Hello, welcome to the Aalberts Interim Results 2020. My name is Jess, and I'll be y our coordinator for today's presentation. For the duration, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I will now hand you over to your host, Mr. Wim Pelsma, CEO, to begin today's presentation. Thank you.
Good morning. Welcome everyon e joining our webcast for the interim results. First of all, we go to the contents of our presentation. At first, we're going to tell you something about Aalberts, then the operational development, the financial development, and then we will say something about the outlook. After that, we hope at 10:00 A.M. to have a question and answer session. Going to Aalberts. As you know, our essential part of Aalberts is that we engineer mission-critical technologies for groundbreaking industries. We do that in a way that good is never good enough. I think that's part of our culture. Our mission-critical people make the difference, and that's also why we believe in our real value, which is the Aalberts way, winning with people.
A very essential part, which has also proven itself, again, I think the last six months, is that sharing knowledge also in crisis times is a real important thing because you learn in many parts of the world what happens, and you can evaluate these actions in other parts of the world. For us, being a specialist in technologies with a very continuous improvement culture with very good people, and that combined with sharing knowledge is the basis of our success.
Our way of value creation is that from these essential three things, we create shareholder value by building leading niche technology positions, which we defined also last year in our Capital Markets Day presentation, that we have five leading niche technologies which we want to build further with high entry barriers, high pricing power, and generating high added value margins, and creating sustainable, profitable growth over a long-term period. You can also only do that when you are unique in your markets and when you combine the uniqueness of your technologies with a selective end market. We're looking for combinations of the technologies which are leading and unique with a selective end market. We're building these positions step by step further out. This can be organically, it can be inorganically. Good is never good enough. It's really our culture to improve every day.
We do that through operational excellence, continuously improving our EBIT margins. Even in crisis times and difficult times, we look for improvements all the time. I think also the actions we will explain later in the presentation about our strategic restructuring costs based on the Capital Markets Day and the presentation we did in December, again, shows that we react very quickly to improve our operations continuously. We aim for a very strong conversion from operational excellence to cash generation. I think also we see that the last six months, where we generated good cash flow from operations, a little bit lower than last year, but with a much lower revenue, and also with a reduction of our inventories of EUR 30 million, which is, of course, affecting the absorption in your factories. Despite that, we generated good cash flow.
The cash we generate out of that operational excellence, we allocate very disciplined. That means that we continuously look where we allocate our money because capital allocation is one of the most important things, especially for me, because it actually says something about the profit and the positions you're going to generate in a few years, because the capital we invest this year will generate revenues and results in the years in 2021, 2022. It's very important where you allocate your capital in a disciplined way. Technology exchange, very important. It catalyzes innovation speed, it catalyzes fast learning, adaptation quickly to the new situation. It really helped us also the last months to adapt very quickly to this specific circumstance.
We do that on a long-term basis, so relentlessly we create long-term shareholder value. We have a playbook for that, and you can see how we do that. We're continuously looking to the competitive advantage we have in the market to the growth drivers. We explain these growth drivers in our strategy. It's also on our website, very well explained. From that point, we leverage our activities by gaining organic growth, by having more volume in our factories, combined with excellence, efficiency, actions and projects. We drive margin expansion. With this margin expansion, we create a strong free cash flow, which we allocate very disciplined in our five core technologies, where we optimize our portfolio continuously, and this goes on and on. This way, how we create compounding returns on a very disciplined long-term way to create shareholder value.
Our track record, it's now 45 years that we have done this, we will not stop with this even when we have the COVID-19 crisis. It's not stopping us from, let's say, executing this strategy. You can also see that in our earnings per share, dividend per share over the last 10 years, our return on incremental capital employed for us a very important one. Of course, we look to a long-term period, and we are sure that we will overcome also this COVID-19 period. Our long-term shareholders are growing, we have more than 50% now, more than 3% holdings with a long-term view. They are supporting also our sustainable business model. Our PP&E strength, I can't say enough about that. Also, again, in these times, your people are the most important. You win with the people.
That means also that the business teams we have in our company are the most important. They make the difference. They take the actions, of course, with the intensive discussions with us as a board, but also with the head office. It means that we have five drivers: be an entrepreneur, be creative and think in solutions. Take ownership, don't wait, be proactive. Try to be better and quicker than your competition all the time. Take your own decisions in the values we have. Of course, we go for excellence every day. Every day we challenge ourselves to become better. Share and learn information. A very good example, also the last six months was we were very early warned in our activity in Italy about the COVID-19 experience and disaster, what happened there.
We could immediately act already beginning March, also in the U.S., to take preventive health and safety measures to be earlier with our measures. Of course, act with integrity, very important. Our greatness with our people is also made by sharing knowledge and winning together. The strategy and objectives not changed. These are before IFRS 16, and we are still very active to realize these strategic objectives. We started and we updated our strategy last year, and we are aiming still for these objectives to hit them in the coming years. Very important, innovation, it drives organic revenue growth. Important is also to mention that we did not stop any innovation project during the last six months. Actually, we accelerated certain projects like digitalization in climate technology.
We accelerated our investments in our press manufacturing, where we see a lot of potential, especially in North America. We accelerated our investments in cleaning and machining and advanced mechatronics. We also mentioned in our press release more examples. We have to continue with innovation because it makes us only stronger going in the future. We were also able to do that because we had a very solid balance sheet, a good cash generation. We could also postpone things to generate more cash or, let's say, spend less cash out on our investments. That's what we actually did. Innovation is very important. It is driven by three mega trends, as we also explained. What we see is that our innovation rate, where we have a target to go from 10% to 20%, it's really improving.
We are measuring that every three to four months. Of course, now we have a lot of other actions we do, but this is still on the radar very intensively, and the same is for our key account management rate. You see more and more that through focus elements and delivering more solution and systems and more complete package, that our key account management rate is growing. We see that the strategy is really taking place. Also important is that by having a lean structure, that you always keep ahead of the game. That our entrepreneurial spirit, our entrepreneurial organization, which we also see more and more as sustainable entrepreneurship, is that you can react very quickly with your innovation to changing market circumstances. I think we all saw the last six months how important that is. Coming to the mega trends shaping our future.
Again, reflecting to our strategy, very important, these are three trends which are no t changed at all. Rapid urbanization will continue. Climate change and resource scarcity will continue, and especially the Internet of Things, connectivity and integration, more homework. Now, we saw that all with our Microsoft Teams experience or Zoom or whatever we used. We also intensively used that, and you see that a lot of things accelerate by doing that. A very nice trends we also see is more and more digital services in our business. Remote control questions, data information, which we give more and more to our customers where they pay for, and that in combination with, let's say, our products, our hardware is a unique combination.
We focus the company much more to five niche technologies, hydronic flow control, piping systems, surface technologies, advanced mechatronics, fluid control, and we combine that where we make actually a match with the selected end markets, eco-friendly buildings, industrial niches, sustainable transportation and semiconductor efficiency. We embrace our Sustainable Development Goals in this strategy, where 64% of our revenue is already embraced by the SDGs, which I mentioned. By doing this, we achieve a unique market position with sustainable impact. Sustainable entrepreneurship, we went a step further. It's not only that we embrace the Sustainable Development Goals, but we also have integrated them completely in our strategy. I think that's pretty unique. We made very big progress there. It's because we believe that we have to take our responsibility as a company.
The second thing is we also see a lot of money flowing in these directions where we can take advantage of, for example, energy savings in buildings, energy savings in fuel reduction in combustion engines, also going to hydrogen applications. We are all there active in fluid control. In piping systems, we look for hygienic distribution of water. Very important is that more and more, the applications in transportation look for lightweight materials where, for example, steel is replaced by aluminum, but aluminum needs the same strength as in, for example, steel. That you solve with specialized coatings, specialized surface technologies. This will also be in the future, you extend lifetime of the materials and you make them stronger and more specified to the use you do. Our segment reporting structure to make clearance.
Our five niche technologies, as mentioned here, are reported in four business segments, as you can find in our press release. Operational development. The highlights, where you can call them like that, highlights, of course, I think there are not many people who had expected to have a first six months like this. I must say the first two months of the year, we started very well. We saw also a pickup of the industrial markets in the first two months. We had a very good record order book in end of February, which I've never seen before, and not only in advanced mechatronics, but also in other parts of the group. Actually, you could say that the recovery in the industrial markets, which was really taking place, was a little bit broken by the COVID-19 situation, which of course started end of February, beginning March.
We took immediately action. Also due to the fact that we were warned already in China, but especially due to the experience we faced in Italy, we took actions in all our locations in the world. That really helped because we had a limited amount of infections. It's also till now, on our, let's say, roughly it's now lower than 150 sites. We only had to close probably four or five for certain periods, mainly in France and Italy. That really helped to continue our production, because we have to produce, we have to supply our products and our services, which is very important to keep also our revenue running. We were able to do that, and thanks to a lot of people, which were really reactive in taking the actions, and I want to give a big compliments to all the business teams.
Of course, we were affected, especially in the month April and May, where we saw a decline in our revenue. In June, we saw a real good pickup. We also see a further increase of our order intake. The effect of that was that we had a revenue of EUR 1.287 billion. Organically, we had a decline of 11.1%. Our operating profit amounted to EUR 121.7 million, with an EBIT margin of 9.5%. This is including a EUR 4.5 million strategic restructuring charge, which we will explain further in the presentation. When we will take out the restructuring charge, operationally, we did a little bit below 10% EBITA margin. I think it's 9.8% or 9.7%. I think we came through it pretty well. We focused on cash generation. That's the first thing we did.
Cash generation, cost optimization, because the moment we started to go in this COVID situation, beginning March, nobody knew what would happen in April and May, how deep it was, when would it recover. What you have to do is to manage your cash very thoroughly. We did that. We generated solid cash flow from operations of EUR 68 million, roughly 8, 9% less than last year, but with a much lower revenue and also a much lower production absorption because we also reduced our inventories with EUR 30 million. That is a big number because we start reducing the inventories from the month of March. That means in three to four months, we were able to do that. That means you really have to reduce your production pretty heavily, otherwise you never reach this number. That, of course, hits also your EBIT margin.
A net profit of EUR 85.6 million, per share EUR 0.70. Important is to mention that we continued our investments and innovation initiatives. The CapEx we spend was roughly EUR 54 million, but the CapEx cash out was EUR 72 million. We kept that floating because we believe it's very important to keep on innovating, also to stimulate allocating your capital to the growing product lines and technologies. Also the new products which we launched last year, that we keep on pushing that in the market, so we become stronger out of it, and we evolve in a better and stronger Aalberts, what we also explained in our strategy. We were also able to do that because we generated the cash, mainly due to working capital improvement. We also look to our strategy, which we were implementing further.
Actually the decision we took is that we going to accelerate the action plan which we presented last year. So a lot of actions which we planned in 2020-2022, we have accelerated. We already knew which locations we had wanted to reduce. We already knew what kind of overhead we wanted to reduce. We defined roughly 30 projects in the whole company, in all the segments, and we will take a one-off full year strategic restructuring cost of approximately EUR 40 million, because these projects give us a clear picture, but could differ a little bit, so that's why we say approximately. It will give us an annual benefit of approximately EUR 45 million.
We think that we can really structurally improve the costs by really consolidating locations, reducing locations, divesting locations, but especially also, and that's we did a lot already, reducing the overhead and making the company and the organization much more simple, because there we still can gain a lot. Aalberts Accelerate Strategy focused acceleration. Operational development. As said, an organic revenue decline totally of 11%. Order book end of June, higher than last year. I think that's important. We started also with a very good order book before the whole COVID situation affected us.
In addition to the recently published trading update, where we already give some guidance in the different areas of our company, is that we saw a further increase in order intake in Piping Systems and Hydronic Flow Control, we also saw, and that is additional information, and that's actually good news, is that in Surface Technologies, we see a slight recovery of order intake and sales. We have more orders per day, per week, and very important in this business is when there is more customer activity, that means our customers are producing more. We will also get the business. We know that because we will coat the parts, we will treat the parts. That's why that is actually good news. Advanced mechatronics, very strong growth in semicon efficiency.
We grew there 19%, which we already guided at the beginning of the year, that 2020 will be again a good year, and our order book is on a record level. Also the second half will be good. fluid control, increase of order intake and sales also, especially also in sustainable transportation end markets. We saw a slight recovery in order intake in Beverage Dispense. Beverage Dispense was hit pretty hard, but also here, we see a recovery in our order intake. Overall, when you look to our four end markets, semicon efficiency at +19%, and in our eco-friendly buildings end markets, we had a decline of 8% in the first half and compared to last year. industrial niches, -15%, I think that's pretty good. It shows something about the positions we have in several markets, that we are pretty sustainable there.
Sustainable Transportation also due to the closures of customers in the period, let's say end of April, beginning May, till mid-May, end of May, that was the biggest reason that Sustainable Transportation had a decline of 23%. The main message of order intake and sales is further increasing. When we look to our organic growth and innovation initiatives, and we have some nice examples in pictures to show you that we continued with a lot of projects in our company. We even strengthened and expanded our R&D and engineering force. Now, some examples. We strengthened our engineering in our press production area, to extend the product ranges and to develop a new range where we acted with an additional range, you could say, in another material.
We expanded the R&D efforts in our digital services, and we are busy with that, with digital services also in Climate Technology, but also in Piping Systems where we offer more and more drawing services to our customers to specify the projects. We added engineers in our valve lines for Fluid Control. We are developing some very nice new patented valve lines for district heating and gas. We got some nice projects at the beginning of the year in advanced mechatronics for new co-development, so we had to add engineers. This is a lesson at least I learned, and we learned, but also I learned from 11 years ago when we also had a crisis. We were forced a little bit to cut in our engineering force. We did not do that at all in this crisis because it takes you years before you get the right people back.
We will not do that, and we will continue our R&D efforts and innovations on the highest level because it will bring very good growth to the future. Piping Systems, I mentioned already what kind of examples we did in innovations. We have an organic decline, we still kept on innovating to reach again organic growth in the coming years, because we will do that. That is, we expanded our press product ranges in materials, in SKUs, because we see a good growth in that area, also in North America. Our FullFlow valve line, which it's a patented product which we launched the last years, is doing very well. We had a big growth. We even are a little bit out of our capacity, we have now installed additional lines to serve our customers.
Also there we expanded the portfolio to other connection types, and we go to other materials. We are still in development also to extend that portfolio further. We launched a patented balancing valve, started in the U.K., and a composite gate valve for below ground applications for water and gas. It is a composite, it means a plastic combined with glass fiber. We are unique in that market with this kind of gate valves. We have already the connections for that now. We have ordered the gate valves. We launched in April, and good order intake for that, and we are busy with an in development of new plastic manifold systems and also new connection systems in our plastic piping business. A lot of activity there.
Surface technologies, we allocate our capital, you could say, in service technologies by investing less in capacity expansion because, of course, we had a decline in our revenue. We reallocated the capital to faster invest in our facilities for the treatments for additive manufacturing parts. It's a growing market. We opened our HIP facility in Greenville, South Carolina, which we'll expand further because we refurbished the building, we put a facility in the first HIP vessel, and we will expand that further. It's a big investment, with a very good profitability. We didn't stop that, we even accelerated that. We integrated our austempering and reel-to-reel plating activities acquired last year, Applied Process and PPC in Chicago. They did well. Of course, also they had their downturn in the last six months. Good companies aligned with Aalberts values and culture.
We are in process to strengthen and bundle our R&D forces within surface technologies in our location, which we already had in Switzerland. We have different R&D locations, which we bundle. In Switzerland, also there we invested in so that we can offer new coatings, new treatments, having other heat treatments in the future. That's concentrated now in Switzerland. We continued our initiatives to expand our footprint in Eastern Europe. I think this is a growing area for surface technologies, especially also what you see now in trends in the automotive, where you see that the more the electrical vehicles in our OEMs are more and more produced in their home countries. That's the strategy where it goes to. That combustion engines, where they try to get a higher margin, also go more to other countries, like Eastern Europe. We follow that trend.
We develop surface technologies to a more and more specialized technology company. We also move in the right regions to follow our customers, this process already started last year after summer. Innovation is driving our organic revenue growth, so we are pushing that all the time. Some nice examples, as already explained, our press product range, we expanded to eco-friendly buildings and also in industrial applications and niches, Aalberts Piping Systems. With different materials, we are very unique. We have not only the connections, but we have also the valves, we have also the pipes, so we can offer a complete system. Pressing is one technology. We also have the technology of groove. We have the technology of screw. We can do that with all materials for pipes, which there are copper, steel, stainless, plastic. A unique position that we have in piping systems in the world.
There is so much to gain, not only in growth in all over the world, but also in our operational efficiency. That's why we also pulled forward a lot of projects in Piping Systems to become more efficient in the coming years. Another example, the FullFlo w line, which we launched last year, did very well. As said, we have some issues with producing what we can offer to the customer. We combined that with the connection of the press fittings with the valve. It's a fantastic package. We expanded the portfolio further. As said, we are also developing other materials to be launched in Europe and North America and Asia. We launched a newly developed patented balancing valve, really a unique product. We developed it in the U.K.
Was a great job of these people in the U.K., and we brought it on the market. We are in the process to bring it further on the market in Europe. A great product. It is an example of integrating different functionalities in one valve. It is pressure control, it's balancing. It's a very good valve for maintenance. You win a lot of time as installer. It's uniquely developed. We expect a lot of it to roll that out in the coming periods. New composite gate valve for below ground water and gas applications. It's a company and a brand, Isiflo, fantastic brand. We already had the composite Isiflo Sprint connection range. Now we combine it with a gate valve, produced ourselves and assembled ourselves. A great product, which also we expect a lot of it.
We are in the process for our plastic piping systems to develop a new manifold range and also new connection systems, not only press application, but also other connection types to expand our portfolio. We did very well in this area, especially also in Belgium. We did great. Activities in North America in the different niches we do there in our activity in North America in industrial and pool and spa and golf irrigation, we did a great job. Opened our HIP facility. We announced already earlier that we were busy with that. We opened it. The installation is working. We have the first orders. Very interesting, very complex additive manufactured parts. You cannot do only additive manufacturing without the post-processing. The post-processing is very important to come to the specification of a complex part.
This is a unique technology, where only a few players in the world can do that, and this is a very specialized technology which will expand further the coming years, not only in North America, but hopefully also further. Continue to Hydronic Flow Control. As we already mentioned earlier, we launched a lot of new products and services the last years. We mentioned that time, 15 product lines with a lot of growth potential. Of course, also the business team of Hydronic Flow Control had to manage the existing situation the last months, but we did not stop giving attention to these product lines. We will continue with that. Still, there is a lot of growth potential. What we see is a strong increase in offering digital solution and services to heating and cooling systems.
We are really exploring that field because it's new for us, but also for the market. You must imagine that, for example, you have a boiler room and where our products are made connectable, they give data information. We are able now to collect all this data information. We are able to give our customers on their mobile phones all kind of information about their boiler room, about the performance, and we give them advice how to use our systems. This is going to grow. We see more and more traction there. It's, for us, a fantastic opportunity. Also remote control is the next step, so the digital platform we built the last three years, we put a lot of money in, is really working.
We have a digital platform where we can communicate through mobile with our customers, and this is the result of the investments of the last three, four years we did in that area. With a separate team, a lot of R&D people, where we spend all the money already, and now you see step by step the first successes. It's still a small amount of revenue, but this is fast-growing, and we really believe the combination of the product in combination with the digital service, that that is the route to go. We further strengthen that department. We're also looking for people from outside to give us more knowledge that we can think, let's say, more creatively about these services. We added people and capacity. Advanced mechatronics.
Managing a record order book, several new co-development programs, great performance in the first six months that will continue also in the second half. We follow our customers there, and we have to serve our customers there. Even in COVID-19 times, we were able to, with the 1.5 m distance in the clean rooms, that was not easy in the beginning, but we found a way to keep our efficiency on a pretty high level. It deserves a compliment to that whole group because that's not easy to gain the same service for your customers, but they are fighting hard and working hard to do that. fluid control, as already mentioned, valve lines and innovation in sustainable transportation. Some examples. This is the Flexcon Premium.
It's one of the most sustainable expansion vessels in the world, because we storage the heat and the warmth through salt crystals, patented, fantastic product. We've seen more and more projects coming where they use this system. It has a big potential the coming years. It takes time, of course. Last year it was launched, and now we see the projects coming. Digital solutions, as we see here, I talked already about, that goes through the mobiles of the customers. We ta lk to the technical people in the boiler room installations, in hotels, in offices. This role really will grow in the coming years. We have a fantastic position here. Advanced mechatronics, record order book, and we are developing a patented new valve range, valve line for district heating and gas. It's a more bigger range. We call it the mid-range.
A great product, which is based on the FullFlow valve, and that's for district heating and gas. District heating is growing. Also, the gas market was good, and as you know already, in the auto market, we have a very low position. It's because already four years ago, we said we should go to other markets. Operational leverage and excellence. As explained, we accelerate our action plans presented during our Capital Markets Day, and this is exactly what we presented there. We further focus, cluster, then simplify the organization. We concentrated all Aalberts Group activities in our lean head office. We reduced our staff also here in Utrecht. We reduced our costs. We reduced also the staff in the different niche technology clusters, the business teams. Because of this clustering, you can also optimize your overheads in all business segments.
We did a lot, and we're going to do a lot. We divested already some smaller locations. Recently, also one in Italy. End of the year, one in Germany. We closed several sites, but we are really in process of executing the plan to go from 154 sites to 122, which we explained. We will do that much quicker than we earlier said in our presentation. A lot we will already do this year and probably the first half next year. That's why we have a one-off strategic restructuring cost of EUR 40 million. We take that in 2020. EUR 4.5 million we took in the first half, EUR 35 million we will take in the second half, roughly. An annual benefit of approximately EUR 45 million, partly in 2020 and fully in 2021. Aalberts is accelerating the strategy.
We are not stopping because we think that COVID is a temporary thing, but we always think long term, and we will come stronger out of this crisis. We see it also as a momentum to accelerate our strategy. Allocation of capital, of course, focus on cash management and customer optimizations, especially cash, costs, working capital, but also innovations. The CapEx continued. I'm very happy we did that. We continued that. We said we're going to do that in growing product lines, future technologies, innovations. We postponed mainly capacity expansions in the different segments and also building expansion. We were adding building plans in three places in the world. These projects we postponed so we could also, let's say, spend less cash this year. The CapEx cash out, but also my colleague will tell more about that.
You see that the CapEx cash out was still EUR 72 million. A little bit lower than last year, as you can imagine, that it takes time to reduce your CapEx. The main effect will be seen in the second half in the CapEx cash out, that will be lower than last year. The capital is allocated, it's in line with our innovation and our organic growth areas, press product ranges in piping systems, hot isostatic pressing, the HIP, in additive manufacturing, digital solution and services in hydronic, machining and cleaning capacity, advanced mechatronics, because we believe we will grow further. We will add an additional cleaning investment in the second half of the year to follow the volumes of our customers. We are developing new and existing new valve lines, but also had to expand the capacity in existing valve lines in fluid control.
The tagline, focus on cash management and costs, but we continued CapEx and innovations. I give now the word to my colleague, Arno Monincx.
Yes. Good morning. Also welcome from my side to everybody in the webcast. I would like to take you through the financials of the first half year 2020. First of all, the bridge, the revenue bridge, the explanation of our organic revenue decline in this first half year. We came from EUR 1.436 billion last year in the first half year, where we had this year a gain inorganically from our acquisitions we made last year. We had a loss from our divestments we did in the first half year last year. Of course, there's a currency effect, mainly US dollars, of EUR 3.9 million, that leads to an inorganic revenue decline of EUR 157.6 million. The EBITA bridge, the same. We came from EUR 187.5 million last year.
We had a gain this first half year from our acquisitions we did last year, PPC and Applied, of EUR 2 million. We lost EBITA because of the divestments we did last year of EUR 1.8 million. We had a very small impact of only EUR 100,000 from currency. That leads to the organic, let's say, EBITA decline of EUR 66.7 million to end up with EUR 121.7 million over the first six months. The condensed consolidated income statement, where you see the difference between this year and last year. Of course, the revenue decline. What is not mentioned here, but also I would like to circulate again, is that the added value we made this year was 62.3%, 1% less than last year.
Despite the fact that we had to really break, of course, production from the end of March until the end of June with a much lower sales level, we managed to even reduce the inventories with EUR 30 million, which, of course, has a big impact on the absorption. Despite that, still 62.3% added value, which also says something about the portfolio of ours that is becoming stronger and stronger. Operating profit, EBITDA, EUR 59.8 million less than last year. Our depreciation is a little bit higher. The operating profit, already explained. Net finance cost a little bit higher than last year, also because of the acquisitions we did last year of Applied Process and PPC, US dollars, which is a little bit more expensive to finance.
There is a higher tax, ETR, tax impact in our numbers this year of 0.7%, which leads to, at the end, to a net profit before amortization of EUR 85.6 million, versus last year, EUR 137.8 million. Or EUR 0.77 compared to EUR 1.25 last year. An organic revenue decline, as already mentioned, of 11.1%. The consolidated balance sheet over first half year 2019, full year 2019, and first half year of 2020, where you can see the variances and limitations. What you see clearly is that the net debt, it's also what we communicated already, also in our press release in June, the net debt reduced with 17%, net debt before IFRS 16, to EUR 648 million, which was 15% at the end of May, so it was even a little bit better in the last month. That leads to a leverage ratio of 1.6 versus 1.7 last year.
We managed to improve that despite the lower results. Because we also could bring the net debts in line with the low results, we could still improve this leverage ratio. Net working capital reduction, I think a good performance, but also necessary to manage the cash. I will explain later. Ended up at EUR 598 million versus EUR 640 million last year. The days working capital, two days improvement, despite the fact, again, that the revenue, of course, declined substantially. Also there you see that we took right actions. The equity percentage increased to 51.8%. The return on capital employed before IFRS decreased to 11.7%, of course, driven by the lower results. The condensed cash flow statement.
I think what you can clearly see here is that the reduction of EBITDA, about EUR 60 million, we could almost compensate by improving our net working capital in the same period. We could compensate EUR 52 million out of the EUR 60 million of EBITDA losses by managing the working capital. Reduction of inventories was a main drive for that, of course, also the other elements were improving. That leads to a cash flow from ops, which is only EUR 6 million lower than last year, that we could compensate or set off, how you want to say, with the net capital expenditures, cash out. That was also EUR 6 million lower than last year. That leaves us to an almost equal free cash flow over the first half year versus last year. Now, further, we see that there are also some other big elements that we could change.
Of course, we did no acquisition this year, so there we have a big advantage shift in the net debt. We paid less income taxes because of the lower results, but also because of the expectations. Let's say the number that we paid last year. Change of lease payments, a little bit increased. An important element here is, of course, also the delay of dividends that is now paid in July instead of the first half year last year. The free cash flow, we ended on the same level as last year. Revenue, per segment. Installation Technology, we decreased 7% of revenue. Material Technology, 15%, the same like Climate Technology and Industrial Technology. We lost 6% of revenues.
The CapEx, as Wim also explained, we really continued to invest in new technologies, in growing product lines, and we try to postpone as much as possible capacity investments and building investments. That leads to a reduction of 9% of the CapEx in Installation Technology, 26% in Material Technology, a reduction of 15% in Climate Technology, a reduction of 57% in Industrial Technology. Again, we continue our investments in growing product lines, technologies, and innovations. Operating profit. Installation Technology declined with 24%. Material Technology declined with 56% to EUR 23.7 million. Climate Technology declined with 23% to EUR 25.6 million, Industrial Technology declined also with 23% to EUR 26.4 million. That leaves us to the holding elimination line, where, as you know, we always take the extraordinary costs in so that we keep the second reporting as clean as possible.
Also in this EUR 7.3 million that we are reporting for the first half year of 2020, that is including the strategic restructuring cost of EUR 4.5 Million, as we have guided in the press release. The EBITA margin for Installation Technology, 7%, 2.2% lower than last year. Material Technology, 7.1%, which is 6.7% lower than last year. Of course, ambitious with a very high added value, so relatively more impacted in the EBITA. Climate Technology, 10.9%, which is 1% lower than last year. Industrial Technology 13% EBITA margin, which is 2.9% lower than last year, which brings the total of our EBITA margin to 9.5% or 3.6% lower than last year. Again, also given the strong decrease of our inventories, and including a restructuring cost of EUR 4.5 million. Please.
Yeah, Aalberts looking forward, so we have an outlook, and of course, it's very difficult to predict what will happen because I think we have to be cautious. We will continue to operation in a safe way, and of course, the most important is that we keep on serving our customers, that we keep our people safe. That is the most important, and that's a real challenge. I think we found a way in our production sites to do that, in our service sites. Looking to the outbreaks which you see now in the world happening in the different countries, I think we have to be very careful and be prepared for a possible second wave, and especially in certain regions.
You see that the people are sometimes a little bit afraid to work or they are sick or whatever, you have to manage that very carefully. We were able to do that, and that deserves a big compliment to all the people in Aalberts. Our focus continues to be on cash because we have to be cautious. Cash, cost optimizations, also innovations and CapEx that will continue in growing product lines, future technologies, and innovations. As we said, we will continue by postponing capacity expansions and also our buildings, which we were aiming to build. We will keep on building postpone it.
Therefore, we expect a lower CapEx cash-out in the second half because we took all the actions in the first half and we saw a small effect in cash-out of EUR 5.5 Million in the first half, but we see a much more bigger effect in the second half. That we keep on investing, but also allocate the capital on the right way. Most important may be here that we will accelerate the strategy as already explained, and to evolve faster into a stronger and better Aalberts, realizing our strategic objectives, which we presented last year. Thank you for this presentation. I think we go now to the questions and answers.
Thank you. We are now about to start the live Q&A session. For those who have not yet joined, please dial into the audio if you wish to participate in the Q&A session. For those who have already dialed into the audio, if you would like to ask a question, please press star one on your telephone keypads. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. We do have a couple of questions in the queue. The first question comes from the line of Henk Veerman from Kempen & Co. Please go ahead.
Hi, good morning, Wim. Good morning, Arno. A couple of questions from my side. Firstly, two on your restructuring plans. Firstly, you already mentioned that the restructuring plans look very similar to the plans already announced during the CMD last year. Have there been any changes as a result of COVID-19? Maybe there are some businesses that you do not expect to recover so rapidly post-COVID, where you decided to restructure as well. Have there been any changes? Secondly, on restructuring, you have accelerated the plans. You announced that the benefit is EUR 45 million on an annualized basis. How much of restructuring will be done in 2021? And what will be the total benefit of the restructuring also beyond 2021? That EUR 45 million, how much will that be for the total restructuring plans? You already mentioned, for example, you will decline the number of sites by about seven locations. Thanks.
Yeah. Thanks, Henk, for this question. I take the first one. Your question was, is it changed? The plan we had in December is a change due to COVID from a business perspectiv e, let's say, the restructuring. No, I think, in principle, it's not changed because I thin k the evaluation of our strategy last year, where we took, let's say, the second half of 2019, forget. We evaluated already very carefully what is the market doing, and in all areas, we tried to align already with these market trends. From that point of view, we are accelerating that plan. Of course, what you see here and there is that, for example, in a business like aerospace, I think that's, of course, something really changed. Fortunately, we have a small percentage in that, very small percentage. There, we will realign our capacity there and focus on other markets. I think trends like electrical vehicles or hybrid vehicles, and that will continue as we already thought.
We were already in a process, especially in Material Technology, to align our organization already to very specialized technologies in that field and to reduce our sites also there, but also in other areas. Yeah, you could say aerospace is maybe a change, but for us, a very small change. For the rest, we are mainly accelerating. What you see is more and more interest in digital solutions. I think that's really what we see. That's why I explained also where we expanded our R&D there, especially in Climate, but also in Piping, but also in Fluids.
It's all over the place. It's still on a low level, so that will develop further, which we already saw last year, but I think it will accelerate, which is logic. Yeah, the answer actually is not big changes, some small ones, and we are accelerating the plan. Yeah, we use also the momentum now to accelerate and to become much more efficient to hit our targets in the future.
Yes.
The second question was about the annual impact, right? Let's say the full annual be nefit, we believe, will be in 2021. Let's say 2021 and beyond, of course. We also will expect some of these benefit in the second half of 2020, let's say approximately 20% of it.
Okay, that's clear. You pulled the restructuring forward, but how much is yet to be done in 2021 and 2022? Just to get a feeling, you mentioned you want to decline the number of locations worldwide from 156 locations to 122 locations during CMD last year. How many locations will be closed by year-end, and how much do you plan to close beyond that? Just to get a feeling, what is the total cost saving of those plans? We now have the EUR 45 million, but what will be the total million for the group?
Arno, just to be clear. The one-off cost is EUR 40 million, and the complete annual benefit on full year basis is EUR 45 million. Of this EUR 45 million, we will realize 20% in 2020, in the second half, and 80% in 2021. I think that's very clear.
Yeah.
After that, you get, of course, the full benefit of approximately EUR 45 million continued in 2022. It's roughly a little bit less than one-year payback. The second question is about locations.
Okay.
I think it's very clear.
Yeah.
The second question is about the locations. We had a plan of 156 to 122. We aim for that for three years. Now, it's a little bit difficult to say where are we exactly end of the year because, of course, this is all people work, and so I don't want to mention a number there. We will make already a big step this year. It can be that certain activities will roll over to quarter one, so I don't want to commit myself completely on a number. Let's say we do this year a big part, and then next year, the remaining, especially in the first half. That is a little bit the plans which we have now. It could also be that it prolongs a little bit in the second half next year, but then we should be pretty fast. Otherwise, we don't realize also the EUR 45 million benefits.
Yeah.
Hopefully that answers enough for you. Is it clear now, Henk?
That's clear. Yeah.
So the full year benefit-
I have one other question. I'll take them. Yeah. Okay.
The next question.
Next question.
Yes. The next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please go ahead.
Yes, good morning. Wim and Arno . Maybe to follow up on Henk's questions on these action plans. The EUR 40 million restructuring, will that all be cash out or is there some cash element in there, for instance, linked to restructuring? On the EUR 45 million in benefit, could you provide a breakdown by segment?
Let's say, the first question, I think we can say that the majority of these plans is cash out, but not everything in 2020. There will be some overshoot in 2021. We don't give a breakout per segment.
Okay.
What we could say, because these projects are all people work. What we could say is that it's roughly 30 projects we have, but it could also be little bit mo re or less, which we really intensively discuss with our executive team and business teams, and that the major of the projects are in Material Technology and in Installation Technology. There we have the biggest gains, which we already presented also last year, by the way. I think in Installation Technology, we have still a lot of operational leverage and excellence to execute, by closing factories, consolidating factories. By Material Technology, of course, also by site closures and further consolidation and specializing in specialized technologies and reducing overheads a lot.
We also have two big projects in climate, that will really integrate some locations and some activity in dispense that we further integrate, actually, the dispense organization. We don't have a breakout in money. At least, we don't want to disclose it at the moment.
Okay, that's helpful. Maybe on CapEx. In the second half, it will be lower than what you had in the second half of last year. Should we then think of several tens of million lower, or is that too ambitious?
No, for example, what happens, of course, that came a little bit by the quickness of the crisis. We saw it in February, beginning March. We reacted immediately then. Then it takes time to reduce your CapEx. First, you have to talk to every business team. Where do we allocate the money? Should we allocate it there? Should we allocate it in another place? Then, of course, you want to reduce to keep the money in your pocket. It takes time. We did it all very quickly in the first two, three weeks of March, actually. Then, of course, you have to implement. What we will see is that we did now roughly EUR 6 million lesser cash out in the first half of.
2020
2020 compared to 2019. That you will see a much more bigger cash out reduction in the second half. I think we aim for a number approximately around EUR 100 million. That could be a little bit higher, could also be a little bit lower, but let's put it like that. I think the year before, I don't know it completely from my head, we had something like EUR 145 million cash out. It will be around EUR 100 million. Let's say roughly EUR 40 million less than the year before. That will be shown in the second half.
Okay.
What's important is to know that our innovations and our fast-growing product lines will continue, because organic growth is not gone. When it comes back, and it is already coming back, the business, that we are still aiming for organic growth in the situation, when business comes back.
If we then look for the coming years, I think you previously talked about annual CapEx of EUR 140 million.
EUR 140 million.
Is that still valid then for the coming years?
We have all the plans for that. We also postpone now, so that postponement will mean that we will have the cash out in 2021. The moment we see and we have to be less cautious or there is a vaccine and things open again completely, we will execute all these plans. You can expect, of course, that it will maybe have a delay effect. I don't know exactly. I'm not going to talk about the 2021 at the moment, but the plans are there. It could be that it has a delay effect.
Yeah.
We also, of course, when we don't need capacity expansions because of the still lower market environment, which nobody knows the coming 6- 12 months, nobody knows how that really happens due to all the outbreaks you see now again. Of course, we also will not approve the cash out for further expansions. You may expect that we will adapt to the situation.
Yeah.
That's how it is.
Okay.
I don't think we will spend EUR 150 million on CapEx cash out next year. I don't think that, because you also have a ramp-up of that. The plans are there.
Yeah. Okay. Maybe on your top line. You did -12% in the first five months and then -11% for the first half. Organically, that suggests that June was in the mid-single digits decline, if my math is correct. In terms of order book, you're saying it's up versus last year? How should we read that statement? Does it mean that going into Q3, we may actually positive growth then? How should we treat that statement on the order book?
Let's say the order book is higher, which is a factual situation. Of course, there's also, let's say there are long-term orders also in that. As you know, one of our fast-growing businesses is advanced mechatronics, where we have the order book, let's say, for a longer time ahead. That does not say anything about the Q3 versus last year from that perspective. Let's say we believe that, as we said, that orders are improving and sales is improving every other week actually, although it's still not there where we would like to be, of course.
Also to add a few things. For example, when you look to the building markets. What we see now is that people work through in the summer. There's less holiday in the eco-friendly building end market. That means because people want to still get the project finished. I think the -8% we showed in the first six months is actually pretty good, because we even had periods that our distribution was closed. Despite this effect, we had -8. June had a good ramp up. We hav e also there a good order book. It's not only advanced mechatronics. It would not surprise me that we get a catch-up effect. For example, also in countries like France and U.K. In France, we saw that already in June, because of the bigger closures in France and U.K. Also in the U.K., it would not surprise me. That there are positive things. The second thing you should not forget that is long term, is that the industrial markets, including automotive, are already down for two years.
This is complete. I said that maybe already 100 times, this is a complete different situation than we had in 2009. You see that also there's much more activity in OEMs. There's much more activity in these industrial markets. We see already that the orders and intake, especially for the manufacturing parts, are increasing rapidly in June. Because there's no inventory at all in the supply chain. That means there comes a moment that people have to build up inventory again, otherwise the supply chain is not functioning. That's also automotive. There comes a second effect, is that people are not flying, people are not going in a train, people are driving in cars. People are driving on a bike. Yeah, this is a different situation. The same is for building. There are also some positive effects.
People are much more spending money on their house at the moment, so that means also they improve their heating system, improve their cooling system. Of course, we like that because it stimulates our sales. Yeah, it's difficult to predict how that works out, but these are not negative trends. advanced mechatronics, we have a fantastic order book. I think also in the building end market, we have a good order book. In the meantime, we keep on pushing our innovations, and then restructuring to accelerate and to actually reduce our break-even point as total Aalberts, because that's actually what we are doing.
Yep.
Yeah.
Okay. Maybe my final question for Arno. At the Capital Markets Day in December, you talked about an incremental margin or a drop-through from organic growth to the EBITDA of about 25%. 2021 will be somewhat exceptional because of the full benefit of this EUR 45 million. Looking beyond 2021, you still think this 25% is a reasonable assumption?
Yes, I think so. Let's say, the drop-through of 25% is a valid number, and you're right, 2021 will be an exceptional situation where we have the full benefit of our restructuring plans. When we have the organic growth, like we have forecasted also in the, let's say, the calculation we made in the Capital Markets Day, we should be able to make a drop-through of that percentage. We need, of course, organic growth for this.
Yep. Okay. Thank you.
The next question comes from the line of Martijn den Drijver from ABN AMRO. Please go ahead.
Yes, good morning, and good morning, Arno.
Morning.
Good morning. Two follow-ups on the restructuring. One is, the remaining part of the restructuring, which comes from the 2019 Capital Markets Day. Could you say something about the savings versus the charges of the restructuring that you're still going to do in 2021? Will that have the same ratio in terms of savings versus charges? Now you have EUR 45 million in savings on charges of EUR 40 million. Can you give us a bit of an indication of how that ratio will be for the r emaining part of your restructuring? That's part one. Secondly, we now know a bit more about the impact on costs. Can you also clarify or provide a bit more clarity or guidance or color on the impact on working capital from this restructuring exercise? That would be my first question.
Okay. Let's say the first one. The approximately EUR 40 million of restructuring costs, given the approximately EUR 45 million of benefits, let's say that's the balance that we have given, and that is also the balance that is applicable for, let's say, the program when it's executing. We foresee that we can start most of the program in the second half of 2020, but that we could also still have some of the program to do in the first half of 2021. As Wim said earlier, it's a little bit difficult to predict. It's work in progress. teams are very busy with it, we cannot give more guidance than that. We can only give you the guidance that we gave.
Okay.
The working capital, as you know, and as we also have said, for us, we have on the high priority, the inventory reduction plan that we have guided with EUR 100 million-EUR 150 million of reduction calculated in days, we always say, because of course we know that when the business is growing organically and hopefully on a good level, we also need, of course, inventories for that. We always say calculate in days. That means that especially, let's say the less efficient inventories we have to optimize. We are also busy with all the teams to do that in this same period. Over the next years, we will further improve step by step the EUR 100 million-EUR 150 million of inventories. That is what we are aiming for.
It wouldn't be possible for you to say of the EUR 100 million-EUR 150 million target, this round of restructurings will be roughly 50% or 25%, so we have a bit more clarity on that, on this specific part of your restructuring program.
Let's say some of the improvements, of course, take some m ore time. This is really a big effort, and that takes also structural plans that we are making with all the teams. Actually, we make that really, and we're driving that really for the next three years. 2022, we are continuing to do that. You should see, every year you should see some result of that.
Evenly spread, I guess then, over the next three years.
Yeah.
Okay. Well, we're continuing on the inventory part. You seem pretty happy with the EUR 30 million. Most of your inventory is related to Installation Technology, Climate Technology, and Industrial Technology. If I look at the decline in sales organic, for those three divisions, in fact, the inventory reduction is more or less in line with the decline in sales. While, as you already pointed out, inventory is a key focus for your working capital. Please explain to me again why you're so happy with this number, because it doesn't seem that special, to be honest.
Would it be nice, that if your revenue declines with this percentage, that you could immediately decline in the same base your inventories. That is not how it works, Martijn. Let's say, when we were all more or less confronted with the sharp decline in sales, of course, before you are able to reduce production machinery in the same trend, that costs you some time, and at the same time, your revenue is declining. That is really a big delay effect in that. To be honest, I was positively surprised that we could at least reduce the inventories with EUR 30 million for the group, given the short timeframe of the end of March until the end of June that this event was happening.
Okay.
We expect a further improvement for the second half of the year because all the actions have started, so there's a big focus on it. Of course, when the revenue comes up again, it will help. It will help a lot, because then you get a growing revenue and hopefully a declining trend in inventories, so that will give a big impact. For the time being, we have to work really on our own inventory levels. That is what the teams are busy with.
Okay. With regards to Material Technology, the minus 15%, at least that's the top line. That still seems relatively modest, at least that's what I think, given developments in automotive, aerospace, and Industry. When did you actually see clients starting to materially lower orders? Was that immediately in March, or was that somewhat later? Can you give us a bit of a sense when that really started to decline materially, or whether there was a bit of a lagging element there?
Actually, that was the end of March. It started really to decline.
It picked up again, although from a low level in May, June.
Yeah, June. June, we saw in the pickup. Yeah.
All right. Thank you for that. With regards to the holding costs and the unallocated costs, normally you would say that, or you've given that information in the past, that roughly it's EUR 12 million on an annual basis, EUR 9 million for the actual headquarters, and then EUR 3 million for M&A and restructuring, and M&A plus and minus sometimes. That would mean roughly EUR 4.5 million for the first half year. EUR 1.5 million for M&A and restructurings. You now have EUR 4.5 million. Is that the correct way to think about this, or has the whole centralization impacted those two elements?
Let's say, you are right. We have always said between 10 and 12, and holding costs were around EUR 8 million-EUR 8.5 million. That's what we have always said in the past. Taking from that starting point, we have let's say the EUR 4.5 million of normal holding costs. We have the restructuring cost of EUR 4.5 million. Of course, we made also our savings of the total holding structure, and that ends up then as a total of EUR 7.2 million.
Okay. Got it. A final question. You've talked about reductions of overheads in the technology clusters. That also means that leadership has changed, I would say, or that has already changed in the past. You're also more centralizing leadership on the business lines or the technology lines. This is more a question for Wim. Aren't you afraid that, or how do you manage the impact on the entrepreneurial spirit? The more you centralize, the more you provide leadership on the central location with the ability to steer and manage the organization, that will automatically lead to a reduction in entrepreneurial spirit, I would say.
No, that's not the case. I think your assumption of centralizing, that this is not completely correct. I think what we did the last, let's say seven, eight years, because this is not a process of the last six months, maybe even the last 8- 10 years, we looked continuously to our portfolio and clustered the activities which belong to each other. If you can remember, 10 years ago, we had a regional organization which was not working, in my opinion. We clustered it to, let's say, a business to end markets organization, which is working well. We further clustered that. I think the entrepreneurial spirit is absolutely in the niche technologies. Of course, companies who belong to each other, and that's why we acquired them in the past, should also be integrated in a sophisticated way.
This we did already, so the structure was already in place, let's say, in 2019. Even the presentations you were also attending in December were made by these people. When you look, for example, at Hydronic Flow Control, there were seven, eight companies in the past, and including Comap, it's maybe 10 companies, but we have one strategy. That whole integration process, this is something of the last five, six, seven years. Now, what is the difference? That's also why we can accelerate the optimizations, is that the structure is standing. That means you have one business team, you have the strategy aligned in that business team. You know exactly the way to go.
The next step is you look to your locations internally, and obviously your overhead and your sales force and everything, and you say, "How can I optimize that?" These plans we already had the moment we presented in December. What we said, let's use the time now and accelerate it. That means that we will go faster. For example, we closed the factory in Germany much faster than we planned. It's already in process. We go to one head office in Hydronic Flow Control, which will be in Almere, which we are now building, because we had two or three head offices, we had two digital apps. We will make one approach for that. I think the entrepreneurial spirit is still there, but it's maybe on a higher level. That's what you could say.
It's a process of the last seven, eight years. That's also why the question, for example, how can it be that you believe now that you reduce your inventory? This question came also in December because we talked about it a long time. That is because you have now a very strong structure, which is much more simpler than it was, by far simpler. Everybody is behind that strategy. Now you're going to optimize that structure, including the working capital. We have very good CEOs also everywhere, because these clusters are EUR 400 million or EUR 500 million, or sometimes even higher in revenue. Also the senior management is of a much higher level than it was in the past. We don't have a bunch of small companies now. We have one company who drives a strategy that's a complete difference. That's also why we believe we can generate now these savings and these optimizations.
Yeah.
All right. Thank you very much.
Is still there, but that's maybe you're correct, it's on a higher level.
All right. Thank you for those explanations. No more questions. Thank you.
Thank you.
The next question comes from the line of Luuk van Beek from Degroof Petercam. Please go ahead.
Yes, good morning. A few questions from me left. One is on the impact of government support measures. Can you indicate to what extent you benefited from those regarding costs and working capital in H1, for example, the later payment of VAT?
Let's say the last remark, I have to object because we did not pay later VAT. We did pay everything on time, so that is not the topic. On the first one, let's say we had some programs locally in some countries, mainly on the Kurzarbeit, and I think that is about EUR 9 million, what is in our numbers. Let's say that is really a number that you should interpret as follows, because when we would not have that program, we would have done restructuring in these areas, so that you did not have the cost either. You understand?
Yeah. It's not a net benefit.
No. It's in a situation where you make use, of course, of that situation so that you can still keep the people on the payroll. If not, we would have reduced people from the payroll. We did not take any regulation of the NOW in the Netherlands. It's only in some foreign countries.
On climate control, if I calculate the drop-through of the revenue decline, it's quite low. It's well below the 25% that you typically mention. Were there any special cost savings there or other effects why this was so low?
Yeah, I think two reasons. It's a good question, Luuk. Two reasons. I think, one is that you see there much less vertical integration in your production. When you have, of course, Installation Technology, we produce the valves, we produce the fittings, you even sometimes we pour the valves. When you reduce their production, that takes much more time. In Climate Technology, we assemble a lot. That's also why you have lesser CapEx there, because we do a lot of assembly. Assembly, you can act much quicker. That's the kind of addition. You have a lot of engineering and a lot of assembly. The second part is, you're right, we took already a lot of actions in costs already. Last year, we started. You see already some effects of that.
Sure.
That we will continue that with the integration, because as you know, in Climate Technology, the potential there is to earn a margin of 15%, which we do already in certain areas, but we have to further integrate and we have to optimize the portfolio there because we have still some parts which we have to optimize or divest. That's actually the two reasons.
Okay. Typically, you were streamlining your portfolio by divesting business lines or exiting them. I can imagine, especially divesting is at the moment more difficult. Will you go more slowly about that streamlining process, or is this a moment where you maybe more quickly exit business lines that do not contribute enough?
Let's say first, of course, we always go for the optimum value, also for divestment. If the price that we can achieve is not correct or not right, then we will postpone. Let's say we are still preparing these processes because you have to prepare anyway. Let's say there's not a big difference with the Capital Markets Day. We take the three years time for that.
Maybe to add, Luuk, I think there were two months, where there were a little bit lesser activity in M&A. You see in June already a lot of interest again. This market is recovered, in my opinion. We are busy with several projects. Of course, you want to do it with the right price and the right partner, and we continue.
Of course, in certain areas, maybe it's better first to optimize the business further, also looking to COVID-19. We have some activities in certain areas where maybe optimizing at the moment is a little bit better, so you wait a little bit. That's why we take three years.
Yes. I have a bit of difficulty how to interpret your comments on the backlog, because historically, I was always used to not pay attention to the backlog because it was relatively short. That has changed. Obviously, one of the most extreme examples is advanced mechatronics, where you have a very long backlog.
Fluid control.
Fluid control.
All Industrial Technology has a much longer backlog. That's the change of the portfolio. We changed a little bit in the last years. For example, in district heating and gas, we have a very good portfolio. It's in fluid control in that area. Advanced mechatronics is the same. We grew very fast in advanced mechatronics. There you have a much higher order book. Also in Climate Technology, we see many more projects for the longer term.
How should I see that? Is that a fixed level that will be delivered over a longer period, or does the customer have a lot of flexibility in the timing of those deliveries?
No, I think what we guided early, I can imagine that you asked that. I think what we guided earlier that in Installation Technology, mostly your order book is four to six weeks, you could say. That it's also not changed, Installation Technology. Sometimes a little bit longer, but also there is a difference because we do more and more with the same customers, so our key account management becomes more important. You get also forecasts, et cetera, but not real orders. Material Technology, it is short-term. I must say, the projects we do, especially in electrical vehicles, are 10 times bigger than we had ever in the past. That means you get an order for maybe EUR 10 million, where in the past we had only EUR 1 million. Also that is changing, because we do more with key accounts, but it's a small amount.
What is, I think when you look at Industrial Technology, sometimes we can six months look ahead. In this case, I think for Industrial Technology, that's the case. For climate, I think it's more than six weeks as insulation. It's maybe more going to two months or three months in some cases. That's maybe the best answer to give. Yeah.
Okay. That provides some more clarity on how to interpret this. Thank you.
The next question comes from the line of Tijs Hollestelle from ING. Please go ahead.
Yeah. Morning, gentlemen. I've got 15 questions left.
Morning.
No, that's a joke. Yeah, my first question was about the inventory levels at the customers, but I think Wim already answered that quite clearly. There is no excess inventory at your customers, because I'm also picking that up from other industrial companies, and that is indeed quite different from the situation back in 2009, and it's quite important there for Aalberts, because direct immediately leads to replacement orders for your business. Is that correct?
Listen carefully. The first two months of the year were very good because the industrial markets were recovering after one and a half year lower revenue. Yeah. That was broken actually in the beginning. COVID broke that trend. What has happened then in that growth, industrial, automotive, machine build, which are markets also in the industrial area, is that also there were closures of customers. In these closures, they also didn't produce. In the meantime, the sales was also much lower. Before you ramp up a factory, a mass production factory, that takes a lot of time. In the meantime, the sales is recovering, because in June, for example, there are much more car sales than in April and May. The production is not on that level yet.
What you can guess, and that is my guess, is that the supply chain is empty. The sales is increasing step by step, stimulated by more car travel, because of not train travel, not flying. Nobody dares to build inventory at the moment, there comes a moment it will explode because you have no inventory at all. You can't even deliver a car. We can't deliver a machine.
Yeah.
That's of course, let's see how that goes. The last two years, it was already on a low level. In 2008 and 2009, I was there. I was at Aalberts. I was in the board even. I had to reduce all the people. In the third week of October, it looked like we fall off the cliff, certainly. The first six, seven months after the third week of October, people didn't order anything because there was so much inventory in the chain because it stopped very abruptly in the industrial markets.
Yeah. Quite clear.
That's it.
Yeah.
Let's see.
Yeah, let's see.
Good progress.
I also got a question about the pricing climate, because that is also quite important for Aalberts, and then specifically about the pricing climate in June and let's say the first weeks of July. It's never easy for you guys, but is it really difficult to protect your margins or is it business as usual in these, let's say last six to seven weeks?
No. I think on pricing, it's pretty business as usual. Of course, we are very busy with pricing always also to get our position better, to keep up pricing. In some areas, we could also take advantage in the market because we were open longer than competition. We could take market share. I think that's also important to mention, even with the good price. What could be in the future, but it's not at the moment, is that maybe in the building markets, you get a little bit more price pressure because there are a little bit lesser projects.
Yeah.
Also that is not really new. It's pretty business as usual.
Yeah.
Actually what we want to do is that this year we do a lot of restructuring, so the next year we are ready to also attack in market shares and bring our innovations to the market with much more strength. You take also market share, when market recovers. Pricing is on a good level. It also showed the EBITDA went down only 1%. You must imagine that we also reduced inventory of EUR 30 million.
Much less absorption.
Yeah. That says something about the margin that it is not really affected.
Yeah. Okay.
We also did our price increases in the first half. Also the second half, we will do price increases.
Good to hear. Yeah. One final quick remark. I believe you have scheduled your full year numbers for the third week of February, and it feels like another year away.
Yes
I think the market circumstances change because of the second wave of the COVID-19 outbreak or any specific things appearing, that you will update the financial market with the in-between trading updates like you did earlier this year with the COVID-19.
Yeah, very good. That's absolutely the case. We always said, we don't update any more fixed on a certain date, but in this kind of circumstances, we will update the market regularly.
Yep.
When we think it's time to do that, and I fully agree, we will absolutely update earlier than February.
Yep.
Let's see how often we do that, it depends on the situation. We will do that. Yes.
Yeah. Okay. Thank you.
The next question comes from the line of Henk Veerman from Kempen & Co. Please go ahead.
Yes, thanks. I don't know why I was cut off before. I have one question left. In the press release, you talk about a CapEx of about EUR 54 million, whereas if I look at the cash flow statement, there's purchase of PP&E and intangibles equaling EUR 72 million. What does explain the difference?
The difference is cash out. Let's say there's always some overshoot, for instance, of the CapEx that we did in the last quarter of last year, where the cash out is in the first quarter of this year. The payment and the moment that you get the CapEx on your balance sheet is not always equal. Let's say that's every year like that.
Okay. Yeah, normally it's only a couple of million, I think, but now it's almost EUR 20 million.
Let's say, that is variate. It's also depending on what kind of CapEx we are doing, buildings or machines. That's of course, always different.
Okay. Thank you.
It's depending on the nature of the projects, if there's a bigger gap or not. Now we are postponing, of course.
That's clear. Thanks.
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Thank you very much for standing by. We now have the hosts back on the line, I will hand back over to them. Thank you.
Okay. Is Henk still there?
No. Henk is now finished with his question. The next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please go ahead.
Okay. Peter.
Yes, I had one follow-up question, which is related to acquisitions. In December, you talked about the ambition to acquire EUR 100 million-EUR 200 million in revenues. Is that still your ambition or have priorities changed with the COVID-19 crisis?
No. Of course, during COVID-19, we were careful with acquisitions. Still, when we can add our positions organically or inorganically, we will do it. I think personally that these times can give us also some nice opportunities in certain areas, because people maybe get in trouble. Let's see. That are the same focus point as we had earlier. When we can strengthen the five core technologies, maybe in advanced mechatronics or in certain areas in Climate, for digital, for example, or in fluid control, then we will do it. Of course, we are also a little bit cautious in looking how the second half is evolving. We have a strong balance sheet to do that's still the aim.
Yeah. Okay. Thank you.
The next question comes from the line of Maarten Verbeek from The IDEA! . Please go ahead.
Good morning. It's Maarten from The IDEA! . A couple of questions. Earlier in the call has already been made, the calculations for the revenue development in June. Also, I more or less arrived at a mid-single-digit decline. First of all, could you confirm that, and could you also make some statements about the first week of July? Have you crossed the mark into positive territory?
You mean, the first week of July?
No, first day. No. Today we are already at the end of July, so maybe some thoughts about the development in this month.
Let's say, we see improvement.
Okay.
That will continue, hopefully. We cannot look ahead for a very long period, of course.
Okay. With respect to advanced mechatronics, very solid performance, much like benefiting of the trends of 5G, artificial intelligence, and APC. Has this been established by your current customer base, or have you also been able to win new clients, new parties?
It is mainly our existing customer base. We have also additional co-development projects. I think that's also important to mention. It's a combination of that.
Okay. In the past couple of months due to COVID-19, with the lockdowns, have you experienced any disruption of the supply chain, particularly out of Asia into Europe? Will this rethink your thoughts about your sourcing policy?
We had almost no disruption. A little bit in the first week of March, we could solve that pretty quickly. As you know, we already produce a lot in the country where we sell. That's actually a real strength. You see, that is also one of the things which will change, in my opinion, that especially in North America, but also in Europe, that people will say, "Yeah, I like to produce it more locally." For example, we started campaigns like U.K. Made, like U.S. Made last year already. 90%-95% is made already locally for the local market.
Okay, thank you.
Do we have more questions, Mark? More questions?
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Yeah, we have a question here on the screen. It is from Michael Hilkens, and he asked, "Could you provide an update regarding your U.S. operations in light of the increasing amount of COVID-19 cases?" Yes, we can. We can give some guidance on that. Actually, the U.S. operations, what we saw is that we saw a nice recovery, and we still see that nice recovery in order intake, especially in the commercial building market. We also saw a recovery in our industrial and automotive markets, which of course, were down like in Europe in mainly April and May. In industrial, we saw an improvement in beginning June, and in the building markets already in May. Of course, we talk regularly to our people, of course. The situation which is there now is not very comforting.
Yeah, it would not surprise me when it, in the end, would affect our businesses again. At the moment, it's going in the right direction. We have a good order intake. It's increasing. I think also there, on the building plots, which were in the beginning, some were closed. They found a way to work on 1.5 m distance with mouth guards on the building plots in the U.S. When they keep that, the business could continue. In our factories, we had the situation handled pretty well. In our factory in Tennessee, it's a little bit more difficult because there you see people are also a little bit afraid. We had to change people there because people stayed at home. We try to manage that as good as possible.
When these infections continue in America like they do now, then it could bring that you have some regional lockdowns. The other thing is that the building plots and the building in the installers, for example, are used to the new situation. Let's hope that it continues like this, but it's uncertain. Another question, can you give more insight into current state of M&A market, both for bolt-on acquisitions as well as intended divestments? Divestments, we are busy with. As we already explained, we have our program, and of course, two months, it was very low appetite, but now the appetite is increasing again. In the meantime, we optimized our to-be-divested businesses further. We will continue executing that, and when we have something to publish, we will do that immediately. We are busy with different projects.
From an M&A point of view, we keep on looking, strengthening our positions. It would not surprise me that we get some more opportunities due to also companies which are coming in maybe some difficulty, and we could take advantage of that. Let's see. Also there, when we can grow inorganically at a good price with a good business plan, then we will do it. We have the cash flow to do that, and also in the second half of this year.
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Also from my side, thank you. Bye-bye.
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