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Hello, and welcome to the Melexis Q2 2020 Results Call. My name is Rinkel, and I will be your coordinator for today's event. Please note this conference is being recorded. [Operator Instructions]I will now hand you over to your host, Françoise Chombar, to begin today's conference. Thank you.
Thank you, and welcome dear audience. It's a pleasure for Karen Van Griensven, our CFO; and myself, Françoise Chombar, to welcome you again today to our quarter 2 earnings conference. Let's run you through some top line and financial background first, after which we will be happy to answer any questions you may have.So we exited the second quarter with a touch more than EUR 100 million sales, a decrease of 16% year-on-year and a sequential decrease of 27%. This being said, Melexis was able to post half year 1 2020 sales growth of 1% versus half year 1 2019 on the back of a severe COVID-19 disruption to the demand and supply lines. There are 2 remarkable elements to highlight in this context. The first one relates to automotive, the second to adjacent.As far as automotive is concerned, we estimate that global car sales shrunk by about 24% in the first half year. Worldwide car production has most likely fallen about 30%. That leads to the conclusion that Melexis was able to post significant content growth. It is also proof that long term, the secular automotive semiconductor content growth trends remain intact. The short-term industry slowdown does not change our view on the market and its growth potential.The second topic I'd like to focus on in this call is the outperformance of our adjacent products. Amidst all the economic uncertainty in the second quarter, Melexis grew by 19% sequentially and 71% year-on-year in non-automotive markets. If you look at half year 1, that was up 70% year-on-year with several product lines contributing. First, we saw growth for smart drivers, pressure and magnetic sensors for motorcycles, scooters, 3-wheelers. Next to that, our 1-coil fan drivers experienced increased traction in gaming applications. This boost was driven by globally increased consumer interest as a consequence of the lockdown, and it was also spurred by the recent release of the next-generation gaming GPUs. Thirdly, stronger needs of the solar industry raised our current sensor sales. And last but not least, our temperature sensors, as critical components to much of the equipment to overcome COVID-19, continue to be in high demand. The applications range from diagnostics, patient monitoring systems and respiratory devices to a variety of body thermometers. The latter can take the form of classical body ear or forehead thermometers, wearables, or fever screening access control systems.The geographical spread follows the pandemic wave. Asia Pacific continued to rebound strongly over the second quarter, whereas some of our EMEA and American customers grinded to a halt in April, and started to recover slowly but surely over May and June. Today, we confirm the second quarter will have marked the bottom, and we again there to give a guidance for the current quarter of around 10% sequential growth. This being said, customer sentiment and order behavior remain fragile, and visibility remains poor on the back of uncertainties around how the second wave of the pandemic could impact our economy. The silver lining here is that inventories throughout the downstream channel are pretty okay.Going forward, the Melexis values are our best vaccine. We care. Our priority is, in the first place, with the health and safety of our people. Most of our people worldwide have adopted remote working as the new normal. Our test sites are up and running safely at the pace of the customer demand. We remain on the customer side. Our goal is to deliver on our commitments as best we can within the boundaries of what is or will be feasible. The supply chain upstream is on the verge of normalizing, set aside some hiccups here and there. And we always have a plan; bringing solutions through product innovation, making our business thrive despite corona is sure part of that plan.I now hand the stage to Karen, so she can tell you more about our financials.
So good morning, everybody, or good afternoon. Yes. I will start with the financial level, starting with sales for the first -- or the second quarter 2020, where we had EUR 100.4 million, a decrease of 16% compared to the same quarter of the previous year and a decrease of 27% compared to the previous quarter. The Euro-U.S. dollar exchange rate evolution had a positive impact on sales of 1% compared to the same quarter of last year and no impact compared to the previous quarter. The gross result was EUR 38.8 million or 38.7% of sales, a decrease of 22% compared to the same quarter of last year, and a decrease of 31% compared to the previous quarter. R&D expenses were 18.1% of sales. G&A was at 7.1% of sales, and selling was at 3.3% of sales.The operating result was EUR 10.1 million or 10.1% of sales, a decrease of 45% compared to the same quarter of last year, and a decrease of 58% compared to the previous quarter. The net result was EUR 9.7 million or EUR 0.24 per share, a decrease of 38% compared to EUR 15.6 million or EUR 0.39 per share in the second quarter of 2019 and a decrease of 53% compared to the previous quarter.Looking at the first half year 2020, we came out at EUR 238.5 million, an increase of 1% compared to the first half year of 2019. The Euro-U.S. dollar exchange rate evolution had a positive impact on sales of 1% compared to the first half year of 2019. The gross result was EUR 94.8 million or 39.8% of sales, a decrease of 2% compared to the same period last year. R&D expenses were at 16.2% of sales, G&A at 6.3% and selling was at 3% of sales.The operating result was EUR 34.1 million or 14.3% of sales, almost flat compared to EUR 34.2 million in the same half year of 2019. The net result was EUR 30.4 million or EUR 0.75 per share, an increase of 3% compared to EUR 29.5 million or EUR 0.73 per share in the first half year of 2019. Furthermore, the Board of Directors also decided to pay out an interim dividend of EUR 1.3 gross per share. The Melexis shares will start trading ex coupon on October 20, 2020, and record date is at October 21, 2020.The outlook. So Melexis expects sales in the third quarter of 2020 to be around 10% above the level of the second quarter.So I would like to open now the question-and-answer session. So please go ahead, operator.
[Operator Instructions] Our first question comes from the line of Francois from UBS.
My first question was on your Q3 guide of sales, 10% up versus Q2. Could you give us a bit more color on the mix that you see for Q3? When we look at Q2, non-automotive had a very strong growth. So I was wondering if it was still the case for Q3 in your order bookings. And within automotive, what kind of trend should we also look at Q3 and the mix per geography? I mean do you see APAC coming down and maybe the rest going up? Just a bit of clarity on the mix to what Q3 would be great.
Okay. Thank you, Francois. I will answer that one. So the -- to begin with the adjacent markets, as I said many times in the past, adjacent markets are much more fluid than -- and they can change a lot from quarter-to-quarter. But if you look at the absolute number that we've posted in Q2, we believe that, that number can be sustained, though there will be some fluctuations going forward. But all the fundamentals behind that number are sustainable over time. So we believe that Q3 might be more or less the same as in absolute numbers versus Q2. The non-auto also has a higher contribution from our distributors, that needs to be said as well. As far as the automotive is concerned, we see a bit of normalization, although Q2 marked really the bottom there because as I mentioned in the introduction, some of our customers just simply stopped in April and slowly got back into business in May, June. We see a kind of normalization whereby China remains -- or, let's say, Asia Pacific in general, it's not only China, it's in general, Asia Pacific is continuing well. We see little disruption there for now. And from a European and U.S. point of view, we also see normalization. So that's -- it's a combination of both the sustainability of the adjacent markets, on the one hand, and the normalization in automotive that is taking place that combined give a guidance of 10%.And for automotive, in fact, our direct customers also suffered quite a bit in Q2. And they normalize again a bit more in the third quarter. Mix per geography, yes, in fact, I've said it. So Asia Pacific continues. Europe, U.S. starting to get back to normal. And the question is, of course, we have a second wave a bit everywhere. The U.S. never got out of the first wave yet. So how that will affect the economy is still a question. But of course, we're already almost at the end of July. Our lead times are such that we at least see some or we have a better feel for what is happening than we had like 3 months ago, where we could not give a guidance. But of course, if there is a massive lockdown again, yes, and customers start pushing out, yes, that we cannot know today. But today, we don't have an indication. So I hope that answers all of your questions, Francois?
That's very clear, Françoise. I have another one, if I may, on your gross margin and maybe more for Karen. Your gross margin seems to held up quite strongly. So I was wondering, did you have any underutilization charges this quarter? And if yes, by how much?
Actually, the positive effect is twofold. On the one hand, we have a better product mix of what Françoise has already explained. We have stronger sales in Asia, stronger sales. It's to some extent, stronger sales in distribution there as well with higher margins and a smaller share of, yes, our big automotive customers all over. How that will evolve? It's difficult to predict. It will -- yes, Françoise already gave a little bit of a hint how we think it will evolve, but we don't know exactly what to expect there for the next quarter. Next to that, we also have a reduction in the -- in our fixed cost in the second quarter of -- in the range of a good EUR 1 million. To some extent, that is linked to unemployment. Technical unemployment that is covered by the government, particularly in Belgium, but this will be much reduced in the third quarter. So that is not fully sustainable. Yes. And the 2 combined make it that our gross margin was at a relative high level in the second quarter. But both will probably as much the product mix as the fixed cost basis will be rather negatively impact moving forward throughout the year.
But did you have underutilization charges? Because you mentioned last quarter, it was 300 basis points impact negative, what about this quarter?
It will be in the same -- it's a little bit higher than last. It's higher than last quarter, but not so much, thanks to the reduction in costs that we had. So it's likely higher, but not much higher.
Okay. And one thing I wanted to follow-up, and it will be my last question, on your inventory because when we look at your own inventory, it increased again significantly. I mean it's an all-time high. It's not a small number. It's -- you increased by 14% quarter-on-quarter your inventory, which was already high. You are now on all-time high inventories. Now I totally understand your point of having high inventories in this market to capture if there is any recovery. But I'm just questioning why you increase further when it was already high? Just trying to understand this aspect, especially if we go in the second wave, like you mentioned, it could be possible, or even in inventory correction within the supply chain, which is also possible. I just wanted to understand why decided to increase further.
It's as we had mentioned in -- after the Q1 and that we did expect Q2 to still increase in inventory level, as we saw orders -- customer orders really being pushed out to a very big extent. And yes, so it was not fully matched in the deliveries of wafers that we still had ongoing. Moving forward though, we do expect our inventory levels, as business is gradually picking up, to also further reduce. So it's in line as we had expected it, and we more or less had planned it as well.
Okay. And is inventory going to reduce in the next few quarters?
That is indeed the expectation.
Yes. Okay. And if it goes down the inventory, what kind of impact should we expect for the underutilization charges in the next few quarters on the back of this lower inventory?
What do we need to expect for -- which charges?
Underutilization charges for your gross margin? I mean should we expect this to increase?
Yes, we -- the underutilization will -- well, it's something we manage to a big extent with unemployment, if that were the case. So at least for the workforce, we can manage it within technical unemployment. For the fixed assets, obviously, there might be some decrease in utilization. That is correct. But it depends a lot on how much sales we -- how much -- what the sales level will be -- in the next quarters to be.
We have a next question from the line of Janardan Menon from Liberum,
I just wanted to dig a bit deeper into the adjacent markets and what your strategy there would be going forward? In the past, you've always said that there's a lot of opportunity in the automotive market. And so you were not sort of actively pursuing the adjacent markets to the extent of redesigning products or developing specific sales and distribution channels for them, et cetera. Is there any change in that? Do you see this as an inflection point? And if so, what steps would you take? Would you be specifically designing products going forward increasingly for these markets and trying to increase your market share there as well as on the sales and distribution side? And I have a few follow-ups, please.
Okay. Yes. So well, let me first start by saying there are still a lot of opportunities in automotive, that's for sure, so we continue to see that as our prime market. However, the adjacent strategy, I mean, it's a couple of years ago already that we changed that strategy in the sense that after probing with the products that we had on hand, we definitely changed gear into making products specifically for adjacent markets. Because there are different requirements. For example, the way they talk to the application is different than in automotive. In automotive, you have like automotive safety requirements, the so-called ASIL, automotive safety integrity levels, that take a lot of work during development and take a lot of die size as well for the chip. You don't need that in adjacent markets. You need other things in adjacent markets, like higher ESD levels, et cetera. Now it's -- in fact, the strategy is for both adjacent and automotive, we are looking for disruptive world first innovations based on the technologies that we master. And as I mentioned already a couple of times in the past, temperature is one of those technologies that we master very well and where we made, developed products specifically for adjacent markets, like these thermometers, like the fever monitoring that I talked about. And we see now that some of the health and well-being applications, they seem to profit or benefit a lot from having a temperature sensor. This is something we discovered over time. For example, patient monitoring systems. When you look at the pandemic, and the fact that the first wave, and hopefully not the second wave, but at least we've seen it in the first wave, the health system could get overwhelmed. And then this does change the mindset of some of the people in our health system saying, "Well, we need to monitor patients while they're at home to avoid that they come to the hospital too soon, but also to avoid that they come to the hospital too late. And we can use the patient monitoring system as well to let them go from hospital much sooner than we would now." Because in many cases, whether it's after an operation or after they've been thoroughly ill with, for example, COVID-19, they keep patients in the hospital just for observation reasons. But in fact, that can be taken over by technology.And I can tell you about it because it was already in the press, and that's one that we are really excited about is the cooperation with the Belgian startup called Byteflies, who have a Sensor Dot that a patient can indeed stick on his or her breast and that measures heart rate, temperature, et cetera. And you see that this is being adopted much more willingly by the health system and certainly, in the first place, by the hospitals who do not want to get overwhelmed. So the mindset has changed quite a bit. But even before the pandemic, our strategy has been indeed to look at the technologies we master, look at the market and see where there is a match for bringing really disruptive innovation. And the Sensor Dot of Byteflies could probably not have taken our previous generation, but the current generation, where last year, we got even 2 innovation awards for the, current innovation is small enough and have medical accuracy. So there's nothing that comes that is as small as ours and has as good medical accuracy as ours on the market today. So that opens quite a bit of new applications, and we're pretty excited about that thing. But it's an opportunity that we could take but it's not something that just dropped out of the sky. It's something that, at least, we've been busy stimulating over the past couple of years because it's quite a long -- it has had quite a long development cycle because it's a very difficult product to make or to develop, let's say.
Understood. And on the automotive side, you've said order behavior and customer sentiment is fragile, and visibility is poor. Can you just expand a little bit on what exactly you mean by that? How much visibility do you have right now? What are not just what you have is firm orders, but what our automotive customer forecasts looking like for a more extended period towards the end of the year and into the early part of next year at this point?
Yes. Well, customers are still a bit hesitant. And what we see is a bit erratic in the sense that some customers might push out heavily, and 2 weeks after they pull in. So it's -- that is why it's still a bit hard to understand where that is going. When we ask for forecasts, well, some say your guess is good as mine. But in general, they do have to plan their production levels as well. Therefore, we see a bit of normalization as I said in the introduction. And therefore, we feel, again, a bit more able to forecast or at least give a guidance on the current quarter. It's hard to predict Q4, it's even harder to predict 2021. But what we do see is that there is a recovery ahead of us. How much that recovery will be, that still remains to be seen.
Okay. And just my last question is, one trend that's coming through, especially in Europe, but also to a certain extent in China, is an improvement actually in Europe, very strong growth in the EV side, both EV and plug-in hybrids even through this crisis. I'm just wondering whether -- how you are seeing the benefit or the impact of that on your sales, is that in the past you've talked about how you are -- have design wins in EVs on current sensors and some of the comfort, safety, body applications, et cetera. Any qualitative comment on how you see the impact of this sort of ongoing transition in Europe towards more EVs and perhaps less on the gasoline side affecting your sales specifically.
Well, I don't think that China had such a surge in EVs. They rather had a downward trend because they scrapped the subsidy schemes. In Europe, we do see indeed a surge. And typically, the EVs that we have today I think that might change going forward longer term, but the EVs that we see today are rather high-end vehicles, and high-end vehicles tend to have quite a bit of semiconductor on board as well. So for us, that looks like a good trend going forward. At the same time, it's not only EVs, it's also hybrids that do well. So in that sense, for us, the -- whether it's EV or something else, somehow -- and it will change the product mix somewhat, but not enormously, I would say. In our Investor Relations presentation, which is on the website, you will find what we think will happen in the -- but, okay, there, it's -- our forecast is also as good as yours. But we believe that with that, we can steer our business in the right direction. So yes, EVs -- it's good news in general for the climate, of course. What we see is that with air travel and public transport travel being not so advisable, I think that might have a good impact or a good influence, let's say, on automotive sales going forward certainly in the midterm. In the longer term, climate concerns will definitely come back, but not in the midterm. Is that what -- is that an answer to your question, Janardan?
Yes, that's great.
[Operator Instructions] We have our next question from the line of Jeff Osborne from Cowen and Company.
A couple of questions on my end. You mentioned, Françoise, the increased content, additional sensors per vehicle. I think last year, you averaged 11. Do you have any sense where that is as you reflect on the number of sensors and switches shipped in the quarter relative to vehicle production?
Well, we only make that calculation once a year because then we know how many chips we sold in that year and how many cars were produced. I think we take the production, yes, we produced in that year. So I don't have that number for you right now. And -- but I'll have that in February next year.
All right. It sounds like a plan. You referenced solar. Is that in the inverter or the combiner box on the back of the panel? Where are you seeing shipments into the solar industry?
It's indeed in inverters. Back panels, I am not completely sure. It's definitely in the inverter and in motor controls. It's a bit -- it's also in industrial server markets. But for solar, I think it's mainly inverter and also some electric motor control. Back panel, I am not sure if that's the -- if we mean the same thing here.
Okay. That's helpful. And the last question I had, had is just on social media, Melexis seems to be stepping up your advertising of your third-generation time-of-flight system on LinkedIn and other mediums. I didn't know if you're seeing any momentum in orders or bookings for driver monitoring or other applications for that solution?
Well, what we're seeing in that area is that there is a lot of interest. Customers continue to work with us on developments in automotive, mainly indeed in interior for interior awareness and for driver monitoring. What we do see is that because of the -- yes, pandemic, the technical unemployment, et cetera, is that some definitely European OEMs have delayed a bit their work because, yes, their engineers are simply not available. They need to stay at home in many cases. But they do continue. So we have seen no reduced interest, rather a continued interest. But it was already pretty okay before that. So yes, we are continuing that. We do see that the time of flight, the third-generation that we bring on the market is really, really satisfying customer requirements in terms of sunlight rejection, in terms of accuracy of performance. And I hope that we will be able to bring some real design wins, fixed design wins going forward. It will -- if you're looking at when does it go into production, typically such complex systems, they take quite some time. So it is -- it will not move the needle in 2020 or in 2021. It will -- you will see that starting maybe '22, '23. So the SOPs for such are a bit later.
Maybe to that point, some of the Tier 1s that have reported have talked about reduced bidding activity from the OEMs themselves, but certainly seeing a recovery in the market that you referenced. Are you seeing a disconnect between new vehicle design because of COVID and qualifications and labs relative to just the broader recovery of the automotive market as it relates to some of these new programs, whether it's EVs, ADAS or in-cabin gesture control or driver monitoring?
I would say from our point of view, we do see some projects being delayed. We've seen some projects being canceled. We didn't see a big delay or cancellation in the electrification area, a little bit more delay in, let's say, ADAS related projects.
We have our last question from the line of Marc Hesselink from ING.
My first question would be on the inventories. I've seen at some other companies that they also positively benefit from the fact that clients wanted to stock up because of the uncertainties of COVID-19. And in the introduction, you said that you believe that inventories are still low. So just to be 100% insure, you didn't see that kind of behavior in your sector.
Which kind of behavior? Could you repeat that, please, Marc?
Yes, yes. So people stocking up inventories because they were afraid that because of COVID-19 supply chains might be disrupted and just to have some extra...
Yes. Okay. In that sense. No, we did not see that necessarily. I think that what our customers did is make sure that they had all the components readily available before planning their production. And when they didn't, then they tended to ask us to push out some of the deliveries. That's what we've seen in Q2. Stocking up, I would say, not really, and that is also a bit of a concern to us that because of the financial impact on working capital, that customers tend to shift the stock and don't take the stock that they need, which might lead afterwards to, well, a bit of a run on the bank, let's say. And that's why we're cautious also and really dig deep. When customers ask us to push out, we really dig deep, not all of them, but let's say, the ones that really matter in terms of volume, and we need to understand why they push out. We don't -- because it is a concern that once the economy starts moving again, that suddenly then everybody starts ordering on a very short notice, and that would be difficult to follow.
Okay. And second question is on your comment that you made that the EV push out in China because of lower subsidies. What's the impact for you? Because if I'm correct, you had a bit stronger position in the more traditional or the hybrid front. So is that a positive for you?
Well, I would not say that we have -- that we don't have a strong position in battery EVs, I think we do. It's just that the product mix is quite different between one and the other. Again, whatever type of powertrain is being used, I think there is Melexis inside. Everything that has to do with body, chassis safety is the same, no matter which powertrain it is. And when you look at the projections that we made in our PowerPoint -- Investor Relations PowerPoint on the website, you will see that the potential is more in body, chassis, safety and that, again, is independent from powertrain.
Okay. Clear. And then a final question. You talked about the impact of the technical unemployment on the growth. Can you also say something on the OpEx cost going forward and the effect of this?
In the OpEx, we have, in total, around good EUR 3 million in OpEx less than the previous quarter. This is partially external services that were reduced, but also technical employment that is impacting there. So some is sustainable, some is not. So probably the next quarters to come, we will see a further increase, but not the levels that we had in Q1.
We have a next question from the line of Varun Rajwanshi from JPMorgan.
I have a couple of questions. And I do apologize if these questions were answered before. I missed your opening remarks. My first question is on the gross margin. You reported 38.7% gross margin in 2Q, which is a little higher than what I was expecting. So can you maybe clarify if there were any one-off components within your 2Q gross margin? And then how should we think about your gross margin evolution going into second half of this year? Clearly, there will be some operating leverage driven by your sales improvement. So maybe you can help provide some color on that. And then a slightly midterm question, when can we expect Melexis to achieve this mid-to-high sort of -- or let's say mid-40s percentage gross margin level going into '21 or '22 because you have your new Sofia testing capacity, which will start ramping from early next year as well, which will be a headwind for your gross margin. So some color on gross margin, please?
So going first to Q2. So there was indeed positive impact. Obviously, there is underutilization as the sales went down more than in Q1, but it was somehow limited by also reduction in costs, of which temporary unemployment is also an important one, but also some costs go down when sales go down. Next to that, we had a more favorable product mix that also helped to keep margin relatively high compared to Q1. Moving forward, that is very difficult to say. Yes, if we would use all, full utilization will definitely increase margins, by, yes, certainly more than 3%. But when that will happen is extremely difficult to say today. Also the product mix, Q2 is a relative disruptive quarter. Looking at the proportion of adjacent and automotive sales, how that will further evolve, it's also very difficult to know. So when sales go up, there will be gradual improvement, but how fast that will be, that is very difficult to predict.
Okay. Understood. The second question is on the sustainability of the performance seen in adjacent markets. Clearly, a great job on executing in that market. My question is how sustainable is this demand? Because as I understand, a big chunk of this demand is distributor driven, and the order lead times are typically shorter for the adjacent markets. So I'm just trying to understand how do you see evolution in the adjacent markets going forward? I mean it's grown 46% year-on-year in 2Q. Should we expect a similar cadence for the rest of the year and into '21? Some thoughts on that.
Okay. So adjacent indeed has grown quite a bit versus the previous year. Now when you look at the absolute figure, around EUR 14 million, EUR 15 million, that -- the adjacent will always be much more volatile from quarter-to-quarter than automotive. We do believe that the fundamentals of that -- of the different businesses are sustainable. On the one hand, we have several product lines that are contributing, so it's not just one in particular. And it's also different markets that are behind it. So we have, for example -- and indeed, if you missed the introduction, partly, it is already in the press release, of course. But we have -- on the one hand, we see an increased demand, in general, because of new applications that come on board, direct injection for example, the Bharat 6 norm in India has driven quite a bit of more content growth for scooters and motorcycles. And that helps us in delivering more smart drivers, more pressure sensors, more magnetic sensors. So that's one item. It's also in e-bikes in general, but like Q2 was mainly in the area of motorcycles.Then we have -- already for quite a bit of time, we're well-known in the industry for fan drivers because of our high reliability, high quality fan drivers. And what we've seen in -- during lockdown is that there was a lot of interest in gaming. There was also recently a release of a next-generation gaming GPUs, which drove, in fact, much more fan drivers. But these fan driver -- I mean, these trends are also sustainable. Though it might have seen a bit of a surge in Q2, we do see it continuing. Then we also had current sensors that -- where there was more traction from the solar industry. But that solar industry is also quite sustainable. There were some ups and downs over the past year, mainly because of China because of also subsidy schemes that have changed. And then fourth element is temperature sensing, where we see that it has changed the mindset of many in the health and well-being areas where temperature -- measuring temperatures continuously or measuring temperature when you enter a building or when you are using the subway or whatever, that is also quite a sustainable area of business that we see. So in that sense, we do believe that it is sustainable, but at the same time, it will be more volatile from quarter-to-quarter. In Q3, we see it more or less at the same absolute level. But there, you are right, the order behavior of customers is much more -- is shorter than in automotive. So that's why it's also a bit more erratic. But we do see it sustainable going forward, yes.
One final question from my side. In terms of recovery profile across different geographies, I mean, if I look at your sales by different regions, APAC is still up close to 18% year-on-year, whereas Europe and North America are down 48% to 50%. How do you see the recovery profile playing out across Europe and North America? Based on the recent order trends that you are seeing exiting June in the first few weeks of July, do you expect these regions to sort of be flat on a year-on-year basis over the next few quarters? Just want to get a sense of how we should expect the recovery profile playing out over the next few quarters?
Well, we only gave you guidance for Q3 because we still believe that it's difficult to project Q4. We see overall that Asia Pacific is continuing its recovery. We don't see a downward trend in that area. So that continues to do well. And we see a normalization after a very, very difficult Q2. We see normalization in Europe and in the Americas.
We currently have no more questions in the queue, so I will hand it back to yourself for any closing remarks.
Well, thank you all. Thank you for your attendance. And until our next earnings conference on October 28, please do keep safe and stay healthy out there. Thank you, and goodbye.
Thank you for joining today's call. You may now disconnect your lines.