you get 30 pieces, and then a week later when the delivery comes, there are just 20 pieces instead of the 30 they promised you a week earlier? Yeah, exactly. We have everything organized in the plant and in the field to do this, and then this happens. It really drives inefficiencies. That's correct. Yes. Okay. That's mainly electrical components, I guess. Yes. Across many suppliers. Yes. Many different pieces. Yes. I would say it's probably less than 10 suppliers of which five are really important, and it's always the same. It's around engines. It's around electric motors, it's around drives, it's around memory cards, it's around things like that. Okay. Have you looked at the industry, your competitors, do they have the same problems or do you get less good deliveries from the same suppliers and some of your competitors just get more stuff? I don't hope so. Yes, I have had many discussions with other areas, and depending on what exact product you use, it's a little bit different. I can say that, you know, with everybody that I've talked in our industry, we have very similar challenges at different ways. This challenge is very big in our industry. Okay. The only thing that could have prevented that would have been safety stocks you would have built up one, two, or rather two years ago? Yeah. If I could go back two years, I would build up safety stock for a large amount, and I would deliver wonderful results in sales and earnings now. That's correct. Okay. Thank you very much. Thank you, Andy. The last question for today's call comes from Milena Kälin from AWP. Please go ahead. Hello. Thank you for taking my question. It's about the energy crisis, and I wonder, would you be affected by a gas shortage? And if yes, how would you deal with it? Yeah, I can answer that. I think everybody would be somehow affected by that. When it comes to plants, you know, gas is one discussion I think we should have, and power is the other one. Let's stay on the gas. You know, we have certain dependencies when it comes to plants on gas. We're actually changing that as we speak right now because there are alternatives that we can bring in, and I think we are able to manage that in mainly Germany and in Switzerland by having alternative to gas. We are more concerned about our suppliers where we do a lot of work right now to understand what the situation there is. Obviously also on the power side, we are concerned about the power side, what that would do and what concepts. We are currently working on concepts, how we can work in different scenarios, gas, you know, and power shortages. Those scenarios are still in progress. I can tell you one very quick thing. We have had experienced the power shortages in China last year, where at certain days, especially in Shenzhen, the power was switched off and we managed to, you know, to work around these situations. It is certainly high in our agenda to work on plans, how we can live with different scenarios in our industry when it comes to gas shortage or power outage. It's complex, though. Okay. Thank you very much. Gentlemen, this was the last question. Would you like to conclude the conference call? Yes, please. Thank you very much. It was a pleasure to inform you about the H2 results, and thank you very much for your attendance and for your questions, and have a good day. Thank you very much. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.