2023-08-04 15:13:01 ET
ElringKlinger AG ( EGKLF )
Q2 2023 Earnings Conference Call
August 03, 2023 07.00 AM ET
Company Participants
Stefan Wolf - CEO
Thomas Jessulat - CFO
Conference Call Participants
Akshat Kacker - JPM
Marc-Rene Tonn - Warburg Research
Frank Biller - LBW
Christian Glowa - Hauck & Aufhauser
Michael Punzet - DZ Bank
Presentation
Operator
Ladies and gentlemen, I welcome you to our Earnings Call on the Second Quarter of 2023. We have already published preliminary quarterly figures on July 11 via an ad hoc announcement and with today's publication we confirm them. On this earnings call, our aim at providing a more detailed look into the results from the second quarter and first I will start with some headlines on the second quarter then discuss the financial figures and close with a few forward-looking remarks on the current financial year. At the end, you'll have the opportunity to ask questions and I am pleased to answer them.
First of all, the second quarter saw improvement in important macroeconomic conditions when compared with the situation a year ago, global GDP was slightly in the blank mainly driven by China and India. However, macro challenges such as inflation and restrictive monetary policy curb the economy and at the regions such as Europe. Inflation generally lose some of its dynamics in the first half of 2023 and it is still above the 2% target of the ECB. Last week, the ECB and the fed each implemented yet another interest rate hike. At the same time, supply chains are more stable than one year ago. We are also seeing a stabilization on the raw material side and when it comes to market price developments of several key raw materials that we are using in product that in addition energy costs are down the prior year which is also visible in our margins.
Both international vehicle sales modules and global vehicle production saw a marked upturn in Q2 compared to the previous year. Light vehicle production benefitted from improved supply related factors as well as the low prior year base. Production recovery in the key regions like Europe and North America and Asia Pacific was reflected in the double-digit percentage growth rates. In China, production output picked up significantly after manufacturing activities there have been severely affected by lockdowns due to the pandemic in the previous year. As with all successful start into this year with the Q1 figures, we're able to improve sales and earnings performance visibly in the second quarter of 2023. Sales revenues increased to €467 million, that is an increase of 9% compared to the second quarter of 2022.
Given that global light vehicle production rose by 11.2% in the first half, organic root sales were in market level in the first six months of 2023. Adjusted EBIT came in at €24.8 million, adjusted EBIT margin for the group was 5.3% at the second quarter of 2023 which is a strong improvement compared to the 0.4% adjusted EBIT margin in the prior year Q2. With the sales growth for working capital level was also elevated on the previous year while the networking capital related to sales remained flat at 28% on Q1 and the second quarter of 2022. Operating free cash flow was in positive territory at €3.7 million as in the prior year Q2. With net financial debt at €380 million, the ratio of net financial debt to EBITDA improved visibly compared to the end of June 2022. And given the good first half of 2023, we confirm the outlook for fiscal year 2023 as well as our mid-term outlook.
The second quarter was also a successful one for ElringKlinger in terms of nominations. We received significant orders, we're also disclosed via official announcements. Starting with a classical business area, we received new business scenarios resulting from a strong market position. For example, an order for wealth cover for global OEM including of volume in the double-digit million euro range. Second, transformation is continuing as originally classical business units used in knowhow for e-mobility products and to generate substantial new business. For example, we have just announced last week an order for metal battery housings to be used in commercial vehicles in city bus applications. This order will be executed by the metal forming and assembly technology business unit formally shielding technology.
Additionally, we have received a serious production order for battery housing components from a major global battery manufacturer. Third, there are new mobility products to be supplied by our e-mobility business driving transformation of the group. For example, we received a high volume order for cell conducting systems for the BMW group's new class. This order has a term of several years and the ramp-up from 2025. And orders in 2023 also included a large volume serious production order for the supplier bipolar plates by ElringKlinger Plastic Omnium, EKPO. This order has confirmed the path of transformation chosen by ElringKlinger and be sure it has more to come.
On Slide 04, you can see that nominations like these move us forward on the path of transformation. In total, the nominations which we have received since 2021 for applications in the new drive technologies amounted total volume of around €2.5 billion. Nearly 2/3rds of the nomination volume relate to our e-mobility business which includes the unit's drive train battery technology and fuel cell technology. In these units, we offer future mobility products like fuel cell stacks, bipolar plates, and other fuel cell components, we have the joint venture EKPO, fuel cell technologies, battery systems, battery modules, and battery components like the cell conducting systems and last but not least electric drive units and components.
In addition to our e-mobility business unit, the originally classical business units have also won significant orders for e-mobility products as outlined before. All-in-all you see that ElringKlinger successfully pursuing the process of transformation. Turning now to the financial figures. Starting with orders and sales on Slide 05. Considering the recent large scale nominations in battery and fuel cell technology, it should be noted that order intake and backlog only comprise the order book recording the short-term orders by customers placed as part of their scheduling arrangements not the nomination volume over the respective remaining contract periods that is yet to be executed.
Looking at the recent development of order intake and backlog, the order situation returns to normal levels. After the order intake showing pent-up demand related to the coronavirus pandemic in previous quarters, the order intake in the first half of 2023 was roughly on par with the pre-COVID levels. Currency effects only had a slight impact on our intake in the second quarter of 2023. Against the backdrop of relatively high revenue and low order intake order backlog also changed. Order backlogs stood at €1.35 billion and this was below the high level of the previous year but above the average of the past years and also significantly above the pre-COVID figure at the end of 2019.
Sales performance was significantly improved, we increased sales in Q2 by 8.8% to €469 million. Total currency headwinds of €8.8 million in the second quarter for this organic growth of 10.9%. Looking at the first half of 2023, revenues amounted to €956 million up by €91 million about 10.5%. ElringKlinger group recorded organic sales growth of 11.5% in the first six months which is on part of the development of global light vehicle production over that period. On Slide 07, we see the sales performance of the different segments and business units. The original equipment segment is on track for growth with nearly all business units increasing revenues in the second quarter of 2023.
Lightweight and Elastomer technology being the largest business unit increased sales to €149.3 million. Metal sealing systems in drivetrain components as well as metal forming and assembly technology we're able to report higher revenues and in prior year second quarter now amounting to €126.4 million and €73 million respectively. The e-mobility business unit reported sales of €10.9 million in Q2 which is up against the figure of the first quarter of 2023 but lower than the €14.1 million in Q2 2022. Turning now to Slide 08. In the second quarter of 2023, the group expanded revenues in all regions. Let me elaborate on the three main regions. The rest of Europe being the region generating the highest revenue within the group recorded the strongest growth with revenues that increased by €16.4 million or 12.7% to €145.8 million.
Adjusted for currency effects, the increase was even pronounced at 14.6%. In Germany, revenues were up €6.5 million or 7.4%. Sales in the Asia Pacific region amounted to €83.9 million that equals around 18% of group sales and adjusted for foreign exchange effects, revenues in this region were up 12.3% in the second quarter. And the region comprising North America, revenue grew by 8.3% to €120 million in the second quarter of 2023, foreign exchange effects on revenue North America were only marginal. Let us now have a look at the earnings from Slide 08. After the second quarter last year that was primarily influenced by energy and material cost inflation, the effect eased in the quarter just ended. And therefore we could record a significantly improved EBITDA for the group amounting to €46.8 million after €26.7 million one year before.
Adjusted EBIT in Q2 2023 amounted to €24.8 million with an adjusted EBIT margin of 5.3% markedly better than last year's Q2 with €1.8 million and a margin of only 0.4%. Growth in the group sales again translated into visible earnings growth and in terms of adjusted EBIT, the positive effect of operating leverage was €13 million compared to Q2 of 2022. Concerning raw materials, the positive effect of €11 million now a big step towards the cost level from 2021 and first and foremost to the effective negotiation results of our sales teams. For energy and logistics, the purchasing situation was better than in 2022 as I have previously mentioned. Further ramp-up cost and the strategic future area of fuel cell technology as well as in a new plant in North America totaling €2 million effecting readjusted EBIT in Q2.
Net finance cost in the second quarter was €-5.3 million and given the height seen in market interest rate, interest expense were higher than a year ago resulting in a higher net interest expense. In addition in contrary to Q2 2022 exchange rate development led to a lower net foreign exchange rate result and taking net finance cost into account earning -- earnings before taxes in Q2 amounted to €11.4 million. After deducting tax expenses and taking into account non-controlling interest to share of the net income attributable to our shareholders amounted to €2.4 million. Therefore earnings per share amounted to €4 in Q2. On Slide 11, we take a close look at CapEx networking capital and operating free cash flow. At €17.4 million capital expenditure and Property, Plant and Equipment was up from prior year Q2.
In many others, CapEx flows were directed at manufacturing facilities from you SOP ramp-ups planned within the global production network. In addition, CapEx included projects aimed at aligning the product portfolio with an e-mobility market as part of the transformation. The investment ratio stood at 3.7% in the first quarter of 2023 after 3.2% in the first quarter of the previous year. Given the strong sales growth in the period under review, accounts receivables expanded year-on-year in view of cost inflation as well as the tense situation seen for some raw materials, inventory was adjusted accordingly. Irrespective of this, inventory levels also expanded and few of the group sound order situation. Networking capital totaled €529 million at the end of Q2 expressed as a percentage of revenue for the 12 month period, its share was 28%, slightly up from 70 -- from 27.9% a year earlier and flared on the Q1 2023 figure.
Regarding operating free cash flow, less capital was required for inventories and trade receivable, then in the preceding quarter and therefore operating free cash flow was a positive territory at €3.7 million comparable to the prior year Q2. Slide 12, now shows the net debt. The group was able to reduce net financial debt by 2.4% or €10 million year-on-year to now €380 million despite the higher funding requirements for the groups operating business in terms of networking capital. The net-debt-to-EBITDA ratio was 1.9 as of June 30 th , 2023, markedly reduced from 2.5 one year earlier. Let me now turn to Slide 13, showing the performance of our segments in terms of sales and adjusted EBIT margin. As mentioned before, the OE segment continues its growth path both sales and earnings were improved compared to the prior year Q2 and this mainly reflects the fact that the group was better able to absorb negative cyclical and sectoral factors such as elevated energy and material cost in the second quarter.
The adjusted EBIT on the OE segment was positive at €3.4 million, sales were up 6% compared to Q2 of the previous year. The aftermarket segment successfully continued its growth strategy in a very strong business cycle and delivered again an outstanding EBIT result. Already from a high revenue base, the segment managed to expand earnings compared to the same quarter of the previous year now amounting to €75.6 million. The aftermarket business generated an adjusted EBIT of €19 million and an adjusted EBIT margin of 25.1% in the second quarter. The Engineered Plastics segment was able to expand revenues by a 2.5% to a €32.7 million in Q2. This regards to earnings, a combination of higher staff material and energy cost exerted pressure on this segment performance compared to the same period last year. Adjusted EBIT amounted to €2.5 million from April to June 2023.
Having said this, let me provide some remarks on the market in the current financial year. As I've already outlined in the beginning, the car market and thus light vehicle productions influenced by several geopolitical and macroeconomic factors. The global economy is expected to see legal growth of 3% in the current year according to the latest estimates of the IMF. Despite an improvement in the first half of the year, strict borrowing terms inflation in supply-side conditions that are not yet considered entirely stable together with geopolitical uncertainties continue to post considerable risks for the automotive sector.
According to recent projections, our S&P global mobility, the global light vehicle production is expected to grow by 5.3% to 86.7 million vehicles this year, still below the pre-COVID figure of 89 million vehicles produced in 2019. While the projections were lifted compared to the April projections most significant increase in production is likely to have acquired in the first half that just ended. The second half of the year is expanded to trend sideways on a global scale after a strong first six months of 2023. Against the backdrop of the general uncertainty and volatility still evident in the economy, ElringKlinger confirms the guidance for 2023 on the basis of its first half results in current market assessment. Accordingly, we continue to expect its organic revenue growth in 2023 as a whole to be significantly above the rate of change in global light vehicle production.
The foreign adjusted EBIT in 2023 as a whole, the group expect a margin of around 5%. The outlook for the remaining key indicators has also confirmed as well for the medium term targets. Now, having said all these, I'm happy to take your questions. Thank you, very much.
Question-and-Answer Session
Operator
At this time, we will begin the question and answer session. [Operator Instructions] Our first question comes from Akshat Kacker from JPM. Please go ahead.
Akshat Kacker
Thank you. Good afternoon, Akshat from JPMorgan. Few from my side, please. The first one on our performance and growth over market. I want to ask specifically on the auto OE division. I think in the first half of the year, auto OE revenues have underperformed auto production slightly. So, I just want to check what your expectations are here for the second half. As S&P now expects production to be roughly flattish year-on-year in the second half. So, if you could comment on our performance on that division please, that'd be great. The second one on the auto OE margins. First half result was better than breakeven, could you just talk about what you expect for the second half as labor inflation now picks up in Q3 but you also get probably higher compensation from the OEMs going into Q4.
So, just how you expect second half to develop versus the first half result. And the last one on aftermarket. Can you just talk about inventories and distribution right now? Do you see the strong sales numbers of the last few quarters holding up or are we entering into a period of these stocking now in aftermarket. Thank you.
Stefan Wolf
Yes, thank you for your question. I would start with question number one. The outperformance in the second half and the expectation here and the expectation is that the market is going to be flat based on S&P and also based on observations and so market is going to be flat, we'll have some projects running up and from the OE side and will also have a continued in this reflect a little bit on your question number three will have also continued good performance in our expectation in the aftermarket, yes. And therefore but from an overall perspective we think that we can outperform in the second half and the market that is going to be flat as you said.
The auto OE margin, your question is here how is the expectation on the second half and here and the some of the elements you said, I share the same. On the risk side, we have higher cost in some areas. For example, in Germany the increase in personnel cost based on the of the increases here they were not negotiated. In our energy levels are up to some extent little bit on a higher level even though that some of the commodities here and the energy area came back significantly and from a commodity side we see generally a relief in the markets I assume based on the reduced outlook of some industries. But on the chemical side and on some plastic material as we see some increases still.
And so, on the chain side, they is the customer compensations, yes, and the as the expectation did overall we have a situation that is not as significant as last year. Now we talked about very much significant compensations that were required in the inflation cycle of 2022 and that essentially started in 2021 and but the figure the risk figure for 2023 is lower but at the end of the day those increases still needs to be compensated and there is also some risk in regard to that. So overall, we think that we'll be able to compensate the risk with those compensations, yes, and therefore we think that we can confirm the outlook that we had given at the beginning of the year.
Okay, your third question was related to the aftermarket and the aftermarket it seems like is strong cycle that will last. And there is two elements to that. On the one side to strong cycle that obviously people like to repair rather than to buy the vehicles, the new vehicles, and on the other side we have a good performance year in particular in the North American market where we started along with also China to go into those markets and realize the chances that we see in the particularly in North America we made good progress in regard to that. So, the second element of this is really that we have a good situation here in terms of parts availability to support that growth for the additional demand from new customers.
And on the other hand, when we take a look at inventory, inventory in the OE segment remains flat and the increases in inventory here that is associated to the most extent with our increase in business activity and aftermarket. Here aftermarket we can only realize growth when we have parts available when we can satisfy immediately what the customer's request and need for us and therefore we have increased here inventory levels in order to support that growth. And I hope that all answers your questions, yes.
Akshat Kacker
Thank you, so much. Just one quick follow-up on the auto OE result this year. Are you expecting the second half to look very different from the first half?
Stefan Wolf
And I would not expect it is significantly different but I have to say this, this is my expectation but there is a risk also in regard to that in terms of okay how some of the cost elements are developing in the second half, yes this is one item. And then on the second part of course to what extent we're able to compensate by customer compensations. Yes.
Akshat Kacker
Understood, very detailed. Thank you, so much.
Operator
The next question comes from Marc-Rene Tonn from Warburg Research. Please go ahead.
Marc-Rene Tonn
Yes, good afternoon. Thank you for taking my question. And maybe around e-mobility and EKPO. I think we've seen and we can take this number I think from the minority's line. And that it's in the fourth quarter last year yes that they're more than 2 million let's say in but really lots of that's attributable to other shareholders which are planned and corrected. Yes, which a design, some are correctly or mainly attributable to the ramp-up costs which you would have at EKPO. But would you give us some indication on what you are expecting here that is the quarters ahead and also in the years ahead. How we should look at this number and when you task and can think about the breakeven in this segment.
And secondly guys, also as a referring to your earnings space which you provide thankfully and in your presentation. Where do we see those in EKPO losses here in three area and in your comparison, isn’t in the ending volume despite there's an operating leverage while you include this though decide. And thirdly, also related to the e-mobility. If can give a second half, you have these the ramp-up of the batteries. This person had the contract with the global battery manufacturer putting just some indication on about how we should think about later revenue generation for the e-mobility segment in this quarter and Q2 was that they already did better than in Q1.
And third question would be with regard to the financial results. I think been -- I calculated correctly the interest cost we currently have around 5% now when looking at your gross debt on an annual basis. Is this level what you also expect for the second half year or should we assume any further increases in financing costs for the second half. And that's certainly looking at the tax rate I think presumably also has to do a bit with these lots of that at EKPO but also I think like the region differences in your profit generation. How should we look at this number for the full-year, from your perspective? Thank you.
Thomas Jessulat
Yes. Thank you for your questions. When we take a look at if we in particular but not only e-mobility, let's say e-mobility and lightweight and then we have on an annual basis we have double-digit loss on a full year like I said, mainly battery and fuel cell in the group. And you see this of course in the losses that are associated here with other shareholders and in the reporting is one part of it but it's not all of it. And second, we have startup plans. We have a startup situation here in Texas related to lightweight products and also we have startup plant a new plant here. This is our center for e-mobility here Neuffen that we have recently just opened where we will produce here a lot of e-mobility contracts.
So, based on this its right from an observation that we have here still in 2023 significant startup losses and expectation is that starting with one cell contacting system that will start in the second half of this year, most likely towards Q4. There's going to be some activity in Q3 that will start revenue cycle in the battery business here and really going into the higher revenue figures. And this is the starting point and I said that my expectation would be somewhere around '25 we'll have a significantly different situation here in terms of the operating leverage in the business units and also in the group based on the revenue cycle and revenues in those business areas and also in those new plants.
Now, I come to your last question here in regard to Texas. The Texas that we see here as a relative high tax rate, so the loss situation is distributed in the group so that on the one side we have taxable gains and on the other side we have losses in some of the areas and those examples that I mentioned. And this balance so to say over group entities, this leads to unusual high tax rates, generally speaking. And in regard to the financial results and the interest rate that is right now, we see here when I take a look at the net interest I think it's around €7.3 million for the quarter and there is interest in the interest expense and let me say this, there is from our hedging positions there is €2 million interest in their coming out of hedging and there is €1.5 million coming out of pensions.
So, this high interest expense would need to be a corrected so to say by around €3.5 million when you compared to other quarters. Now and those effects are based on interest effects based on the interest cycle that we have come through and they lead for Q2 here to more significant interest expenses. Now, in regard to the question here in terms of the earnings bridge, could you please repeat that because I did not get that question?
Marc-Rene Tonn
It's also a big win when we look at the P&L number for minorities in Q2 2022, it was just say basically there was probably zero and we have this €2.8 million which you have this year which indicate that must have been a date pretty deterioration at earnings and EKPO probably pertaining for all the contracts just launched. And where would we see this deterioration in the earnings book which you provide here and on page number nine -- Slide 09. Is it included in sales growth this deterioration on it?
Thomas Jessulat
Yes, it's essentially in ramp-up cost is one portion of that, there is another portion in others here. And there is one topic also and this is in offsetting of startup situation here at EKPO if you pick this example also with improved situations in other areas here. So, there's also a little bit of offsetting in regard to that. So, you will not see this full amount as in let's say entity related topic now. Because we have also some other developments here that offset this what you observe there. Yes.
Marc-Rene Tonn
And let's say as don’t know whether you'd consider this or just as a remark there I think is a part there, the with some years in which you mentioned some results for e-mobility specifically and that it'll be an idea to be more let's say tick it that a direct and a number for that everything. Basically we the figure that is paid every month kind of under stating and how successful actually were particularly in the OE segment at times, so touches that are here from the future to provide them.
Thomas Jessulat
Yes. Point is you know battery here is starting from this year will be front running in terms of sales growth here, and again it's an early time to look at that. But the basic making is missed at you know the revenue cycle and operating leverage to what's 2025 in the new business areas will get us in a different situation from an entity perspective but also from a group perspective, yes. Okay, I hope I answered all your questions here?
Marc-Rene Tonn
Thank you, very much. Thank you, yes.
Operator
The next question comes from Frank Biller from LBW. Please go ahead.
Frank Biller
And yes, hello. Thanks for taking my questions, it's actually two. The one is on this Engineered Plastics. Here the margin nearly was halved here. Maybe you can elaborate on that what happened here and what could be expected for the whole year, so to stay in the single-digit range or returning to the double-digit range. The other question on net debt and free cash flow target. So, when assuming free cash flow in the range of last year, so is it fair to assume and net debt in the range of about €350 million?
Thomas Jessulat
Yes. Let me start with your first question. Right now, we are at €380 million with I think at free cash flow minus 16, you know 350 would be a 30 million move. I'd say this would be on the high side and some other possible, yes, but it would be on the high side. I think it would be yes somewhere around 350, 360, I think it’s a reasonable month. We see a little bit of the same cycle that we have seen last year on the free cash floor. So, I'd expect here an improvement in the second year. But there is one point of course that is different comparable to last year and this is the development here in aftermarket, yes. Expectation is from now on, inventory levels are going to be flattish and to what's the end of the year getting lower in bringing us to this sort of net debt.
On the first question here, yes Engineered Plastics, they has different exposures here from a sales perspective as well as from a cost perspective because there is like I mentioned here on the commodity side and maybe the Engineered Plastics that business is effected by cost increases here in regard to the used materials and material mixtures and here also it is the same mechanism relative to the OE segment and is going to be compensation that I would expect to what's the second half. But there's still some uncertainty. So, at least I would see a comparable level but if we're successful in regard to compensations, then it could be a little bit higher. Thank you.
Frank Biller
Thank you.
Operator
The next question comes from Christian Glowa from Hauck & Aufhauser, Investment Banking. Please go ahead.
Christian Glowa
Yes, hi there. I just have two questions left basically. My first one again is on your aftermarket business. Can you please provide lets that growth we made at in terms of price and value. And my second question is with regard to the most recent orders in e-mobility which you have announced. How much of that is already reflected in your order. Take or in other way to put it, let the out of the order intake business development piece and in Q2 and in the first half here?
Thomas Jessulat
And thank you for your questions. On your second question, the new orders they are not reflected in the order intake. The order intake, as we as ElringKlinger measures it and it's based on the actual releases from customers and there is different release horizons and the new projects that we have announced, they are not part of those let's say operating communications from the customer starts. On the aftermarket, I haven’t gotten really an exact figure on that and I would say very roughly speaking it's half and half. Because the volume increase is happening in Europe and is happening in North America, yes, and the effectual significant development, I can look that up, roughly speaking now I'd say it's maybe half and half.
Christian Glowa
And the auto business OE standalone or the insight because that's similar to group development or is there a big deviation?
Thomas Jessulat
The development in OE segment and in terms of the order intake and also the orders that situation that has two components. One component is general market development which is in line and this is why I said this is also based a flat market based on our expectations here. This is reflected in there, and we have also a little bit of product mix because there is some customers that have very long horizons in terms of their scheduling and some a little bit shorter. And here we have some let's say short-term developments that effected on the negative side but essentially that's out of our hands. But those two sectors goes essentially enter the OE order stock situation.
Christian Glowa
That maybe one follow-up from me, please. We are guiding for our CapEx ratio of 5% to 7% for the full-year you stand at about 4% in the first half here. And that 5% to 7% is that sustainable looking forward with regard to the ramp-ups in e-mobility or is it even possible to lower that CapEx ratio moving forward than below this ratio affects.
Thomas Jessulat
Yes, we are on a very low CapEx rate right now and it is certainly the lower end of this guidance now. We're going to be moving up with those projects here and the degree the intensity of CapEx really depends on what the project is. Now there is inflow here and they deploy added is more like assembly type. And but my expectation is that step=by-step we'll go into from a working capital perspective into a better situation and generating here a better free cash flow but on the other side we'll have also a higher level of CapEx going forward, not necessarily in the short-term but when we look into, they're 2024, 2025, my expectation is that CapEx is going to be going up. EBITDA right now runs at roughly €200 million and up. So, the from an earnings perspective, group is prepared for that as long as we have the working capital in check. So, we will see some higher levels there.
Christian Glowa
That's very clear. Thank you.
Thomas Jessulat
Thank you.
Operator
[Operator Instructions] Our last question comes from Michael Punzet from DZ Bank. Please go ahead, sir.
Michael Punzet
Yes, Michael Punzet. Good afternoon. I have one question with regard to your adjustments. Can you split up the adjustments you have booked in Q2? And can you give us any kind of guidance whether we should expect some additional restructuring provisions or something like said in the second half of this year?
Thomas Jessulat
Yes. Thank you, for your question. We have in total I think around 8 million or 8.1 million booked and CEO departure of that is €4.4 million and then we have €3.7 million related to restructuring and impairments. And for the second half of the year, I would expect a little bit more in terms of restructuring and impairment because we have some activity here in regard to Lenningen on the one side and consolidation efforts and the group here. And but would we be seeing a higher number relative to Q2 in the upcoming quarters? I don’t think so. And so, yes days kind of be more restructuring as we do consolidations but this Q2 figure is high.
Michael Punzet
And there's no additional PPE expected in the coming quarters or is it only some minor that you have not included it in the guidance?
Thomas Jessulat
No impairments when we look at --.
Michael Punzet
No I mean, purchase price at locations.
Thomas Jessulat
No. Typically purchase price at location is associated with M&A activity.
Michael Punzet
Okay.
Thomas Jessulat
And right now we don’t have any of that, we haven’t acquired anything, so there is not.
Michael Punzet
Okay. Thank you.
Thomas Jessulat
Thank you.
Operator
And there are no further questions at this time. I hand the call back over to Thomas Jessulat for closing comments.
Thomas Jessulat
Yes. And thank you very much for attending this call. Thank you for your questions. And I'm looking forward to talking to you on our next call and that's going to be November 7 this year where we will be discussing Q3 figures. Thank you, very much. Best wishes to you and talk to you soon. Bye-bye.
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ElringKlinger AG (EGKLF) Q2 2023 Earnings Call Transcript