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Good afternoon, ladies and gentlemen. Welcome to the analyst and investor's conference call on the third quarter figures of SCHMOLZ + BICKENBACH. I would like to welcome you this afternoon from our group headquarters in Lucerne. With me are our CEO, Clemens Iller; and our CFO, Matthias Wellhausen, who will report on the quarter to you shortly.Media release, interim report and the following presentation are available for download on our website as of 7:00 a.m. this morning.During today's conference call, we'll make forward-looking statements as described in the disclaimer on Slide 2. These statements are based solely on our expectations or projections of future developments and may differ materially from actual results, performance or achievements. With this note, I now give the floor to our CEO, Clemens Iller. Please, Mr. Iller.
Yes. Thank you, Mr. Steiner, for the introduction, and good afternoon, ladies and gentlemen. Welcome also here from our side, from Lucerne. Thank you for dialing into the telephone conference on the third quarter results. As usual, I will begin the presentation with a review of the year-to-date, today that means on the first 9 months, as you will hear in a moment. We are well on track to meet the guidance for the year. After my comments, my colleague and CFO, Matthias Wellhausen, will speak on the financial figures and developments for the third quarter. Finally, I will explain how we assess the current market situation and give an outlook to the rest of the year. You will then have the opportunity to ask questions. So same procedure then, every time. Let us now begin with Chart #5, the key figures for the first 9 months. And in the first half of the year, we increased volumes, revenue and adjusted EBITDA by double-digit percentages. Sales volume increased by 16.9% to just below 1.6 million tons and revenue by around 25% to roughly EUR 2.52 billion. Two major factors had a favorable impact on the top line. On the one hand, this was the contribution of Ascometal, which has been fully consolidated since 1st of February, that is now for 8 months. On the other hand, the intact market environment which allowed a gradual increase in sales prices. Combined with the higher volumes, this lead to a disproportional increase in revenue. Yet I would like to emphasize that Ascometal was not the only reason for the sustained growth. Even without the contribution of the new business unit, the group achieved revenue growth. A contrast, the percentage increase in adjusted EBITDA did not quite match the higher revenue growth. This was, again, due to Ascometal, which, as expected, has -- was not yet able to make a positive contribution to EBITDA over the first 3 quarters. Earnings were slightly negative in the third quarter, offsetting the positive EBITDA of the previous quarter. However, this is due exclusively to seasonal factors as business in the core French market always weakens significantly in the summer months. Overall, Ascometal is fully on track with its transformation and integration.We have used the period of low demand to carry out important maintenance and repair work. As a result, we can already see the improvement and the improved productivity in September and October very clearly. At group level, we achieved an overall 13.1% higher adjusted EBITDA of EUR 197 million. As far as group result is concerned, it rose from just under EUR 20 million to EUR 92.4 million, the first 9 months. But even without the badwill of EUR 46 million for Ascometal, which had a positive impact on the result and is included in this figure, group result more than doubled. The other side of the coin, however, is to be found in the free cash flow, which was negative at minus EUR 173 million. The high demand for our special steels and the acquisition of Ascometal required investments into net working capital. This had an impact on cash flow generation. The good news is that cash outflow slowed significantly in the third quarter compared to the first 2 quarters, which was also expected in view of the normal seasonal pattern.Let us continue with Chart #6. As in the first half of the year, the continuing favorable market environment and the robust condition of our end markets backed up the good results. Nevertheless, beyond the normal seasonal softening in the summer months, the market dynamics weakened slightly. This did not affect all markets, but was particularly noticeable in the European and especially in the German automotive industry. Our colleague, Matthias, will discuss this in more detail in his speech. Synchronized with the reduced market dynamics, raw material prices were also lower sequentially. Quarterly average scrap and nickel prices were 8% lower than in the second quarter of 2018, while ferrochrome was on average 2% cheaper. Oil prices also stagnated after a steady rise since mid-2017.Despite this, the fundamentals for our most important end markets remained robust. Also, the automotive market was subject to major fluctuations in the individual months of the third quarter growth over the year was 3%. The mood remained good in the mechanical and plant engineering sector, with production increasing by 4% in the period from January to August, and there was also a slight increase in the number of active wells in the oil and gas segment, which is a key indicator for the industry. Unfortunately, our Finkl Steel business unit was unable to benefit from this for structural market reasons. Let me make some comments to this. Demand for steel for fluid and applications, that is mainly for pumps used in oil and gas production, exploration and also in the fracking industry, has weakened significantly. There are 2 main factors for this. Firstly, more durable stainless steels are used today, which means that demand is structurally lower. Secondly, inventories were built up as the oil and gas industry recovered earlier in the year. Those inventories now have to be adjusted first. These factors are currently adversely affecting Finkl's business and we have taken both technical and cost measures to get this business back on track.The slight increase in the number of active wells is therefore not a very meaningful indicator of the Finkl business situation, at least not in the short term. In addition, the protectionist measures taken by the United States have meant that Finkl's production of bars for the U.S. market now has to be done at the less cost-effective Chicago plant, rather than at the Montréal location as was previously the case.As you can see on the next Slide #7, despite the slowdown at Finkl Steel, business in North America developed very well, with revenue growth of 13.5%. This was mainly due to the local service units, which operate as a sales arm for the other business units in the region and due to the first time consolidation of Ascometal. The results also show that our export from Europe to The United States are, if at all, been only marginally affected by the Section 232 measures by now. The other regions grew even faster than North America, resulting in an overall revenue increase of almost a quarter for the group, exactly 24.7%. As in the first 2 quarters, the most important contribution came from the above-average Ascometal driven growth of 27.2% in the core region of Europe.In Central and Latin America, the opening of new locations had a positive impact on revenue growth of 20.8%. As you know, we traditionally do not have a very strong presence or, I have to say now, we do not had a very strong presence in Latin America. However, we want to slowly develop this region with our new sales offices in Argentina, Chile, and for the time being now, Colombia is the last new location. The first successes can be seen in the figures. Even ahead of North America, the Asia, Africa, Australia region came in with a plus of 17.5%. Before I'm handing over to Matthias, I would like to explain a few words where we stand with the integration of Ascometal. You have already -- you're already familiar with this Chart #8, with the rough timetable for the 3 phases of the integrations from the presentation of the half-year figures. In August, we gave you a deeper insight into the ongoing project. As I already said, we are on track with the integration overall. The summer break was used intensively for progress in integration and transformation. In addition to maintenance work I already mentioned, we've also made progress in implementing the industrial concept. The DEW business unit is now able to cover a large part of the requirements of the rolling mill in Les Dunes from its production in Witten.In January 2019, we will, therefore, be in a position to terminate the contract with Ascoval, for the purchase of 110,000 tons of crude steel, above market price. The independence from the supplier Ascoval is very important for us as the future of the plant is not secured until now. Strikes at Ascoval in recent weeks have required a great flexibility from our mills to produce enough crude steel for Les Dunes. Further significant investments in Ascometal's equipment will also be realized now in the fourth quarter, from a good way. And I have to say that at the end, skilled people are still our most important thing to acquire, to find and to search for them.With that said, I will give over to Matthias Wellhausen for the discussion of the third quarter figures.
Clemens, thank you very much. Ladies and gentlemen, warm welcome to you also from my side, and thank you for taking the time to join us here for the conference. Yes, as usual, I will now focus on the quarterly perspective. And as a reminder, in comparison to the second quarter of 2018, Ascometal's figures are already fully included and for both periods. But when comparing to the same period of previous year, we use the historical results of our group that means then for Q3 2017, no restatements being used, but historical figure.Now overall the third quarter was characterized by the usual seasonality and an overall continuing good economic environment. And return to Table 10, this summarizes the key figures on the top line, which is crude steel, sales volume and order backlog. Crude steel production amounted to 519 kilotons, that was 27% above the prior year quarter. And this is mainly attributable to Ascometal. However, also the old parameter was 6% up compared to previous year. And that was already a good quarter. Capacity utilization remained high, if considering the seasonal effect and descent. In terms of locations, we saw the same pattern as in the first half of the year. That means Swiss Steel in Emmenbrücke, Ugitech in Ugine and DEW in Siegen were operating at very high capacity utilization, whereas in the other production units, there was still some headroom.Sales volumes also increased to a total of 470 KT. However, this was only an increase of 16%. In other words, we did not succeed to deliver the entire increase in production to the market. What were the reasons? Well, on one hand, this reflects our precautionary adjustments to the provisional safeguard measures of the EU. This quarter regulation, as you know, it's intended to limit steel imports from non-EU countries and, unfortunately, it also includes Swiss steels exports into the EU. So on here we have pre-produced those products for which the quotas can become tight until February. So we can, therefore, ship now the quantities in Q4 and protect our long-standing customers and ourselves from unwanted burdens.Second, on the second leg, we also said, as Clemens was saying, a somewhat weak offtake, especially from customers and the order industry. And here are the well-known issues surrounding the new approval procedure and the deal issue, which had obviously an impact on our German plants offtake in that period. We currently see this effect as temporary and indications from October shipments are indeed also encouraging.However, in total, these effects cost us around 20,000 tons in sales volume in Q3. Broken down, by the way, into product groups, we see double-digit growth in quality and engineering steel that was driven by Ascometal, while stainless declined by approximately 5%, tool steel being stable. Looking at stainless, I just remind that in the prior year's quarter, that was already a very good sales volumes, so that has to be considered when judging on that. Yes, our order books continue to be well filled. Compared with the previous year, the order backlog at the end of Q3 was more than a third up versus the previous year at 734,000 tons.Let us now turn to Chart 11 for revenue and average sales price. Revenue was also up, obviously, following the direction of sales volumes, but it rose significantly faster. Revenue grew by 27.7% to EUR 780 million. This disproportionate increase over the previous year reflects a 10% increase in average sales prices. It was now the 10th consecutive quarter of rising prices. Only Q1 '18, if you remember, represented a short pause, reflecting the structurally diluted effect of the increased share of engineering steel from the Asco consolidation. Now decomposing the price development, we see that the base prices were again up compared to Q2. Also the second element of the average sales price, the surcharge for import materials also contributed to the increase. The increase of raw material prices in chrome, nickel and vanadium during Q2 could largely be passed on into the sales realizations of Q3. So with some lag, we find these raw material price increases back and accordingly increased sales prices. This was the best achieved as usual in stainless steels, but also with engineering steel. The price dynamics for tool steel were a bit less pronounced, but still positive.Please note here that the recent decline in raw material prices during the third quarter is not yet reflected in the sales prices of the third quarter. So that will only come in the fourth quarter because we have this lag between 2 and 3 months until -- according to the production cycle.Yes, but this higher base price and surcharge, the extraordinarily strong increase on Q2 to Q3, which was EUR 94 per ton, also had a very strong seasonal component. The sales share of rather low price engineering steels was lower than in the other quarter due to the [ stainless steels ]. So this mix effect accounted for more than half of the increase compared to Q2.So with the impact of lower raw material cost in Q3 and the unwinding seasonal mix effect, the average sales prices in Q4 should be nominally a little bit lower. Nevertheless, we expect the price environment to remain solid in Q4 and into 2019.Let us now turn to EBITDA and the group result on Chart #12. The adjusted EBITDA increased by a double-digit 10% over the same period of the previous year. The lower increase compared to sales volume reflect the effect of Ascometal where as expected, Clemens spoke about it, we are currently not yet achieving a positive EBITDA. Without this mathematical or dilutive effect, EBITDA per ton would have been EUR 118, meaning significant higher than in the previous year. When you go further to the EBITDA margin, to the ratio to revenue, the dilutive effect is then even amplified by higher raw material prices. So that is additionally adding then to the lower revenue margin.Our profit improvement program continued according to plan. As you will recall, we had planned for EUR 20 million of sustainable improvement this year. And after EUR 12 million in the first half, we were now able to achieve another almost EUR 5 million in the third quarter. So in total, we are now standing at EUR 16.8 million. Due to the seasonal factors, increment in the quarter itself was slightly lower than in the previous month. But overall, we are very well on track for the EUR 20 million. The progress on the restructuring and integration of Ascometal is also visible in the adjustments to the EBITDA. These amounted to EUR 3.3 million in the third quarter. This corresponds then to an accumulated total of approximately EUR 18 million. As a reminder, we had a positive net effect of EUR 46 million in the first quarter for Ascometal, the so-called badwill. The cumulative restructuring and transformation cost for Ascometal will largely offset this positive effect of badwill over time. And -- but as expected, this will not be completed this year. So hence, we expect further restructuring in transformation cost in 2019.Yes, the group result for the third quarter was marginally negative at minus EUR 3.7 million despite a positive EBIT of EUR 3.2 million, so reflecting a tax rate of 200%, so to speak. This is what we all feel, I think, sometimes in our own pocket here. But indeed the reason for this was a technical one and the temporary one as the reason is that for our business unit, DEW, which was, due to seasonality, not making a positive result. The resulting tax asset could not be capitalized because we already have a lot of tax loss carryforward historically in that unit. So it's a temporary, very peculiar technical reason that led to a negative earnings after tax, while we have positive earnings before tax.Coming now to Chart #13, which is cash flow and financing. Well, despite the year-on-year improvement in EBITDA and the positive seasonal impact, the free cash flow was slightly negative at EUR 3 million. This was mainly due to the temporary development of net working capital and that one I will discuss on the next chart.Overall, we had an investment here in net working capital in Q3, instead of the usual -- seasonally usual reduction. With the negative cash flow, net debt and leverage, again rose slightly to EUR 651 million and EUR 2.7 million, respectively. As I will show in a moment, this atypical development will normalize by the end of the year. Net debt and leverage will be significantly reduced until then.Look at our financing and the second quarter, you'll remember, we increased our long-term financing by EUR 150 million in connection with the acquisition of Ascometal by issuing a new bond. A temporary credit line of EUR 50 million was then repaid as planned in Q3. So our long-term credit lines now amount to around EUR 1 billion, including the outstanding loans -- bonds. The unused lines and the funds at the end of the third quarter stood at EUR 390 million. This gives us adequate financial flexibility despite a slight decline in the funds available from financial instruments.Coming to Chart #14, which is the development of the net working capital. As you know, its absolute value of net working capital [ breathes ] with volumes and prices. We, therefore, steer, as a company, the ratio between net working capital and revenue over time. And in 2017, we had reached excellent progress after completing our 3-year improvement program. These 2017 ratios are depicted here in the graph in the lower line. And obviously, we will want to continue to measure ourselves against these levels. However, during 2018, we were above those levels. And in Q3 2018, the difference has even further increased. Nevertheless, we see this development without concern.It is temporary and appropriate in the current business situation. In details it means, first, the distortions in the German auto market, which had led to the evident offtake and the EU-protective tariffs, which have prompted Swiss Steel to adjust its production, have led to this temporary inventory buildup. This will be entirely reversed until year-end. Second, the integration of Ascometal entails the conversion of the external supply of Dune by Ascoval to the internal supply from Witten. Clemens, do explain that. This will happen during February 2019. To accommodate this, we keep on building temporary safety stock of up to 15,000 tons until year end. Now beyond this temporary safety stock, the overall efficiency of Ascometal's net working capital is also not yet at the level of the rest of the group despite they've already made some good improvement, but this is also further progressing. Finally, and thirdly, we added further to our graphite electrode inventories with a view to the future. Although, the market is somewhat more stable than a year ago, tensions remain. And with a view to 2019, we think it is worth having buffers and thus, security on prices and availability.These influences have raised the ratio of net working capital revenue above the usual seasonal peak. The ratio stood at 32.7% compared to 29.3% a year ago. If we had wanted to achieve the same ratio as in previous year, net working capital would have had to be around EUR 100 million lower. But as I said, these additional investments are temporary. Half of the overrun will already be reduced by the end of the year. By the end of next year then we will be aiming for the 2017 result again, meaning we will have achieved the full efficiency at Ascometal and be back to our 2017 level of the ratio.Coming to 2000 -- sorry, to Chart #15. Would finally like to share a view on a more detailed view on our investments. You see the capital expenditure rose further to EUR 32 million in the third quarter compared with the previous quarter, this is in line with our usual annual profile, which is building up by quarter, the spend. This was approximately EUR 3 million higher than in the same period of the previous year. In the first 9 months then the total amounted to EUR 68 million. Now in total for the total year, we expect around EUR 145 million. This means that there will be an intensive last quarter with the volume of almost EUR 80 million. The lion's share will go to our major strategic project namely, the walking beam furnace at Swiss Steel, the NADCAP certified furnace at Ugitech, and we are also making progress with the integration and transformation of Ascometal, including the needed preparation at DEW. Fourth, in addition our joint venture in China will execute the planned investment.So in summary, we can therefore, report a very pleasing quarter today with excellent progress on the strategic projects. Clemens, may I handover?
Yes, thank you, Matthias. So ladies and gentlemen, let's move to Chart #17. As you can see on this chart and also following our report, we believe that the glass is half full and not half empty. Our order books remain well filled, which we interpret as an indication of our customer's confidence in the year 2019. This is despite the fact that experts have been cautious about economic forecast and growth prospects in the recent weeks, which means that the forecasts have been reduced.This may be true, but in my view, it means nothing more than a normalization, partly overheated markets in the last 2 years, if you look, for example, to the automotive market. We are well positioned for market environment with somewhat slower-growth momentum. Another important reason for our cautiously optimistic view of things in the development of Ascometal, as we have regularly reported to you since the acquisition in February, we are making steady progress in integrating the new business units. Accordingly, we are confident that we will achieve the target set for 2018 and 2019. We do not want to look further into the future today, but I think that Ascometal will give us a lot of pleasure in the coming years. In addition to the robust demand in the market environment described above, we also see our sales in a good position in terms of selling prices. The decline in raw material prices in Q3 should not be overestimated in this respect. In view of a medium to long-term volatile and inflationary environment for the most important raw materials, we are convinced that we will at least be able to pass on the cost increases. We have already successfully positioned ourselves in the market for 2019 in this respect. Nevertheless, I will and I cannot withhold you from a discussion also of the most important uncertainties and risks. The very top of the list are the political uncertainties and trade conflicts, which I do not have to discuss in detail. You can read it and hear it every day. However, I would like to highlight the safeguard measures taken by the European Union against steel imports from non-EU countries, Matthias was talking about that. We can live with the provisional safeguard measures despite possible but smaller impacts. Should the EU, however, convert the provisional measures into permanent protection measure for, let's say, multiple years at the end of this year, the situation could become critical for our Swiss subsidiary, Swiss Steel and also for the Steeltec business unit. We took some significant effort in recent months to avoid this scenario by talking directly to the political decision-makers in Switzerland, the European Industry Association and also in Brussels. We have received confirmation from all sides in EU that Switzerland is not part of the problem, as import quotas into the EU have remained stable over all the past few years in the product groups that are relevant to us.We are, therefore, confident that the solution will be found such as a country quota for Switzerland, which will enable us then to continue to be a reliable partner in the cross-border value chain of the steel industry. As far as the future development of the automotive industry is concerned, we regard the recent issues as temporary in nature and expect robust and maybe less dynamic growth than in the last 2 to 3 years. This also applies to the German automobile manufacturers who should benefit from the trade incentive for diesel cars. Last but not least, there are higher energy cost that are already having a noticeable impact on our cost, especially in Germany. However, we want to pass these on largely margin neutral. This brings me then to the end of the presentation and to the outlook on Chart #18. Political risks remain high, which could also have a negative impact on the market environment. At present, however, we do not see any significant impact on these uncertainties on the global economic upswing, which has so far been synchronized. Nor do we see any fundamental weakening in our end markets. It remains to be seen whether the effects of the third quarter are only temporary. We assume that the special long steel industry will continue to grow in the final weeks of 2018, both in terms of unit sales and product value. An unchanged higher order backlog as of September 30 and visibility beyond 3 to 4 months supports our view of things. As far as the development of raw material prices is concerned, we expect a sustained high volatility, which will, however, remain supportive for our business.On the other hand, cost inflation, which has build up in the good market environment over the past few months, could have a negative impact. In order to absorb this inflation, we will continue to focus on efficiency improvement measures as we have done successfully in the past. Based on this assessment, we can today confirm our forecast for 2018 as a whole of adjusted EBITDA in a range between EUR 230 million to EUR 250 million. And with this outlook, I would like to thank you for your attention, and would now like to open the floor for you for questions.
The first question from the phone comes from the little line of Rochus Brauneiser, Kepler Cheuvreux.
Yes, 2 from my side. The one is on the comments you made on the further growth and the special long steel business. If I get the numbers correct, it appears that the group result Asco has been down in terms of volumes at the current year. So you're not fully participating in industry growth. Maybe you can elaborate a bit where this is coming from? The second question is regarding automotive. I guess, you're voicing quite some optimism on the product evolution of the European car demand, which sounds a bit in contrast to what we heard from one of your competitors yesterday, which sounded more worried about sustained recovery into the first quarter. What is the kind of indications you have for this optimism? Can you talk a bit about the call-off rates from the auto industry in October and November versus the trough months in September? And then thirdly, on Asco, can you give us a flavor what the -- what we shall expect about the EBITDA outlook for Asco in Q4? And from today's point of view, where you want to be in terms of the profitability in the next 2 years?
Thank you, Mr. Brauneiser. I think the outlook on Q4 is something that, obviously, we cannot give you today. But I will try to answer the question about the automotive situation and Matthias maybe about the other point. You have correctly said that, I mean, yes we have seen in the last 2, 3 months a certain kind of weakening. Now, obviously, we had a very hot market the last 2 years. And what we have seen, I think, I call this a normalization and our customers have started to consolidate their orders with us and maybe also some backlog. So this has happened, but you have also heard from Matthias in a [ site sentence ] that actually in -- and this was, of course, the first information about Q4. What we are seeing in October in this market is pretty normal, again and relates more to the beginning of this year. So it seems that the industry also in the summer months has maybe adjusted a little bit, but from what we are hearing and what we are seeing, and you know from the past, that now is the time for price negotiation for 2019. There is no indication that there will be a complete collapse or anything. It's really a kind of normalization. Therefore, half full, half empty. Yes, I said it's half full.
Yes, with your observation with respect to the growth or nongrowth of the old perimeter in terms of tonnage. You're right. YTD, the old group perimeter is down by 3% and if you only take quarter 3, it's minus 5%. That equates roughly to 40 KT. Well, I explained 20 KT of this by alluding here to the temporary offtake situation that we discussed at Swiss and at DEW. The second portion of this development is the fact that in the tool steel business, we didn't see the same dynamics then for engineering steel and as for stainless steel in general. So tool steel was a very moderate growth. Worldwide is not the same dynamic. So it's due to our portfolio of product, if you so like. These are the main drivers for the -- for your observation. Overall, I also like to remind that already 2017 was quite a substantially good year in terms of volumes. You will remember the strong catch-up that we saw in the first quarter 2017 when there was restocking happening in the market. So that, of course, also gave quite a strong base for the comparison. The third element I would want to highlight here as you will also remember that we focused more on profitability in the product rather than on pure volume growth. So we are clearly focusing to be selective on our -- on the areas where we engage. Particularly in the case of Steeltec, we have shed certain volumes out of our portfolio because in the long run these are not contributors. So these are the 3 drivers.
Okay. And on this Asco profitability, I remember when you did the acquisition, you were expecting positive EBITDA in year 1. I think since the consolidation, you're still negative. So you're probably -- you will be, eventually, be a bit below that. Is there anything new in terms of the path you have been seeing for Asco in the next 2 years? And what are the kind of the big triggers which improve -- lead to a step improvement in the profitability? And maybe secondly, can you talk about the issues at Finkl where, I think, you had been previously planning or working on new product offerings with stainless -- including stainless products. So can you give us a sense when these products are coming and why this is, obviously, taking so much time to ramp it into the market?
Just a word on Asco from my side. We had already in -- when we acquired, had announced that during 2018, Asco would be more or less around the black 0 or the red 0, around the 0. And that's where Asco stands after 3 quarters and it will be the same at the end of this year. So this is fully in line with our expectations. The driving force that we explain going ahead will be our synergy concepts and we spoke about the transfer of the sourcing of the semi for Les Dunes going from the expensive Ascoval source to the Witten plant. So this will be one part of the equation. But more importantly, all the internal improvements that Asco is currently having underway in terms of improving their productivity are progressing very well. So it's on productivity where they will gain, including also on the purchasing side, where they will participate from the cooperation here with the group. So this is the 2 strong drivers is on the -- or 3 drivers. The synergies from the integration. It is the productivity improvement of the plant itself and it's on the purchasing side.
And if I may add Mr. Brauneiser, as you maybe have noticed also in the last, let's say, 2 years. Steel industry was doing fine. So if you order today, new equipment as we are investing at the moment in Witten for the supply chain, you are talking roughly 18 months between order placement and finally, erecting of the equipment and then going into operations. So it's quite a time. So the plan was like this, from the beginning, we said '18. All decisions have been taken, investments decisions taken, order has been placed, equipment is actually manufactured. So this will take us still more than 10, 12 months before it's finally erected and up and running. So this is all part of the plan.
Okay, Got it .
And then on Finkl, what is actually the problem Mr. Brauneiser? First you talked about ...
I think what you're flagging in your call, also in your releases that, obviously, you're not participating in the market dynamics because of your product offering as apparently, your clients are switching to different steel grades and containing stainless steel, which are more resistant to these chemical liquids. And if I remember correctly, in the past that you were also thinking about such offerings. And the question is until when can we expect those? And why is it taking that much time?
The same story, Mr. Brauneiser. The investments are on the way. So the first part of this -- actually, it's 2 parts. The furnaces and also in the secondary metallurgy, but it also means finally, if you want to produce stainless, you have to buy the rights material like scrap, for example, alloyed scrap or you have to buy ferrochrome or whatever. So all these things need some preparation and that is on the way. And the market has changed indeed to stainless, which means that just the consumption because it lasts 5, 6x longer. It's just if you had 100 tons before you have now 20 tons because things are remaining much longer. And as we said, the stocks are still there. The old orders have been taken, so the material is still sitting there. And now this has to be digested. If you see volume-wise, Finkl was then, of course, going into other market also in the international markets where the margin is not as exciting maybe as the -- you have this for the oil and gas business. And that is a part of the actual problem. But we have addressed this also with a cost program. The good thing in the U.S. is that you can react very quickly also with personnels, so that has been addressed. So we'll reduce personnel now. There's other measurements also. A lot of support from our stainless steel mills. If you take in DEW in order to produce because, it's a new product and you need to have people that help you for the steelmaking into the rolling that's different to the normal unalloyed steel, but all this is on the way. So next year, it will start as they can produce their own stainless pre-material, which is, of course, then also a cost advantage than buying this pre-material today.
Gentleman, there are no more questions at this time.
So then thank you for taking part in today's conference call and for your interest in SCHMOLZ + BICKENBACH. If you have any further questions or comments after the call, please let us know. We look forward to continuing an intensive dialogue with you. Thank you very much, and goodbye.