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Welcome to the conference call of Krones. We want to present to you today to figure for the first 9 months 2021. As the presentation held by Christoph Klenk and Norbert Broger, you have the possibility to ask questions. [Operator Instructions] So let's start with the presentation.I will hand over to Mr. Klenk. Christoph, the floor is yours.
Olaf, thank you. A warm welcome, ladies and gentlemen, to the Krones Q3 call. We are very happy to have you here today. And I have to say even more happy than the recovery after the COVID-19 crisis is going ahead, and we see very substantial and sustainable recovery. However, I have to say in the beginning, Krones is not over in COVID-19, but it seems that our customers and, in particular, the consumers are used to the new normal, and this is supporting the recovery we see right now. And I would say we jump immediately into the presentation that will give you an overview of where we are.So Olaf, do you take it forward? Okay. Perfect. So you see a very strong Q3 for us. And if you look at the numbers after 9 months, you see that the order intake was very strong and with a plus of 38.8%, up to EUR 3.2 billion. This is very remarkable and beyond what we have expected, of course, we will explain that later on. And as I said already, the market development is very sustainable.So if you look to the revenues at EUR 2.6 billion at the moment and 8% roughly up compared to the last year figures. So we even see there I would say, offset in terms of the revenue recovery, but it's all going in the right direction. And the revenue growth in the third quarter was 23% is pretty strong. Profitability significantly improved as well in the 9 months, so the EBITDA went up by 44%, and the margin is at 8%. Norbert will go deeper into that later on. And even the free cash flow has developed very nicely in the right direction and is EUR 166 million higher than last year and was plus EUR 108 million. So we are confident to manage the year to match our forecast for 2021 with the numbers we have just given and that's the growth of the 7% to 9%, and EBITDA margin of 7% to 8%. So that's in a nutshell where we are.Here, you see, again, the numbers repeated very important ones, which we see as the key figures for today's presentation. And I will continue with the order intake, and Norbert will then hand over. So again, we see a very nice growth. And in particular, if you see the comparison with 2019, which is a -- from our point of view, the more important comparison rather than 2020, then you see that the order intake in all 3 quarters is actually on pre-crisis level and a bit beyond that. So that's, I would say, important message, and we see that things for the rest of the year is going in the right direction. So we keep pass on the order intake. And you might now ask, why it's so different than we predicted in the beginning and why is the order intake so high? I would say the retailer business is still very strong and growing, which is the one which survives the COVID-19 crisis the best, but hotel bars and restaurants are recovering strongly. So that's, in a nutshell in combination, that's giving the boost to our order intake.And when you would ask us because we said last year that the order intake might be a bit lower. This has to do with, again -- and we said it already in Q2 that the key accounts have actually less invested than they had done in 2019 and they stick very much with the budgets they have. At the moment, they are increasing with their budgets that they can follow. But we see, in particular, the private-owned companies and the private equity-driven companies being the aggressive one and investing. So that's in a nutshell up to here for order intake, and I hand over this to Norbert. Norbert, please.
Yes. Thank you, Christoph, and also a warm welcome to all participants today in our digital conference call. Our revenue development lags behind order intake, which is quite normal. You know that from the past. Year-to-date, almost 8% above last year. But when we look at the pre-COVID situation, 2019, then we are still about 8% behind. However, what's important is when you look quarter-by-quarter, first quarter, we were lower than last year; second quarter, already above 12% higher than last year; and now the third quarter, 23% more revenues than last year same quarter.We have a book-to-bill ratio year-to-date of 1.2, which is quite good. And as Christoph mentioned before, you see the difference in the increase of order backlog, the highest order backlog there is of more than EUR 1.7 billion. And at the same time, this goes also together with the longer lead times, our customers know that, same with our competitors. For example, in normal lead times for us from order intake to ex-works is around 3 to 5 months, and it has more or less doubled to 8 to 12 months.When we look at the different regions, very strong, and you see always the share of the region compared to the total sales of the group. Very strong. North America, 21.2% share in the first 9 months of total revenues of Krones compared to 18.6% and 17.5% the period before. Europe also recovering above 31% again from 28.4% last year. Eastern Europe more or less same level and also China improved compared to last year. On the other hand, you see South America still lagging behind. Middle East, Africa with 12.9%, still below last year and then this is here prime -- or exclusively in Africa. The African countries, Middle East itself is running strong and Asia Pacific, still below the shares in the past. And those are the regions, we all know that are impacted most and still are impacted by this COVID situation, Asia Pacific, Africa and South America.I was personally traveling last week. It was a first overseas since a long time to U.S. and Brazil. And the feedback I got there from firsthand from our sales organization is that in both regions, the markets are still strong, also perceived for the future to come for the next quarters. They don't see any slowdown, neither in North America, nor in South America.When we look at the results on the EBITDA level, year-to-date, we are at 8% margin versus 6% last year and 5.7% before Corona. The last quarter was remarkably strong for Q3. Those of you who have followed Krones for a longer period of time, you are probably aware that usually Q1 and Q4 are the stronger ones in terms of profitability and sales. So the 8.1% for Q3 is a very good result for us at this point of time, which means 100% -- 160% more compared to Q3 last year, and 58% more compared to Q3 2019. And so I think this shows a clear recovery that we are on the right way, on the right track to move forward and reach our own internal targets.And we increased our guideline beginning of August to 7% to 8% increase in sales, sorry, margin -- EBITDA margin, and we are quite confident that we will be in the upper corridor of this guidance at year-end. A similar deviation in EBT after 9 months, 4.5% year-to-date. Also a very strong increase compared to last year at this point of time and also a strong increase compared to pre-Corona 2019. However, we all know that 2019 was not a very good year and is not the benchmark for us. But it clearly shows that we are recovering very strong and we see that we are on the right track.So when we look at our 2 major cost blocks, personnel costs and material costs, you see an increase in personnel costs compared to last year. Last year, we had short time in many areas and so on. We are out of that this year, but the ratio compared to sales dropped from 34.1% to 32.6%. On the other hand, material ratio, 49.7%, a slight increase compared to last year. This reflects, on the one hand side that material prices has been increased almost everywhere, and it's still ongoing, as we all know, but also that we increased temporary labor, which is part of material cost in the P&L in order to work off the heavy workload we have.On Slide #10, you see the headcount development of Krones'. So end of September, we are at 16,180, which is almost 600 less than 9 months ago at year-end and almost 1,200 less than end of 2019, which means roughly minus 7% compared to 2019, whereas Germany reduced by 9% and outside Germany, about 3%. And our restructuring program that we started in 2019 and then, of course, increased last year in the pandemic situation. This program is finished now. And I told you already, we are hiring temporary labor to cover the higher work out here. On the other hand, we are hiring in certain specific areas, especially in software, in automation and in some engineering areas.Okay. The next slide #11, is a development of working capital. Year-to-date, after 9 months, 26.2% of sales. This is obviously lower than last year and slightly before 2019. What helps, of course, is the prepayments that we are receiving now for the orders that had the biggest positive impact. You see on the right side, the development in percentage of sales. Receivables are increasing a little bit, and it has to do something with the market environment with projects we took last year, where we helped customers in financing. Payables are increasing a little bit due to our supply chain financing program and inventory is increasing on the one hand side because we have more shop load, and on the other hand, because we're trying to put in the safety stock wherever we have a chance to do so.Now let's have a short look on our 2 segments that we report product selling and decoration, the main segment. From the revenue perspective, almost 6% increase compared to last year at this point of time, but still 8.4% below before Corona time in 2019. On the positive side, profitability is increasing step-by-step from 7% EBITDA 2019 to 8.3% last year and 9.1% this year. The second segment, average production process technology. Here, you see a strong increase in revenue of about 20% from EUR 355 million last year to EUR 427 million this year, still around 10% below pre-Corona, a strong increase and this comes primarily from our intralogistics operation, especially from the Italian one. Because as you might remember, Northern Italy was in a complete shutdown beginning of last year that's why this suffered a lot last year in revenue. Now this year, it's almost back on normal, not quite. And you see the recovery, profitability from minus 26.1% last year. Of course, this was an exceptional negative year, but also from the minus 5.4% before Corona year-to-date to plus 2.4%.And we -- then we go a little bit deeper in this, let's say segment where we have a lot of focus because the profitability has been very low in the past. One part of that segment is process technology. And here, you see more or less constant sales compared to last year, but a significant improvement in profitability to currently plus 2.3%, which shows that all the actions we did in process technology in Germany and North America show further results. You might also remember that we carved out one big portion, the peer product in Germany into a newly entity where we have now much better transparency. And they also can -- they have more room and freedom to do the internal process is the way they need it. Also the IT system the way they need it.On the intralogistics side, as I mentioned already, a strong increase in revenues, by the way, also a strong increase in order intake going forward and a significant profit improvement year-to-date to 2.5%, which is not sufficient. We know that, but we also know that what we have to do to make a real good profit on the segment, and we will tell you more about that in the Capital Markets Day on November 16.Now Slide #14, the financial situation. That's not new for you. Krones is a very solid finance company it has ever been, and this will not change. We have almost EUR 1.3 billion. Liquidity reserve around EUR 290 million in cash and more than EUR 1 billion in the credit lines and also EUR 1.3 billion in equity. And last but not least, for this quarter looking at the free cash flow, and Christoph mentioned it already at the beginning, we have a positive free cash flow of EUR 108 million year-to-date, which is an improvement of around EUR 165 million compared to the same period last year, and it's primarily coming out of 3 lines. One is, of course, a significantly better EBT, almost EUR 100 million. The other one is the change in working capital, which is also around EUR 19 million positive on free cash flow from minus EUR 85 million to plus EUR 7 million. And the other one is a reduction in liabilities. That's a negative one of around EUR 30 million just because we reduced our tax liabilities.So far, Q3 and [indiscernible] Altera. Now our outlook unchanged, revenue is 7% to 9%. Now as you asked me today, this was beginning of August. Today, I would say, 9%, pretty sure. Maybe it will become 10%, but it's definitely in the upper range of the guideline. EBITDA margin, similar. We are at 8%, and we also expect Q4 to have 8% margin, so this will be 8 time something probably and working capital between 26% and 27%, closer to 26%.Takeaways, record order intake and order backlog, which is a good pace for next year. Revenue is recovering and capacity utilization is improving. We had a strong improvement in profitability due to our efficiency, programs and also due to a good and strong and continuing service business, free cash flow generation is very good. We have, of course, supply chain challenges like everyone in the industry and -- but we are still able to manage this and the guidance that I just said for this year is confirmed.So that concludes my presentation, and Christoph and myself are available for any questions you might have. Thank you very much.
[Operator Instructions] So the first questions coming from Sven Weier, UBS.
We don't hear?
Can you hear me now?
Yes. Just now we can hear you.
Sorry, the system still had me muted. The first one is on the subject of the order intake. And I guess you also sounded relatively happy about the coming quarter. I was just wondering, I mean, your record order intake was in 2019 with almost EUR 4.1 billion. I guess, to get there, you would have to have another, let's say, EUR 900 million in Q4, which would actually be the lowest order intake this year. So should we assume you reach another record here on the order intake? And what is your view into 2022? I mean, how much of this has been really at the expense of next year already? On the other hand, you said the big accounts haven't invested yet. You've got drinktec next year. So I would suspect that maybe next year is not going to be a bad order intake here either. So that's the first one.
Okay. I would say the Q4, we see still positive. I would say we have a queue of 6 to 8 weeks for those projects being really finished and nailed down and where we have -- and at the end of the APOs. So we see that positive. On the other side, we have to say we are very selective and careful. Selective on one side because of pricing. I think we touched that later on, certainly. But the essential thing for us is that in pricing, we reflect already material cost increases for next year and that our gross margins are the way that we are able to achieve the profitability targets for next year. So that's one limitation. And second, of course, with -- let me say, the very high order intake we had and the extended delivery times, that for some customers, the delivery time might be a bit of a hurdle because we are, at the moment, booked up to 2 line ex-works. And that means the customer goes in operation August, September by the earliest. So that's, let me say, the second factor why we are a bit careful. But all in all, we see the Q4 very positive. And I have to say, even in intralogistics, which we should not forget because the mix has changed a bit in terms of order intake, looks very promising, and we have good projects even processing on hand, which are going to be materialized in order intake in Q4. So let me say, what we are really then beyond 2019 and the record year before, let's see but I would say we are certainly in the range, and Norbert said it earlier, I would say we are well set for that, that we can go close to that or even beyond. To the question, is that going to the credit of 2022? I would put it this way. I mean, we have a visibility of those being out and the possibility to check whether they are substantial and customers are serious on that.I would say, between 4 and 6 months, and this looks still very good. We do not see that there is a decline. And I would say, except from the point that we do all not know how the supply chain issues are developing all over. And then in case they stay as they are, I would say, it's a good fundament what we see for next year. And we still believe that things are going on a sustainable, stable way forward. I would put it this way. So order intake for next year, we do not believe at the moment is going -- the current one is not going to the credit of 2022, and we see at least for the first 6 months, 2022 positive. Does that answer your question, Mr. Weier?
Yes, absolutely. Thank you very much, Mr. Klenk. And again, it's probably a drinktec year, so the second half might be quite interesting then.
Can I do one remark on drinktec, Mr. Weier? I don't think we have it with those big shows. I mean, I would say the '19 crisis has certainly, I would say, from our point of view, put exhibitions on a lower level than they have been in the past. And I would not expect, even in case it's an important show that this would generate a lot of tailwind. I would say it's more important, let me say, the general environment, and I wouldn't -- at least from my perspective, any card on the drinktec at the moment, again, because I don't believe it has that importance anymore as in the past.
Yes. Fair enough. Any major innovations or is that also more smooth in terms of how you bring these things to the market and don't wait for such a show anymore?
Definitely. And we don't wait. Why? Because actually, drinktec was scheduled for 2021 and a lot of innovations have been, let me say, brought to that point and was scheduled for 2021. However, on the other side, we do not develop any more in specific to a show because I would say it's more to the need of our customers and as fast as possible, of course. So even innovations are not timed to a show at all.
Understood. Thank you. And the other question I had just was on the delivery of the backlog. I mean, if I understood you correctly, all of the backlog you have currently is due for delivery next year. I mean, would you still expect that to be the case when you end the year that there would be some orders in the backlog that actually go out to 2023 already? Or is that still not the plan?
There are some orders definitely which are going to 2023, but they are not, let me say, in the core business of Krones, most of those going into 2023 are either processing even more into logistics. And there are only some very few projects in bottling and packaging and they are related, again, maybe to bigger projects in processing that they are going to 2023. At the moment, the majority is to be shipped in 2022. And I would calculate 95% to 96%, most probably.
Thank you for that color. And finally, just, I mean, you said it already on pricing. I think last time we spoke, you already mentioned that Sidel has followed your pricing initiative. What about KSS? And yes, just maybe the latest on pricing discipline in the industry and how customers are following it?
Yes. Again, Sidel will follow and we see that clearly in the market from KSS, we have no indication, let me say, on a public base like we have from Sidel. We have from some Italian competitors that was really interesting that they did follow. I haven't seen them in my career before but Italian competitors announced a small price increases, so that's very good. I would assume that even KSS is handling pricing carefully in the market. That's what we see at least. And that the price discipline all over is increasing as everybody is in the same need of compensating for the high material cost.
So we got the next one that's Daniel Gleim from Stifel.
Actually 3 of them. I would start with the price increases that you just touched upon. Are there any additional price increases in the making for the coming months?
Of course, we reflect that. And I would say, we are looking very carefully on our gross margins. And I would say with the predictions we have material cost increases and forecast for next year, we are considering that as well. Yes. It's not done yet, but we are considering and we would act accordingly if needed. And I would say, with the things we see, that's not far away. But you see that then in, let me say, a public statement, whether we are increasing our pricing. This is another question mark, that at least we will act accordingly internally in terms of how we set our quotes.
And maybe if I can add something, Mr. Gleim. When we calculate new projects and now, as I said before, we have longer lead times, we anticipate price development in our free cash relation. So when we make a prospect now and we know the delivery time at the end of next year, then, of course, the effects are in the expected material cost increases in our project costs, which automatically means a price increase. And as Christoph said, rather we announced one officially or not, that's a different page but in reality, this is the effect that we see in the order backlog projects.
Very clear. You spoke about the order intake momentum into the next year. May I ask, do I understand correctly that you expect the mix of customer type to change in H1 22, more specifically, more larger customers that now have a new budget in our ordering and less smaller customers that already ordered in this fiscal? Or is a large customer ordering even incremental to the current momentum? Maybe you can put a little bit more color around your thinking?
Yes. First of all, the assumption that the bigger customers, and let me call it, the closed ones and the key accounts, which usually were very strong and disciplined on budgets because actually, that was the limitation. They said their budgets in late 2019 -- sorry, late 2020 for 2021, and that's the biggest limitation they have and that's pretty much to that. We do expect for those that they are going up in the budgets for 2022 and that we see a bigger contribution from those. Not necessarily we see declining, let me say, the private ones and the smaller ones because I would say their appetite and the change in the market we see is still there. And when we see the quotes going out and how serious they are on certain projects for next year and as I said, we have, let me say, a visibility of most probably 6 to 8 months in how serious the projects are. I would say that this comes pretty much together in a combination, and we don't see a decline of the private or not or the smaller ones. So the bigger ones give that contribution, and this is why we believe that order intake might sustainable before next year as well.
Very good. The last question is on the upcoming Investor Day or Capital Markets Day and would you mind sharing the key focal points with us? And specifically, should we expect new guard rails for the coming years, so an update of the sales development and the margins that you have given previously, which I understand would to serve an update.
Yes. Norbert, would you answer that question?
Yes. I mean, we have, of course, the update of our business and segments. What we are doing, we will be more precise about sustainability, what we are doing, what our customers are expecting, also about digitalization initiatives and the business we are planning to create with it. And of course, we will also discuss our midterm targets, and we want to be more precise and also get a commitment for 2025 in terms of sales, profitability and return on capital implied.
[Operator Instructions] I see now Mr. Stefan Augustin.
Just 2 housekeeping left. Could you update us on Hungary and, let's say, possible, with more or less the possible savings that you could foresee for 2022 on the cost side here? And is there any larger chunk on cash out for the -- from the restructuring still left for Q4?
But I'm doing that one on Hungary, and you are taking second one. Mr. Augustin, Hungary, I would say, is proceeding, now in the meantime, let me say, in a way that we are increasing production hours month by month. We are facing now different problems in Hungary, and those are the same as we face them in Germany. That's mainly based on the supply chain issues we had there because we build out a supplier base since we didn't want to do anything ourselves in Hungary. So that at the moment, a bit of a momentum. But I would say, in the same scale as we have it for the German plants, but things are going well ahead. And I would say, at the end of the year, we most probably heading them close the planned production outputs we have. It might take a bit longer because of what I said, the supply chain issues we had. But Hungary is, let me say, I wouldn't say out of the focus, but certainly out of the focus in the sense, it's something fierce, which we have to fix and go on. Now it's more continuous improvement program and get things from Germany over to Hungary. And I would say, if you look to the, let's say, capacity hours we are using there and we are doing there is around 70% of the overall capacity of the plant. So I would say that that gives you a bit of an impression where we are. And with any production are being added, there is contribution to the margin and I would say, with 2022, we see certainly some improvements, but this will be factored in into our overall profitability.
Okay. Then the other question was about future cash out of the restructuring programs, correct? So year-to-date, we had roughly around EUR 30 million in the first 9 months, cash out and I expect another EUR 10 million for Q4. And then we have around EUR 15 million less 1-5 of which about EUR 10 million will be cash out next year and the remaining EUR 5 million in 2023 and some even later, but that's minor.
And the next question is coming from Peter Rothenaicher from Baader Bank.
Yes, firstly, on capacity. So given this strong demand, do you see here any restraints in your capacities? Are you able to work [Technical Difficulty] this order backlog? And what is the situation, do you plan to expand outside Germany?
Yes. Yes. Thanks, Mr. Rothenaicher, for the question. And a very important and serious one. Indeed, we have limitations in terms of getting all the orders we have on-board done. I mean that was quite clear, but we are planning and scheduling accordingly to what we can achieve. So one of the points why we have so long lead times, of course, and as I said, it's outlined for 2 lines that we are booked that the capacities have not followed the same manner as order intake has happened. And since we are let me say, doing the increased capacity different than in the past because we don't want to take all the headcount again on board, which we have just paid off. Our point is that we are building up a supplier base where we have more in the supplier base and more buyer than it makes. And this -- I don't think I have to explain for you how difficult this is at the moment. But we definitely want to stick to that path and we don't want to answer that with significant increased headcount. So that's where we are at the moment. This is one of the big challenges we have since we have to see how capacities have to be adapted for the future. But on the other side, we are all aware of this. We had years of overcapacities, and pricing was suffering very much from that overcapacity. And that's the reason why we stick so much in terms of -- we are very careful in adding capacity. In particular, as I said, if it's own headcount, it should go more in a supplier network. And of course, it should go more for Krones inter-countries where they have more flexibility like Hungary and China, where we have even in building up and reducing headcount a bigger flexibility. I hope that answers your question but again, it's a challenge for us, yes. And particularly on the commission side.
Okay. Then we have the situation that we have to expect that wages will increase definitely in the upcoming years again. So I think for the first half next year, you're relatively safe. But what is your expectation regarding wage increases? And to what extent are you considering this already in price negotiations with customers because you then you have to build these orders, I would say, end of 2022 or even in 2023 then. Yes. Norbert, do you want to answer because that follows you.
Yes, we have wage increases around the world, very different. As I said, Germany for the first 10 months, we are fixed with around 2.3%. Then we have new union negotiations, which will probably come with a higher result if economic recovery continues. We have other countries, similar increases, but also significantly higher. When you look at Turkey, for example, other countries with high inflation. But in general, customer is not paying for wage increases, and this is our job to compensate with productivity increases internally. And we have, like always different programs. And what we have learned in many areas during the pandemic that digitalization internally, of course, creates significant productivity increases in how we do business, how we -- I mean, just that we do conferences, our Capital Market Day is digital, then our technicians do not have to travel around the world all the time because local people can do it and more and more can be done with remote support digitally. So yes, there will be increases like always in the past, but the clear task for us here is to make it up and even overcompensate internal productivity increases.
Then the next point is with the topic, supply chain challenges, and you have a huge record order book. So normally, you would expect that in 2022, you should be able to reach the pre-crisis sales level of between EUR 3.9 billion to EUR 4 billion. How do you consider this? Do you think this might be possible in 2022?
We think it is possible. That also means that the order backlog from its value not from its content of projects will pretty much stay stable. And if we get EUR 4 billion order intake next year like this year, and we end up this year with EUR 1.7 billion order backlog, and we make sales of EUR 4 billion next year, then we will have the same order backlog level or similar on a backlog level, but of course, with different projects in there.
And I would like to reflect a bit more on that as you have a background on that. I would say the one which has the biggest impact on supply chain issues is certainly our new machine business in our core. And this is related to semiconductor issues, which everybody has, but we have the big advantage that we -- the semiconductors are not directly used from us. Usually, they are used from our sub-suppliers like Siemens, B&R, [indiscernible] and Allen-Bradley. And the good thing is that most of those components are sitting in our switch cabinets. And this allows us for, let me say, a pre-commission at our facilities. And even in case, we are short, we take the components out and ship the machines and can put the components in at very few, let me say, additional working hours to do that because this is still something which is hooked into the switch cabinet in and out. So -- and if you look to the schedule of the second quarter for next year, we have factored in that we might see some problems here in the supply chain and the capacity we plan for it is based on what we see right now from our suppliers. However, we see that that's quite manageable up to now. And I have to say there are many, many measures taken and unconventional ones that we can continue with our production program, and we will face some challenges during installation and commissioning on-site at our customers. But since we are learning at the moment and have good processes in place to overcome that, I would say the impact might be not as severe as in maybe in other industries. For a life cycle, it's not harmed at all. And I would say even for processing and into logistics, we are very sure that the shortage we see right now, we can overcome and manage those projects with very less impact. So overall, I would say, yes, we will see in the first half of the year supply chain issue and hopefully, it's getting worse than we see right now and I put a disclaimer on that but up to now, it seems pretty handled. Okay. And my last question is on liquidity. So now you have a luxury situation with huge net liquidity, huge level of unused credit facility, what do you intend to do with the money? So on the one hand, consider decisions regarding increasing payout ratio or the situation regarding acquisitions?
Yes. Well, acquisitions, of course, is back on the agenda, and we will talk a bit more on the Capital Markets Day on -- in 2 weeks that we share with you our thoughts, but it's back on the agenda. Again, reasonable from our point of view, so I would say that don't expect from us that we are going into acquisitions, which, let me say, are putting crowns at risk. But on the other side, one learning out of the old acquisitions we had is don't do it too small because it doesn't matter whether it's EUR 20 million or EUR 100 million, it's a huge effort to do. And I would say we have certainly a sweet spot. But for the sweet spot, you need opportunities. But again, it's back on the agenda. We have some targets in mind and talk about them, but it's in an early stage. But yes, it's back on the agenda.
The next questions are coming from [indiscernible] from Deutsche Finance.
I just have a follow-up question regarding personnel costs, more in the direction of getting personnel, especially [Foreign Language] how you handle that and is that an issue for you?
Yes, of course, it's an issue for us. In particular, when Norbert said that earlier that our target is that we get whatever is IT related. What it -- certain [indiscernible] being on the IT side or whether it's people for the utilization program or automatization program. Yes, that's an issue and we can tell that only in case we are using our international hubs. So one big activity goes on in India, where we have already a good setup for IT, second one is China because we have to serve China a bit different. And the activities are even related to Germany to get those people on board. For the rest, let me say, if you talk about [Foreign Language] which is the German word, I would say that pretty much is online and in hand. So I don't see that we have a big issue here because Krones is well-known in that regard and we are doing a lot of apprenticeships. You know that we have around 500 people that we got on board, and we maintain those programs. And even we didn't touch that at all with, let me say, the reduction of headcount we had over the last 2 years. So people and yes, it is still a very good perspective for Krones. So this we can handle. But IT is an issue that's for sure.
Okay. And the second question regarding new products, kind of in the direction of environmental-friendly products, recyclability, new materials. Do we get probably more an update also on the Capital Markets Day or would you speak?
Yes, absolutely. I mean a big proportion of that Capital Market Day is how do we address the challenges of our customers. All those, let me say, 2 major points to touch is sustainability and recycling will be in the core of what we are going to present.
So I don't see any further questions on the e-mail line. And later I want to ask somebody from the direct telephone line. Do we have questions? Doesn't look like.
Thank you very much, spending the time with us. And I would say, at the end of our conversation today, it's good that we hopefully see each other in 14 days again on the 16th of November that we can share with you more insights, how we see the mid and long-term future and how we want to drive that forward. So looking forward. I would say, looking back, we have done a lot of things, which we have promised and kept them, which is, I would say, the important factor, which you have seen today, even the results, and we will continue this way. Thanks a lot and have a nice day. Have a good weekend.
Thank you. Bye-bye.
Bye.