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Speaker 1: We're joined now by this CEO of Zieman's, Roland Bush.

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Speaker 1: Thank you so much for joining us today as you

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Speaker 1: release your earnings, the stock near an all time high.

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Speaker 1: This set of number is a little more mixed than

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Speaker 1: the last quarter, so I want to sort of get

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Speaker 1: into them.

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Speaker 2: Now.

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Speaker 1: How did this quarter shake out and what really changed?

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Speaker 2: Well, I mean, we are happy about another strong quarter.

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Speaker 2: Order intakes grew by fifteen percent, revenue by ten and

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Speaker 2: the business delivered three billion cash flow, so it's a

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Speaker 2: great quarter. What we saw though, is faster than expecting

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Speaker 2: normalization of the market, and this was particularly driven by China.

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Speaker 2: But other than that, sitting on another record or the

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Speaker 2: back level of one hundred and ten billion, I would say

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Speaker 2: it's another strong quarter which we delivered.

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Speaker 1: And then you say normalization. But orders were down forty

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Speaker 1: percent in China? Is that normal? Is that what you're

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Speaker 1: expecting for China? What is your experience of the economic

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Speaker 1: situation right now in China?

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Speaker 2: So it's a set the market. The Chinese market did

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Speaker 2: not did not deliver as we expected. So we said

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Speaker 2: always also in our last guidance that we expected China

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Speaker 2: to recover in the second half of the calendar year.

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Speaker 2: This did not happen at all. So China is really

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Speaker 2: very very down in the market. It's the private consumption

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Speaker 2: didn't pick up. The export is down. In June, the

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Speaker 2: export in China was on a record lol for the

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Speaker 2: last ten years. So this is what happened, and let's

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Speaker 2: see how that goes. This impacted in particular our digital

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Speaker 2: industry businesses, but electrification less still because they had a

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Speaker 2: much much lower upturn in the past, so they had

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Speaker 2: also kind of a more stable situation. It was most impacted.

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Speaker 2: The most impact was on our automation business, and.

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Speaker 1: I see that that was sort of that was one

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Speaker 1: of the parts that was revised down, although a lot

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Speaker 1: of the kind of other goals were kind of set

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Speaker 1: were unchanged. So what is your outlook more broadly, and

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Speaker 1: if strength is not going to come from China, where

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Speaker 1: do you think it will come from?

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Speaker 2: Yeah, so I mean, let me reiterate. We confirmed our

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Speaker 2: group's outlook in terms of top line nine to eleven

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Speaker 2: percent growth also earnings per share excluding the impact from

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Speaker 2: Semen's energy. So this is all good. We kept everything

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Speaker 2: stable except as you said, the outlook for digital industries,

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Speaker 2: and we brought it back to where it was before

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Speaker 2: and based again based on the assumption that the Chinese

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Speaker 2: market would pick up in the second half of the

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Speaker 2: calendar year. Did not happen, so we brought the outlook

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Speaker 2: back to where it was before. That's basically about it.

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Speaker 2: Going forward, our trends, the mega trends which we are

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Speaker 2: working on, the trends in the market of electrification, automation,

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Speaker 2: digitalization of our markets, they are unbroken. So we see

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Speaker 2: still a strong demand. This will come. There might be

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Speaker 2: a slow growth in the Chinese market for the next quarters.

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Speaker 2: Let's see if and when the Chinese government is putting

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Speaker 2: some stim on the market. There's a lot of uncertainty there,

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Speaker 2: but I mean have in mind that this is still

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Speaker 2: the second largest market in the world. It will come

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Speaker 2: back well, that's for sure. On the other side, we

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Speaker 2: are one of the most global companies in the world,

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Speaker 2: so we have a very strong footprint in the United States.

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Speaker 2: We are serving India. India's coming. I was recently on

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Speaker 2: a trip to South America. We'll see a lot of

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Speaker 2: potential renewables hydrogen, but other areas as well. Food and

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Speaker 2: beverage is working well, so there's a lot of batteries

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Speaker 2: are built which we are. We have a very very

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Speaker 2: high market share. So from that perspective, it's for me

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Speaker 2: more the question of how long will China sit on

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Speaker 2: this normalization before they pick up again.

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Speaker 1: And speaking of stimulative activity that's going on, we've had

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Speaker 1: a huge number of chip plant announcements here in Germany.

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Speaker 1: How do you think that will impact Zemans? Can you

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Speaker 1: profit from that? Are you how involved are you in

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Speaker 1: that and and sort of how does that contribute to

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Speaker 1: your business?

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Speaker 2: I mean this great news for us. On the one side,

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Speaker 2: we believe that's good to have a solid chip industry

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Speaker 2: in Europe and particular served out of Germany. We believe

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Speaker 2: we have the competencies in the ecosystem and of course

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Speaker 2: it's tailed in for our business. We are very strong

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Speaker 2: in electrifying any kind of semiconductor plant. Remember they are

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Speaker 2: high energy consuming. The building management is very critical. I

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Speaker 2: think about the clean rooms which we have. We are

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Speaker 2: sitting with our automation on the shop floor. So this

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Speaker 2: is really one of the really strong verticals of semens

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Speaker 2: and if this vertical growth we will see the impact

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Speaker 2: in seamans too.

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Speaker 1: Do you think that the chip industry gets at all

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Speaker 1: an unfair advantage. It seems to get a lot of

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Speaker 1: focus in Germany. Do you think that other industries could

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Speaker 1: benefit in order to have some more of that sort

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Speaker 1: of activity in Germany.

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Speaker 2: I mean, let me start in the question do we

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Speaker 2: need a chip industry in Europe at all? Currently? The

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Speaker 2: dependency is very strong in Asia, and if it comes

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Speaker 2: to high power chipsets, it's just Taiwan where the chips

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Speaker 2: are coming from. So we need a diversification. You know,

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Speaker 2: United States is having put a lot of stimulus money,

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Speaker 2: but I believe coming from one dependency to another one

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Speaker 2: is also not good. So having a solid semiconductor industry

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Speaker 2: in Europe is a good idea to have above of that.

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Speaker 2: As I said before, this is not only the chip manufacturer,

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Speaker 2: the foundries, is also the whole ecosystem around which is

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Speaker 2: supporting it. So this will create jobs, it will stimulate

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Speaker 2: an ecosystem, and it's high tech. This is technology where

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Speaker 2: I believe Germany should go in looking what are the

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Speaker 2: technologies which are really make a differentiation. High tech that's

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Speaker 2: where we are good at and if it's ecosystem based,

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Speaker 2: we are even better. Think about our small and medium

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Speaker 2: sized enterprises which we have in Germany the hidden champions.

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Speaker 2: So therefore I'd believe this is one of the poster

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Speaker 2: childs of an industry where we believe we should really

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Speaker 2: stimulate and get all the fertilizing effects for others as well.

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Speaker 1: And since you mentioned the smmes in the Middle steand

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Speaker 1: I'm curious because we see the PMI manufacturing figure in

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Speaker 1: Germany basically at the lowest level since the pandemic, when

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Speaker 1: there was zero activity. However, I see a lot of

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Speaker 1: these big industrial companies, the auto sector, they all seem

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Speaker 1: to be doing okay. Where is this weakness? Where is

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Speaker 1: this manufacturing recession? You have a lot of clients throughout

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Speaker 1: this industry. Where is it being felt?

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Speaker 2: I mean, you see that in Germany. You see there

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Speaker 2: was in Italy where we have the machine builders, machine

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Speaker 2: tool builders. And remember a lot of that volume goes

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Speaker 2: also to China. So if China this is the most

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Speaker 2: industrialized economy in the world and again the second largest,

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Speaker 2: if they're weak, we see also then a weakness on

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Speaker 2: any kind of export coming from Germany to China. So

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Speaker 2: therefore it's interlinked. I do believe again this is a

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Speaker 2: kind of an intermediate weakness. We see a pick up

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Speaker 2: because the level of automation and digitalization needed. When you

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Speaker 2: build new plants like semiconductor plants, new battery plants, this

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Speaker 2: will kick in and there's a lot of machines going

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Speaker 2: into these markets and that will come back on a

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Speaker 2: global scale. Definitely, United States will be very strong. We

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Speaker 2: have a very strong foothold there too.

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Speaker 1: And in terms of I just want to ask you

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Speaker 1: quickly about Zeman's Energy, because you still hold a twenty

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Speaker 1: five percent stake there. Are you confident that they're going

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Speaker 1: to be able to get their arms around this crisis

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Speaker 1: very soon? And do you think you'll have to look

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Speaker 1: at potentially revaluing that steak.

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Speaker 2: I think there's a question we have to ask to

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Speaker 2: Christian Brook how they are doing. We are very much

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Speaker 2: disappointed with what happens so that the quality issues are

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Speaker 2: not getting under control. Let's see what the next measures are.

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Speaker 2: But I do believe they have a strong team in

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Speaker 2: place and they will make it. They will solve these problems.

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Speaker 2: I hope it doesn't take too long. Regarding the evaluation,

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Speaker 2: I mean it's a clear statement from our side we

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Speaker 2: are going to dilude our share. We did it, six

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Speaker 2: point eight percent sold down now we're sitting on twenty

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Speaker 2: five point one. We will go further down. So this

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Speaker 2: is the past going forward, as we said, and we're

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Speaker 2: going to execute.

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Speaker 1: And you said a lot of side money aside for acquisitions.

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Speaker 1: Do you have a clear idea of what kinds of

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Speaker 1: things you'll be looking at and how what the cadence

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Speaker 1: of those acquisitions could be.

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Speaker 2: Yeah, we do have a clear idea. Of course, we

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Speaker 2: are looking in a broad space. We have first and foremost,

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Speaker 2: we do have the firepower. We can do any kind

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Speaker 2: of acquisition we would like to do, but we have

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Speaker 2: to be careful though it has the right return. So

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Speaker 2: if we're looking, of course into this software space, our

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Speaker 2: core industrial software space, but also any kind of adjacent

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Speaker 2: fields where we believe we can do more. Doubling down

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Speaker 2: on our very very strong software business is a good idea.

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Speaker 2: We're looking in any kind of hardware which is connected,

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Speaker 2: so which has a certain intelligence, which connects to the

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Speaker 2: cloud we can think of. So there is plenty of space.

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Speaker 2: And on the other side, we do have a very

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Speaker 2: very solid rounded product portfolio and to go with our

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Speaker 2: partners which we serve via our Semens Accelerator Open business marketplace,

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Speaker 2: we can really serve the market quite well. But again

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Speaker 2: we're looking through that market and we will make similar

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Speaker 2: steps as we did in the past, taking care about

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Speaker 2: the right turn if we're going to invest in EM.

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Speaker 1: And A and then I guess just a follow up

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Speaker 1: on that in terms of the market conditions, given that

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Speaker 1: interest rates have gone up, maybe some asset values have

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Speaker 1: come down. If you're holding in a strong cast positions,

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Speaker 1: are the conditions good right now to do a deal

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Speaker 1: for you?

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Speaker 2: Yeah, as I said, are We are not really leveraged.

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Speaker 2: We have a very very solid, very very solid financing.

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Speaker 2: We have a very strong balance sheet. We had recently

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Speaker 2: also an upgrade by the rating agencies. So from our perspective,

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Speaker 2: this is not a concern we have. We are ready

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Speaker 2: to strike if there is a great target.

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Speaker 1: Ready to strike if there is a good opportunity. Roland Bush,

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Speaker 1: thank you so much, the CEO of Zieman's