Please go ahead, speakers.
Thank you. Hi, good afternoon, thank you very much all of you for taking the time to attend Gestamp's first half during 2023 results presentation. I am Ana Fuentes, IR Director. Before proceeding, let me refer you to the disclaimer on slide two of this presentation, that has been posted on our website, will set out the legal framework under which this presentation must be considered. The conference call will be led by our Executive Chairman, Mr. Francisco Riberas, and our CFO, Mr. Ignacio Mosquera. At the end of this conference, we will open up for a Q&A session. Please let me turn the call to our Chairman, Mr. Francisco Riberas.
Good afternoon. Thanks for attending this call, in which we will be presenting the results of this half of 2023. During the first half of 2023, Gestamp has obtained a very positive set of results in a more stable market. I think, basically, in terms of revenues, we have grown by 28.8% year-on-year, outperforming the market growth by 12.3 percentage points. We have also been able to increase our EBITDA by 26.3%, reaching already EUR 700 million in this first half, and at 12.4% margin, excluding the impact of raw materials.
We have a good growth, and profitable figures, helping us also to generate free cash flow and to be enabled to leverage, to reduce our leverage to 1.6 x debt to EBITDA. We have been able to do that while keep on investing in order to support our customer projects, especially in EVs. Moving to the slide number five, and focusing in the financial performance in the half of the year. In terms of revenues, our revenues in this first half have been EUR 6,273 million, which means that 28.8%, in reported basis.
In terms of EBITDA, we have generated EUR 700 million versus EUR 554 million in first half 2022, which means an EBITDA margin of 11.2% and 12.4% if we exclude raw material impact. In terms of EBIT, we have generated EUR 364 million, which means 51% increase with EBIT we generated in first half 2022. Which represents 6.5% margin excluding the impact of raw material. Net income of EUR 162 million, which is an increase of 38.5% compared with the net income in first half 2022.
Even with higher interest rates, we have had the CapEx of EUR 425 million, compared with EUR 376 million in the first half of 2022, and we have been able to reach the debt comparing with the June 2022 by EUR 76 million. If we move to the next slide, I'm focusing in the financial performance in this quarter, 2023. Our revenues in this quarter have been EUR 3,129 million, which means close to 20% increase compared with the second quarter 2022 revenues. We have generated in this quarter, EUR 363 million EBITDA, compared with EUR 301 million in the second quarter last year, which represents 11.6% margin in reported times, and 12.8% if we exclude the impact of raw material.
We have generated EBIT of EUR 199 million, compared with EUR 139 million in 2022, which is representing 6.7% margin if we exclude raw material. In terms of net income, we have improved our net income by EUR 10 million, reaching EUR 82 million, and we have had a CapEx of EUR 221 million, which is very similar to the one we had in Q2 2022. Moving to slide number seven. In terms of our, of the, of auto market and especially in the Gestamp footprint, we had in first half 2023 an increase compared with first half 2022 of 12%, which is a very important recovery of the volume, but still with volumes which are below the ones we had in 2019 and 2018.
Specifically, if we talk about 18, there is already a gap between volumes in first half of 9%. This increase in first half of 2023 has come from the different geographies, but especially it's been a very important comeback in volumes in Western Europe after suffering a lot in 2021 and 2022, also some strength, a very important recovery from North America. Moving to slide 8. We have been able to obtain a good outperformance of the growth of the market. In fact, in terms of market, we have been able to increase the growth of the market by 13 percentage points, 25% increase versus 12%.
We have had a clear outperformance in different regions, like in Asia, that we have been able to grow by 39%, while the market has grown by more than 10%. Also in Eastern Europe and Mercosur, we have grown 22% in our most important market in Europe, but in this case, aligned with the growth of the market, and we have had less growth in North America due to our less exposure to U.S. manufacturers. Moving to the slide number nine, I think, clearly we consider as a management that we have had quite positive set of results, record results for Gestamp in first half 2023.
In terms of our revenues, and excluding raw material impact, we have generated revenues for EUR 5,639, which means a 32% increase compared with the volumes in first half 2018. At that time, in this first half of 2018, the number of vehicles manufactured at that time was 48.4 million, while in the first half 2023, the number of vehicles manufactured has been 43.3 million. Very important increase in revenues with less addressable market. In terms of EBITDA, we have generated in the first half 2023, EUR 700 million EBITDA, which means a 44% increase compared with the EBITDA we generated in 2018, and again, with different and lower amount of vehicles manufactured.
A very, solid, set of results in an environment which is, which still is non-completely favorable. Now I hand it over to Ignacio Mosquera.
Thank you, Francisco. Good afternoon to everyone. Moving on to slide 11. We show in this slide the performance by region on a year-on-year basis. As you all know, our results remain impacted by the increase in raw material prices, which amounted to EUR 634 million in revenues during the first half of the year, versus EUR 483 million in first half 2022, due to the volume increase despite the lower prices, particularly in Q2. Broadly speaking, EBITDA is not impacted by raw materials due to our pass-through process. Looking at each region in detail, Western Europe has performed broadly in line with the market, with revenues growing by 21% year-on-year, almost to EUR 2.5 billion. This implies a limited outperformance to the market year-on-year.
Excluding raw materials, impact outperformance would be close to mid-single-digit, as expected. It is worth also mentioning that the Western European market performance in first half has been remarkable, growing above 20%. This region has lagged behind overall market recovery, and now it's resuming its growth path, boosted particularly by electric vehicles. In terms of EBITDA, it reached EUR 283 million, 34% increase year-on-year. As a result, EBITDA margin stood at 11.4% in the period, improving by more than 100 basis points year-on-year, even with the impact from the raw materials pass-through and inflationary pressures. This has been thanks to an improved operational leverage, ongoing implementation of efficiency measures based on our operational excellence strategy, market recovery in the UK, and lastly, constructive price discussions.
In Eastern Europe, the performance in the period has been strong, proving again our solid positioning in the region. The performance in the region has been affected by Russia, and additionally, a bit of weakness in Turkey due to the lessons and project mix. Turkey is now back to strong growth, and hence, we should see some recovery in the region going forward. Overall, during the first six months of the year, revenues have grown by more than 23% year-on-year to EUR 868 million, while EBITDA has increased by almost 10% to EUR 127 million, with an EBITDA margin of 14.6%. EBITDA margin came weaker, mainly as a result of temporary FX impact on our P&L in Turkey.
In NAFTA, the performance of the region continues to be weak due to our client exposure, project mix, limited profitability in some specific contracts. As a result, our revenues have grown by nearly 14% year-on-year, underperforming the market, as previously explained. EBITDA has increased by 4.5% in the period, leading to an EBITDA margin of 7.8%. In Mercosur, our solid market positioning has allowed us to grow by 25% year-on-year in the first half. EBITDA in the period has increased by 19.5% to EUR 61 million, with EBITDA margin is slightly deteriorating to 12.9%, as the comparison base is a bit affected by one-offs affecting EBITDA. Similarly to Eastern Europe, excluding the raw material impact, profitability has been better than last year.
Revenues in Asia have grown by almost 32%, reflecting the good market window, particularly during the April to May period, and our strong positioning in EV in line with the group strategy. As a result, EBITDA grew by 27% in the period. EBITDA margin in the region stood at 12.5%, below 2022 due to the project mix. Finally, the scrap has contributed with EUR 351 million to our first half 2023 reported revenues, and EUR 26 million at EBITDA level, which implies a 7.4% margin. Margin decline is reflecting lower volume and prices sold, linked to the overall decline in raw materials.
Overall, we have seen a solid performance in the period, with strong revenue and an EBITDA margin excluding raw materials at 12.4%. We're firmly convinced we will reach our financial targets for the year. Moving to slide number 12, we can see that we achieved a record figure for first half net income. Net income in the first half 2023 amounted to EUR 162 million, which is 39% above the EUR 119 million reported in the first half of last year. This increase is thanks to top-line growth, despite having reported higher financial expenses during this period, as a result of negative FX impact, increase in interest rates, and lastly, one-off costs from the refinancing agreement which we closed in April.
This performance at net income level demonstrates our commitment to improve profitability and generate value for our shareholders, as we stated in our Capital Markets Day in June. Turning to slide number 13, we see that CapEx amounted to EUR 425 million in the period, equal to 6.8% of reported revenues in the first half 2023. In the period, recurring CapEx stood at EUR 165 million, representing at 2.6% of revenues, and growth CapEx amounted to EUR 197 million or 3.1% of revenues, while intangible CapEx represented 1% of revenues in the first half 2023.
We should see CapEx increasing as a percentage of revenues throughout the year to reach around 7.5% of revenues we guided in February, with a stronger contribution from growth CapEx. Turning to slide number 14, we see that we're back to positive free cash flow generation. As shown in the slide, in Q2, we have generated EUR 57 million of positive free cash flow, more than offsetting the negative free cash flow generated in Q1, in line with normal seasonality of our business. As a result, during the first half of the year, the company has generated a total of EUR 30 million of free cash flow. This cash flow generation demonstrates we're in the right path to reach our targets of generating more than EUR 200 million of free cash flow in the year.
We have ended up June with a net debt of EUR 2.2 billion, which is EUR 79 million above the EUR 2,140 million reported in December 2022, but EUR 41 million below the EUR 2,265 million reported in Q1 2023. Turning to slide 15, you can see that Gestamp is fully committed to the leverage. We have met the new target, and we're on target to meet the target presented in the CMD of reaching a net debt to EBITDA ratio of 1%-1.5% by 2027. As of June 2023, net debt implies a leverage ratio of 1.6x, which is the lowest since the IPO.
In terms of liquidity, we have ended June with a solid liquidity positioning of EUR 2 billion, which includes total cash balance of EUR 1.1 billion, as well as undrawn credit lines. During this Q2, we have dispersed almost EUR 340 million of maturities to make an efficient use of our cash and limit our financing expense. Thank you all. Now I hand over the presentation to Francisco for the outlook and final remarks.
Okay. Thank you, Ignacio. If we move to slide 17, in terms of auto market for 2023, clearly we have had a first half better than expected, assuming that in the second half it's gonna be very much in line with 2022, now the forecast is 86.7 million units manufactured during this year, versus an initial forecast in the beginning of the year of 85 million units. For following years, basically in line with what we have already communicated at the Capital Markets Day, we are forecasting that during next year, there's gonna be a limited growth until 2028, the volumes at that time in 2028, are gonna be able to be close to the ones we already have by 2018.
In terms of the EVs, clearly, EVs is gonna be leading the set of the growth for the future years and the EV penetration in terms of manufacturing vehicles will keep on growing. Last year was around 14%. This year is expected to be in 18%, and probably by 2028, where it's gonna be more than 45%, which is now included in the forecast. Moving to slide 18, in terms of our guidance, and following our positive set of results in the first half, we clearly confirm our guidance for the year, which means that in terms of revenues, we are, we should be able to reach high single digit outperformance to the market, and adding, of course, the additional revenue which is coming from the incorporation into perimeter of Gescrap.
In terms of EBITDA margin, we guided and we confirm a guidance of 12.5%-13% margin, excluding the impact of raw material. Which clearly means a double-digit reported EBITDA growth in absolute terms. In terms of CapEx, we should be able to be in a CapEx of around 7.5% of reported revenues, probably with more CapEx in the second half of the year, as in the first half of the year, we were below 7% to sales. With a generation of EUR 200 million, mainly in the second half, as traditionally, as traditional seasonality for in our business. Clearly, and again, in fact, we deliver on our guidance.
In slide 19, we commented that already five weeks ago, we held our one of our plants in Germany, our Capital Markets Day. At that time, we clearly stated that Gestamp is gonna be a key partner to our customers in the transition to this EV, to this kind of a green revolution. Clearly, at that time, the idea was to focus in the short term, in trying to meet our guidance for 2023 to deliver in our commitment for 2023, and in the long term, to be able to develop on a strategy toward 2027, with different pillars and different and clear targets. Moving to slide 20.
We just very quickly, we built this strategy at that time, stating that, of course, we wanted to maintain a clear ambition in terms of growth, preserving our status of trusted partner with the customers, basing our technology and innovation, preserving a high level of operational excellence. Of course, focusing in keeping and increasing our profitability, preserving our balanced health and soundness, and of course, being a pioneer in the circular economy through Gescrap. At that time, we set up more and more targets, and we provided more visibility. In fact, in moving to the slide 21, I want here now to reiterate what were the targets we stated in the Capital Markets Day.
In terms of revenues, we have stated that we wanted to keep a mid-single-digit performance to the market. In terms of sales for EVs, that we wanted to multiply by 5 x, reaching 50% or more of our sales in 2027 related to electrical vehicles. To be able also to expand our EBITDA margin between 150-190 basis points. To have a leverage throughout the period until 2027, between 1x and 1.5 x. To increase the return on capital employed by 350 basis points by the end of the period, moving from 14% to 17.5%, and also to preserve our strategy, long-term strategy of dividend payout of 30%.
In terms of ESG, always we are very focused and especially after the approval of our new ESG plan, and especially it mentioned in all these areas around the decarbonization, we have a clear target set to be able to have be neutral in Scope 2 by 2030, to be neutral in the Scope 1 by 2034, and in both cases, we are moving very well in advance and to be completely climate neutral by 2050. In fact, in slide number 23, we can see that, in terms of the Scope 3 and in terms of circularity, we are actively moving for net zero.
In fact, following the acquisition of Gescrap at the end of 2022, we have recently announced the agreement with ArcelorMittal. By this, by means of this agreement, we will have the possibility to use high quality scrap through Gescrap in order to be able to have availability of low emission recycled steel, and with this steel, to be able to manufacture components to our customers, components made out of recycled steel and with low CO2 emissions. Clearly moving forward in all our commitments around decarbonization. That's all now from my side, and now we are open to your questions.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press star one on your telephone keypad. Please be informed that there might be a short silence while questions are being registered. One moment, please. Your first question comes from Akshat Kakar with JP Morgan. Please go ahead.
JP Morgan. Three questions from my side, please. The first one on your EBITDA margin guidance for the full year. I just want to understand at this point of the year, are you still targeting the higher end of that range for 2023? To the extent it depends on OEM cost recoveries, how many of those negotiations have been finalized and closed, please? That's the first one. The second one is on CapEx. To the extent you can, as you're doing your budget for next year, what kind of CapEx numbers should we be thinking about, probably in absolute terms? Should we be thinking about something that's higher year-over-year, or as a percentage of sales, should we be thinking about 7.5%-8% of sales? Any guidance on that number would be helpful.
The one on working capital, if you could just talk about your assumptions for the second half, and if there have been any changes in factoring. Thank you.
Regarding your first question around the EBITDA margin for full year, as I have already commented, that we have generated 12.4% margin in the first half of the year, and we have guided a range of between 12.5%-13%. We feel comfortable about reaching this target. Of course, in terms of the negotiation we have with our customers, we have already part of these negotiations closed and agreed in the first half of the year, and we still have some room to end up some of these negotiations by the second half of the year. In any case, to your question, we are gonna be in this range, comfortable, but I cannot provide you a much more accurate definition of this margin of EBITDA.
Maybe for the other questions, Yes, so On the CapEx side, I think that first of all, I'd like to reiterate that we have not built up the specific budget already for next year, 2024. I cannot give you a specific number on that. Secondly, I think that also as we talked in the CMD, it's not so much about CapEx, but also about return on capital employed. Also, we're not guiding specifically on CapEx, and I don't expect a proper guidance to be provided at the end of this year on CapEx. Going to your third question on working capital, I'd like to reflect on the working capital performance actually of Q2, the first half, where we have managed it diligently, trying to minimize the impact of increased interest expense.
You see that the actually, in terms of base, of clients, base of suppliers and inventories, they have remained roughly constant and maybe with a little deterioration. I expect that in the second half, we will continue to managing in the same way, diligently trying to minimize the impact of financing expense.
Understood. Thank you.
Your next question comes from Anthony with ODDO BHF. Please go ahead.
Yes, hi. Thanks for taking my question. I had a couple on my side. Just firstly, on the top line, seeing as you now sort of subscribe to the new LVP scenario, is it fair to assume that our expectations for your growth for the full year should increase by the same magnitude? Then on the financing, I'm sorry, I didn't just catch the latest comment that you made, but we did see a bit of volatility in the different items of the financing cost in Q2. You mentioned there were some one-offs with refinancing. Could you help us understand how, you know, the financing expense is going to evolve going forward, you know, not only the financial expense, but also the other items below the EBIT, basically?
Lastly, also, on factoring, could you give us the level of factoring, and also how does that come into your financial expenses? Thank you.
Okay. Yes, I was not able to hear you properly. Just to understand, I think, the first question was related to ourselves. I have understood that assuming the second half of the year, the number of vehicles expected to be manufactured worldwide, is gonna be constant to the first half of the year. What is our position regarding the growth in sales? I did not really catch the point. Sorry.
It was that, and also because, you know, the LVP scenario has been increased over the last couple of weeks. I'm just wondering if, you know, it's fair to assume a similar magnitude of increase for your top line, or also, you know, if the pricing effects, how are they gonna play into second half with the raw material price, et cetera, et cetera?
Well, I think, just to be all in line, I think we have guided to do this outperformance to the growth of the market. It's true that the growth of the market at the end, beginning of the year was a little bit lower than the growth that now we are expecting. Even if this is gonna be the case, as I mentioned, I reiterate this guidance, and we are gonna be in this position to be in this high single digital performance of the market in 2023. Apart of that, you mentioned about the financial expenses?
Yes. On the financing expenses, we had actually a few one-offs this last quarter. The first was related to FX. We have had an impact specifically in Argentina, Mexico, and Turkey, related to our debt denominated in the non-functional currency and the currency depreciation. At the time, we also had an impact of the unwinding of the prior syndicated facility. When you unwind the prior syndicated facility, due to IFRS 9 application, you need to unwind the non-price costs, and that has been also an additional one-off. With those two have been the main impact that have been of the increase of the financing expense, together with basically the increase of the IBOR.
This being said, we have most of our debts, and reiterate that, we have most of our debts, basically denominated in fixed rates. For the second half of the year, we should see a reduction of the financing expense compared to the first half. I think that your last question was on the factoring levels. As mentioned previously, we are managing very diligently our expenses related to financing, and therefore we have reduced our factoring levels monthly by EUR 19 million in the first half of the year.
Okay, great. Thank you very much.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. Your next question comes from Alvaro Lenze with Alantra. Please go ahead.
Hi, thanks for my question. Just firstly, a follow-up, you mentioned that you have had some one-off from the unwinding of non-amortized costs, but if you could just quantify or maybe is the EUR 42 million of financial expenses that we saw in Q1 is what we should extrapolate into second half? The second question will be on the results attributable to minorities, which there have been none in Q2. Just to understand what's driving this coming after roughly EUR 16 million in Q1. Coming back to your guidance, within the range to deliver, but just to understand the margin pressure that we have seen year-on-year, excluding raw materials, what do you think are the main drivers here, and how do you see this evolving into the second half of the year? Thanks.
Yes. on the financing, I think if, Alvaro, just correct me if I'm wrong, but you said that if we could see the EUR 42 million as a run rate for the second half, is that correct?
Yes, on a quarterly basis.
On a quarterly basis. Yes. Yes, I think that that is that number is more or less okay. It should not be. Maybe it's a little bit a little bit lower than that. Okay. On the minorities for Q2, part of the minorities have been impacted by directly the actually the effects that we had on financing expense. If you think about it, where we have been impacted have been on countries where we have minority partners, like Mexico or Turkey. To the extent that there is also an additional FX impact in the second half or not, which we cannot speculate right now on the currency, that would have also an impact on the minorities.
Coming to your first questions around the margin of EBITDA, it's true that it's gonna be complex for the second half, but it's also true that part of this margin is gonna come from the ability we have in order to be able to improve the performance of our operations. Also, we should not forget that we are increasing volumes, and we should be able to find some kind of a leverage on that. We are still discussing with the customers some topics. Of course, as we all know, in terms of some inflation problems around energy are not right now as important as it used to be in the previous year. We feel comfortable that we could really reach our target.
Also, we can also preserve our long-term strategy with the customers, being able to preserve a very good relationship in order to be nominated for future programs.
Thank you.
Your next question comes from Enrique Yáguez with Bestinver Securities. Please go ahead.
Good afternoon. I have two quick questions. The first one is market outperformance. In Q1, you outperformed the market by 27 percentage points, while in the second quarter, if I'm not wrong, you are in line with the market. What is the main reasons for this different performance? Is it just the geographic mix or any project ending and the new project not ramping up enough? The second question is, you know, for the next year, you mentioned that you're not going to provide any CapEx guidance, but should at least we expect free cash flow in line with this year or roughly in line, or should we expect any material difference in the free cash flow? Thank you.
Okay. Thanks for your questions. It's true that in the second quarter, we have not been able to outperform the sales of the market, especially in Europe. As you know, it's our main market. We have a very important minority, and it's true that we have outperformed in different areas, but in other areas we have not been able to really outperform. This is very important to understand that in the case of our Western European facilities, that this increase in terms of sales has made up possible to use this leverage in terms of volume. We have increased substantially our profitability compared with the previous period. We have been doing quite well. There is no any kind of explanation.
We feel comfortable, and, we are in line with, being able to hit with the kind of guidance that we have provided. Overall, we are gonna be able to really get this outperformance that we have already guided. CapEx?
In terms of CapEx or free cash flow, I reiterate what I mentioned before. We have not started yet budgeting process. It's a little bit too early to start working on 2024 when we've got still very interesting next six months, which we are very confident that we will deliver the guidance of 2023.
Thank you. Thank you very much.
Your next question comes from Manuel Lorente with Mirabaud. Please go ahead.
Hi, good afternoon. My first question probably is on Europe profitability increase. Watching the numbers on a quarterly basis, Europe, both continental and Western, have somehow dropped revenues versus Q1 on a standalone basis again. However, profitability altogether in the area has increased EUR 40 million. Can you give us a little more detail of this significant margin improvement in the area without top line expansion?
Yes, look, I mean, I think we mentioned it on the call, but let me just remark on it. I think that there has been, obviously, a substantial market recovery in Europe, which has Europe had lagged behind that market recovery over the last few quarters. That market recovery gives us operational leverage. At the same time, efficiency measures and operational measures that we are taking are making the improvement on margin as well. Last but not least, we have constructive price discussions with our customers and with our clients, which are providing some additional positive impact against inflation on labor and inflation on energy.
Also, I'd like to reflect on the UK market specifically, which in the past has had a very rough ride, and we are seeing, we are seeing benefits now and market recovery that it's providing, additional EBITDA. Those are basically the key levers of the EBITDA expansion.
I see. Just then a quick one on guidance, especially on the free cash flow front. Cash flow on the first half has been EUR 30 million, which implies EUR 170 million on second half. That's the correct way of seeing the free cash flow, the free cash flow guidance. If that is the case, you also have mentioned that CapEx should increase in the second half of the year. How can we balance this massive improvement of free cash flow on the second half in the context of also a meaningful increase on CapEx? Which are the levers to reach that guidance? Are we talking about cash earnings, working capital improvement?
I think that you need to reflect on the usual seasonality that the company experiences on the quick cash flow generation, which is more skewed towards the second half, actually more skewed towards Q4 than Q3. We see that pattern that likely to happen again in the course of 2023, and therefore, we see that at least we will be generating EUR 170 million in the second half. Furthermore, the seasonality is also driven, as we've mentioned a few times, that on our tooling business. The tooling business gets progress over the year, but it's only paid at the end of the year, most of it paid at the end of the year.
I see. Standard seasonality. Thank you.
No problem.
Your next question comes from Francisco Ruiz with BNP. Please go ahead.
Hello, good afternoon. Thank you for taking my questions. I have two. The first one is on Gescrap. When you acquire a company, you promise a margin of similar to the group level, and it's clearly on the performance on that side. Could you explain a little bit this, and if there is any kind of seasonality, both in margins and in sales on the numbers that we have seen in first half? The second one is in NAFTA, which is something that probably, you know, surprises us. I mean, the low profitability than last year, but also we have seen another performance in the top line. Could we see a similar picture in the second half?
Do you think that we will see a better improvement in performance on behalf of a lower market share in the market? Thank you.
Okay, thanks for the questions. first of one, concerning Gescrap, it's true that we guided that it was gonna be neutral, and it's true that we have a less percentage of margin in Gescrap in the first half. Basically, it's coming from the fact that the prices of the scrap globally have been reduced in some extent, as was not expected. Also, in parallel, they have been able to manage quite well working capital, and they have been able to increase sales. We are not concerned at all about the trend of this business, but in fact, it's true that this kind of business, which is a little bit more commercial, has a little bit more of variability in terms of the prices of the scrap.
In terms of NAFTA, I think we have clearly set an ambitious plan to recover our NAFTA operations. We have an scope in order to be able to reach a better margin by 2026. It's true that we are moving forward. It's probably that we have not seen good advances in the first half of the year. Some of it could be coming from this less sales coming out for the programs of some European customers. For the second half of the year, of course, apart of volumes, that should be back, there are already some operational things that are starting to improve, and we are convinced that it's gonna be some recovery.
Whether it's gonna come in the second half of 2023 or it's gonna come later, clear, but we are on the path.
Okay, thank you very much.
Your next question comes from Alberto Espelosín with JB Capital. Please go ahead.
Yeah, good afternoon. Thank you for taking my questions. I have just one quick follow-up on the EBITDA margin. On the first quarter, you mentioned that margin dilution was partly due to the ramp up phase of the strategic projects that you announced in July last year. I would like to understand if you could clarify how much of the margin growth this quarter was due to the ramp up of these new projects, and how much was due to organic growth? For second half 2023, what is the positive impact on margins that you expect from this ramp up in new projects? Thank you.
Well, I think that regarding to the new projects that we talk about during the last year, it's true that we mentioned that it was a CapEx that was gonna have a return a little bit good more quickly. it's true that we also mentioned that at that time, that some of these projects had a very good return on investment and probably some kind of dilution on the margin. We have had probably some delays, but all these projects are running basically online or what we were expecting. Of course, there will be some volume still missing in the first half, and we are expecting this volume to come back by the second half of the year. I don't know, naturally. Nothing more to complement.
I think that, the projects are going on the right path, and, we're seeing that margin dilution, as mentioned, but on the strict side, what we are looking at is the return on capital employed, and it's looking positively.
Okay, thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one.