Hello, and welcome to the Bodycote Trading Update call. Throughout the call, all participants will be in listen-only mode, so there's no need to mute your own individual lines, and afterwards, there'll be a question and answer session. Just to remind you, this conference call is being recorded. I now hand the floor to Stephen Harris, Group Chief Executive. Please begin your meeting. Good morning, ladies and gentlemen. Dominique Yates and I will go through this this morning. I'll just give you a light trip through the trading update in terms of looking at some of the sectors here, and then we'll open up for questions and answers. So, if we just talk about each of the sectors in turn, I think the first one is automotive, and the question on most people's minds is probably, so what's the semiconductor shortage doing to the automotive world, and how is it going? How is it recovering? And I think our general answer to that is that the automotive business has recovered very strongly. The actual impact of the chip shortage, we don't really know. I mean, in fact, if we hadn't read about it in the newspapers, we probably wouldn't really know what the impact was. The only place we see it is in some very specific areas where we've had direct contact, for example, with people like General Motors, and they've informed us that they've got three of a few dozen plants that are on short working hours. But in terms of our sales, it's probably taken a little bit of a cracker off the top there, but we don't really know how much. Even so, our automotive business is doing quite strongly. Moving into the general industrial area, so the general industrial area is recovering. I would remind you that general industrial is the slowest to turn in our business, so we don't tend to see sharp changes in general industrial. People often talk about stocking and restocking, but it happens across a very wide front in lots of different industries. And so impacting the total number, it happens quite slowly. It might be going a little bit slower than some people might have expected, and if you were to ask me to guess, well, what's causing that? I would say it's more about raw material shortages and supply chain disruptions as companies are trying to gear up. I don't see it as a big issue. Generally speaking, this part of the business will keep accelerating, I believe, but at a modest pace of acceleration, because it does take a long time for general industrial to move. The more complex one to talk about is aerospace and defense. Defense is doing fine, and the civil aerospace side is a story about three different pieces. Encouraging, I think, is the general word I would use for this. So if we look at the widebody business, where our primary exposure is through Rolls-Royce, we actually have forecasts coming in now for a pickup in that area, driven by freight business as much as anything else, and a little bit of a following wind from the reinvigoration of the Trent overhaul program that we benefit from. But that is, it's a small amount going up, but it's better than the total flat that we've seen in the past. We're also seeing incoming from the Airbus supply chain. When I say incoming, these aren't reflected as yet very strongly in our numbers. This is more about, customers telling us, particularly, the likes of, Safran and GE, about the pickup that they expect going forward. Fundamentally, the supply chain supplying the Airbus A320, the inventory levels, that were in excess have been burnt off. There is no excess inventory there now, we're told, and so that will be turning into, higher growth in due course. We need to remember, though, that that particular platform is split 50/50 between Pratt & Whitney, and the 1A, and we don't have a big exposure to Pratt & Whitney. So our exposure is to the CFM Alliance's LEAP-1A, and that, particularly the landing gear associated with these planes, will start to accelerate. But the big acceleration will come, starting in next year, and that's likely to be once the 737 inventories have been burnt down, and that will start probably, we think, in the same way that we've been saying all along here, second half of 2022 is when it will really start going. And we should see aggressive growth in 2023 in that area. So overall, I think the automotive business is certainly going in the right direction. Early days yet, nothing to get too overexcited by, but certainly some, some more music in the background, if I could put it that way. Energy, I think the point to make on energy is that, you know, we have several pieces on energy. We've got a little bit of nuclear, offshore, subsea, and then onshore. Generally speaking, our business doesn't directly follow oil prices. I think that's a good point to note. I mean, oil prices have recovered. What drives our onshore business is rig count, or more properly, it's actually well count. And what you have right now is, in the areas that we service, which is primarily the Permian Basin, you have a lot of already drilled, but not yet in service, not yet completed wells. And so, turning them on will take quite a while yet. We don't expect to see a big pickup there, because a lot of our business in that area is to do with drilling and exploration, as opposed to production. There's some production business related to, but not a huge amount. So yeah, energy is a small part of it anyway at the moment, and that's the picture there. Let's see the rig count get up more; we might start seeing some business coming in. Just a word on how we internally are looking at the business. I think it's important to note that the volatility that we saw in 2020 was extreme. So when we compare to 2020, this month, it's gonna look quite different from next month and the month after, because the movements that were happening at this time last year were huge. So internally, we actually tend to look at 2019 as a much better proxy as to how the business is doing, and that's why, in the trading statement, you've seen our comparisons to 2019. You can see there that automotive revenues are down 6%, general industrial down 8%, and aerospace and defense are 35% down, on an organic basis there. Overall, 19% down on an organic basis. That, as I say again, is to 2019, which is a much more steady benchmark for us to look at. Margins are improving, as we expected, doing quite nicely, and that's something that should firm through the year. I think with that, we can hand over to Q&A. Thank you. If you wish to ask a question, please dial zero one on your cellphone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your turn to speak, then you can dial zero two to cancel. Once again, it's zero one to ask a question or zero two if you need to cancel. Our first question comes from the line of Mike Tyndall at HSBC. Please go ahead, your line is open. Good morning, gentlemen. Just a few questions from me, if I may. If I could start with auto, I wonder if you could talk a little bit about the strength, just in terms of what's underlying that and continuity of those trends. Is it just production overall, or is there something else going on underneath? And then the second question, if I remember rightly at the full year, there was a discussion around China and potentially looking at maybe Brownfield sites to try and get some capacity there. I wonder if there's any development on that front you might be willing to share. And then the last question is just around headcounts versus activity. I guess as we now move into full-blown recovery, when will you start to think about putting more people on, or are we still some way off from that point of view? Thank you. Okay, Mike, thanks for those questions. Just taking them in turn. Automotive trends, I mean, that's, that's all associated with, at this point in time, with a general increase in production. There's a huge growth going on in the emerging markets for us in this area. And to be clear, China is doing very well, and a lot of that is automotive. Our exposure in these areas, just to reinforce to people, it's not really internal combustion. This is platform agnostic work, so this is a lot of brakes work going on in steering gear, and in fact, we're putting in expanded capacity to service that work. And, as I say, emerging markets, Eastern Europe acceleration, we've got China going very strongly, and of course, the U.S. as well has been picking up. The one that's probably been going the slowest is European auto, but it's not shabby. I mean, everything's moving ahead there. So no other underlying trends that you could pick out in at this early point. As far as the China brownfield strategy is concerned, I don't think we've got anything further to add. We are progressing it, and it is never easy in these things, particularly in territories like China, to get through all the different levels of bureaucracy. But it is something we're still pursuing, but with no success just yet. As far as headcount is concerned, we are adding people already. It depends where. Clearly, China is somewhere where we're adding, as I've already mentioned, that's very strong. Eastern Europe, we've started to add people. United States, we're adding people, and I think it's worth just pausing a second there because there are labor shortages out there, most notably in the U.S., and I think this is something that's been quite widely reported. And people then talk about potential wage inflation. So where we're seeing labor shortages is, as I would say, on the front line, it's the shop floor. And a lot of this appears to be a fairly temporary phenomenon, with people at the moment staying out of the workforce, but my American colleagues assure me that, as the federal benefits start winding down in September, then we should see the labor force starting to ease up. So there is a slight pinch. I don't expect huge wage inflation coming from that, though, because it appears to be, at this point in time at least, a short-term phenomenon. Just one final point to add there on the headcount is, it seems absolutely right. We're adding in certain areas where our revenues are strong. At the same time, we did have, obviously, in those plants that we were shutting back end of last year, that headcount gradually coming off the payroll as those people came to the end of their notice period. So actually, at the end of April, our headcount level is very similar to what it was at the end of last year. Yeah. Thank you. ... Thank you. Our next question comes from the line of Andre Kukhnin of Credit Suisse. Please go ahead, your line is open. Good morning. Thank you very much for taking my questions. I have a couple on automotive or AGI. In autos, do you feel you're taking share? I know it's quite difficult to judge by short periods of time, but maybe if you look at the last sort of 6-9 months rolling, or would you say your market share has been unchanged? Yeah, and Andre, I think it's important to clarify that when we look at who our competitor is, it's our customer. It's not necessarily other people. We don't do share analysis versus some of the other players that are in the, let's call it, the subcontract market. Typically, we don't compete head-to-head with those guys. We have a different value proposition. So, I don't see much movement on either front. I mean, the issue here is that everything's in recovery. It's not about us getting more in-house work. It's not about us picking up work from other competitors who are in the third-party market. It's just about basic growth. But what I will say is that there are a number of the Tier 1s mostly, who are looking down the pike here, who have started quite aggressively looking at expansion, which is something that was slow prior to the pandemic. But now looking at site expansion, particularly in the newer territories, and this is in line with the trend that we've been commenting on. And so we are getting involved with a few more than the normal requests for can we put capacity down in different territories, which is quite pleasing. Indeed. Good, thank you. And on AGI margin, very helpful that you indicated it's above 2019 levels already, and that's with volumes obviously still clearly off those levels. Do you think you can get back to the sort of 19%+ profitability with that volume recovery, back to 2019 levels, or would it take a bit more than that? Well, I think you're there you're referring to the overall group margins, and obviously there's two parts to that equation. And that will depend on the ADE contribution to the overall margin. But, I mean, as we would have discussed at the back end of last year, the logic of the restructuring savings that we are achieving out of the business means that as we get back towards 2019 revenues overall in our business, then we absolutely should be seeing higher margins across our business than we were back in 2019. Got it. Got it. I think, well, I was thinking more specifically about A-AGI, but I, I think you've answered it, Dominic. I guess maybe just to follow up on this, in terms of the thinking about operational gearing that you outlined before, on volume growth from here, should we continue to think about that around 50% as the drop-through? Yeah, I mean, we're certainly achieving in line with that, and we're comfortable with that level, yes. Great, thank you. If I may, just a final one on, M&A. The usual kind of question, if there's any updates, if you see the pipeline starting to move in the right direction, or is it still a relatively slow burn? Still a relatively slow burn on the M&A, that's just the way it is. We'll keep waiting and asking. Thank you very much to both of you. Thank you. Our next question comes from the line of Jonathan Hurn at Barclays. Please go ahead, your line is open. Hey, guys, good morning. Just two questions from me on aerospace. The first question is, I think historically with aero, you've said that you're going to lag a recovery. Is that in the guidance that you made in your initial comments of when markets are going to turn? Or is there sort of an additional lag that's going to be there for you? That was the first question. Let's just take that first of all. So Jonathan, I'm not quite sure what you mean by lagging a recovery. Well, it's not the way I would think about it, but maybe that's the way it translates. What we should see is our profitability recover faster than our sales, just because of the higher margins that we'll be getting. So we'll see profitability getting up to 19 levels before revenues do. And in terms of our revenues, those should go along with the engine and primary landing gear sales that are going on. And to the extent that that will lag plane build or plane sales, that's a factor of the inventories of the airplane manufacturers. So, I'm not sure if I'm answering your question here, but I don't think anything's changed in our lives in that situation. We would just expect it to be as the engine sales pick up, we will pick up with them. You may be referring to the fact that, particularly in the United States, as we supply right the way through the engine build, from the raw castings to the finished products that would have right at the very end, that our initial production on engine, which is the aero structures, which is mostly on the West Coast, will come later as new engines are built, are required. Yes, that will lag because it's, it'll be the last thing to turn. And certainly once we see the West Coast structural business picking up, we know that the whole pipeline, in fact, is firing on all cylinders... if you can use that analogy for an aero engine, I don't know. But the situation there is that it will trickle through the U.S. supply chain from that perspective, and how long that takes in this environment is anybody's guess. Certainly, in the LEAP-1A, we seem to be through all of those problems already. That's very clear. Thank you. Thanks. The second one was just, just on the excess capacity of aero. Can you just remind me essentially what you're filling that, that spare capacity with? And essentially, following on from that, as you start to see the rebound coming through in the aerospace, can you hang on to those additional revenue streams you've essentially got there? So the capacity is mostly still there, by the way. We haven't filled a lot of it, I have to say. It's not as if the aero parts are filling up rapidly with other work. We do have some high spots where we've got medical work coming in, but it's not a huge amount. So will we keep what work we get? I think very definitely, because the issue you get with a lot of this work is that it takes time to qualify, it takes time to be accepted through the pre-production approval processes that go on, and customers don't like changing very quickly. So the amount of work we've picked up so far has been minimal. We will keep going at that, but as we get through these acceptance phases, that should pick up more and more, and we will keep it. But as we sit here right now, our aero capacity is still largely unutilized. Great, thank you. And then, and then just maybe one just quick follow-up, just coming back to that, general industrial. Like you say, I mean, if you look at the sort of the growth in the first four months, it has looked like global IP quite significantly. And obviously, as you go into the remainder of the year, you know, global IP is still pretty strong. So in terms of that improvement, are we gonna see sort of a sequential improvement, Q2, Q1, Q3, Q2, as we go through the rest of the year for that general industrial? And if so, I mean, what kind of magnitude improvement do you feel that you could get there? Well, those questions are well above my pay grade, I'm afraid, in terms of the exactness of them. I can see that we will, we will be seeing improvements. The only way we can look at it really is what we've seen in the past, and this is not a typical situation. The improvements will start coming through. We can't say exactly when, but they should be not aggressive improvements or spiky. It should be a smooth turn moving upwards. Can't really add more than that. Maybe Dominic's got a view on something that I've missed here. No, I don't think so. I think, as you say, and as you said already on the call, the AGI business doesn't move in a speedy way, one way or the other. So I think a gentle sequential recovery, assuming that everyone's expectations around the uplift in industrial production turn out to be correct. Great. Thank you. Thanks. Thank you. And our next question comes from the line of Andrew Douglas at Jefferies. Please go ahead, your line is open. Morning, gents. Thank you for the run-through. Most of my questions have been answered. Would like to hear. I just have one on your ongoing restructuring program. Am I right in saying that a vast majority, if not all, of the heavy lifting has now been done, with possible exception of one or two plants kind of now being kind of finally closed, so therefore there's not a huge amount of work to do in order to deliver your restructuring cost savings? Is that a fair comment? It's not 100% true. I think it's much better to say all of the heavy lifting's been done, not the vast majority. What we're into now is really the countdown of the clock as people's service contracts come to an end. There's no more playing or jumping around or negotiating going on. It's all in place. It's really a rundown on the clock. Perfect. And then one just quick follow-up on your previous comment on M&A or lack of. Is that due to lack of interesting opportunities, or is it largely that price is just overaggressive, just wondering how that market has actually- Yeah. Yeah, it's a great topic, which we could spend hours on if we had it, but we don't. I would say most of the activity that we see is coming from smaller companies that are not... I'm not talking heat treat here, I'm talking specialist technologies, actually. Smaller companies in adjacencies that have basically found it extremely difficult in this, in the financial squeeze that's gone on. And these are businesses that have been, you know, relatively, small startups, and we've certainly got them knocking on the door left, right, and crazy. The problem is when we get into them is their viability is problematic, and not easy to deal with. And as yet, we haven't seen something that's said, "Oh, yeah, that's a great idea. Let's take that one on." But there are discussions on some of that. There are bigger opportunities that are private equity owned, but the problem we've got there still is, the private equity guys, if anything, the, if I can call it, the market run, has encouraged them to take prices higher. So we've had some really wacky conversations with people saying, "Let's ride the capital market wave," quote. That is not based in, in, economic logic. But, so it's, it's, it's really quite a difficult area at the moment in terms of standard M&A. There's nothing, that we feel we're on the cusp of completing. It's just a lot of discussions right now. Okay, and whilst I'm on, can I just ask about ESG? We know that you guys have got a good ESG story. Are your customers pushing more and more for that now, or is it just taking a while to push through? I wouldn't say we get pushed from customers actually. That's not where it happens. If anything, it's the other way around. So, you know, we're going through a whole exercise right now about how we go to market in terms of ESG with our customers, because we do have a very good offering in that respect. It's very rare for us to have a customer sort of smacking us on the head and say, "Come on, you know, you've gotta help with the ESG situation." One or two, but very, very few. It's more about us pushing the boat rather than the customers trying to pull it. Understood. Thank you very much. Thank you. Our next question comes from the line of Robert Davies at Morgan Stanley. Please go ahead, your line is open. Yeah, thank you for taking my questions. My first one was just coming back to some of the comments you made around the comparison between 2021 versus 2020 versus 2019. Just be interested across, you sort of brought out some color across the sort of end market sort of comparison there. Just be interested sort of regionally, where things sit. I know you're obviously not got a huge exposure to emerging markets, but maybe just kind of touch on the key regions and sort of contextualize where they are versus where we were in 2019. Is it sort of materially higher in sort of China and much lower in Europe and US, or just be kind of interested for any color you have there, please. So certainly it's materially higher in China, but if you want to take, you know, sort of a more granular look at that, why don't Dominic have a go at that? I don't think there's huge movement elsewhere, but Dominic can illuminate us a bit on that. Yeah, no, I think, I think if we're looking organically, then, as Stephen says, emerging markets certainly contributing to the overall numbers, and that means that the underlying North American and Western European comparisons would inevitably be below the average. But I don't think there's anything very significant in terms of difference between North America and Western Europe that's that is worth bringing up. I think there's one other area which we've been a little bit quiet on, but might as well talk about it now, is that there are a few of our emerging, sorry, our specialist technologies that are really clicking on very, very well. So for example, our specialty stainless steel business, S3P, and our Corr-I-Dur business are both really, you know, they're really going very strongly compared to 2019. So and we should see more of that. So that's something that we've not touched on before, but it's gonna be, I believe, increasingly something that we'll be talking about given the success of this year. Thank you. Then just sort of looking on the sort of monthly cadence of growth, and I know this is sort of probably going into levels of micro detail that can lead you down a rabbit hole, but just to get some sense of the volatility or difference, I guess, as you kind of progress through January, February, March, April, and in comparison to last year, are we talking sort of extreme swings of sort of, you know, minus 30 in the group up to minus 5? Or do you can you just give us some context of the, looking at those year-on-year numbers versus 2020, how different the sort of four months of this year were compared to last year? Yeah, Dominic, want to take that. I think the big volatility, by the way, was last year as opposed to this year, but Dominic can take it through. Absolutely, the volatility was last year. I mean, you've got to remember that, I mean, if we go back to last year, in Q2 last year, we reflected, I think it was around about 33% revenue drop through the second quarter. So, you know, inevitably, when we're looking then at the four months result, that four months result against the first four months of last year is a significant improvement over where it was in the first three months. In the first three months, we were, you know, down further against last year. And, you know, as Stephen already highlighted, that position will change again at the end of May because we'll have another comparative month to last year at a significantly lower revenue, and again in June, and so on as we go through this year. So the volatility is not in this year's numbers, the volatility is in the comparative numbers. Thank you. And then, 2 questions left ahead. One was just around the sort of chip shortage issues and automotive. What is your sort of base case assumption based on what people like GM have told you? Is it that you're gonna sort of expect moderating growth over the quarters? Is it just that you're taking a haircut to sort of growth momentum over the year? What are you sort of thinking the shape of growth for automotive, specifically for the back half of 2021? So we're not taking a highly analytical approach to it, to be honest with you, because we can't see it in our numbers at the moment. We just imagine that our growth would be higher. The only thing that General Motors has told us is the specific plants that they have on shorter working time or sometimes they're taking down for a week, and that is, you know, it's a small percentage of their overall production. It's not at the level that we can figure it into some big analysis. It's just not that way. So I'm afraid we can't give you a lot of color on that at all. It's going along at the moment quite nicely. We don't see it going backwards. We expect at some point this whole thing will get itself worked out, and, provided the market demand stays, which we don't see why not, it will probably start accelerating again. Will that be the end of this year, as some of the people are saying out there? Or will it be next year? Don't know. But, it's probably in our numbers already, the fact that, the growth is not as high as it could have been. And when that moves it out of the way, it will increase. By how much? Really can't tell you, I'm afraid. Thank you. And then my final one was just around the savings. Just be curious, in those numbers that you set out for savings, I think it's GBP 20 million this year, GBP 10 million next year, is there anything in that that was temporary in nature, would be affected by some of these wage inflations, and maybe just sort of align with that? How often do you sort of renegotiate sort of wage contracts or pricing on the flip side? I guess I'm trying to get a sense of the push-pull and how much control you've got over that at the moment. Thank you. So, I'll talk about the timeliness of the pricing and wages, and Dominic can address the rest of that. In terms of the shop floor, which is the biggest part, obviously, that is an annual process. And typically, they run it depends on the country, but it would be annual awards, either from April or sometimes as far back as September. So they kick in through the year. We're pretty much set at the moment as to what those are going to be. And we don't see, at this point in time, a problem with inflation in our wages. If we've got a problem, it's in the ability to hire new people. So it's not as if we're pushing our costs up yet. The problem is attracting new people. That may eventually turn around into higher wages, but that's not the issue. We just can't find people at the moment. It's not about offering people more money. As far as pricing is concerned, there certainly is, on our customers, a lot of pricing pressure that is happening. But not for us at this point, but for the other people in the market that are supplying our customers with products. They are certainly trying very hard to push prices through. And indeed, some of our larger customers have made it quite public that they, in turn, are taking this opportunity to really increase their prices really quite strongly. We tend to do this stuff under the radar screen, and we do price increases as we can, as we see it. But because of the stickiness of our business, we try not to abuse our position, so we do it quietly. We don't go sticking out sort of a notice to everybody saying, "Terribly sorry, our prices just went up 10%." That's not the way we work, so we'll do it customer by customer, and we'll move it in as we can. Definitely, we have an opportunity for price increases that should be over and above any cost increases that we see, given that we've only got labor and energy, really, industrial gases as inputs. Dominic, do you want to add anything more to that? I think just to reinforce that, really, and say that, you know, if you go back and look at our presentations half in, half out, year in, year out, over the last 10+ years, yeah, we have a very strong, consistent track record of passing through cost increases, cost inflation in through price increases. So, there's no reason to think that we wouldn't continue to be able to do that. That's great. Thank you for... Thank you, everyone. Thank you. Our next question comes from the line of Dominic Convey at Numis. Please go ahead. Your line is open. Good morning, both. Thanks for taking the question. Just a couple, if I may. Firstly, around first half, second half split, and what your expectations are for the phasing of profits this year. Obviously, there's a load of moving parts with respect to various end market trends, and obviously, then the phasing of the cost savings to deal with as well. But if you could perhaps just give us a little bit of color there. And secondly, just with respect to your civil aerospace comments, you've said that the A320 inventories have been burnt through, but I'm just keen really to understand what degree of visibility you have on those 737 inventory positions and future build rates. Has there been any movement in your mind with regard to the working assumption that Boeing will ramp up to 31 a month by early next year? I'll take the aero question. Dominic, can take the halfway and half two, if that's right, Dom. The aero side is the visibility we get is purely from the OEs. You know, they give us their production forecasts. And in some instances, you know, all we're getting is planes, and we have to know how many planes are on the ground at the moment that still are yet to be shipped. And they talk as much as anything else about engine ship, sorry, plane shipments as opposed to plane builds. There's a lot of commentary around from different observers, but we know that there are a lot of planes still, and a significant amount of planes, in terms of 737s, still fully engined up, sitting on the parking lot, waiting to go. And it's those calculations that go through that tell you when the real production of the planes, in terms of new engines coming in, and landing gear happens. So it's not that granular for us, frankly, in terms of how much is in the inventory. We're taking it from both the OEs and industry commentators that look at it. We certainly can't see it from our own numbers, put it that way. But the GE projections are more useful to us than the Boeing projections. They suggest, as I think I said earlier, an acceleration in 2022, but then a really strong acceleration in 2023. On the H1, H2 split, I know we were already benefiting from restructuring savings at the beginning of this year, but there is an element where those have built through the year, as some of us, you know, we still have some plant closures, the actual closure happening this year. So those restructuring savings build through the year. And to the extent that we've already talked about an expectation of some level of sequential improvement in general industrial, for example, then all things being equal, one would expect our second half profitability and margins to be higher than our first half profitability and margins. Thank you. Thank you. Our next question comes from the line of Christian Hinderaker of Liberum. Please go ahead, your line is open. Yes, good morning, gentlemen, and thank you for taking my questions. I have two. Firstly, just a question on margin strength, particularly within ADE. You previously highlighted an ability to utilize excess capacity in ADE to absorb throughput from general industrial. And I just wonder whether there are any such considerations in the margin comments in this update in that regard or if it's just a case of an early improvement that you flagged with respect to aero margins improving ahead of aero volumes. And then my second question, perhaps a bit more simple, but just then perhaps I can clarify from your outlook statement, is it fair to assume that you're perhaps on balance a little bit more optimistic than you were at the last update in March? Thank you. Sure. So, yeah, it's a nice question on the margins, and it's a little bit different though, from the way you might have perceived it. If I can put it in these terms, the work going into any one of these facilities is broadly... Incremental margins are broadly the same between the GI work that's going into an aero plant and the aero work that's going into an aero plant. So it doesn't really matter whether it's aero work that's coming in or it's medical work or whatever. The incremental margin that you're seeing is really a utilization-driven issue as opposed to any one segment. It's not as if the incremental margin for aero is wildly different from you know, some other market, believe it or not. So that situation is pretty clear. I think it's a higher level of throughput, and it certainly is a somewhat rosier picture on the aero than we had seen or that we were potentially expecting. But we did start saying quite early on here that there was risk to the upside. But I think it's quite important to note that this is more of a rosy glow as opposed to some red-hot burning growth issue, okay? I mean, we don't at this point, we're not getting too excited about it. It's certainly there is a sort of rosy background glow here, but it's not charging anything. Thank you. Very clear. So in terms of the sort of, I think the second part of your question was around, are we more optimistic than we were a few months ago? I think the answer to that is marginally. Yes, you know, there's nothing negative in this trading update. But as Stephen highlighted, we're not getting carried away about the outlook. Thanks, Dominic. Thanks, again. Thank you. And we have one further question in the queue so far. So just as a reminder to participants, if you do have a question, please dial zero one on your telephone keypads now. And that question in the queue is follow-up from Andre Kukhnin of Credit Suisse. Please go ahead. Your line is open. Hi, thank you very much for the opportunity to follow up. I just wanted to clarify on your comment on pricing. Do you see the opportunity to push price beyond the internal inflation you're seeing, or are you sticking to balancing that? I'll answer it, and then Dominic can answer it. The answer is yes, we will probably go ahead of internal inflation. Dominic, would you like to say something similar? Yeah, but... Well, I think what it does is it presents the opportunity where we have margins below what are decent margins to somewhat redress that balance. But as Stephen's already indicated, we are not out there to push margins, you know, half in, half out for parts of our business that already earn good margins, because where that inevitably leads you eventually is to losing the business. So, it's not—We're not looking at this as an opportunity to increase prices massively ahead of cost inflation. But, I mean, I apologize, Andre. The clear answer to your question is, yes, we will be keeping our prices ahead of our costs. I hope that's clear. Yes. Yeah, and I completely understand that there's a balance obviously of customer relationships and compressing yourself out. I just wanted to double-check, and I think that's very clear. The only last follow-up I had is just on cash that we haven't really talked about. Just wanted to check that, if there's anything to say on cash and how things have developed year to date. Our cash generation is good. We obviously, you know, are up against a comparable period last year, where the free cash flow was very strong as we had a significant working capital inflow. We typically have a working capital outflow in the first half. Because there was no real variable pay, well, there was no variable pay payouts this year, then we don't have as large a working capital outflow in the first half as we would typically have had, but we should expect a similar working capital inflow in the second half to what we normally achieve. So, you know, overall, I think the outlook for cash is quite positive. Yes. Great. Thank you very much. Thank you, Andre. Thank you. As there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments. Yeah, thanks a lot, everybody, for participating in the call here. It's gonna be an interesting period going forward here for the next few months because, as we've been saying, last year was pretty choppy. This year we've got a little bit of a rosy glow about life. I'm looking forward to the half year and see what more detail we can actually share with you then. Thanks very much. This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.