Welcome, ladies and gentlemen. Today we present our full year results, 2021. We delivered a strong performance thanks to our Aalberts people who continued our operations in a safe way and also served our customers as good as possible. The agenda for today. First, we talk about Aalberts a little bit also we talk about the Aalberts things we said during our Capital Markets Day, the operational developments during 2021, financial developments, and then, of course, the outlook. Hopefully, we have a lot of questions which we can answer. You will find Aalberts where technology matters and real progress can be made humanly, environmentally, and financially. I think it's a very important sense, and there where we make the difference we want to be in all these three aspects. Where does our brand stand for?
Aalberts stands for mission-critical technologies, where we are enabling a clean, smart, and responsible future. We are a company of mission-critical people who can't resist going beyond the line of duty. In these times, it's so important that we have this culture. Good is never good enough. Sharing and discussing bad gets us to brilliant. Greatness is made of shared knowledge. We stand for this. This is our brand, the essence of Aalberts. We are relentless in our pursuit of excellence. Our way of value creation, which we explained also in December last year, the Aalberts playing field with our four end markets, with our mission-critical technologies. The Aalberts playbook, good is never good enough, where our executive board is busy with every day to improve our performance to create compounding returns. The Aalberts way, winning with the people, sharing knowledge. Greatness is made out of that.
It's a real asset we have in our group. We are relentless in our pursuit of excellence and improve all the time. That's our way of value creation. The playing field. We engineer mission-critical technologies, enabling a clean, smart, and responsible future. In four end markets, we drive sustainable transportation, we shape eco-friendly buildings, we increase semicon efficiency, and we enhance industrial niches. That's where we stand for. That is our purpose of our company. You will find us there where technology matters and real progress can be made. We are continuously innovating and improving all the time. The Aalberts playbook. Good is never good enough. How do you do that? It's winning with the best teams.
Operational excellence, continuously progressing, a relentless effort to do that all the time, leveraging your manufacturing locations, strong cash conversion, and allocating that on a disciplined way there where you can make the difference, there where you can improve your market position. That means also you continuously optimize your portfolio. We're driving innovations to create more organic growth. This is a continuous circle. It's a relentless effort for pursuing excellence. It delivers compounding returns on a long-term basis. It's driven by entrepreneurship and a relentless way of working. That is our playbook. The Aalberts way, very important. Greatness is made of shared knowledge. You can't imagine how much knowledge is shared between the business teams, between the head office leadership, between the head office leadership and the business teams itself, between a lot of people in our factories.
It's a continuous exchange of knowledge to improve innovations, to share, to be safe, to share the knowledge you have. We want to be an entrepreneur, make the dreams happen, take ownership in what you do. Go for excellence. We go for improvement every day. You have to do that together by sharing knowledge and learning from each other and improving. Of course, we act always with integrity. The Aalberts way, winning with people. The strategy which we presented in December 2021, it's only two and a half months ago, but it's still, of course, very valid for the coming years. Now, the strategy we presented is that we will accelerate our unique positions which we have created.
With mission-critical technologies, where we have high entry barriers, pricing power, by creating sustainable, profitable growth all the time with high added-value margins, continuously improving the EBIT margins and our innovation rates. Driving relentlessly operational excellence and continue our portfolio optimization because you can always improve. Converting that into free cash flow and achieving world-class operations. Still a lot to do there. Having lesser locations, but the locations we have, we want to achieve world-class. Allocate the capital in a disciplined way, strengthening our unique positions. That means you really choose where you allocate the capital, and you follow that so that the returns are also becoming visible. Realizing sustainable entrepreneurship with clear impact and commitment. That was an objective and a strategy we added. More than 70% of our business is related to SDGs, the Sustainable Development Goals in Paris.
Of course, you can only do that by ensuring an open and pragmatic culture and the objective you find there, which we presented. SDG impact, more than 17%. You see that our strategy is integrated in our business, driving sustainable entrepreneurship. That is what we want to do continuously. Also here, we have a clear commitment. Target is less than thirty percent carbon zero. We are already at 23%. We do a good job there. Committed to be net zero by 2050. It's all what we presented also in December 2021. Operational development, the year 2021. I think the figures speak for itself. A revenue of almost EUR 3 billion, organic growth 16%. Order book increased with 52%. Very important, our added value percentage achieved 62.2%.
That's looking to the inflation we had and all the, yeah, let's say, also disruptions in our supply chain. You can say this is a very good percentage because compared to 2020, it was 61.6%. A very good result. Thanks to Aalberts people who were really able to increase the prices and to adapt pricing excellence all the time, of course, in very good communication with our customers. Our EBIT reached EUR 454 million. Our EBIT margin was 15.2%. In 2020, we reached 10.8%, but also this is a record percentage in our history. Our net profit reached EUR 337 million. It's an increase of 69%. Of course, the earnings per share is on the same page, EUR 3.05, also a record number.
Capital expenditure, we already said that in December last year, increased to EUR 147 million, an increase of 54%. We even have more projects in the pipeline, and also this capital expenditure will actually increase further than we have now at the moment in 2021. In 2022, this will increase further because the projects we have in the pipeline are yeah driving actually our businesses forward and increasing our organic growth, also our innovation rate. This number will increase further. We guided in our capital markets day that we will have roughly a CAPEX between EUR 200 million and EUR 250 million. It could be that it will even be higher. Our ROCE, the return on capital employed. It was in 2020, we did 11.7%.
Of course, also due to the COVID year we had and a lower revenue and a lower profit. You see the strength of the company because in 2021, we reached 17.2%. This is including the IFRS 16, and my colleague will explain what is the number before IFRS 16, because there we achieved our original goal, which we defined in 2018. Aalberts realized 16% organic revenue growth and an EBIT margin of 15.2%. I think it's very important that what we did during the year, and especially in the second half, we have chosen to serve our customers. That means we have more working capital. We did it on purpose. We increased our inventories because also the disruptions in our supply chain.
Of course, we also face that, not only from us, but also the disruptions with our customers. What we did, we decided to have more raw materials which were critical, but also we increased our work in progress because when you have some components missing, but you also miss components you produce yourself, then you can't deliver the finished good. That's the reason why we chose for service instead of cash. Of course, we also optimized our cash as good as possible. By doing that, we reached an organic growth of 16% because we believe that our market position is the best to protect. That's also what we did. The strength of the business, you can see by growing 16% and still reaching an added value of 62.2%.
That's the combination that shows the strength of our businesses and our technology clusters which we have created. It's a choice we made there. Really now going to the operational development to our end markets. Our first end market, what we have is shaping eco-friendly buildings. The activities we have there are Integrated Piping Systems and hydronic flow control. Overall, a very good performance in all regions. Our order book increased to a record level, even further again than we announced last year. What is then the reason the order book is increasing, yeah? We have many growth drivers. We are really at the heart of a very good business here. The first thing I want to mention on the growth drivers is the market recovery we had.
It's of course last year the market recovered in 2021, and we had a lot of restocking of our distribution channels after COVID. That's still ongoing because also when we looked at our own finished goods stock, it's still on a low level. Also, our distribution channels, our distribution partners still have a low stock in their distribution centers. That's that has to do with the fact that a lot of products are really built in the eco-friendly buildings. We deliver these products almost directly to the building site. The end users, that means you and me, but also project developers and building companies, invest more in renovation, upgrading of residential housing and commercial buildings. This is a real trend. We also think this will not stop because there's so much money, there's so much investment.
It has to do with sustainable housing, which wants to be created. Very important, I think that's one of the biggest reasons that you see our growth, and that will also be this year, that our innovations are really driving our growth. The innovation roadmaps we initiated, let's say, 5, 6 years ago, are now really coming to growth. Expansion of a connection and valve technology portfolio. We have integrated piping solutions with digital drawing services. We have our master data there really on track. That means we can offer a complete integrated solution for piping, yeah, so that you also are specced in the project. Of course, our hydronic flow control solutions combined with digital services are doing very well.
Here, you see that we combine hardware with a digital solution, and that combination is that you are stronger in your project spec. Besides, we have product lines which we introduced 5, 6 years ago. I can mention the press fitting line. I can mention new heat interface units which we made electronically with digital devices. A lot of examples here which are running and also will keep on running in a good stage this year and the following years. This all is supported by governmental support programs. A nice example in France, in Germany, in every country, you see that old systems are changed to systems which are much more sustainable for your heating and cooling system. Our products and our approach there is really stimulating this whole trend.
We are on the right spot. Now, good progress is made with many operational actions initiatives. We have still a lot to do. We have tens of projects here still to further, let's say, pursue. We find new projects all the time to further improve our footprint. Still a lot to do to further improve. We accelerate our capital expenditure. Where do we spend our capital expenditure mainly? It's mainly in capacity increase in fast-growing product lines related to the innovations, but also a lot in operational excellence in our manufacturing, in our distribution, to further optimize and make more efficient our processes. Still, again, a lot to improve. Overall, a good performance, a record order book, and acceleration of our capital expenditure. Increasing semicon efficiency, it's another purpose we have as a company.
Strong growth, good performance, order book even further increased to a record level. Long-term growth drivers, and these growth drivers are there. They will be there also the coming years. Strong microchip demand for computer logic and storage, e-mobility developments, connectivity and Internet of Things, investments in new fabs and 5G rollout, it's all continuing. That's a new, let's say, a new trend we see more and more. It's called reshoring, that microchip manufacturers expanding regional capacity to secure technology know-how and supply chain. That means that more and more, they will be produced locally. It's not only, by the way, in this end market, it's also in end markets like eco-friendly buildings, where our customers choose to have suppliers close by.
It's one of the main reasons also to reduce transport to be much more sustainable in the new Scope 1, Scope 2, and Scope 3 rulings which are coming in the market. It's a real opportunity for us, this whole trend of reshoring. Preparing capacity expansion and efficiency improvements in all locations. You can imagine due to the strong growth, but also the order book, which is further increasing all the time, we have to expand. We are really try to push really strong that we create more capacity, that we utilize our location, which we have in our group, Advanced Mechatronics, that we really try to optimize that in all locations.
It will not be enough. We are exploring at this moment also greenfield manufacturing expansions, which will be probably in the Netherlands, and we are looking for land to build to expand further the coming years. We did that, of course, in very close cooperation with our customers, and also the strong order book and of course the trends which I just explained. Parallel, we also busy with new product introduction with our key accounts. That goes on, because do not forget that we are one of the key enablers for the big OEM customers of us to enable their growth. When we can't grow with them, they also have a problem.
We are in the same slipstream, and what we see is that we do more and more co-developments with them, that also we get more and more knowledge and technology to be delivered to these bigger customers. We further strengthened also our organization, which was necessary, and the management teams because also there you see more, we need more power in managing this. We have to recruit more additional people, and especially engineers and manufacturing people to, let's say, also facilitate the growth for the future. You can imagine with also the shortage which you see now in people that we have to attract these people. We have to do a lot of effort to make Aalberts really interesting for them.
We are also making plans at the moment to develop, let's say, education programs to bundle our forces. We have to do that. Aalberts is a strong name, and we have to empower our people to come to us and work with us for the long term. That's very important because you can have management, you can have machines and orders, but when we do not have people where we can win with, we have a problem. That's a big attention point for the future. Now, when we go to our next end market, that's driving sustainable transportation.
Here, despite, I would say, supply chain disruptions at our customer facilities, at our customer supply chains, because here we are delivering to our customers services but also products, and of course when they have a disruption in their supply chain, we also have our problems. Despite that all, we made a good performance. We are not back, let's say, on the revenue path, which we maybe had in 2019, but we are on a good track, and we see it improving. Also the first months of 2022, we see step-by-step things further improving. Despite this issue, in 2021, we made a good performance.
Do not forget that end user demand for passenger cars and commercial vehicles continued to be very strong. That means there's no inventory in the chain. The moment you solve your disruption in the chain, we get more business, and that's what we see. Because service technologies, but also our activities in our fluids control activities are still needed. The ramp-up will go on. Many new co-developments in progress for e-mobility and electrification of vehicles. It's accelerating even faster than we thought. Now, what are the other topics? There's a big need for lightweight of materials because when the materials are too heavy with a battery car, you have a problem because then the car is far too heavy.
They look for solutions for lightweight materials combined with service technologies that you can optimize the weight of these vehicles. We are in the process of developing these things. It's a big opportunity in combination with reshoring. Connectors are growing fast because there's more current through the car, different kind of currents because electric car is different than an, let's say, a traditional car. Connectors are growing fast. We make connectors, precision manufactured parts, but we combine that with metal strip coatings. Our metal strip coatings service technologies are really growing, and we acquired a few companies there the last years in France and in America, and we see that a big part of that business is already electric vehicle-oriented.
New passenger car and light truck models in general create additional business because by far the biggest part of a new vehicle is not for us the engine. It's the drive shafts, it's the wheels, it's the chassis, it's all kind of products which are re-engineered. When you re-engineer parts, you need also to think about your service technologies, your coatings, your treatments, how to improve the metals, how to improve that. There's a lot of request for all these new developments. Additionally, we saw that aerospace and marine market are recovering fast with an increased order intake, strong order book, and also here driven by sustainable solutions for lightweight materials and reduction of the carbon footprint of our customers.
Driving sustainable transportation as a purpose of our company did a very good performance. Look into the situation where we were in with the disruptions, with many new co-developments of e-mobility. Enhancing industrial niches, our fourth end market. As already explained earlier, a few months ago, industrial markets are always a little bit behind 'cause it's project-driven. It's more related to CapEx of our customers. What you see when you decide a project and it delays a little bit. We saw already that the order book was increasing during the year, step by step, in Europe and North America. What we also saw is that further recovery was visible in the last months of 2021, and we can see that in our order intake.
It's climbing, but it's still climbing, and we see it further climbing in the first months of this year. Now, what we also did, we further optimized the service technology portfolio. We invested in more specific industrial niche segments with higher margins. Yeah, we want to optimize the portfolio. The last years we took out a lot of old technologies where we are much more volume-driven. That was part of our restructuring program, and we invest much more in niches. These niches bring higher margins and are more technologies of the future. This is an ongoing process.
There we put our investments, we allocate our capital there, and these new technologies, for example, the brazing and hot isostatic pressing which we do for very specialized parts of additive manufactured parts, we also bring now this technology to other regions, utilizing our service network in service technologies. We added equipment in Eastern Europe, so we follow there our customers because you see that there's also part of the business is going to Eastern Europe, where we now have very good base, and we expanded that base, we extended the building, we put more equipment in, and with a very good performance, and that's ongoing. Now, when we look to our industrial valves, there, in North America, we have a fantastic position in industrial valves in our integrated piping systems activity.
There, we saw also the same trend. We saw more orders during the year. These orders are continuing, so you see there is more, let's say, trust in the market to do CapEx, and, therefore, we prepared additional investments to facilitate this growth. Also we hear investments to increase the manufacturing efficiency. Industrial niches is still not there where it was in 2019, but order book increased, and we see further recovery visible. That gives us a good guidance for 2022. Now, I give the word to my colleague, Arno Monincx.
Thank you, Wim. Also good morning from my side, of course, to everybody in this webcast. I take you through the financials of our company of last year, and I would like to start with the revenue bridge, where we explain to you how we came from the EUR 2.610 billion revenue reported in 2020 to the EUR 2.979 billion reported in 2021. First we have the positive revenue effect from our acquisitions that we did in 2021, Sentinel and Premier Thermal of EUR 34.7 million. Secondly, we have the negative revenue effect of the divestments that we did in 2021 of the companies Adex, Lasco, and Standard Hidráulica.
We have a negative currency effect, which is mainly caused by US dollars of EUR 20.6 million. We have the remainder part of an organic revenue growth of EUR 404.7 million in 2021, which comes to an organic revenue growth of 60.0% in 2021. The EBITA bridge, where we reported in 2020 EUR 282.5 million of EBITA. We had the positive effect of our acquisitions of EUR 7.7 million in 2021. We had a negative effect of the companies that were disposed during the year in our EBITA of -EUR 2.9 million.
We also had a negative currency effect, in line with the revenue effect, of course, of mainly US dollars, which also cost a negative EBITA of EUR 1.9 million. Then the remainder is, of course, the EUR 168.8 million organic EBITA improvement, which is a drop through of almost 42% on our organic revenue growth to finish at the EUR 454.2 million for 2021. If you remember the first half year of 2021 with an EBITA margin of 40.9%, you can calculate that the second half year we finished with a 15.6% EBITA margin, which was at the end full year 15.2%.
The consolidated income statement, these numbers are before exceptionals, and let me start with that number because it's an important number. We have made an exceptional disposal benefit of EUR 54 million positive on one disposal. We also, as you remember, announced last December, an additional operational excellence program of also EUR 54 million of one-off costs. The balance of these two numbers is our exceptional benefit of EUR 100 million, exactly EUR 100.3 million, which is not taken into consideration in these numbers. That's an additional benefit. The revenue, of course, we already discussed this.
What you don't see here in this slide, but also Wim mentioned it, is of course the added value percentage of 62.2%, which is very strong, we believe, given the situation of disruptions, strong inflations, and all kinds of challenges that our business teams had to deal with. Nevertheless, a very stable added value, even a little bit better than last year. The EBITA percentage, 50.2%, already mentioned, the increase. The depreciations are a little bit lower, these depreciations before exceptionals, because we also had, of course, lower investments last year, and that is also having effect in this year. We expect again, with the CapEx increasing, that this number will go up in the coming years also.
Now, you see also the finance costs really going down, of course, because we also managed the net debt further down. Then the income tax, yeah, let's say, for 24.5% versus 24.4% last year is more or less comparable. Now then, you finish at the end with an EPS before amortization of EUR 3.05 versus EUR 1.81 last year. A very nice performance of 68% growth. The revenue growth of 40.1% is an organic growth of 16.0% already discussed. A strong performance with a very nice 60% growth and an EBITA margin of 15.2%. The consolidated balance sheet.
Of course, here you also see the net debt going down from EUR 600 million last year to EUR 492 million this year, and also with an increased return and increased EBITDA against a lower debt. Also, our leverage ratio further improved from 1.4 last year to 0.9 this year. Net working capital, EUR 452 million versus EUR 399 million last year. It is going up, and Wim already touched the reasons for that. We really made a choice to have focus on our service. Despite that, we also faced the inflation causing the pricing impact on our raw materials. We also had to put more safety stocks in the locations to be able to continue to deliver our products to the customer.
Besides that, with the missing components, you also see that the work in progress is increasing. Now, days' net working capital, therefore a little bit higher, 58 days versus 55 last year. The solvency due to the good performance, and of course also reduction of debt again, even increased to 59.7% versus 55.5% last year. Then the return on capital employed, where all these elements come together, finished at 17.2% versus the 11.7% last year after a difficult 2020. Back on track, I would say. The free cash flow. Also, this overview is before the exceptionals, where you see that the cash flow from operations is EUR 464 million versus EUR 474 million last year, so that's even a little bit lower.
The reason and the big impact in that is what you see in the line above, in the changes in working capital, where we face this year a negative number of EUR 109 million versus a positive number of EUR 62 million last year, which is a difference in the delta in the free cash flow of EUR 170 million. It's a big gap, but that is exactly the effect of having the need of more raw materials and work in progress in your factories, and on the other side, going from a declining business with a reducing working capital last year towards an increasing, strongly increasing business in 2021. Of course, also the need to build up your working capital in line with that.
That has a big impact on your cash flow. Now, for the rest, you also see that the CapEx, the purchase of property, plant, and equipment, went up with EUR 37 million, and that is at the end returning in this free cash flow of EUR 310 million in 2021 versus the EUR 360 million last year. It's a solid free cash flow despite the increase of working capital and CapEx cash out. The segment reporting structure, which we also explained to you in December, where we, you know, went from the four segments that we had last year towards the two segments, Building Technology and Industrial Technology. Where in the Building Technology, we bring together the hydronic flow control technology cluster and the integrated piping systems technology cluster, who are both operating, of course, in this eco-friendly building end market.
In the Industrial Technology, we bring together the Advanced Mechatronics technology cluster and the Surface Technologies business in Industrial Technology. As we have also explained, we go back from four to two segments because we believe that gives you a better picture. On the other side, we can also disclose the organic revenue growth of these two segments. We go from four to two segments, but we also disclose more information with this organic revenue growth number. At the end, which is crucial, is that Aalberts is operating as one company in different end markets, four different end markets, but we have one purpose together, and that is where we work on with all the teams every day. The greatness is made of shared knowledge.
The reporting business per segment, where you can see that the Building Technology business went up with 13% in the reported revenue line, but organically, they performed 16.2%. The EBITA increased by 53%, to a margin of 50.5% versus the 11.5% last year. A very nice improvement of 4%. The capital expenditure already explained. We also increased to EUR 75.7 million versus the EUR 49.5 million last year, an increase of 53%. The Industrial Technology business, the revenue went up with 16%, reported line, but also 15.6% organically. The EBITA finished at 175.8 versus 102.7 last year, which is an increase of 71%. Very strong improvement.
The EBITA percentage also increased from 10.4% to 15.4% this year. That also here in this, let's say reporting segment, business segment, we increased the capital expenditure from EUR 45.6 million last year to EUR 68.1 million this year. The revenue per end market and per region, where you see that the eco-friendly building end market represents 58% of our total revenue. The semicon efficiency end market, 9%, is climbing step by step because they are growing very fast. Sustainable transportation, 15%, and industrial niches, 18%. The revenue per region, you see Western Europe, 59%, still the majority. America, 25%. Eastern Europe, Russia, 11%, where Russia represents less than 1%, I would say. APAC, Middle East, Africa, 5%.
Our dividend. Yeah, let's say we have made a proposal. We have prepared our proposal for the general meeting, of course, with a cash dividend of EUR 1.01 per share versus EUR 0.60 last year. That's an increase of 68% in line also with the profit improvement that we made. On top of that, related to this exceptional EBITA benefit of EUR 100 million, we are proposing this special cash dividend of EUR 0.64 per share. That means that we have a very nice dividend proposal prepared for the general meeting this year of EUR 1.65.
also here you can see that the dividend over the last 10 years, and we focus on the regular dividend, of the EUR 1.01 versus the EUR 0.58 in 2016 and the EUR 0.34 in 2011, that there is a nice development over the last 10 years, also in the dividend payments. then I come to the track record. Over 45 years of sustainable, profitable growth. I remember last December that I had to present this picture with the 2020 finish. this is looking, of course, much better again with the nice 2021 numbers. you see that we make really a nice development over the last 45 years with this company.
Especially, I would say, in the last 10 years, where we really focused on the mission-critical technology, you can see that the revenue increase and the EBITA increase is really making the right direction. A proven sustainable business model. That is, of course, also then coming to the earnings per share, where we, over the last 10 years, made an increase of EUR 1.36 to EUR 3.05, which again, is before these exceptionals. That is not in that number. That is the really operating profit and then the earnings per share operationally, which represents a CAGR of 8% over the last 10 years, the growth. The dividend per share also, the EUR 1.16, thirty-four cents in 2011 represents a CAGR of 12%.
We have also this special dividend on top of that for this year. An important KPI, we believe, also, to explain the proven sustainable track record is the return on incremental capital employed. What you can clearly see here when we compare the last 10 years, 2021 with 2011, we made 244 more EBITA, and that is corrected for the IFRS 16 effect because the 2011 numbers we still reported before IFRS 16. It was not in these numbers. If you want to compare apples to apples, we have to make that correction. Also in 2021, we had the capital employed of EUR 2.676 billion.
We correct that for the IFRS impact of EUR 174 million, and then you get a delta of capital employed of EUR 1,038 million, and that you can apples to apples compare with the improvement of 244 EBITA over the last 10 years, which then gives a 23.5% return on incremental capital employed. Now, we believe that is a very solid performance. It also proves that the way we allocate our capital is bringing the right returns. The long-term shareholders, over 3% holdings, still more than 50%, who also believe in this strategy, a proven sustainable business model.
Now, the objectives that we made in our previous strategic period of 2008 to 2022, we also put here, we had at that time when we presented this strategy, the objective to have an average organic revenue growth of more than 3% over the period in average. From 2008 to 2022, that was the objective. We realized until this year, so that means one year less, but including this COVID year, that we realized an organic revenue growth of 3.7% on average, which means that we are above our objective already one year earlier. The EBITA margin, likewise, we had the objective of more than 40% to realize, let's say in the period 2022, and we are now in 2021 at 15.2% realized.
Also there, we realized our objective. The return on capital employed, we had the objective, and that was again also at the time that we did not have IFRS 16 in our books. We had the objective of more than 80%, and we have in this year realized before IFRS 16, 18.4%. The 70.2% was including IFRS 16, which we also will communicate from now on in the future. If you want to compare these objectives, on a fair basis, we have made 18.4%. Also here, a proven sustainable business model.
Yes. Thank you, Arno. We have the outlook. As you know us, we give guidance during our Capital Markets Day, which is two and a half months ago. What we are doing and also gonna do this year and the coming years is that we will relentlessly execute our updated strategy, Aalberts Accelerates Unique Positioning. Now, we also updated our objectives in this strategy, which we'll pursue. We just presented also our track record. That's what we want to achieve. 2022 will be that goal. What we have to say that in 2022 we start with a very strong order book.
I think we have record order books in our companies, in our businesses, and that of course helps. What we also will do is of course, when that we hope is that the disruptions in the supply chains of our customers and also internally in our factories, which we could do very well. We had no severe issues. We could really handle it, but it's a lot of effort, and also we had our challenges, of course. When that is improving, we will further improve, of course, also our inventories again, our working capital, and by doing that, by having more shipments, by having more sales.
I think we made there the right choice in the second half of the year because we can really serve our people or serve our customers with our people in the right way. Yeah, we're gonna pursue our goals and our strategy as presented during our Capital Markets Day in December 2021. Let's see how that develops. We come to the next slide, questions and answers. We hope that you have a lot of questions which we of course can answer them also.
Thank you very much. Our question and answer session starts now. My name is Andrea, and I'll be your coordinator for today. For people attending the conference call, questions can be submitted by pressing star one. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. For people watching the webcast, questions can be submitted via the Ask a Question button. Our first question of this morning comes from the line of Henk Veerman from Kempen & Co. Please go ahead.
Hi, good morning. Thank you for taking my questions. I have a couple of questions, and I will do them one by one. My first question is on your added value margin, which remained quite stable during the second half of last year, despite sort of continued input cost inflation related to materials and energy costs. Yeah, into 2022, when you look at the environment today, yeah, we obviously have seen continued inflation of some of those costs. Are you still sort of confident that you can pass them through to your customers and sort of keep that added value margin, which has been stable so far? Do you plan to keep it stable into 2022?
Yeah, let's say, I would say, yes, of course, we try to do so, he? We are no robots, he? Because it looks sometimes that we are always able to cover that. Yeah, let's say we work hard on it every day, and it's really a big job from our business team, managements, yeah, to transfer these cost increases towards the markets. We did it again, and, yeah, we will try to continue that as good as possible. Let's say, at this moment, I have no reason to think that we are not able to do so.
Okay, clear. My second question is on.
We already did additional actions again. We follow that very carefully, very closely, raw materials, but also the next will be, in my opinion, personnel expense. We really make our calculations, and we are ahead of the game. We already announced additional price increases also during 2022. We can do that because we have strong positions.
Yes.
That is the whole key thing. When you don't have a strong position, it's very difficult to increase your price because you have a lot of competition. You have to have, yeah, that market position, and that's where we are continuously working on to improve that. It's a lot of effort. That's also why.
Yeah.
Our Aalberts people deserve a big compliment for that.
Okay, clear. Second question is on your inventories are significantly higher year-on-year. You already discussed that because you wanted to secure the materials. Where do you see, let's say, these shortages into this year? Can you maybe give some more color on why and which areas you sort of increased inventories?
Yeah. I think it's as my colleague explained, it's mainly in raw materials and work in progress. Okay. The raw materials is various, you could say. Okay. For example, aluminum in certain areas, when you make aluminum tubes for, let's say, our piping systems, yeah, then we of course try to get the aluminum because otherwise you can't make a pipe. Another example is that we put some more components on stock because, for example, in advanced mechatronics, where we saw that we needed some additional components. The same as in hydronic flow control, where we needed components, electronic components for our heat interface units. Okay.
Again, it's very local. It's local decisions. We gave the message to our people, serve your customers. Of course, you also have to manage your cash flow, but it's very important that we don't improve our cash, and then we cannot serve our customers because you lose your position. Market position is the most important. Now, that's raw materials. What happens then, the moment you don't have some components in your manufacturing or assembly line, you have other components already ready. That means your work in progress is then automatically, let's say, increasing because of the imbalance of your, let's say, your products you have to assemble or to produce. Now, this is improving step by step again, in my opinion.
We are over the hill there, it looks like. We're gonna optimize that in the coming 6-12 months. Now, the other thing is safety stocks. You see, where you have certain areas or components, you take another safety. That has more to do with suppliers running out, or you need a second source for a supplier, or you need a third source. Then you have to give them some more orders to get the second supplier. It's a continuous effort to get that done. But as I said, the good news is we had no severe issues. We could still serve our customers and create 16.0% organic growth. Compared to 2019, we were even close to 7%.
That means, in my opinion, we took the right decision. Now, the coming 10-12 months, we have to optimize that again.
Yeah.
My colleague said due to the ramp-up of the big order book, we are producing more and more. You need anyway more working capital. In 2020, you go down, so you also get that effect.
I would like to add to that. We also, of course, as you know, are working on our inventory reduction programs, which is still ongoing. But there we focus on finished goods, yeah, and really to get the quality of the stock to a higher level. I must say, we make good progress there. We are on schedule. That has nothing to do with these temporary effects that we have now in the raw materials and in the work in progress side, because that is something that has to do with the situation outside and of course, our anticipation, how to deal best with that.
The inventory improvement program is still ongoing, and we have said at that time until 2022, we think we are able to, yeah, to improve inventory in days. That is exactly what, as Wim says, yeah, we have to do that now also with all these elements together, yeah, in the rest of this year.
Yeah. Okay. Clear. On your exceptional dividend, yeah, you link this to the book gain that you reported, the EUR 100 million. When you look at the cash flow statement, because obviously it's a cash dividend. Do you then like link this exceptional dividend to this non-cash gain, or has it also to do with obviously the leverage that has further declined last year? The question is, should we expect, let's say, additional exceptional dividends if the leverage remains below 1x net debt to EBITDA?
Now, let's say the special dividend is linked to the, yeah, you call it book gain, I call it an exceptional benefit, and because it's from two elements. It's the book gain that we make on the special book gain on disposal of 154, but also after the deduction of the operational actions program, for which we made a one-off reservation of cost of EUR 54 million. These costs create a recurring annual benefit of approximately EUR 25 million, as we have explained it last year. It's improving the company going forward. Now, this 100 million, if you calculate the tax effect from that, yeah, then you come to the 64 cents. That is related really, the 64 cents, to the exceptional benefit.
That's the balance of these two elements. Which has nothing to do with, let's say, the normal operating performance of the company. For the future it has, but.
Henk, also to add, the question about future. Like we have always said, that's not changed, that when we generate cash, which we cannot deploy to higher CapEx or let's say to acquisitions we do, because for example, acquisitions are too expensive or we have no operational time anymore to integrate acquisitions. Yeah, then we will also look for other let's say, cash deployments. Our aim is to develop the company, so that's not changed. This is an exceptional EBITDA benefit. Yeah, and we will continue to be an entrepreneur. When, of course, yeah, in the end, that could also be because acquisitions are too expensive, which they are at the moment, especially the bigger ones.
Yeah, we are very disciplined in that capital allocation. The message is still the same as we also said in December last year.
It's not. There's no sort of rule of thumb with regards to the leverage where you say, Okay, we drop below this point, then, you know, we have this excess cash which we can give back.
On that, we have no rules.
Okay.
Of course, we also look for acquisitions. There we want also to deploy our money. We have a nice pipeline, as said. Our company gets more and more focused. By having more focus, yeah, you see also that our management team becomes stronger. By having this stronger management team, we are also able to do some nice acquisitions, which we did again, I think in January. We acquired a very nice business, Isel. It's really an additional business line to Advanced Mechatronics. Yeah, with very good prospects for growth.
Okay. Last question, if I may. I think you in the call, Wim, you mentioned that CapEx could also be above that sort of EUR 200 million-EUR 250 million guidance for the next years. Has that also not to do with CapEx with, let's say, the inflation of building materials of construction projects, the costs related to these construction projects? I mean, if that is continuing, then I think on a like for like basis, you will already be sort of at the top end of the EUR 200 million-EUR 250 million range, right? Or is it more to do with more opportunities that you see that you now say that it could be above that EUR 250 million?
I think that's a good point, because inflation is also there, but that is not reflected in what I said. It's more, the opportunities we have to drive organic revenue growth are really impressive. I think that is reflecting in the guidance we gave in December. We are getting more and more ideas how we can actually drive the growth of these four technology clusters. That is the best growth you can have. Again, in May, June, we are evaluating with all the teams these business development plans.
What I see is, yeah, we will, I think even go over that EUR 250 million. On top of that, you have even the effect you explained, and that is that you have inflation. That's not what I talked about. Okay, when you have record order books, and we have that, yeah, you have to go for it. What we see is there's certain product lines in piping systems, our hydronic flow control are growing so fast, so we have to put equipment on it. When you have put more equipment, you need also space. That's something which, yeah, which is looking very good.
That's why I've told that. Let's see, because we have often operational, from an operational point, you must also all handle it and keep it under control. That needs also time.
Yeah.
The delivery times of machinery. You also know probably delivery times of a new building can also take more time in this world where we are in at the moment. It's very difficult to predict what is the exact number, but it will go up, and especially also in 2022, 2023.
Okay. Clear. Thank you very much.
Fine.
More questions?
The next question comes from the line of Luuk van Beek from Degroof Petercam. Please go ahead.
Yes, good morning. Two questions from my side. One is on the passing on of the cost increases. In the past, you have always been very successful in quickly passing on increases in raw materials. Is there any difference in passing on increase in raw material costs and in other costs like energy and labor and so on, which may be less visible to the customer? Furthermore, can you give an indication of how much the price impact was in 2021 and how much increase you've already implemented for this year?
Now, let's say, when we look at price increase, of course, we take the whole spectrum, including the energy costs, but not only the raw material effect, I would say. That is, energy cost is of course a theme at this moment, but also going forward, I would say, already starting in the second half of last year. We take that into consideration for the necessary price increases anyway. That is clear. Yeah, what is the effect of the price increases in our, I think you mean in our organic growth, yeah?
We expect, let's say, 4%-5% is the effect of the price increase in that number.
Okay. For this year, can you give an indication of the increases you've already implemented?
Yeah. We just started.
That's the question.
Let's say that is something we are evaluating on a monthly basis. In all the monthly meetings with our teams, we are studying the margins, the added values, and on the other side, of course, we look ahead in our raw material prices for the next months because we are covered for a few months ahead, and we are still covered. We can anticipate on these costs. Of course, we know the contracts that we have or are changing for energy costs. Of course, we follow the labor developments.
That is all taken into that perspective to make sure, yeah, that we protect the bottom line of the companies.
Then maybe to add, Luke, okay. The price increase has started actually, and especially on the raw materials in quarter four 2020. So from that moment on, we started to increase. So in certain business teams, we already made 5% increase announcements. That is not stopping when also prices go up. We have to protect our position and our margins, otherwise we can't invest. But it's a climbing thing. So in 2021, we increased again, and then again in 2021 and on and on and on.
Of course, also in 2022, we will see effects of that because of the announcements you make, for example, in the second half or first half of 2021, that is now full effect in 2022. It's only very difficult to exactly say what is the percentage. It takes time to come in the revenue. What Arno said, it's probably 3%-5%, 4%-5%. It's probably somewhere between that. It's in 2021, so also in 2022 we will see some effects.
That's clear. Then one more question about the acquisitions. You mentioned that the large ones are still too expensive, so I assume that we should not expect too many of them, or actually none, going forward or at least in the near term. Does that also offer opportunities for doing further divestments at good prices, or is that at different markets where you may not necessarily be able to benefit from the high prices?
What we see in acquisitions is that the moment you have, now, when you do not develop the relationship yourself with an owner or it is a complete broker process where then there's so much money in the bid, as you know, that prices are driving up and they go to multiples which we don't do because we don't see how to get returns on that. As my colleague presented, our return on incremental capital employed is almost 24%. Now, when you want to keep that or even improve it further, you must not spend too much money on paying too high multiples.
Acquisitions where we develop the relationship or they are very specific where we have lesser competition, there we have very nice pipeline. We are very, let's say very cautious and very specific and very critical when we do an acquisition. On the divestment front, there's different story. Because there, when there's, you can maybe take advantage of the situation. That's also why we have now a nice exceptional benefit which we give also back to our shareholders. We think that, let's see, the M&A market is still good at the moment. We don't know if it will be good for years, probably not. Our divestment program is announced in December, and we are pursuing that roadmap.
For the time being, that market is good. Let's see how that prolongs or that goes further in, let's say, the second half of 2023. That's also why we launched that divestment program to drive these divestments.
Yeah.
It could be that we there also have good prices. Yeah. Let's see.
Yes. One follow-up, because I understand that typically you try to buy companies where you have a relationship with the owner and can get a good price. Do you see that because of all these high prices that are now in the market for quite a long time, that some of these parties, although they have been in contact with you for a long time, decide to launch a tender in the end when they want to sell to get the highest price possible?
Of course, price is always a discussion during these processes. What you see when you really can find, let's say, a target which is where not only the price is dominant in the discussion, yeah, you have opportunities to at least pay a reasonable multiple.
Yeah.
Now, that's where we are looking for. Combined with our business integration plan, where we aim for synergies, which we always look based on our business integration plan, which we make for 8 or 10 years. We want to get our money back, as I always say, on a free cash flow basis in maximum 7-8 years. That's our payback.
Yeah.
Because that's what we can oversee. We also, when we need a loan for that, then we also have the loan for seven years. Yeah? That's the philosophy we have already for many, many years. Don't pay too much for an acquisition.
No.
Because in the end, you bleed because you don't get the returns. That's not for nothing that we have a return on capital employed target between 18% and 20%. Organic growth is the best growth. Then combined with bolt-on acquisitions, that's a very good combination because normally the bolt-on is further driving your organic growth over the years. Not in the beginning, but over the years. When we want to go in an additional business line or we want to go in a certain area and you want to buy a strategic footprint, yeah, it can sometimes be that a bigger acquisition brings you further in that path, but it should also always keep looking to the return.
Exactly.
That's what we agreed with our shareholders, and that you can count on.
Yeah.
That's nothing new. We have a nice pipeline.
Yeah. That's clear. Thank you.
The next question comes from the line of Aurelio Calderon Tejedor from Morgan Stanley. Please go ahead.
Hi. Good morning, Wim, Arno. Thanks for taking my questions. I've got three, and I'll take them one at a time, if I may. The first one is around you indicated that restocking was an impact in Buildings during this year. I wonder if you can maybe flesh out how much was volume and how much, or, i.e., end user demand and how much was the effect of restocking. I appreciate that it may not be 100% clear, but any indication would be helpful. Also linked to that, you also indicated that you expect this restocking to continue. What gives you confidence that that's going to be the case?
Now, let's say coming from a situation last year, especially the first half of last year-
When the markets were really down and nobody knew how long this would take before it would come back, because it was very difficult at that time. That is what I remember also, that we really focused on the cash because nobody knew what would happen and how long this pandemic would go on. After the summer, you saw very good improvement. What happened at that time is that, of course, the demand increased in a situation where the stocks were very low. You get the situation that everybody is scaling up to cope with that demand, which is very difficult because they ask much more than what you can make.
I think that situation is still ongoing, because you see that the growth has been so strong, and also the sustainability impact in our business is increasing, because also all people are thinking more in that way. People are thinking about electric cars. It's standard. A year ago, you would not think that. It was exceptional. Now everybody buys or a hybrid or an electric car. Everybody's thinking about making his house more sustainable, making his building more sustainable. That is an unbelievable driver for these markets. It's very difficult to judge what is now restocking because has there been restocking already?
Everything that is coming into the distribution, let's say, volumes, is also going to be delivered. What do you get? You get installers, smaller installers who normally have one or two vessels in stock. They take for the security five because they know they can sell it. That is what you see in many cases. Let's say we don't see the effect yet that the stocks are on the right level. That is just how it is.
The situation is that we have not enough finished goods stock.
No.
Also our distribution partners don't have enough stock. They started restocking during 2021, but they still are restocking.
Yeah
Because everything is used. Okay, maybe an example how this works. In Germany, there's, for example, also a subsidy that the 12 million oil-burning heating systems can be replaced by a heat pump or even a gas heating system. When you get a subsidy of, what is it? EUR 5,000-6,000 when you do that before the certain date. The same programs are in France. The same programs are coming also in other countries. That means that people, with this awareness, as my colleague said, yeah, that people are busy with improving their, let's say, their housing. In France, there's a tremendous program now for social housing to make them much more sustainable. It spends hundreds of millions of EUR on that.
Now, that also drives this need. What you see is there's still not a lot of stock in the chain, in piping systems and in hydronic flow control. That even when the business would be a little bit less at the moment, then still you have to fill up these pipelines. That's for 2022.
Yeah.
That looks very good.
Okay. That's helpful. Thanks. Maybe if I continue on this topic on buildings. You mentioned that people are investing in kind of renovation of homes and stuff. I wonder if you can comment maybe on the dynamics of resi markets and non-resi markets. I obviously appreciate that in Comap you are way stronger in resi and maybe in pipes. What are you seeing in these two different verticals?
Yeah, you see that residential housing. There we are a little bit stronger in Europe. In North America, we are stronger in commercial building. First you saw that residential building, we were doing better. All these trends, but also the market for commercial building is, especially in North America, really improved the last six months. More projects. It's also more project driven, like also industrial markets, which are project driven. That looks pretty good in North America. Even there we have at the moment backlogs to deliver to our customers. Residential, of course, is driven by these, let's say, subsidies. More and more, let's say, businesses, companies, hotels are also looking to sustainable solutions.
Do not forget that, for example, in the Netherlands, but also in other parts of Europe, there comes in legislation from 2023, that your building has to be in a certain level of sustainability, which is a much higher level of sustainability than it's at the moment. Yeah, all this legislation come in, Taxonomy comes in, Green Deal is coming in. That will also affect commercial buildings. It's driven by legislation.
Yeah.
Let's say we saw first residential, but now you see also commercial.
Great. One last question from my side. I know that you don't disclose the size of your order book, but I wonder if you can comment maybe on the delivery times of that order backlog, if it's kind of lengthened during this supply chain kind of constraints and component availability, or if it gives a decent cover for the year. Any indications around the backlog would be helpful.
As we always said, like roughly the backlog in our businesses, our technology clusters, like advanced mechatronics and also, let's say, activities we have there in certain activities in Industrial Technology, can have a 5-6 months order book, which you see there. In our service technology, it's a completely different business. There it can sometimes be that you have a business which is in you have to deliver in 24 hours. So that's a service business. So there your backlog is very short, and when you have a very big backlog, probably they go to somebody else. So it's a very service model, so that's a big difference.
Let's say Advanced Mechatronics and also industrial applications, industrial projects have six months-
Yeah.
for 5, 6 months. When you look to the building activities, there you see also let's say a higher order book, which is going to a few months now at the moment, and which is for that business pretty high because it's you deliver products through a distribution channel and they are in stock. So normally when they run out of stock, they order that in 2 weeks or 4 weeks or 1 week. So we have a few months of order book there also, which is even climbing. And that says also something about the projects which are going on there.
Great. Thank you very much.
The next question comes from the line of David Kerstens from Jefferies. Please go ahead.
Hi. Good morning, gentlemen. Thank you for taking my questions. I've got two, please. Morning. First of all, following up on the restocking in buildings, I was wondering if you could please give an indication on how that has led to organic growth in the first 2 months of the year. Following up on the previous questions around eco-friendly buildings, do you expect that we're now at the start of a dramatic increase in building renovations, supported by legislation, as you mentioned, government support programs, a gas price that went up another 50% this morning? I was wondering, how does that translate into the 4%-6% organic growth that you're targeting?
The first question was related to, let's say, the restocking in the first months. It's these kind of processes don't change in weeks. What we say now about 21, that's continuing also in the first two months. You know, let's see. We are just at the beginning of the year. I can't say numbers about that, of course, but that continues. This trend is not stopping at the moment. The second thing about, yeah, do you expect legislation? I just explained that. You should not forget that the things which are now prepared, for example, also in the European Union, with the Green Deal and Taxonomy, that's just starting.
I think the effects of that you don't see yet. You see that in 2, 3, 4 years. Also the funds they make available for that are not visible yet in our business. It's more local, let's say, local stimulation, which is increasing. Look only to the Dutch government, who has a tremendous billions package they reserved for sustainability in the coming years. We explained also during our capital markets day that 40% of the energy which is used in countries or the world is related to buildings. That means, yeah, when you want to improve your carbon footprint and you want to drive Sustainable Development Goals, which we are doing, that's our purpose, one of our big purposes in of our company.
Yeah.
This has to be flowing in the markets. The answer is yes, but it's just the beginning. Now, on top of that, I would like to say, because that is a little bit underaddressed, let me put it like this, is our innovations. Our. It's we don't grow with the market. We grow much faster because also we have innovations launched the last five, six years, where teams have worked relentlessly on getting these products in the market, combined with digital services, which are helping also to make, in this case, buildings or other things much more sustainable, but also because it's a new technology.
When you look, for example, to our connection systems, we are really a dominant player in the press technology. Now, the origin of press technology was that you save labor, because you are much quicker as an installer to connect your pipes. I think it's tremendous, much quicker than soldering a pipe. Now, we are a leader in that area, so that is only stimulated by less labor because they need to install quicker. Now, that is innovation. That's also driving this growth. Now, energy prices, I must say, where does it end? That's a very good one. What we do, for example, is also we show to the customer that we add surcharges.
That you say, Now, this is the increase. The surcharge is so much, that especially in our industrial area, we show the customer just how much, and he knows that. That has to. We have to put that through in our pricing. Yeah. Yeah, in the end, you have to fight for your company in that way. We are very on top of that.
Yeah. Very interesting. The momentum in building renovations seems to have really picked up in the second half of last year, post-pandemic. Your organic growth, I think, slowed somewhat in the second half of the year, right? To come out at 16% for the full year. What-
Like in quarter four.
Sorry.
Yeah. My colleague can also answer that. In quarter four, 2020.
Let's say the first half year.
Yeah. Exactly
of 2020 we had a decline of 11%. Yeah.
Exactly.
In the second half year, only EUR 2.5 against EUR 19. Yeah.
Exactly. Yeah.
In the fourth quarter, we already had a small plus.
We had 0.7% growth.
Let's say the comparison is becoming more difficult.
Yeah. Understood. My second question is on the nearshoring trend that you highlight and as an explanation on why CAPEX is increasing to EUR 200 million-EUR 250 million. Does nearshoring support your decentralized structure with many local production organizations, or do you expect to add additional local manufacturing capacity in order to be closer to your customers? And to what extent are you able to source locally, and how dependent are you still on supply chains from Asia?
I think a very good question, this, because you come now to the business model, which actually Aalberts has already, I would say, for 45 years, that's never changed, is you produce there where your market is. Yeah? Of course, we source here and there a little bit components, but always that philosophy. We never went to another country or to a region just because the price was lower, and then we ship it to Europe or whatever. We bought some components here and there, but that is now a big strength. In North America, we sell a lot in piping systems, we sell a lot in service technologies, and we sell a little bit less, but we want to grow there in hydronic flow control.
Advanced mechatronics, we are also there, not so big. On piping system, for example, we produce almost everything locally, despite a few components. Now, what are we gonna now add? For example, what is the project, and we have many projects on that. The components we still, let's say as a group in, for example, piping systems, we still purchase in Asia or other countries. Yeah, we bundle that now and see if we can produce that in our factory in Hungary or in Italy, because we see that the competition and also the competitiveness, we can almost hit the same prices as in Asia due to the increased costs.
Now, let's say the things we still do in Asia, we now analyzing to reshore that to Europe or to North America and optimizing actually our locations and creating added value for our business. The second example for reshoring is a very important one, I personally believe, but it will take years, because in manufacturing you don't change so quickly. Due to COVID, but also other reasons, look to the semiconductor industry. People want to protect the supply chain, medicines, machines, but also semiconductor chips, they want to produce it closely to where they are. So that's why you see now investments of Intel in North America. You see investments in Europe. In Munich, they're gonna build a fab. That will continue also with other products.
When you make products in Europe, Eastern Europe, but also in North America, where we are very present, we are not so present in Asia, then you need also to treat all these products. You need service technologies for that, and especially new technologies. We are a fantastic service network, so that in the future, that we see that as a good trend. So we are anticipating on this trend, let's say, to expand capacity there, where we can also insource things which we now do, let's say, somewhere else. That is why we mentioned that. So we want to be ahead of the game and produce even more locally. In North America, we want produce even more locally than we already do.
We're transferring knowledge from Europe to North America and sharing actually the production technology knowledge, we have, and greatness is made of shared knowledge. That's how it works. That's the strength of the company.
Yeah. Good. Thank you very much.
As a reminder, if you want to submit a question, please press star one on your telephone keypad or submit your question via the webcast. The next question comes from the line of Anne van Leeuwen from ABN. Please go ahead.
Thanks a lot. Thanks a lot for the great presentation, I'm Anne. I'm taking over from Martijn today because she couldn't make it. We have a few questions for you. On the cost savings from strategic restructuring plan announced at the Capital Markets Day, how much has been achieved in 2021, and what can be expected for 2022? The second question, what was the annual revenue and EBITDA margin of the divested company? In other words, what uplift in EBITDA margin should we assume for divestments in 2022? Thank you.
Okay. Let's say, the first question, I think you first touched the strategic restructuring costs, which we have, the project that we did in 2020, where we took an EUR 51.3 million cost with an annual benefit of approximately EUR 50 million. At that time we said. Sorry, I'm still watching every time in the wrong camera, but that's my mistake. At that time we said, we expected about 20% of these annual benefits are also into the books of 2020, and the remainder will come into 2021. That is, let's say, all in the books. We have an additional operational excellence program we announced this year with this EUR 53.9 million of costs and an annual benefit of approximately EUR 25 million.
Yeah, we have said also in December that EUR a few million will be in 2021, and then we expect the rest in the coming three years. Yeah, let's say the exact dividing is, let's say, I would say gradually over the next three years that effect will come in. Is that clear?
That's very clear. Thank you.
Okay. The second question was about the divestments, huh?
Yes. Thank you.
The effect? What was your question? The effect of the 2021 acquisitions and divestments on the revenue side.
Margin.
The margin.
On the EBITDA margin as well. What's the annual revenue and EBITDA margin?
What you could clearly see in the bridges is that the EBITA that we divest is relatively lower in percentage of revenue than the EBITA that we acquire. That also has to do, of course, with our focused approach that we really try to strengthen our position in niche technologies and with very focused acquisitions. That is the picture that you could already see in 2021, which will continue also that effect in 2022. I would say that the divestments of course and acquisitions today. If you calculate everything until the end of 2021, the divested revenue is higher than the acquired revenue.
Also the acquired revenue has higher profitability than the divested revenue. Let's say that will for sure lead to a further improvement of our profitability, but we are not finished yet, huh? As Wim also said, we have a nice pipeline, so we have already acquired again company, and we have also divested a company. There I would say also the same situation, the acquired revenue has a higher profitability than the divested revenue.
Divestments are not only linked to margins, yeah? This, I think, is important to understand. Okay. It can be that it has a lower financial performance. The second thing is it can also be that it has no growth potential, and therefore, we have to have a vulnerable market position. The third thing, it's non-core. So it's not always only the margin. It can be that we also divest a high margin business where we see no growth perspective. Yeah. In the end, it's about market position, because market position gives you pricing power. High entry barriers, pricing power gives you margins, and you are able to pass through what we did again in 2021.
Yeah, raw material increases, inflation, yeah, in our pricing, which we think is tremendously important for the long term of the company.
Thank you. The next question.
We received a question via the webcast of Italo Cadei, who asked, Could the unstable situation in Eastern Europe affect Aalberts's business in 2022? To which extent?
Yeah. That's a good question. I think of course we also see the news. It's worrying what we hear also this morning. I must say I couldn't dig in the news in detail. Probably you all know already more than we know. I think I can say we are on top of the situation. What my colleague already said is that it's small 1% of our revenue is Russian related. Yeah. Yeah we with our teams we communicate very closely and let's see how that develops.
Yeah.
Fortunately, it's not a big part because Eastern Europe has 11% in our business, but it's mainly also the other countries like Southeast, Eastern Europe, Poland, Hungary, Czech Republic, where we are very strong, but and partly Russia.
Of course, even the 1% revenue you want not to be under threat or whatever. Let's see how that develops.
Yeah.
The next question comes from the line of Maarten Verbeek from the IDEA!. Please go ahead.
Good morning. It's Maarten Verbeek of the IDEA!. Firstly, I don't know if I heard you right. You mentioned that the EUR 154.2 million gain was on one disposal.
You heard it right. That's one disposal, yeah.
That must be Lasco. What happened to the ones of Adex and Stena Technica? Did it also create a gain or result?
Yeah. Let's say, as you probably know, Maarten, you know us already for a long time, every year we have disposals with, let's say, also with book profits. Every year we have also our extraordinary costs. What we always do, and what we also did this year, is that we put these on these holding elimination lines. That in the holding costs, net holding costs that are reported of EUR -7.3, which was the same number as last year. That was including the benefits of these remaining 2 disposals, but also including the extraordinary costs that we have besides the strategic restructuring/operational excellence costs. The difference for us is that every year we have one-off costs.
We also believe that this should be put in as we did in the normal operational results. The exceptional thing of this operational excellence projects is that it is really creating recurring benefits because it has a structural character, and therefore we put this aside. In our holding elimination line, we have the two remaining disposal benefits, but also the normal extraordinary costs that we have every year. This balance is always in more or less it's EUR 1 million, EUR 2 million plus minus over the years.
Okay. Thank you.
the two also together.
Um-
We had EUR a few million there. Let's say the book profit we had on these deals was by far not, of course, of Lasco, but it was EUR a few million we gained there.
Yeah. Yeah.
It's not big numbers.
And therefore-
Like we always do.
The impact on our numbers is always, yeah, let's say, very small because it's the balance of these two elements.
Sure
The plus and the minuses are always more or less in balance, I would say. Therefore, we always see this as normal operating profits and costs. We put it in the holding elimination line to make sure that the segment reporting that we have are cleaned up for these exceptionals. That is how we are presenting our numbers. Besides, yeah, this Lasco disposal was such a big one. Also the extra, the operational excellence projects were also big costs. That is why we put this separately. The good thing is this year that we, or last year, that we could fund these costs out of the disposal benefit, of course, that we made, which is a balance of EUR 100 million plus at the end.
Okay. Yeah. Thank you. This gain of EUR 154 that must be included in the other income. More or less there's still a difference of EUR 23.3. Last year you know also there's a new line in the P&L, and last year you made an other income of EUR 14.4. What is this exactly?
Let's say, first of all, this is a gross income of EUR 173. There's a gross income of all the disposals together. That is before, let's say, the benefits that we normally. The EUR 154 is a benefit where we also deduct the disposal costs. We, of course, also make a quite substantial disposal cost for such a big disposal, and also for the other disposal, by the way. This other operating income is only the gross income out of these disposals. On top of that, we always have some grants and some other things that we also have every year. In this line, these costs are taken, or let's say this income is reported.
Okay. Thank you very much.
Thank you very much, everybody. We have now come to the end of this Q&A session. I would now like to hand back to Wim Pelsma for the closing remarks. Thank you.
Yes. Now thank you very much for joining our webcast. I really would like to thank also our Aalberts people who did a great job, and because we can't do that without them. It's a joint effort. Also thank you very much for all the questions.
Yeah.
Thank you.
Thank you.