Hello and Welcome to the Alfen Webcast, Class 1, 2020 Results Call. My name is Courtney, and I'll be your coordinator for today's event. Note that this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any time, please press star zero, and you will be connected to an operator. I will now hand you over to your host, Marco Roeleveld, Chief Executive Officer, to begin today's conference. Thank you.
Okay, Courtney, thank you for this introduction. Good morning, everybody. Welcome to this webcast about the results of Alfen in the first half of 2020, and we appreciate the fact that you've taken the effort to participate. This webcast and the questions that may come forward are being handled by the Management Board of Alfen, being Jeroen van Rossen, CFO, Richard Jongsma, CCO, and myself, Marco Roeleveld, CEO. Business-wise, our first half of 2020 was positive, with limited impact from the COVID-19. To cope with COVID, we've implemented additional safety measures to continue safe and responsible operation. Nevertheless, we are relieved that none of our employees have encountered real problems with COVID and that everybody's done his utmost best to keep working with due respect to all safety measures to safeguard the health and safety of us all.
Also, our suppliers and customers have been very cooperative to keep business going. We are very grateful for everybody's enormous efforts. 2020, followed by a short review per business line of the most important topics in the first half of this year. Next, we will go in a little more detail regarding our financials and outlook. Assuming you've noted the usual disclaimer, we can now go to sheet three with an update of the COVID-19 situation in relation to Alfen. As stated in the introduction of this presentation, in order to cope with COVID-19, we have implemented additional safety measures to continue safe and responsible production. We have experienced limited interruptions of the business up to this point. Our order intake in the first half of 2020 was reasonably strong, and we've accounted for no canceled orders. The supply kept functioning, and production has been up and running.
Of course, there remains an inherent macroeconomic uncertainty as a result of the COVID-19 pandemic. We continue now with slide four, with the highlights of the first half of 2020. We realized EUR 90.3 million in revenue compared to EUR 61.6 million in the first half of 2019. This represents a growth of 47%. This growth was driven by a 23% growth at Smart grid solutions, another 54% growth at EV charging equipment, and a 67% growth at Energy storage systems. As a percentage of revenue, the adjusted EBITDA improved from 7.9% in the first half of 2019 to 11.1% this year, which amounts to EUR 10 million. Jeroen will go in more detail on the financials later on in this presentation, and Richard will go a little bit more in detail on new important project wins and client wins later on in this presentation.
With the presentation of the Q1 trading update, we stated that we could not give any further guidance due to the early stage of the COVID-19 crisis. Now, we can state that we reconfirmed the initial revenue outlook for the full year of 2020 in the range of EUR 180 million-EUR 200 million. In the commentary sheets, I will go in a little bit more detail on the highlights of the first half of 2020. We start on sheet six with the overall revenue growth and the split per business line. Overall revenue growth was 47% compared to the first half of last year. As a business unit, Smart grid Solutions, we continue to benefit from grid investment, projects in the solar PV sector, and revenues from service.
COVID-19 had limited effect on the first half as we experienced and continued focus on grid expansions by the grid operators and micro projects. We gained momentum after some project execution delays due to the COVID-19 lockdown. In the EV charging equipment business unit, we have realized a revenue growth of 254%, and the main elements for this growth are, first, an increase in volumes on the framework agreements that have been set up over the past years, new client wins, and further internationalization. Although the market for light-duty vehicles has been impacted by COVID-19, the electric vehicle segment has proven to be more resilient. It is also very good to mention that governments across Europe have announced additional incentive packages to further support the transition towards electric driving. We successfully completed the relocation of the EV charging production.
With this relocation to a five times larger building, we significantly extended the production capacity for our EV charge points. The relocation has been executed without interruption of the production, and the layout of the production line has been optimized to the latest insights in quick and efficient assembly and testing of EV charging. In the Energy storage business unit, we have realized a revenue growth of 67%. Revenue increase was driven by strong market momentum, resulting in contract wins in the last months of 2019, as well as Q1 2020. However, as a result of COVID-19, market circumstances were again challenging in the second quarter, as decision-making was postponed across the industry, similar as we experienced in the first half of 2019. In this market dynamic, our proven track record across multiple storage applications is playing to our advantage, as well as our strong market position.
On sheet seven, you can see that we increased our profitability by driving the growth of our revenue and operational leverage to leverage the fixed cost base, such as R&D and overhead costs. Going forward, our strategy is a continuation of strong revenue growth and further leverage of our fixed cost base. It is very important for us to keep investing in development. On sheet seven, we have given some examples of recent innovations. First, I would like to mention the development of the direct payment functionality for EV charging points in Germany. We developed direct payment functionality for Alfen charge points using the Giro-e technology. With this Giro-e technology, it allows payments to be transferred directly between banks and accounts. Alfen connects our cloud-based back-office system and establishes the relevant bank connections for the exchange.
In this way, EV drivers in Germany can pay directly at Alfen charge points using their debit card instead of using a dedicated EV charging card. We are convinced that this feature will further improve acceptance and easy operation of electrical cars. The second development is a dedicated substation for onshore wind installations. Alfen Elkamo developed a 36 kV substation, especially for onshore wind farms. With this substation, closely placed to windmills, onshore wind park developers can supply the generated electricity more efficiently and at lower cost to the grid. Now, our CCO, Richard Jongsma, will continue with his commercial aspects and growth progress.
Thank you, Marco. I will continue with our commercial successes in the first half of 2020 on slide nine, and consequently take you through the progress against our strategy. In our Smart grid division, we signed a contract with Goldbeck Solar to provide service and maintenance for six solar PV parks in the Netherlands. HVC, a Dutch waste management and sustainable energy company, handed us multiple contracts for new solar PV installations throughout the Netherlands. Shell expanded the scope, and we are now supplying them with additional installations for ultrafast EV charging stations. For EV charging, Vattenfall and Alfen will attend for the provinces in the southern Netherlands to install up to 4,000 charging points by 2022. Also, Alfen has become the preferred EV Charge Point supplier of Elexent, a new subsidiary of Group Renault, who is dedicated to EV charging.
Our reseller Amperio in Germany is supplying the German hypermarket chain Globus with Alfen chargers for 48 locations in the coming two years. In Energy storage, Vlot Smart Solutions , a transport service provider, ordered multiple mobile storage systems in combination with mobile high-power chargers to charge their fleet. Vattenfall ordered a 20 megawatt-hour storage system at Uppsala, an investment holding of Flemish municipalities in Belgium, bidded Alfen with an order for three storage systems to provide peak flexibility service to a grid company in Belgium. Let's now move to the progress against our strategy. Our four years of growth on slide 11 should be well known by now. All markets we work in are fast-growing markets. We have an intensive internationalization action plan, and on top of our growing install base, we supply service and maintenance.
The true unique opportunity for Alfen is to cross-sell our products over different business lines. For Alfen, a customer in one business unit is automatically a prospect for all other business units. I now go to slide 12. The market where we operate in continues to grow. As for the Smart grid market, investments in the grid by grid companies continue to grow, and the number and size of solar PV parks are growing as well. A market for which Alfen has developed a unique and tailored solution. Installed PV capacity in Netherlands is expected to show a growth of 37% on an annual basis between 2018 and 2023. For EV charging, new EV car registrations throughout Europe are still growing rapidly despite the COVID-19 situation. The expected growth in new charging stations in Europe within 2020 and 2025 is around 35%.
The European Green Deal and the diverse subsidies teams that Marco was referring to, for example, France, Germany, and the Netherlands, are supporting these figures. In the energy storage markets, which is still in the nation states, the annual new battery energy storage capacity in Europe is expected to show a growth with a CAGR of 53%. The market fundamentals for energy storage remain unchanged and strong. Now on slide 13. What we said before, internationalization is very important for Alfen. Therefore, we are happy to share with you that our revenues outside the Netherlands have grown in the first half of 2020 to EUR 26.3 million. Also, in 2020, we have added sales capacity in Poland, Italy, and Spain. Our internationalization strategy is focused on entering new countries and finding new clients.
In our Smart grid business, we are looking to retain our market position in the Netherlands, Belgium, and Finland, and we focus on further growth in, for instance, Sweden and on following our customer approach. Also, the strong growth in our EV charging business in our home market contributes, where we grow market share with the presence of our own sales force and with further internationalization of our client base, for instance, with E.ON, Vattenfall. For our Energy storage business, we are able to scale up with existing international clients and also our new clients. I continue with slide 14 about service. We are still on track in our ambition to grow our service offering both in Holland and beyond. In all our business units, we are benefiting from a growing install base, especially for Smart grids at PV parks and fast charging stations.
We continue with our standardized service package with remote servicing control that goes with storage projects and further international rollout of our EV service partners in multiple countries in Europe, and we plan to expand this going forward. We continue to benefit from our true unique possibility to integrate and cross-sell our product solution. As explained before, a customer in one business unit is automatically a prospect for another business unit. Shell, for instance, we are now supplying grid connections to facilitate their Ultrafast Shell recharges at around 60 Shell locations, and Shell has decided to add an Alfen energy storage system to provide peak saving at the Shell recharge location.
As for Greenchoice , Alfen combines its expertise in Smart grid, Energy storage , and EV charging by developing and delivering a charging hub for mobile storage systems, where these mobile storage systems can be recharged with renewable energy and provide grid stabilization whenever these systems are not deployed at events or festivals. Jeroen will take over with the financials in outlook.
Thank you, Richard. Let us start with the income statement on slide number 17. If we look at revenue and other income, you see that we increased the revenue and other income from EUR 61.6 million in the first half of 2019 to EUR 90.3 million in the first half of 2020. This revenue growth is driven by strong market growth and further bolstered by internationalization, cross-selling, and service. Our gross margin percentage slightly decreased from 36.1% in the first half of 2019 to 35.5% in the first half of 2020. Compared to the first quarter of 2020, the gross margin improved from 34.8% in the first quarter to 36.2% in the second quarter. As we continue to benefit from our strong market position, our leverage from increased scale and a shift towards increasingly complex solutions.
Personnel cost increased from EUR 13.3 million in 2019 to EUR 17.1 million in 2020, also reflected by the increase in full-time equivalents from 457 at 30 June 2019 to 563 at 30 June 2020. Other operating costs increased from EUR 4.4 million in 2019 to EUR 5.3 million in 2020. If we then exclude one-off items and special items, we arrive at our adjusted EBITDA. As you can see, we increased our adjusted EBITDA from EUR 4.9 million, being 7.9% of revenues in the first half of 2019, to EUR 10 million, being 11.1% of revenues in the first half of 2020. This increase of 107% on the adjusted EBITDA is the result of strong revenue growth in combination with operational leverage. Finally, our adjusted net profit increased from slightly over EUR 1.4 million in 2019 to EUR 5.3 million in 2020.
From the income statement, we now go to the balance sheet on slide number 18. Let's start with the non-current assets. We increased the non-current assets from EUR 27.7 million at year-end 2019 to EUR 32.3 million at 30 June 2020. The capital expenditures amounted to EUR 4.9 million compared to EUR 3.2 million in the same period of 2019. These capital expenditures include investments in the new mold for Smart grid solutions business line, as well as investments in a new and significantly larger EV charging production facility. Additionally, we capitalized EUR 2.5 million of development costs, which demonstrates our continued efforts to invest in innovations for the future. Our working capital.
That increased from to EUR 14.8 million compared to EUR 3.1 million at year-end 2019 and EUR 8.8 million at 30 June 2019, which is due to pre-deliveries in the supply chain to cover for the summer period, some strategic stock for additional resilience related to COVID-19, as well as increased stock levels reflecting further growth of the business. Furthermore, our contract balance increased as a result of a timing effect in the triggering of payment milestones. Our equity increased from EUR 13 million at the year-end 2019 to EUR 66.7 million at 30 June 2020. Next to the addition of the net profit, this is a result of our share issuance in June 2020. On the next slide, slide 19, you can see that we are well prepared for further growth in the second half year and beyond.
First of all, we anticipate positive market developments in all of our business lines. The markets for Smart grid Solutions and EV charging are expected to remain strong. The EV charging market is even further bolstered by the incentive packages across Europe that were announced as a result of the corona crisis. Furthermore, long-term market fundamentals for energy storage remain solid. We are well positioned to benefit from these market developments based on our strong market position. Nevertheless, while COVID-19 had limited effect on the first half year, there remains an inherent macroeconomic uncertainty for the second half year of 2020. We also continue to invest in our organization, innovation, and production facilities. With the additional capital that we raised, we have more financial flexibility to further strengthen and expand our international footprint throughout Europe, as well as to invest further in research and development.
Next to that, we continue to invest in the further optimization of our businesses and processes. Based on the first half year performance and our current revenue visibility, we reconfirm our 2020 full year revenue outlook in the range of EUR 180 million-EUR 200 million. We are now at the end of the presentation, where I will hand over to the moderator for any questions. Moderator, could you please take over?
Of course. As a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad. Please ensure your line is unmuted locally, and you will be advised when to ask your question. Star one on your telephone keypad. Our first question comes in from the line of Peter Olofsen, calling from Kepler Cheuvreux. Please go ahead.
Yes, good morning, gentlemen. A couple of questions from my side. Maybe starting with EV charging, could you first shed some light on the momentum that you have seen in that business during the first half, especially in Q2? Did you see a notable difference in growth rates between the months? What is your visibility for the second half for this business?
Yes, good morning there, Peter. We see that the EV charging market is still a very strong market. Despite the COVID-19 situation and the lockdown from some factories, we see still the business continuing and going strong. We actually believe that not only the owners of new cars want to install charging stations, but also municipalities and companies are installing large charging plazas to facilitate their employees and customers who drive electric. We foresee that the market will continue to grow and grow fast. You see that all kinds of subsidies and schemes are in place and even being enhanced and increased, for instance, the Netherlands, France, and Germany. We also see that at the end of this year, there are some tax changes which will boost sales. We believe that this market is a strong growing market in Europe and will continue to grow.
It seems that unlike what we saw with EV registrations, where there was a big drop in April and then a strong rebound later in Q2, it seems that your EV charging business, it was more stable throughout the quarter. Is that correct?
What we see is that this business is quite resilient and not so sensitive for the COVID-19 situation. We saw that everybody, of course, came to a standstill somewhere in the end of the first quarter. We see that this business is picking up and is very resilient and is growing strongly towards the end of the year.
Okay. Could you shed some color on the Smart grids business, on the one hand what you're seeing in the project business, so solar, greenhouses, etc., and then also at Elkamo because it seems sales at Elkamo were down versus the first half last year?
If you look, I'll hand over to Richard with respect to solar, PV, etc., and projects, but I can give you a bit of flavor on Elkamo. Indeed, Elkamo has a slightly lower revenue in the first half year of this year compared to last year. What you know is that we won a contract in Sweden for Swedish grid operators, and that expansion to Sweden is a bit slower than we anticipated. It takes a bit more time to ramp up on that contract. Furthermore, if you look at the business in Finland, and I think we also elucidated that at the trading update in the first quarter, you see that there is a growth in the substation business, but at the same time, the switchgear side of the business is a far more challenging year.
You see that larger projects are more postponed there, and Elkamo is suffering from those market circumstances. Nevertheless, looking at Elkamo, of course, you know we did not only acquire that company for the growth of the company itself, but also to give us a platform in Scandinavia for the cross-selling of our products like our charging stations as well as energy storage. We have a lot of examples, for example, Fortum and Caruna, the framework agreement, Solarigo, the energy storage element that we had there, where you can see that that cross-selling is very prosperous to us. All in all, yes, the revenue is lower than in the first half of the year. Nevertheless, there is still growth in the substation part, so we continue to execute the strategy that we have at Elkamo level.
I think from there, I will hand over to Richard for the market on Smart grids.
Yeah. What you see is that Smart grids business, which is divided in substations for the grid companies, but also on the other side for the project side. We see that the grid companies continue to invest strongly in enhancing the grid in order to cope with the energy transition, and that investment is still going strong. We see no changes there. On the project side, we see that there are more and more PV parks coming, and they're becoming larger. You also see that the grid companies are facilitating the fact that they need to connect these PV parks. That is also opening the road. You see that the subsidy schemes are fully paid out and fully filled. Add to that the possibility of the FTE plus subsidy scheme that is coming, which also enables subsidies on storage combined with PV parks.
We see the market as stronger than ever.
The greenhouses and industries, etc., how's that performing?
Yeah, it's performing well.
Okay. Then maybe on gross margins, which clearly was quite strong in Q2, you mentioned a shift towards more complex solutions. Do you then specifically refer Smart grid solutions, or do you also see this in the other segments?
In all segments, because what you see is that complexity of solutions is needed because the problem is also complex. That needs far more technological-driven solutions, sorry for that. That is what we see. It is not only in Smart grids where the grids need to be smart and need to detect, etc., but also your charging stations do not need to be an extended power plug. No, they really need to be highly technical devices able to cope with a lot of elements like smart charging, load balancing, and those kinds of concepts. We see it in all of our business lines and also in storage.
Okay. In EV charging, you mentioned this innovation in Germany, the direct payment functionality. Is that something that we can also expect in other countries in coming years?
Yeah. What you see is that from the start on EV charging, they were looking for interoperability so that you can actually just with one card, you can pay on every public charging station, preferably in Europe. You see now that on hindsight, that more and more demands and requests are for, "Why can't I just pay with my debit card or even with an app?" Yeah, we see that this is going forward, and this will spread out over Europe.
Okay. My last question is around the energy storage business, where apparently you have seen some hesitation in Q2 when it comes to decision-making by customers. What does that mean for the backlog going into the second half of the year? Could we potentially see a little softer H2 compared with H1?
Yeah. What you see is that this market is broken. We said that it's in the native stage. You saw that we really gained momentum in the second half of 2019 in the storage market and also at the beginning of this year. COVID-19, of course, caused some headwinds and hesitation, but that is also part of the characteristics of this market, which is in the native stage. The underlying fundamentals for Energy storage are still strong, remain unchanged, and the energy transition is in full force and is coming. You need to be able to deal with these instabilities on the grid, and energy storage is one of the main components that can deal with it. We remain very, very confident that this market is a fast-growing market for the long term, so invest for the long term.
What you also see is that there are a couple of projects that are delayed, but we expect that as soon as the COVID-19 fog is cleared, that this will be back on track.
Okay. I would fully agree on the still strong fundamentals, but if I then look at the outlook for this year in energy storage, you won a couple of sizable contracts in the second half of last year that contributed to the results in the first half of this year. With the hesitation in Q2, my feeling then is that H2 might be a bit softer then. Directionally, does that make sense to you or?
I think that Richard explained it from a market perspective. It's a fair statement that we won large contracts at the end of 2019 and also in the beginning of 2020. As you know, we said at that time that that would contribute to the 2020 results. They did, and they still will do in the second half of 2020.
Okay. That's all. Thank you.
The next question comes in from the line of Lotte Timmermans calling from ABN AMRO. Please go ahead.
Good morning, gentlemen. First, on the international growth, in the first half of this year, I saw that the growth was stronger in the Netherlands than outside of Europe. How do you plan to increase this and to reach your target of 50%? Based on which segments this was based?
Good morning, Lotte. Yeah. What you see is that internationalization is one of our key drivers for growth, one of the four drivers of growth, as you know. Our focus is still on growing in Europe. You know that we are expanding our sales teams across Europe and also our sales. The increase of the revenues outside of the Netherlands is clear. Do not forget, we grow also very fast in the Netherlands. Of course, we'd like to grow our figures outside the Netherlands, and we did. We are very happy with the growth in the Netherlands, and of course, that influences that growth figure. The medium to long-term objective of 50% revenues outside the Netherlands still stands.
Okay. Thanks. This sales force was just based on EV charging, or is it all three of the divisions? I know that Smart grids is mainly locally, but what's the segment outlook?
Yeah, that's correct. The main focus, of course, in outside countries, outside the country of the Netherlands, is for EV charging. Do not forget, one of the four parts is also cross-selling. One prospect or customer for one business division is automatically a prospect also for another business division. You see that although they are mainly working for EV charging, they also combine all the expertise. You see that also energy storage is a product or business unit that is very much suitable for European expansion.
Okay. And so none of the growth was COVID-19-related, that the international growth was less than in the Netherlands?
That's hard to say, but what we said before is that due to the COVID-19 lockdowns, some execution of some projects was very hard because simply you could not send your local workers to certain countries or certain areas. That's hard to say.
Okay. Then on your guidance, you reported strong growth in the first half of this year and ahead of your target, actually. Do you expect diminishing growth into H2 2020, or is this somewhat conservative in your outlook?
If we see a growth, it's always, of course, in the first half, the first quarter of 2019, we had, say, a relatively weak revenue. If we then compare the figures of this half year, then we could say, yes, we have a very strong growth. If you take it more in a broader perspective, then you see that our growth is an average. Maybe there's some measuring points from month to month; it could be a difference. We see an average that we still are more or less in line with our medium-term objectives. It could well be that in one month or quarter or half a year, the figures may be deviated a little bit. In average, we see that our growth is more or less stable on each different segment.
We see that the growth of the revenues outside of the Netherlands, we are convinced that the fundamentals were laying now with hiring more people, making markets, also in a market where the revenues are not fully there at the moment. To make sure that we are ready for those markets to be starting up, that we in the coming time are able to maintain our growth as we have more or less stated also during the IPO.
Okay. Thanks. Final question on the proceeds of the capital raise. I saw that similar statements at that time were published. Could you give an update on the progress of the capital allocation?
Yes. An update, not in numbers, Lotte, as you would have figured out. I think it's still, of course, we raised it at the end of June. We are looking at that. The drivers for which we raised the money, investments in networking capital needs to build up capacity, to enhance and increase our internationalization strategy, to enhance the innovations and the research and development, as well as, as we also said, some financial flexibility to seize potential investment opportunities. That still stands at the moment.
Okay. Thanks.
The next question comes in from the line of Jan Richard, calling from Berenberg. Please go ahead.
Yes. Good morning, everyone. Thank you for taking my questions. The first question, I would just like to come back on one previous question from Lotte on the expansion outside of the Netherlands. We see that the share of revenues from outside of the Netherlands is not growing as quickly as it used to. I do appreciate that revenues in the Netherlands are growing very quickly. My question is, versus your budget at IPO, do you see revenues in the Netherlands exceeding your expectations? Maybe then, as a result of that, do you see maybe a delay of a few quarters or a few years in reaching this 50% share of revenues from outside of your home country?
I think if you look at numbers, Jan, what you also see is that in the first half, as we already explained, the revenue of Elkamo is a bit lower than in the first half year of 2019, which, of course, also puts some pressure on that percentage. Nevertheless, of course, it's not a straight line that you can predict, that you just draw a straight line and go to the 50%. I think the medium-term objective for 50% is to enhance and support our internationalization strategy. Internationalization is one of the important growth pillars. It's a focus area. That's what we are focusing on. Of course, in some part, whether it's a quarter or a half of a year, if the growth in the Netherlands is very strong, then of course, we're very happy with the absolute number of growth of revenues outside of the Netherlands.
As a percentage, it might go a bit down. I think the strategy is still intact. We want to increase our international portfolio, focusing on Europe. Richard already explained how we do that with those salespeople, with locations in various countries, with export managers. There are a lot of elements in place to support that internationalization strategy.
Okay. Maybe within the Netherlands, which segment is really growing? Is it exceeding your expectations? Is it EV charging? Again, since the IPO, that would explain that this share of the revenues from the Netherlands are growing very strongly. Is it all three segments or exceeding your expectations since IPO time or one or another?
What you see is that, and we also have a little documentary on the TV yesterday, the growth of EV cars and EV charging stations in the Netherlands is extremely high. I think it's irrelevant to say whether it exceeds our expectations or not. I think that if you look at our sales activities and marketing activities, we try to increase our market share as much as possible. If the market is growing, then we benefit from that. I think we are quite successful in doing that in the Netherlands. The fact that the Netherlands is growing fast and still staying strong, that is, of course, helping us. If you look at energy storage and you look at Smart grids, Jan, as you know, all the markets that we work in are fast-growing markets. That is all supported by the energy transition.
You see that despite or maybe even because of the COVID-19 situation, governments are investing more and more in the energy transition, in supporting the energy transition with subsidy schemes. We see that the long-term fundamental drivers under all of our markets are very strong. I think that is the main topic. If you position yourself well and you have the right products and you invest in long-term in developing the right products and make sure that you have the right people on the floor and the right partnerships, you can benefit from this energy transition.
Okay. Related to the question to your international expansion, we've seen over the last few weeks, either at the European level or each member state pushing for incentive schemes and regulatory changes to include basically the energy transition within recovery packages. My question is the following: do you see a risk that each country in Europe would try and build a moat around its national companies to benefit from this, either in EV charging, storage, or Smart grids, which will make it a bit more complicated for you guys maybe to take market share and grow your revenues outside of your home country?
Yeah. That's quite a question you ask there. I don't have a crystal ball there, Jan. What you see is that people like to do business with companies that have years of experience. That's all about risk mitigation. What you see is that we have in all our business lines multiple references and proof that we can do the job and we do it right. If we continue to do that, we are confident in ourselves, but also in the market. We're confident in our people, in our products. We see the opportunities. Of course, very attractive markets will attract a lot of people who are looking also to get a part of that success or that market. We are very confident that we will get our share fair of the market.
Okay. Very quickly, two last questions on my side on EV charging. The first one is, have you seen any fundamental change in the competitive landscape structure in EV charging, either in your key European countries or at the European level over the last few weeks and since the start of the year? Is it still the same number of players when you bid?
What you see is that I don't know if the number of players are changing, but the structure and the size of the players are changing. Previously, we said that if the market is growing fast, it will attract all kinds of players that want to have part of that market. We will always keep a very close eye on all our markets, all competitions, all newcomers to the market. As long as we keep investing in our company, especially in the products, because the faster the energy transition goes, the more demand and need there is for smart products to deal with these complex situations, I think we are well positioned to benefit from the growth in this market.
Okay. Very last one on my side. We see EV charging becoming a larger and larger share of your total revenues and presumably of your earnings as well. I would like to better understand the leverage model in EV charging. Could you give us just is even the margin in EV charging low teens, mid-teens, high teens? If you cannot answer this question, could you maybe just give us a bridge between revenues and profitability in this segment to better understand how high margins could go going forward?
Yeah. Good question, Jan. Not a detailed answer from my part, I'm afraid. Nevertheless, you're right. We said that before. The fastest growing business lines also have the highest operational leverage. It is fair to say that operational leverage in EV charging is good. Every business line contributes. We do not look at the individual—of course, we look at it, but we do not disclose the individual numbers on EBITDA and those kinds of levels. I think it is fair to say that the fastest growing segments also have the highest operational leverage. Looking at that, that is also the aim that we have. We said the profitable growth is about growing the top line, watching the gross margins, and getting the operational leverage in place. That is how we look at the business as a whole. That is what we see happening there.
Anything?
Okay. We do have one final question coming through. Once again, from the line of Peter Olofsen calling from Kepler Cheuvreux . Please go ahead.
Yeah. Thanks for the follow-up. It's related to the working capital where there was quite an increase. You mentioned some COVID-19 and timing effects. Does that mean we will see some of the working capital increase refresh in the second half? Looking more medium to longer term, where do you see working capital relative to sales?
If you look at the working capital, fair to say there's also a seasonality pattern. I think working capital is playing in our favor at the moment due to the fact that we made the decision to increase stock levels in relationship with COVID-19. What we see is that we have been able to keep the supply chain going on. We keep delivering. We keep our delivery times intact. That's not the situation throughout the whole market. I think that sets us also apart from some competitors. It's helpful. As you know, we have strict monitoring controls on working capital. From a contract balance perspective, that's a timing moment. All in all, monitoring controls are still the same. We don't see a different trend in payment terms or whatever. Going forward, the situation is still the same.
Of course, if you grow the business, you also need, from an absolute point of view, a bit more working capital. I think we will not reduce the monitoring and enhancement of our working capital.
Relative to sales, is there then a range that you think is reasonable to assume for going forward?
I think all in all that our working capital is relatively low if you compare it as percentage to revenue. That is all I can say about that, Peter. I am not going to make any statement on a specific percentage.
Okay. Thank you.
Okay. We do also have another question coming through from the line of Marteen Verbeek calling from The IDEA!. Please go ahead.
Good morning. It's Marteen Verbeek for The IDEA!. One question. You mentioned you went to a new facility for your EV charging production, which was designed on your latest insight about efficiency on production and testing. Could you give some color how much efficiency you think to achieve? Has there already been some efficiencies booked in the first half, or when should we expect those?
As you can, of course, in the discussion we had, is that growing revenues, growing number of production, we have a continuous, say, attention to increase our efficiency. It is not a step function where we one day need to say several hours, and then the next week it is being reduced with, say, a large percentage. It is a step-by-step improvement. We have used then the opportunity with the relocation to optimize. It will not be a step function in results, but it will be a gradual improvement that can be seen over time. It is not a step function that we see on a, say, month-to-month period, but we have a continuous investment in efficiency to be able not only to cope with the overall growth of the production numbers, but also to cope in this way with the delivering of our production capacity.
Okay. Thank you.
Okay. We currently have no further questions coming through. As a final reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad now. Okay. We have no further questions coming through. I shall turn the call back across to yourself for any closing remarks.
Yeah. Marco Roeleveld. We want to express many thanks for everybody participating in this call, for everybody with the COVID-19 situation that has been quite complicated. And we wish everybody a healthy time and stay safe.
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