Samantha Cheetham , the CEO, and Jon Abell, the CFO and COO. With that, before I hand over, just a reminder, if you were looking to ask questions, please type it in the Q&A section rather than the chat section, and we'll get to those at the end as we read them out. Without further ado, let me hand over to Sam. Over to you, Sam.
Thanks, Adrian. Good morning, and thank you for joining us for our first half year FY 2022 investor webinar. My name is Samantha Cheetham , the Chief Executive Officer, and with me today is Jon Abell, our Chief Financial Officer and Chief Operating Officer. As we will discuss today, we have seen a strong rebound in our business and with a record half sales in our core products and in most regions. As always in business, there are challenges. The disruptions of global supply chains has added some additional complexity to our operations, but our focus was always on making sure we met customer demand. While this meant some additional costs and some inefficiencies in the short term, we feel confident that this deliberate strategic decision will deliver longer term benefits for our group.
Let's look at the results in more detail. Before we move on, I always like to recap on where we have come from, particularly for those that are less familiar with our business. Having been established in 1972, we have built this business into a successful manufacturing company, where today we are exporting to more than 100 countries. This year, 2022, we are now starting to celebrate 50 years of SDI. Underpinning this success has been our continuing focus on research and development, and through this, we have developed new and innovative products that meet the needs of our customers. Let me now turn to the agenda for today's presentation. I will begin with a summary of the first half results, then spend some time talking about the product categories and the key geographies we operate in.
I will then turn over to Jon Abell, who will run through the financials before returning to me to talk about our strategy and the outlook for the remaining part of the financial year. We're happy to take your questions at the end. Let's begin with a summary. This was a record half for the group with total sales of AUD 46.3 million, up 26% on the prior corresponding period. This was driven by strong growth in all product categories and in most regions, with a return to normal operating conditions. As I mentioned in my opening remarks, there are additional costs incurred to the period due to disruptions in the global supply chain. Freight costs added AUD 2.7 million and impacted our product margins by 5.8%.
With operations returning to normal, the operating expenses rebounded 23.1% in the period. Importantly, when we compare this period to the first half of FY 2020, prior to the disruption, pleasingly, the cost base is only up 2.5% after adjusting for currency movements. As a result of these conditions and other operational inefficiencies experienced, EBITDA fell 30.3% to AUD 6 million. The balance sheet remains robust with a good level of cash, no debt, and importantly, we continue to invest in our research and development. The restructure of the Brazilian operation, which we shared last year, is now complete and fully operational from the start of this year. Finally, the board has rewarded shareholders with a AUD 0.015 per annum interim dividend, underpinning the board's confidence in the outlook for the business.
Let's now turn to the product categories. Our core categories of Aesthetics and Whitening were once again the highlight for this period, with growth of 30.5% and 20.6% respectively in local currencies. This result was driven by the release of new products in the previous period, but also market share gains, reinforcing the importance of our strategic decision to ensure we met all market demands. Another highlight, although the smallest product category, was equipment, up 16.5% in local currencies, due mainly to the normalizing of market conditions in most markets. Finally, the amalgam product sales, a relatively smaller product category for the group at 15.5% of total sales, were up 41% in local currency.
The drivers of this performance included the changes, the changing market conditions, with two larger players exiting the market and secondly, the return of government tenders in some regions where conditions began to normalize. Turning to the geographies. This slide shows sales by business unit as disclosed in our accounts. Sales by business unit were consistent with a return to normal operating conditions in each market. European unit sales were up 28.7% in local currencies for the half, driven by strong demand in its key market and assisted by the U.K., where conditions rapidly improved. The Australian unit sales, which also captures the Australian direct export market, was up 31%, with the domestic sales down 16.8%, more than offset by direct exports, which were up 67% in the period.
The domestic result is directly related to the lockdowns in the largest markets in the half, being New South Wales and Victoria. Resilient sales increased 66.9% in local currencies from market share gains and with the return to normal operating conditions, the overall strength in the dental market. For a more detailed look at what is going on in the regions, let's look at customer behavior by region. This slide shows the regions where sales were in Australian dollars. The Americas, Middle East, Africa, and Europe all performed well with the Asia Pacific region impacted in the period as discussed earlier. These performances reflect the return to normal operating conditions, but also the continuing success with new product releases and significantly, market share gains.
As shared, we made sure there was no unmet demand and saw the rewards in most regions. I will now hand over to Jon to talk through the financials.
Thanks, Sam. As Sam mentioned, sales were up 26% in the period, underpinned by strong demand in most regions and in all product categories as conditions normalized. On gross product margins, the story bears some further explanation. The decline in the margin is in part explained by the increased freight in the period, where the cost of transporting goods reached record levels. In addition, our strategy, as Sam shared, was to maintain service levels with customers, and while painful in the short term, we believe that having met this demand, we will see enduring benefits for SDI. The other key factor is the mix of product and regions. As discussed previously, margins are not uniform across products and regions. In this half, the influence of lower product margins in lower-margin regions is evidenced.
While unusual, this result is more a reflection on the remaining regions rather than more normal operating conditions, and we expect to see margins normalize over time. On operating expenses, we saw a return to normal levels and the absence of government assistance programs. Encouragingly, operating expenses are only up 2.5% on the more comparable period in the first half of financial year 2020. Finally, on EBITDA and NPAT, the declines reflect the impact on gross margin discussed earlier and the return of normal operating expenses. Turning to the balance sheet, the company's net cash position fell AUD 4 million to AUD 6.5 million, following the planned investment in inventories, plant and equipment, product development expenditure, and as a result of the additional freight costs.
As discussed earlier, we actively managed inventory to ensure we met customer needs and did our best to mitigate the ongoing delays in the global supply chain. Finally, the company has unused bank facilities of AUD 10 million. Turning to the cash flow statement. There were a number of factors that impacted the operating cash flow in the half. The operating costs returned to more normal levels in line with most of our markets. As mentioned earlier, we experienced inflated logistics costs. In this period, as discussed in the conversation on gross margins, we sold into markets where there are typically longer-dated trading terms. No government assistance was received in the period. Finally, we made the payment of the final full-year dividend for the financial year 2021.
I will now hand back to Sam to run through the strategy and the outlook for the remaining part of the financial year.
Thanks, Jon. Turning to our strategy, the company's strategic priorities remain focused on four things. Number one, the key product categories of Aesthetics and Whitening products. Number two, further manufacturing efficiencies and driving sales and marketing team. Three, the ongoing investment in research and development. Four, the company's amalgam replacement product, which remains on schedule for release in 2023. Turning to the outlook. We've continued our comprehensive review of the manufacturing footprint, including relocation, further investment in automation, and on our manufacturing processes to ensure we continue to operate efficiently and manage future growth. This review is ongoing, and as you would expect with something this important, our approach is cautious and detailed, and we hope to share more with you in time.
Looking ahead, I am encouraged by the strong sales growth we have seen in our markets and see genuine momentum in our business, underpinned by new product releases and continued increases in market share. While the challenges of elevated costs and the uncertainty of further lockdowns is still a reality, in time, these conditions will normalize, and we will see ongoing benefits from the strong base we have built in our market. Thank you for listening to our presentation, and we are happy now to take your questions.
Thanks, Sam. We've got a number of questions coming in, so let me just go through them in turn. Firstly, the first question: Can you elaborate on the freight costs from where to where, and why these couldn't be passed on to the customer?
Certainly. Thank you, Peter, for your question. We have freight costs going from our Australian manufacturing here in Bayswater to our warehouses overseas, being Brazil, USA, and Germany. They are actually eventually passed on to the customer with price increases, but they can't be passed on right away. Our export sales, the customer pays the freight, so that's not a significant factor. The import, when we bring freight in, raw materials, parts for manufacturing, there's also the cost of the increased freight there.
Thanks, Sam. Next question. Are you able to split out the sales growth in local currency for the U.K. market?
Thanks, Andrew, for that question. We don't generally share that at that detail. No, we don't have that figure right now, but we can get back to you on that.
Next question. You made a comment that you used this period to ensure that you met customer demands. The question is this related to some of the market share gains that you alluded to that you've experienced in the period as well?
Absolutely. Thank you for that question. Where we've been able to increase our market share in many regions actually, it's where there's been opportunities where our competitors perhaps haven't been able to get into their stock in, and we've used that opportunity to increase the market share. It's happened in, particularly in, Brazil, Europe, here in Australia, and specific countries in different regions.
Thanks, Sam. Next question, and it's a question for you, Jon, with respect to inventory, as you called out at an elevated level. Can you just talk through the strategy behind it and some of the challenges that you faced in moving goods around the globe?
Yeah, sure. Because of the logistics, not just the logistics costs, but also the supply chains have been fairly unstable. For example, we'll book a refrigerated container, 40-ft container to be shipped next week. There's three weeks delay before we can ship it. To mitigate that strategy, we started to ensure that we build up our stocks in the overseas warehouses. If we do have delays in shipping containers, we can minimize the use of air freighting, which is far more expensive.
Next question. At the AGM, you commented that the manufacturing site will double by size. Can you give some update where this is currently at and what is estimated capital cost involved in this particular project?
Thank you.
Look, we haven't finalized any of the capital costs. As soon as we have. At the moment, we have contracted a project management company who is working through our requirements for the site and to ensure that the site is suitable for our needs. That includes production layout, warehouse layouts. We're still at that stage, so we don't have a final capital cost, if you like, at this stage.
Thanks, Jon. Next question, and it goes back to an earlier remark you've made. Have you adjusted sales prices on your products to offset some of the increased freight costs that you've incurred?
Yes, we certainly have. We adjusted freight costs September, depending on the region, then October in some markets, then January in others. We are doing more adjustments at the moment, and they're more significant than our normal annual increases.
Next question, it goes to a comment that you've made, Jon, with respect to margins returning to normal over time. I know it's difficult to actually pinpoint a particular time, but with these unusual costs that have been incurred in the period, do you have a view as to what profile that would look like time-wise for margins to return to normal levels?
Yeah, look, I can't see that logistics problem normalizing by end June. I think it will continue on, from what we're hearing, probably for most of this calendar year. We're seeing more hold-ups, lack of containers, availability of containers. I have not seen an improvement in that whole area as yet. I'm thinking I originally thought we'd be out of it by now, but I'm sort of thinking now the end of the calendar year, until that's finished.
There's another question with respect to the, kind of, even a rough estimate on the actual relocation of the manufacturing site. I think probably it's worth highlighting some of the project team that's been engaged and just some of their processes they're going through.
Yes. What we've done, we've picked a team for SDI, which includes our production manager, our engineering manager, and our logistics manager to work with the project managers to spec out the site, and also to work through costings of that spec. It's still too early to sort of give an estimate, but, you know, it's a substantial figure. We hope to update the market in the next month or so when we've got some more final details.
We've had a question, actually come through on the chat. Best to direct your questions to Q&A. It's a very specific question: What is FTI's involvement with Dentroid's laser robot?
I think I know what you're referring to. We're not involved in with them.
There's another follow-up question, and you kinda dealt with this a bit earlier, but how do you see the ability to pass through a portion of higher costs in higher prices or any other adjustment? Is there any rise and fall scope in some of the contracts?
We certainly have contracts out there that most of the time we can't increase right away. However, they're in markets, such as the U.S., where they're already buying at a relatively high price. We are increasing prices everywhere, and it's sort of an annual. It's not an annual, it's an ongoing occurrence at the moment because it's very important to get back our margins, and that's our goal.
We'll just pause one moment for any other further questions, just to, before we wrap up. I'll just pause for a moment. I think we've answered all the questions that we needed to answer, Sam and Jon, so thank you very much for your time and I'll pass back to you, Sam, for some closing remarks.
Thank you, Adrian. Thanks everybody for listening. I think this year is going to be a very exciting year for us. We're at sales levels pre-pandemic, you know, higher than pre-pandemic levels and we've got some super new products coming out on the market and it's. The future is looking very good. Thanks everybody for your interest.