Good morning, everybody, and welcome to Kendrion's Q4 and full year 2022 results presentation. My name is Joep van Beurden, Kendrion CEO, and with me here, albeit in a separate room, is Jeroen Hemmen, our CFO. This morning's agenda. I will start with an overview of the progress we made strategically over 2022, and hand over to Jeroen for a review of the Q4 and full year 2022 results. After which, I will give you an update of the operational progress over the past period. I will discuss the outlook for 2022 and go to Q&A. Before the strategic update, I would like to draw your attention to the following. Next. Certain statements contained in this presentation constitute forward-looking statements. These forward-looking statements rely on several assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside the company's control that could cause actual results to differ materially from such statements. Next. In 2022, in a volatile economy with high inflation and geopolitical instability, we delivered strong revenue growth and improved normalized profit. Can you take slide back 1? Thank you. We delivered strong revenue growth and improved normalized profit. Most of management's focus was on our operational performance, on product margins, cost and working capital, and on cash flow. We also made important strategic progress in 2022, in this section, I would like to mention 2: Our decision to split our automotive group into Automotive E and Core, the progress we made building our manufacturing facility in Suzhou Industrial Park. A bit more on both. Next, please. Since we announced our medium-term financial targets in September 2020, we've used the Kendrion strategic house as a metaphor for our strategy. The top of the building indicates our strategic intent, linked to this are our medium-term strategic objectives, such as our target to grow with at least 5% organically on average between 2019 and 2025. Underpinning our strategic intent are three pillars. Industrial brakes, which is around 29% of group revenue, industrial actuators and controls, where the focus is on profitability and cash generation, representing 24% of revenue, and automotive, representing the remaining 47% of group revenue. Of course, we have our focus on China, active in all three domains. Underpinning the three pillars is the foundation of Kendrion, our people, our culture, our ESG program. Over the past years, we have made substantial strategic changes to our company. In 2022, as announced during our Capital Markets Day, we implemented another important strategic change. Next. We have split our automotive group into two separate organizations, Automotive E and Automotive Core. The main goal of this organizational model is to create more focus on innovation in products like sound, suspension, and sensor cleaning, while at the same time improving the efficiency and effectiveness of the business that we have with products for vehicles with a combustion engine. Both Automotive groups will have full P&L responsibility and separate and distinct KPIs. Automotive E focuses on innovation, close customer liaison, program management, and profitable growth. Automotive Core is focused on operations excellence, lean production, cost efficiency, profitability, and cash flow. The new organizational structure has resulted in annual cost savings of around EUR 4 million, effective per the start of 2023. We will report Core and E revenue separately. Over 2022, Automotive Core generated around EUR 179.5 million or 74% of the automotive revenues, while revenues in Automotive E was EUR 63 million or 26% of auto revenues. This is the latest move in strategic decisions. Over the past years, we have taken several bold steps to strengthen the company and improve its strategic position. Next. In Q3 2019, we acquired INTORQ, substantially strengthening our position in industrial brakes. 2 years later, we acquired 3T. This strengthened us in an important growth segment, industrial control technology, and gives us more ability to develop and deliver software and electronics important for Automotive E. In December 2020, we broke ground on a 28,000 square meter manufacturing facility in Suzhou to facilitate significant growth in our project pipeline and the many more opportunities we are after in China. All in all, we invested around EUR 128.5 million. These actions have changed the revenue profile and the market exposure of the group. In 2019, around 2/3 of group revenue was automotive, today, industrial represents 53% of group revenue. Looking at our revenue distribution in a different way. Next. This slide indicates how the group's 2022 revenue is distributed along two dimensions, attractiveness of the market and growth. Starting from below left, AutoCore, with 35% of 2022 group revenue, is in a segment that is characterized by low opportunities for growth in a market that has lost its attractiveness quickly over the past few years. A typical cash cow. Moving up, we see IAC representing 24% that has pockets of good growth, overall has lower growth potential than some of our other businesses. IAC, however, operates in markets that are highly attractive, here we aim to sustain our leadership position and grow where we can. Moving over to the right, we find IB, AutoE, and China, all operating in an attractive growth segment representing 41% of group revenue. Profitable growth is the name of the game here. Next. This means that around two-thirds of our revenue is related to the attractive opportunity of the energy transition. Next. While around half is exposed to markets that are expected to offer high growth, which brings me to the second of our strategic initiatives, our factory in China. Next. This picture was taken on February the twentieth. The construction of the facility in Suzhou's industrial park is expected to be completed in the first quarter of 2023. Following some operational tests, we expect to start production of our two current facilities in Suzhou and Shanghai over the coming months, with the intent to become fully operational by Q3 this year. In addition, we expect to start the production of six new Automotive E projects in our new facility in China during 2023. Jeroen and I hope to be in Suzhou for the ceremonial opening of the facility on May 24th. Let's now go to the business review. Jeroen. Yeah. Yeah. Okay? Okay. Okay. I hear myself. Yeah, I hear myself twice. Okay. We do not anticipate further restructuring costs related to the automotive split and the announced cost savings of EUR 4 million will be effective in 2023. Moving to the business, the underlying business performance in Q4. Revenue was strong with 12% growth, 11% at constant rates of exchange. Most noticeable was the good revenue development in automotive, posting 16% year-on-year growth and reporting the highest quarterly revenue of the year. Normalized EBITDA increased 4% as the higher revenue contribution more than offset higher cost for energy, external cost for engineering, and increased wages. The underlying engineering costs in automotive have been comparably high as several new projects will start production in 2023, as also explained by you. Q4 profit before amortization was affected by increased finance expenses, which mostly relate to the reversal of positive currency results earlier in the year. Currency results for the full year were around zero. Cash flow developed positively in Q4 with free cash flow of EUR 16.7 million. This meant that we were able to generate normalized free cash flow of EUR 3.1 million, despite the significant investment in the China building and the price and volume pressure on inventories that we experienced throughout the year. Our leverage ratio improved from 2.6 at the end of Q3 to 2.4 at the end of Q4. Based on our financial position and our confidence in our business fundamentals, we will propose a dividend of EUR 0.72 in cash or shares at the option of shareholder. Moving to the industrial activities. Industrial ended the year well, with 7% organic growth in Q4 on a strong comparable quarter, when 26% growth was realized. The organic revenue increase for the year was 13% on the back of 20% growth in the previous year. Especially industrial brakes continue to benefit from the global trends by which industrial processes are increasingly automated and electrified and posted 17% growth. I posted an 11% revenue increase. Both business groups successfully protected product margins by implementing on average 5% higher sales prices compared to the previous year. Normalized EBITDA in industrial increased by 22% to EUR 47.5 million, indicating strong operational leverage despite inflationary pressure on raw materials, wages and energy. Both industrial business groups in industrial contributed to the increased EBITDA. To the automotive, where despite a strong finish of the year, the revenue for the year remains at a relatively low level. The annual organic revenue increase was 2%, as the automotive industry continues to be faced with low car production numbers, especially in Europe. Increased average sales prices contributed 5% to the automotive revenue. According to market analyst, European car production decreased compared to an already low 2021. According to the same market analyst, European car production is still 25% below the pre-pandemic level of 2019. In Q4, we finalized the announced organizational and financial split of Automotive Core and Automotive E. Based on the final allocation of revenue, Automotive E represented EUR 63.3 million revenue in 2022 on a pro forma basis, which was 11% more than in 2021 and over 30% more than in 2020. The prospects for Automotive E are good based on a strong product pipeline, including an expected launch of 9 new customer projects during 2023. Automotive Core represented EUR 179.5 million revenue on a pro forma basis, which meant an organic revenue decrease of 1%. Profitability in automotive remains challenging in 2023, with EBITDA ending up at EUR 9.9 million, a margin of 4.1%. A 3% reduction in sales volumes, in combination with the higher cost for, among others, energy and high underlying external engineering costs affected profitability. The announced EUR 8 million cost savings related to the closure of the Austrian plants and the reorganization are fully effective in 2023. In addition, we believe that the strong focus on cash flow and profitability in Automotive Core, in combination with a highly focused, platform-oriented commercial organization in E, will further enhance the profitability prospects of automotive. Moving to the cash flow. After a difficult nine months, we finished the year strongly with EUR 16.7 million free cash in Q4, driven by reductions in inventory and receivables. Net cash from operations in 2022 ended 26% higher at EUR 40.9 million. Investments were 62% above depreciation, fully caused by the EUR 15 million investments related to the new manufacturing facility in the Suzhou Industrial Park. Other investments included capacity increase in investments in Villingen and China for industrial brakes and production equipment for new project, customer projects in Automotive E. Due to the good cash flow finish, we were able to limit the net debt increase to EUR 9.7 million, which was EUR 13.8 million lower than at the end of Q3. The reduction in net debt drove the improvement of the leverage ratio from 2.6 in September to 2.4 at the end of the year. Moving to our proposed dividend. As stated earlier, the improved leverage ratio in combination with our confidence in our business fundamentals have led us to propose a dividend of EUR 0.72 per share. As you can see from the table, with the exception of the COVID year, 2020, we have consistently paid out at the high end of the dividend policy, we will propose to do the same for 2022. As usual, the dividend will be payable in cash or in ordinary shares. With that, I hand back. Thank you, Jeroen. I will now proceed... You cannot hear me? Yeah? Am I, Yeah? Audible? Good. Thank you, Jeroen. I will now proceed with an update of operational progress we have made in 2022. As you just heard from Jeroen, in a volatile economy with high inflation and geopolitical instability, we delivered strong revenue growth and improved our normalized profit. We kept our operational focus on product margins, cost, and working capital. Despite the significant investment in our manufacturing facility in Suzhou, our normalized cash flow stayed positive at EUR 3.1 million. I'm proud of our performance and of the progress we've made towards our ambitious financial targets for 2025. Let's look in more detail at the operational progress we've made in 2022, starting with IAC. Next. IAC is active in around 30 different product market combinations. One of the tasks for IAC's management is to invest in those segments that offer potential for growth while ensuring the other segments are optimized for profitability and cash flow. What we are seeing in IAC is that some segments, especially the ones related to the transition towards clean energy, are offering opportunities for substantial growth. On the actuator side, we experienced high demand for rotary solenoids related to logistics. Our newly developed standard rotary lock for industrial washing machines went in series production. Our Newton fluid control valve business is further increasing with high interest, Circle K, and 7-Eleven. On the control side, demand for our flexible input/output or FIO modules has doubled, and we are experiencing high demand and many project opportunities for our new inductive heating solutions. In 2022, 3T also increased its opportunity pipeline with projects for ASML, Priva, and NXP. One of the big issues of the controls business last year was the availability of electronic components, PCBs, et cetera. The IAC team managed those constraints well, which helped our revenue there considerably. As to our different geographies, the market in Europe is a bit of a mixed bag, with textile currently down while the aircraft industry is rebounding. In China, we see a lot of opportunity, and we are disciplined as to which ones we pursue and which ones we let go of. In the U.S., I mentioned it earlier, the opportunities regarding flow control for beverage dispensing is continue to drive growth. Next, let's look into 3T a bit more. One back, please. Thank you. 3T offers a significant enhancement of IAC's control technology portfolio with substantial cross-selling opportunities. We've implemented a new organizational structure with three business units, which we expect will help us focus on the best opportunity and promote growth. Shaping 3T strategy is ongoing, with high complex machinery as a priority. We are continuing the cooperation within IAC, both in terms of projects and technology exchange. 3T software and electronics engineers are supporting Automotive E developments. Next, let's look at IB. IB had a good year with strong growth. Volumes were up substantially in all markets and segments, driven by accelerating electrification. Despite a difficult supply chain, we managed to deliver our key customers in time. We realized good operational leverage and invested in future growth. We continued with establishing local R&D competencies in China in line with our local for local strategy. In Q4, we successfully reduced IB's inventory, helping with the strong group cash flow we realized. In the US, we outgrew our existing manufacturing facility and moved into a larger factory close to the old one near Atlanta. Commercially, IB's commercial momentum continues. Next. We continue with our clear focus on global growth markets, logistics, robotics, and wind power. Currently, we have over 125 active commercial projects, which is a record. We've added some big-name customers like Hilti and North. We've increased our focus on the global growth markets of China and the US. In both regions, we've invested in additional production capacity. All in all, a strong year for IB with plenty more in the pipeline. Next, Automotive. Here we look at the expected development of the passenger car market by IHS Markit, as also presented at our Capital Markets Day, September 2022. This slide indicates the actual and expected production and number of cars of internal combustion engine-powered vehicles and the number of battery, electric, and plug-in hybrid vehicles between 2018 and 2027. The current forecast for the total number of vehicles over this period is flat. Within that, the growth of both classes of electrified vehicles has been and is projected to remain strong. In fact, the number of electrified vehicles is forecasted to grow from 1 million in 2018 to 30 million by 2027, an average annual growth of more than 40%. As a proportion of total vehicle production, the share of electrification is expected to raise from less than 2% in 2018 to over 30% in 2027. Compared to a few years ago, the forecasted and actual penetration of electric vehicles continues to accelerate, it's therefore not surprising that all major OEMs, tier ones and Kendrion too are investing in this. This slide serves as a clear illustration why we decided to stop investing in combustion engine technology altogether and focus entirely on battery electric vehicles. A few more words on this as we are truly entering a new automotive era. Next. This slide indicates what happened in 2022. Please note this is from a different source, LMC Automotive, in combination with an article in The Wall Street Journal. Note these are not production numbers, but the number of cars sold. They do correspond almost one to one with the production numbers as forecasted by IHS for 2022. Some interesting takeaways. First on the left, in 2022, around 81 million vehicles were sold in total. China is the biggest market. The U.S. and the E.U. are about the same. The remaining 30% is sold in other parts of the world. On the right, the sales of the number of pure electrical vehicles, so without the hybrids. Couple of points. First, globally, almost 10% of the vehicles sold are 100% electric, a number that a couple of years ago would be thought of as highly unlikely. Second, look at the importance of China. Around 2/3 of every electrical car sold globally is sold in China. This also means that in China itself, one in five cars sold in 2022 was purely electric. Finally, in terms of growth, next. Globally, the number of cars sold was flat. Next. The growth for electric vehicles was a whopping 68%. To conclude this section on the market, I think it's safe to say that the adoption of battery electric vehicles is accelerating. Next. The combined OEMs are of course also recognizing this. Bank of America looked at the number of models expected to be launched over the coming years. New combustion engine models are to drop from an expected 75 in 2023 to fewer than 10 per year from 2026 onwards. In contrast, new battery electric vehicle launches in 2023 are expected to be 105 globally, and this will peak at 125 new launches in 2024. The OEMs are already facing this trend as a reality. In 2022, BMW's overall unit sales declined by 5% while BMW's electric vehicles more than doubled, according to The Wall Street Journal. VW had a tough year with overall sales down 7% to 8.3 million vehicles, but the bright spot was Volkswagen's EV sales up 26% to 600,000 vehicles. As you could see on the previous slide, the Chinese market for EVs is de-developing fast. This trend is supported by a well-developed charging network, low electricity prices, and by driving restrictions for combustion engines in some Chinese cities. Of course, in typical China fashion, that reminds many of the days when competition in the mobile phone market was heating up, Chinese engineers work fast. Local Chinese car makers engineer new models in two and a half years compared to 4 years for Volkswagen in Germany. Finally, governments are also helping to accelerate the end of the combustion engine era. In Germany and the U.K., new cars must be emission-free by 2030, and in California, all new passenger vehicles sold must be zero emission by 2035. In summary, the automotive industry is changing at an unprecedented scale and at an unprecedented pace. With the split of E and Core, and with our investment in China, we feel we're in a good position to benefit. Let's talk about our 2022 nominations next. This slide represents the lifetime revenue in automotive nominations won over the past five years from 2018 to 2022. We keep track of the nominations in two categories, E and Core. In 2022, we won EUR 305 million worth of new business, the fifth year in a row with a positive book-to-bill ratio. Of the 2022 nominations, 206.7 million EUR or 68% is related to E, 97.8 million EUR or 32% is Core. Given the accelerating importance of electrified vehicles and our own decision to focus our innovation efforts exclusively on Automotive E, we felt it made sense to start looking at our nominations in a different way. Next. On this slide, you can see the nominations over the past 5 years split pro forma into E and Core. The trend is clear. In line with the developments in the automotive market and with our own increasing focus on E, the nominations in Core, both in absolute and relative terms, have decreased, while the E nominations have grown and become much more important. On average, the book-to-bill ratio compared with 2022 revenue in Core was 0.9, while the average book-to-bill ratio in E was 2.2. Going forward, we expect for Core just extensions of existing programs, as we do no longer work on new projects. For E, we're looking at a filled pipeline and many more opportunities in sound, suspension, and in sensor cleaning. From now on, we will no longer report on the nominations for Core, but of course, we'll continue to report on our wins in E on an annual basis. Let's look in a bit more detail at the E nominations. In sound, we added more models with one major OEM already equipped with our AVAS sound products, and we expect to start production of multiple PANTONE sound projects in mid 2023 in China and in Europe for major OEM brands. In suspension, we expect the start of production for the first modular ECDV projects in China, also in mid 2023, and experience strong interest in ECDV products with major suspension OEMs globally. The modularity of the ECDV means that we do not have to invest in a dedicated production line each time we win a new project. The market for complex sensor cleaning system that clean multiple sensors independently is shifting into the future as the development of fully autonomous vehicles is facing delays, which is why we have suspended our strategic collaboration with Tier One Kautex. However, we have great traction with a simpler system for the cleaning of rear-view cameras. A significant nominations for this first generation sensor cleaning valve has been won with the European top three OEM. All in all, we are pleased with our commercial progress over 2022 in Automotive E. Next, let's look at China. In China, the main goal for 2023 is to move into our new factory. Our China-based nominations are significantly higher than the size of the business. Assessing the size of our pipeline, we expect more project wins to come. We saw earlier how China today is globally dominant in electric vehicles. The same is the case for wind power. In 2023 alone, we expect to start production of 6 new Automotive E projects within our new facility out of a total of 9 globally, which is why we are pleased that we are preparing to move into the new factory over the coming month. Please take a look at this video impression. Ladies and gentlemen, we are now sending a video for a minute and a half. Please don't hang up as you won't. As you could have seen from the video, we're getting there, and we are looking forward to moving in. Let's talk about our ESG progress next. Corporate social responsibility is an integral part of the way we do business at Kendrion. A response to the increasing environmental awareness of society and our stakeholders by focusing our resources on the development of sustainable products. At Kendrion, we set ourselves ambitious targets to continue to improve on ESG. Currently, we are in the final year. This slide indicates the progress we have made towards two of our targets, relative reduction of energy consumption and relative reduction of CO₂ emission. As you can see, at the end of 2022, we have reached a relative energy reduction of 16.82% relative to our five-year target of 15%. When it comes to CO₂, we achieved 29.94%, so almost double our five-year target of 15%. As mentioned, this is our second five-year plan. In the first, we also had targets for CO₂ reduction, and the cumulative relative CO₂ emission reduction compared to the start of our first plan in 2015 is 60%. We are proud of that, but of course, we do not stop there. Next. Over the coming years, it's our plan to accelerate our progress. One of our goals for 2023 is to create Kendrion's third ESG plan covering the years 2024, 2028. We will set challenging targets for all aspects of ESG, further relative CO₂ and energy consumption reduction, sustainable sourcing, health and safety, and diversity. We expect to share the targets of this third five-year plan at the start of 2024. ESG in all its components, natural capital, social and human capital, and responsible business conduct, will continue to get full attention by all Kendrion employees, starting, of course, with the supervisory board, Jeroen and me. Next, let's go to outlook. Next. We expect the current volatile economic environment to continue in the first half of 2023, with potentially a better second half as China reopens. The IMF expects global inflation to decline this year, but even by 2024, headline and core inflation will still be above pre-pandemic levels in more than 80% of the countries. We do see a substantial and sustained opportunity for growth with products that help advance the global push towards electrification and clean energy, creating positive business fundamentals for Kendrion. Which brings me to our long-term targets as announced in September 2020. Next. Over the past 3 years, dominated by COVID-19 and now the war in Ukraine, I believe we have shown resilience and achieved good operational performance under difficult circumstances. We also kept progressing our strategic agenda, having invested close to EUR 130 million in acquisitions and production capacity. Over the past year, again, we made a good step forward towards our medium-term targets of average organic growth of at least 5% per year from 2019 to 2025, and an EBITDA margin and return on invested capital of at least 25%. Sorry, an EBITDA margin of 15% and then return on invested capital of at least 25% by 2025. Before we go to Q&A, let me take a look at the cumulative progress we've made since we announced these targets. Next. As you can see, the progress so far has been encouraging. Revenue has grown with 26%, EBITDA with 29%, EBITA with 80%, and return on invested capital with 44%. We are certainly not here to declare victory, but we have made progress. We were and we are confident in our plan, and we believe our overall position in the markets of choice has substantially improved. Let's go to Q&A. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Frank Claassen of Degroof Petercam. Please go ahead. Yes, good morning, gentlemen. Two questions, please. First of all, on the cost inflation, how much, yeah, inflation is there still to come, and how easy is it for you to pass this on via pricing? Secondly, on China, what was roughly the growth in Q4, and how should we think of 2023? Will it be limited to no growth in the first half and then suddenly a big boost once you open the plant or? Frank, thank you very much for your questions. I'll let me take China on and then hand over to Jeroen to talk a bit about that cost inflation. In China, in 2022, it was quite from an economic perspective, you've seen that quite difficult. The zero COVID policy and basically the strict lockdowns there didn't do the China economy any favor. We saw that. Therefore, in 2022, we were flattish in terms of revenue. The pipeline is filled. You heard us talk about six projects starting in Automotive E alone in the second half of 2023. On top of that, of course, there is the China economy. Currently, our expectation, and we're echoing a little bit what we read, of course, in the newspapers, is that starting perhaps already in Q2, but certainly in the second half of the year, the economy will rebound, coming out of that zero COVID policy. That will help, of course, also our revenue there. For 2023, we expect to resume growth in China. It's probably going to be more towards the, sort of, the second half and a little bit in Q2 than in Q1. For the year, we expect that China is going to grow, so back to the levels that we've experienced in the years before. Jeroen? Okay, thanks. Yeah. The next- On the inflation, what you see first of all, the ingredients, energy prices, copper, steel, the sharp increases that we have seen, they have stabilized, and in some cases we even saw that price increases are passed on with some delay. It starts with the raw material. There you have immediately the effect, later on, you also see that suppliers start to pass on cost increases related to energy and wages. Subsequently, we pass that on to our customers. In 2022, I would say we have succeeded basically one-on-one passing on the higher input prices to the customers. However, there is still some more to come, I think, because, yeah, like I said, it's, it goes with some delay through the supply chain. We're not there, but the underlying inflation based on energy, copper and steel, has stabilized. Later in the year, it should, yeah, it should come down. A follow-up on this. Can we also expect some more price increases from your side as a result? Yes. Okay. Yeah. Certainly. Not at the level which. We continue to pass it on, yeah, one-on-one and also look at wage increases, for example, also to reflect that into the prices. Are you able to quantify? Will it be low single digits, mid single digits? What's... That's very difficult to quantify, Frank. I will say that, of course, as you can imagine, specifically also in Automotive Core, our cash cow, we're looking at, in some cases, quite substantial price increases, because of the nature of that specific industry. Also in IAC and IB, where it's all about growth, we aspire to pass on one-on-one all the inflationary pressures that we feel. So far we've been able to do that. You can look at last year's. I think we disclosed a number. 5%. If the inflation comes down, that will come down a bit. If inflation stays where it was last year, expect something similar. Okay. Thank you very much. The next question is from Axel Stasse of Berenberg. Please go ahead. Good morning, everyone. Thanks for taking my questions. I have actually 4 questions. The first one is, when should we actually see a ramp-up in profitability across this automotive division? Should we expect some further pressure into 2023, given, like you correctly said, energy inflation, supply chain issues, but also wages? Is it aggressive basically to assume, for example, 6% or 6.5% margin in 2025? What type of margin, Axel, are you referring to? Normalized EBITDA margin. Without being drawn into guiding too far into the future, which always is tricky, as you well know. So expect an increase in profitability in the year 2023. One of the goals of splitting into Core and E is to effectively internally and externally become more transparent as to where we invest and where we are really focused on profitability, cash, and cash flow. That transparency, both towards our customers but also internally, we expect that will help us. Of course, Jeroen already mentioned that we've also taken out between closing the factory in Ibbenbüren and the split itself, EUR 8 million in cost. You need to offset that by wage inflation. We've all seen that specifically in Germany. The unions have negotiated quite a generous wage increase that obviously we have to follow. I would expect that from the profitability levels where we are in 2022 in automotive as a whole, I expect it to improve starting in 2023 and then hopefully continued into the years thereafter. Okay. Okay. Very clear. Maybe can you give us an idea of the normalized EBITDA margin for Automotive Core and Automotive E? If not, when do you expect to provide this information? We have We're not going to split that out. We do of course give you the revenue numbers. There's various- Yeah ... reasons why we are resisting of doing that. The most important one is competitive. Because if we guide this, if we disclose this, then we also disclose it to our customers, and that is not necessarily in an automotive environment the best idea. So in trying to be helpful, you can look at the overall profitability development of automotive, and I'm sure you will. It's clear that as we invest, and that's also one of the reasons Jeroen mentioned that in Q4, you look at the other operating costs are quite a bit higher than Q4 in 2021. That is mostly carried by the investments we're making in all these new projects in Automotive E, where we see great growth opportunities, where we have a filled pipeline. You looked at the book-to-build, there over the past five years. Nine projects that are starting in 2023. Of course, at some point also that investment level, will, as a percentage of revenue, come down a bit. That is going to help us as well. Okay. Okay, clear. Two remaining questions on my side. Maybe can you provide an update on the working cap and CapEx over sales in 2023? Should we expect some, you know, more normalized level of 5%, for example, for the CapEx? What about the working cap? Do you expect still high inventory levels in 2023? And then the last question is about gross margin. Should we expect gross margin to improve in the next few years by 2025, or you still expect some pressure here and therefore, I would say flat or even, you know, declining gross margins here? Thank you very much. Jeroen, you wanna take those? Yeah, certainly. On the working capital, it largely depends also on the inflation. The inflation on inventory has driven the total working capital upwards. We have seen a decrease since it peaked in the first half year, especially on inventory. We are confident that we are able to maintain that level. Currently for the year, we ended the year at roughly 13% working capital as a percentage of revenue. I estimate that will be roughly stable unless prices really come down on the inventory. On CapEx, in the coming years, when we still have some payments to do related to the China building in Q1. When that is done, then CapEx in the coming years will be slightly, on average, will be slightly above depreciation. We have invested quite a bit in capacity extensions in IB, as I mentioned already. Yeah, slightly above depreciation I think is good guidance. On the growth margin, yeah. We have modeled stable growth margins. Also there you have to take into account that in a high inflationary environment, then obviously if you pass on prices one on one, then the percentage added value margin actually goes down, while the absolute number is stable. That we do have to take into account. In our model, towards the 2025 targets, we have assumed stable added value margins, which I think is realistic. If I may come back on your first one. Did you say 6.5% EBITDA in 2025 for automotive? That's correct, yes. I was just. Yeah. Yeah. asking if this sounds unreasonable to you or not. Yeah. So that, yeah. To be honest, I think that would be a pretty safe bet. Okay. That is certainly in the product margins, and also, substantially more than that. Okay. Thank you very much. The next question is from Tim Ehlers of Kepler Cheuvreux. Please go ahead. Yeah. Hey, good morning, everyone. First of all, I've got a few questions regarding E. In this year, you had 11.4% revenue growth. Is that a figure you're happy with? Is that a little bit below your expectations? In addition to that, could you elaborate a little bit, if possible, on the development of the individual product groups? If I know, for example, the sound systems were a little bit more satisfactory than others in your opinion. Yeah. I would say, the 11.4% in the world we were in last year, I think is fine. Of course, if you look at the pipeline, if you look at our book-to-bill, if you look at the underlying market, that, you know, in the long run, every market researcher forecasts at least 40% per year growth in Automotive E. Last year it was even, you know, closer to 70%. Through the cycle over many years, we expected 11.4% to be substantially higher. Now, Jeroen mentioned we have 9 projects starting in Automotive E alone this year. Some of this stuff, of course, you prime the pump. You win a project, it takes usually 1, 2, sometimes even 3 years before your revenue gets going. We're now hitting the point where we have quite a few of these projects ramping. Now it's still a relatively small base, just over EUR 60 million, but I would expect the coming years to see that growth number on E substantially elevated from the 11% that we've seen in 2022. Your other questions was. Within that, if you look at it today, there is sound, there's suspension, and there is sensor cleaning. We talked a bit about sensor cleaning. Initially, we were working with a partner on quite an advanced kind of mechatronic sensor cleaning block that could clean independently or simultaneously up to 80 different sensors in cars. Of course that is predicated on cars with those types of level of driver assist that is slowing down. We have now basically repurposed the roadmap. We're starting off with a bit of a simpler cleaning system. There's a lot of demand for that as well. We have won a substantial new project with a rearview camera cleaning system with an OEM, large OEM, big name OEM in Europe. That is the same story we wanted this year. It's gonna take a while before we have that into production. There's an enormous amount of activity in that pipeline. Today, the revenue is sound and suspension, I would say they're both equally active and equally promising. A lot of traction in sound, but also a lot of traction in suspension, both into the classical suspension business we have with Bilstein thyssenkrupp, but also our own in-house developed ECDV suspension valve. Okay, clear. Thanks for that. On automotive in general, your top line grew a little bit before adjusting for prices and FX effects, or at least was stable. Yeah. What was the driver behind the decrease in the margin then overall? Was it mainly because of the higher R&D costs? If you were able to pass on prices, then it must have been the wage effect... Yeah. The higher R&D costs or... Yeah. Jeroen? Yeah. The main reason is actually that the underlying volumes were flattish, also because we had a reduction in inventory. Last year we had increased inventories. That always helps, if you produce more than you sell. Basically you put some cost on the balance sheet. This year we had the opposite effect. The total volume level was actually, if you exclude, for example, the price increases, was slightly lower than last year. And that comes in combination with high cost. Energy increased substantially. Some other costs as well, for example, related to travel. Last year we were predominantly in COVID lockdowns with very limited travel still. Most importantly is, and especially in the second half year, this was the fact, that we saw a peak in engineering costs for these, and especially related to several sound projects that will ramp into 2023. I also expect that peak in engineering costs will tail off in after Q1, when these projects actually go to the market. Okay. We can expect a significant improvement there next year then because also, yeah, considering the fact that it's not that much time left till 2025 to achieve the margin target. The ingredients are there. We have the EUR 8 million cost savings of which EUR 7 million additional. That will contribute EUR 7 million into 2023. Obviously, as you mentioned already, we also have the wage inflation, but with some tailwinds both from the market. But more certainly also from the 9 projects that will ramp. The ingredients for a much better result in automotive are there. One short question just for dividend. You have a payout ratio of 50%, which is obviously the higher range of what you guide for and what's your target? Can we assume that you will maintain this 50% since, I mean, results went bit, but crazy strong this year, and hope, as you said, that you expect them to be strong in the next years? Is the 50% then, let's say, the standard, and-? Yeah you don't plan to go down from there? Well, I mean, the policy says 35-50, as you know. Yes. Yeah. If you look at the slide that Jeroen presented, you see that we've consistently, with the exception of COVID year 2020, that we've consistently hit that, in some cases even a little bit more. So, yeah, I mean, we've learned, I think over the past few years not to be too definitive on these type of things. Who knows what happens? Mm-hmm ...and if, you know, and we of course fully expect our performance to support that, then it's highly likely that we're going to continue to propose at this level. Yes. Okay. One last question just for clarification. If I got it correctly, you first stated that you were planning to open China in Q1, and now you say H1. Is there some delay that happened, and that's why you changed that guidance a little bit? Yeah. A few. What is the reason for that? Yeah. No, a few points. One, we had a bit of delay. Of course, there was China was completely locked down, as we all know, for a long time. That has delayed a bit on the building. Not dramatic, but just a bit. The other thing is we're going to move in actually in at the end of Q1, but we need to do, before we start, be fully operational, we need to do quite a few of operational tests. Give you an example. We have built, you saw that on the video clip, quite a large fully automated warehouse. There's a lot of software that needs to be brought up for that. We have two factories that need to come in. We need to integrate the ERP system. These types of things. We've said, "Look, let's take our time. Let's make sure that it's all debottlenecked before we actually give up on the leases of the other 2 buildings. That's why we said, "Look, we're gonna be prudent. We'll take our operational tests. We'll take 3 months more, but in the summer." Before Q3, we expect to be fully operational in China, and then move out of the 2 other buildings. Yeah. It was out of, yeah, cautious reasons rather than some mishaps- No, yeah. Certainly. in the process. Certainly not. Certainly not. Okay. I think that's it for me for now. Thanks for answering the questions. Thank you. The next question is from Johan van den Hooven of Edison Group. Please go ahead. Yeah, good morning, Jeroen. It's Johan van den Hooven, Edison Group. Three questions, if I may. The first question is. Well, we talked already about price increases, but can you give us a bit more details about the current status of the availability of materials? Second question is about the development of the EBITDA margin, of which you expect to be higher, driven by the cost savings, the EUR 8 million. What is the specific impact of the startup in China on the margin in 2023? The third question is M&A in general. Is there a shortlist? Also M&A in relation to the current leverage ratio of 2.4 times EBITDA. Thank you. Okay. I'll talk to M&A and the price increases. Maybe, Jeroen, a bit on EBITDA. You asked in the first question, the material availability. I would say generically it's improved. However, as you also heard from our remarks when we described 2022, in some cases, specific cases, like in IAC, for certain printed circuit boards or specific, usually quite commoditized electronics, it's still a bit tight. I'd say the big shortages around semiconductors and other materials that we've seen at some point, plastic, steel, copper, all that stuff, that is behind us. The inflationary pressures, however, are not. Of course, you know that we're still in a world where the inflation is not as high as it was, it continues. You maybe heard in my remarks, you look at the IMF, they forecast inflation to come down, also say in 2024 it's probably still well above pre-pandemic levels in 80% of the countries. This environment where, you know, we look at the cost pressure on our raw materials and have to translate it into price increases, I think will be with us for a bit longer. On M&A, M&A for us is an important tool to improve our strategic position, it's not the goal in itself. We have an organic strategy. The growth target that we've set, 5% average between 2019 and 2025, that's an organic target. However, if there is an M&A opportunity that improves our strategic position, so improves our ability to make use of the energy transition or improves our position in a certain geography where we think we can grow, then we will consider it. Of course, there's a lot of other questions to answer, but that's always the first question we ask. We've done that with INTORQ, we've done that with 3T. We always looking. If the opportunity is there, then we'll look at it. Okay. If you look at the, well, economic circumstances, which are still uncertain, has that changed the market for opportunities in the market? Sorry, can you repeat that? I missed it. Given the uncertain economic conditions and, well, China coming out of the zero COVID policy, has that changed the market or increased opportunities? Not from our- Regarding M&A, you mean? No, not from our perspective. We do get frequent teasers, as you know they're called, for opportunities. That is a constant flow of. Most of them are not that interesting from us from a strategic perspective. I haven't seen a market change either way, more or less. Okay. Thank you. Clear. Your question, EBITDA, Jeroen, maybe you can talk a bit about that. If I understood correctly, you refer to specifically to also to China, and I think the cost savings. Obviously, the EUR 8 million cost savings will contribute to the 2023 EBITDA. Yeah, the growth in China, which we do anticipate, especially in the second half year, due to the markets, but even more because of the 6 projects that will be ramping, they will be EBITDA accretive. We have been investing quite a bit in China to prepare the organization for continuous growth. With this additional contribution margin from these projects, we that will be. We do expect that to be EBITDA accretive. Okay. Margin accretive that's mainly in the second half. Yeah, the margin accretive, especially in the second half. In the first half, of course, when you're moving from two factories to one, there might be. Yeah ... still a bit of a negative impact. Yeah. The major costs there, so, for example, some severance costs, have been taken. We have impaired, some equipment related to the existing buildings. With the exception of some moving costs, yeah, I do not expect too much negative impact from that move, actually. All right. Thank you. gentlemen, there are no more questions registered at this time. Back to you for closing comments. Sorry, there's one more question just registered from Maarten Verbeek of the IDEA!. Please go ahead. Good morning. It's Maarten of The IDEA!. Firstly, looking into 2023, the comparison base for automotive is not that strong, so it's likely that you are gonna see some growth there also with your Automotive E strategy. However, industrial had a very good year this year, and the comparison base is therefore pretty strong. Do you believe that the demand for energy transition is strong enough that you also expect growth in this business group? In the industrial side, Maarten, right? Excuse me? You're asking for the growth. The industrial side. Yeah. Okay. Yeah. Okay. Thank you. The energy transition is definitely fueling the growth, and we expect that to continue. I will say, so this year, the combined industrial unit grew with close to 20% year-over-year. Last year, it was something similar. That is not a level I expect to continue for many more years. At the same time, there's definitely more growth opportunity and we do expect the industrial businesses to continue their growth. Now, you know, it's also always cyclical. It also depends a lot on what happens in the economy. The underlying trends are clear, are favorable, and we feel that on our way to the 2025 targets, we can expect some definitely some more growth from that part of our business. Okay. Thank you. lastly, about China, could you more or less break China business out into your four business group? You mean in terms of revenue or in terms of importance? No, in terms of revenue. Yeah. some feeling. Yeah. Current revenue of China is around, as you know, 10% of group. The biggest contributor there by some margin is IB, which we, of course, strengthened a lot when we acquired INTORQ. The second is actually IAC and Automotive Core because traditionally, a couple of years ago in China, all we had was Automotive Core. That is almost entirely that's not yet gone, but it's disappearing. As you heard us say a few times, we have 6 new automotive projects for E starting in 2023. The expectation is that if you look, say in 2024, 2025, that then the makeup of IB will probably continue to be the largest, and IAC and E will start competing for the second place. Today it's IB, IAC, and then Auto. Okay. Great. Thank you. This was the last question. Okay. Well, then, rests me to thank everybody for your attention. If you have any follow-on questions, of course, we're available and you know where to find us. Thank you very much. Thanks. Thanks Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.