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I'm not sure yet. Hello, everyone, welcome to the earnings call 2022 from Basler. We wait for another, let's say one more minute, to see that all the participants are getting in the call, and then we will start in about one to 1.5 minutes. We are still waiting for some participants. Yeah. Many people already entered the call, but we are still waiting for some more that are coming in now. As we have one minute after the hour, I would like to start our today's annual report earnings call. I welcome you very warmly. I will present you today light and shadow. Light on the results with regards to the last year on records, sales, and also a lot of strategic progress.
Shadow more on the guiding guidance for this year, what is in front of us later in the presentation. Before I start the presentation, I would I need to remind you or carefully refer to our disclaimer message that this presentation is containing forward-looking statements that are all based on information that we have right now. There are obviously risks involved. Let's come to the agenda. Again, warm welcome. It is the standard agenda of also the last calls. I will give you at the beginning an executive summary and overview of the year 2022. We dig into the financials in the second part of the presentation, coming to a quick glance at the share price development over the course of 2022.
Coming to the outlook at the end of the presentation, and after the presentation we have time for a Q and A and the last few days. Let's start with the executive summary, I would summarize it as that we have achieved great results in a very challenging year. Maybe reflecting a bit and remind on last year because it's quite, already quite some time ago, but we were struggling all over the year with regard to the COVID situation in China, the zero-COVID policy on the supply side, but even more so on the demand side. In the market in China, especially in the second half of the year, last year was pretty weak and also tough to manage due to the multiple lockdowns in the area.
The chip crisis also continued in the year 2022 after hitting the whole industry in 2021 already. We have experienced a relief in the second half of the year, but for certain parts, it's there are still constraints, and especially the year 2022 was difficult on that side. Also, a quick reminder, we were hit severely by a cyberattack in end of 2021, specifically in November. We were in the beginning of 2022 still struggling from recovery, especially on the systems on our development side. I mean, the production was running, and we could fulfill orders. We concentrated on this recovery, and we were able to recover there in within two to three weeks.
For the rest of the company, it was quite a severe or a lot of work in the first, especially in the first half of last year. In parallel, we executed 3 M&A transactions, two in South Korea, 1 in Italy, and we also entered into a joint venture in France in order to, yeah, execute on our strategy for the direct market access. We were working heavily last year on the last miles also on our switch from SAP R/3 to SAP S/4HANA on a worldwide basis besides Korea and besides China. So a heavy undertaking, two years of project.
We were very happy to go live on January 2nd, and we are running at the moment and working on the new system, on the new infrastructure. Not only the IT infrastructure was totally renewed, also we had a heavy building project. Our headquarters was expanded over the last two years, actually, and over the change from 2022 to 2023, we moved in. This I would also give you a little bit of an impression of the new headquarters or the expansion of the headquarters. What you see in this image here in the picture, the gray part of the building in the front is new. It's about 10,000 square meters on top of the already existing 20,000 square meters headquarters in the back.
It contains only office and let's say, workshop elements. Very new building with new infrastructure, especially to foster hybrid work, modern infrastructure, also modern restaurants, workshop environment. Hopefully it works. I would like to show you a little video that you get an impression of this building before we continue with the presentation. It takes around 90 seconds. I will start the video now. This should just give you a little impression. At the end of the day, it's one element to be an attractive employer, to offer an attractive place to work, an efficient place to work, that also is offering hybrid work and lots of collaboration possibilities.
Yeah, coming from this more general parts to the more specific highlights, firstly, market environment. Last year, the German machine vision components billings were up by 14%, so we increased our sales by around 27%, and the bookings were up 5%. As mentioned before, the whole industry was hit still by the chip supply, especially in first half-year, and then certain relief started in the second half-year. We have seen that the high order backlogs of 2021 and also the first half-year fueled billings in the second half-year, so because supply were better and people were working on the backlog and getting products out. Interestingly, we saw very significant regional differences with regard to the market development.
China last year was very weak, especially in the second half of the year due to the very strict zero-COVID policy. We have seen that in this weak market situation, the competition intensity even further increased, especially the local suppliers who were caught in the local markets were really fighting for the business domestically. The market significantly declined in Asia and North America in the second half of the year, not in sales, but in bookings. You have also seen this in our numbers. This was specifically connected to the weak markets in consumer electronics and logistics, so the CapEx investment in those verticals. Very nicely to see, but to a certain extent, surprisingly strong and robust, the European markets. This continues.
Europe is much more robust and much more stable, and, as, than, the rest of the world, as what we can see still right now and, continuing. Consolidation trend is ongoing and, yeah, flipping over to what we did because we also were part of the consolidation trend. Also as mentioned earlier, we closed and started to integrate three distribution companies that we acquired, two in Korea, one in Italy, and we closed a in Germany close to joint venture, with our French distributor, the, with the goal to take over of the shares, in approximately one and a half years from now. We successfully did go live with S/4HANA. It was quite a challenge.
Two years on a project, a heavy investment, a heavy workload on the whole organization. We are happy that the system is running, and we are now, I mean, as normal, going through a challenging hypercare phase. The system basically is running. We are able to work on it, now we need to continuously debug and improve the system performance. Very happy to work based on a new modern IT infrastructure. Record book billings, 27% up, our bookings on the other end, there we already see some of the shadow. We're down 23%, especially due to the bullwhip. We had very strong bookings in 2021, also continuing in the year of 2022 in the first half year.
The backswing started, as a result, you can see that the bookings were significantly behind the previous year's bookings. We had also on the gross margin side, a weaker gross margin, so around 48%. The main reason behind that were the crunch that we were in. On the one hand, the supply constraint and many spot buys on the other end. We also had only the chance to, let's say, increase our prices to a certain extent. Especially, we were concentrating on increasing on par with structural cost increase, but not with temporary cost increase through broker buys.
This hit our gross margin, but also the M&A effect, because what we have done is when we acquired the distributor, we also acquired a lot of accessory products. These accessory products have typically a lower gross margin. We also acquired other products sitting on the inventory shelf of the distributor, and we need to turn them around. For those, for a short, temporary period of time, we have lower margins. There were all sorts of effects at the end of the day, ending up in a lower gross profit margin. The pre-tax earning margin was 10.4%. It is below our long-term approach of being around 12%.
We were in the light of all the market dynamics, the chip prices and such, we are happy to have achieved this. We are also ending, or we started the new year with a relatively high order backlog still of EUR 100 million. I come to this later. We were growing very fast in the year 2022. We come to this also, we exceeded already in the first half year the 1,000 employee threshold. I come to more specific numbers later. Another highlight I would like to give, or to encourage you to go on our website and have a look. We totally renewed our sustainability report. It gives now much more information on what we are doing with regard to ESG topics.
As you know, we already for decades work very strongly on the social aspects, but we are now also step by step taking the ecological aspects more serious, integrate measurable goals in our strategic system. To just give you a glimpse also on the ecological side, we gave ourselves ambitious goal setting. We would like to reduce our carbon footprint significantly and, yeah, contribute to this part. Until 2030, we would like to go to get to zero emissions in Scope 1 and 2. We are still working on, let's say reasonable goals for Scope 3. I mean, this is not an easy task, but we are definitely working on significantly reducing our Scope 3 emissions in relation to sales as we are a growing company.
Yeah. I would like to encourage you, have a look. It's a big step forward, I think, in transparency and giving you much more insights in what we are doing and giving also measurable goals. Coming back to the organization. With the strategic measures that we integrated came also a lot of organizational growth by M&A, but also organically. We grew the company from around 900 employees, full-time equivalents in end of 2021 to almost 1,150 by end of last year. An increase of almost 250 people within a year. The split of the employees on the share has changed a little bit, especially due to the M&A transaction on the distribution side.
Our marketing and sales portion grew, as you can see, from 35%-37%. Also, the rent kept stable besides production. Also admin stayed at 15% because we hired a lot of IT specialists working on modern infrastructures for the IT architecture. With regard to R&D investments, we also continued to stay on the gas pedal. Last year we invested around EUR 33 million-EUR 34 million in R&D, a little bit over 12% with regards to sales. On the product launches side, I mean, we launched tons of new products, but we had a quite some expansion on the new ace 2 product platform with regard to new sensors, but also we introduced new interfaces like 5GigE.
On our higher-end platforms, so-called boost, we also integrated new sensors. We also integrated faster interfaces, and also combined this with nicely with special so-called frame grabber cards or pre-processing cards you can see on the lower left-hand side. As our ambition is to be to become and be a full-line provider for our clients, we also added a lot of accessories. We had special focuses last year on light, on lighting, but also more cables, more lenses, also more interface cards that are available from us. In the center of our R&D work and product launches were clearly the our software SDK called Pylon.
Pylon is the framework that connects the different hardware elements and also connects the hardware elements to the machines of our clients or to make the integration within the machine of our clients or devices. The very new thing in Pylon were the so-called vT ools. This means we are no longer just offering a framework that is able to acquire an image. We also starting to offer tools, so-called vT ools, to the customer that can process the image, like you see it below, either measuring something or find a defect or reading a barcode or a matrix code, for example. This is also part of our full-line provider strategy, offering all components our OEM clients need to build a vision system. Looks like this from a, yeah, pictogram.
Pylon is the interface for our clients, so the R&D person at the customer. Pylon connects all different hardware devices, software interfaces standpoint, also connects other actors in the machine of the customer. On top of the standard product, which is our main business, around 80% of our revenue, we also offer customized solutions where we integrate or customize a single component or fully customize a subsystem for the customers, depending on the business case and the attractiveness of the business case. To summarize this, most of you know this picture. We are step-by-step making a progress in our, let's say, journey from a camera company that is focusing on factory automation towards a full-line provider.
The Y-axis here, adding all products to our portfolio and entering different kind of markets and applications and becoming a computer vision full-line provider. We have made nice progress last year, especially also with the new products, with the M&A transaction on the channel side to really execute on this strategy. That's the executive summary. Let's come to the financials, giving you more insight, and we start with the bookings and billings. What you see here are our bookings, the light blue bars, and the billings in dark blue bars, over the course of 2021 and 2022. Here we can nicely see the bullwhip effect, and I will refer to this later on because we see other effects that this happens in our, let's say, other financial KPIs.
We had a really a run in 2021 and the first half of 2022. Our bookings went up from roughly originally EUR 50 million level to EUR 85 million and stood at the level of EUR 85 million or in the midst of EUR 80 million for four consecutive quarters. In Q2 of last year, we saw already a decline, but still on a high level, the bookings. The flipping or the tipping point was actually Q3 and the starting of the second half of 2022, where the bookings start to go down because the supply eased. The customers also adopted their buying behavior. They were irrationally behaving also overordering.
This then started, and you see the significant decline in bookings that happened then in, especially in Q2, Q3 and Q4. Bookings in Q4 were at a very low level of around EUR 39 million. What you see in the blue bars, here in the lighter blue on top of the, of, in the bookings, we show you the cancellation that we got in the fourth quarter, for example, EUR 3.41 million from orders we already received a year before, because this gives you a better indication on the real demand situation. If we just deduct this, then you cannot as well interpret the situation.
What you see is bookings were really going down and were very weak at the end of or in the fourth quarter. Billings were high because of the supply we got. We got a little bit of a hit in the fourth quarter because due to the SAP S/4HANA switch, we closed production around two weeks earlier, so mid of December. This had impact on the revenue side. This also had impact on the margin side. I come to this later on. All in all, we ended the year still with a backlog that was above normal with around EUR 100 million.
Normal backlog would be around EUR 60 million, so we still talk about an excessive backlog situation of EUR 30-40 million when we entered from 2022 to 2023. From a regional perspective, the picture has not really changed when we look through all the regions. Revenue, we achieved EUR 272 million. Over 50%, so 53% were in Asia. This is a little weaker than normal, but it's still very high, 29% in EMEA and 18% in Americas. What changed is the mix within Asia because we have experienced a very weak market situation in China on the one hand. On the other hand, due to the M&A effect and also in other areas in Japan and Korea, we experienced a stronger business.
There were some shifts within Asia to different country markets. Let's have a look to the gross profits and the gross profit margin. In general, I mean, we started the year with approximately 50% gross profit margin. I would say this is not stellar, but this is a little bit weaker than normal. On average, in the long-term trend, we are around 52%. Beginning of 2021, we had very strong gross profits of 54%, but this was also in a long-term trend, pretty high number. We started a little bit below our normal level, and we were not able to catch up. I mean, in Q3, we were able to catch up a bit, but as you can see in Q4, it fall again.
There are some special effects in the fourth quarter that caused this weak gross profit margin. On the one hand, we still have this spot buy effect because even though we were making less spot buys in Q4, we still have a lot of material in our raw material stock, and we need to first turn those around to see the effect. We had also inflation compensation payments that were and that hit the personnel costs. These were extraordinary payments in the fourth quarter of our operations, so production and purchasing. Last but not least, we had another effect in the fourth quarter due to the S/4HANA switch. We closed our production, as mentioned earlier, roughly two weeks before the year-end.
This meant we were selling more, let's say, non-Basler products in the second half of December. The product mix shifted artificially towards non-Basler products with lower margins due to this system switch. This all together ended then in a relatively low gross profit margin in Q4. Looking at the earnings margin, also here you can see quite some up and down, mainly dependent on revenue levels. Also here due to the lower revenue, due to the special effects mentioned earlier, the earnings margin in Q4 was weak with 6%. We were flipping around and I mentioned already on average, we were at 10.5%. Summing up the year compared to the year before, order entry -23%. Mentioned the sales, record sales, EUR 272 million.
Gross profits, in absolute terms grew 17%. In relative terms, we were 5 percent points down due to the variety effects I mentioned earlier. The profitability more or less stayed at the same level depending on what profitability parameter you look at, but it stayed. This means, in a nutshell, that we significantly increased sales, but due to the weaker gross profit margin and due to the vast increase of our organization, we were not able to increase the earnings in absolute terms, and the relative earnings margin went down compared to the previous year. On the cash flow side, also here we have to mention multiple special effects.
When you look at our cash flow here, you can see the operational cash flow in dark blue, the free cash flow in gray, and light blue, the financing cash flow. We started the year with a significant minus free cash flow, especially due to the M&A transactions and the payments for our M&A transactions in Korea. In the second half of the year, we went back to normal with regard to the investing cash flow, but the operational cash flow was weak because also the revenue was not that strong. In Q3, with a strong revenue, we had good operational cash flow, but we invested and had M&A transaction again for Italy and also the joint venture stake we acquired.
Also here again, extraordinary effects are kicking in. In Q4, you could then see, okay, with high revenues in Q3 and Q4, no extraordinary M&A transaction effects. The free cash flow was back to a higher level of EUR 6 or EUR 7 million. Also a year on the cash side, maybe a summary for the year. We started the year with a cash account of around EUR 55 million. Cash flow from operations were EUR 12.4 million. You can see compared to the previous year that this was not as strong as in previous year. This was mainly related to the raw material increase when the COVID effect was starting to flip to the other side.
Also due to the high revenue growth and also the M&A transactions, we have built up more accounts receivables, and this cost also or increased our working capital. On the cash flow from investments, you can see significant investments compared to the year before, EUR 44 million. Mainly driven by M&A transaction, by S/4HANA in-investments and investments in the building architecture and IT, modern IT architecture, because the building itself is a leasing construct, but the internal, the IT infrastructure was also a heavy investment that we, that kicked in in the second half of last year. All in all, free cash flow, EUR -31 or -32 million. Below you can see the effect on the net debt side.
I mean, our liabilities to banks increased by roughly EUR 20 million. The net debt increased from 2021 to 2022, from EUR 19 million roughly to EUR 21.7 million due to the multiple investments we did for the future of the company. On the balance sheet side, don't dig into every element here, but let's have a look at the overall balance sheet. Sum, the sum increased by 70%, so over proportional to sales. Under proportional to sales, excuse me, the main growing positions are on the intangible and goodwill side due to the M&A transaction and the S/4HANA infrastructure investments.
Then on the building side, there is also IT equipment and modern IT equipment and infrastructure, and also the build-up on the inventories due to the chip prices. And also on the finished goods side due to M&A transactions. With regard to the liabilities, I mean, what you can mainly see is, I mean, equity increased by 9%. Under proportional growth of equity, which means, we have invested or have financed these investments I was talking about mainly by the increase of liabilities over the course of last year, that the long-term liabilities increased it from EUR 51 million or EUR 52 million to EUR 78 million. Let's have a look to the share price. Also here on that side, I mean, we see the effect of especially the second half of the year.
We had high billings. I mean, it was already visible that the bookings are going down. Also I think this was an effect why we were not able to keep the very high valuation from the starting of the year. We started the year with EUR 52 per share and ended around EUR 30 per share at the end of the year. From a dividend side, we as management team and also together with the supervisory board, we were talking about, okay, how is our dividend proposal for the main shareholders meeting in May?
We came to the conclusion because of the outlook, and I come to this in a minute, that we want to be careful, and that we want to deviate from normally the 30% we are paying out because we want to consider the special situation, high investments last year, as you have seen, and a gloomy outlook for this year. Considering both elements, we will propose a 20% payout ratio for the earnings in 2022, which would mean a EUR 0.14 per share dividend. Yeah, this was the year 2022. Let's take a look into 2023 and also beyond. What are we expecting for 2023, as we are already three months now in this year?
We have to face the reality here that we came to the conclusion to give a gloomy market outlook because we are still seeing that the order entries are staying on a low level. In the first quarter, this is what we have seen. We also expect that they stay on a relatively low level, slightly increasing but relatively low level in the second quarter of this year. We also see still cancellations kicking in, mainly from China. Also this effect is not stopping at the moment. We definitely believe in a recovery in the second half of the year. What we have to consider is also that we are now for quite some quarters, the bookings are weak, and they went down.
They are stabilizing on a low level. We don't believe it's further going down, but it's making side move or slight improvements. At the end of the day, they are on a low level, and we need to face this situation. We also still, as you know, have a lot of geopolitical uncertainties. We have seen that especially due to the lockdown situation and especially to the weak market situation in China, that the domestic competition and the intensity of competition is very high. We expect this to continue in 2023, even though we expect the markets starting to come back and have a rebound. The competition level and intensity will stay.
On the gross margin side, we see due to the less spot buys and step by step, we will turn around our inventory levels. We will, we expect, let's say, an increase and positive effects on the gross margin side on the one end. On the other end, there is a certain risk involved in China, because of the strong prices or radical prices that we see in this market, specifically in this domestic market. On the gross profit or the margin side, we are, let's say, seeing now this pressure. On the one hand, we have headwinds on the market side. On the other end, we see a cost increase due to the high number of new employees we acquired, or we acquired in M&A, or we hired.
Also the cost of living increase, that the salaries are going up. I mentioned in one of the earlier calls that salary increase across the board globally for this year is around 6.5%. This definitely is bringing us into a sandwich position at the moment, and is definitely putting pressure on our earnings margin. Reflecting this situation, our guidance for 2023 is our revenue EUR 235 million up to EUR 265 million from EUR 272 million last year. We expect a decline in sales. I know the corridor is pretty wide due to all the unknowns at the moment, due to the geopolitical situation.
In this pressure, with regards to the cost increase and the, let's say, all the right things we did strategically to move forward the company, this hit us now, I would say, in the wrong timing, but it is what it is. The earnings margin will be at around 5%-8%. Below our steering point of 12%, where we want to have the company back in the long run. In the year 2023 for us, this year seems to become a transitional year, and we have to manage this out carefully. With regard just to set the right expectation with regard to Q1, this will be in line with this guidance. We had a slow start into the year.
We have high back orders or backlog, what we were experiencing is that the back orders, so the unnatural backlog portion has a large percentage of our, let's say, products contain constrained materials still, where we have a limited supply, we are still facing supply issues on the back orders. On the other end, we are also struggling at the moment in the hypercare phase with S/4HANA on process issues, especially in outgoing goods processes. Also we are here struggling in first quarter. That quarter will definitely be in line with our guidance here, which is a weak guidance obviously, that we are giving for 2023.
This means for us, we have to react, and we've already reacted. Management team, supervisory board, and also the whole Basler team, we reacted to kickstart, let's say, kind of a savings program. We stopped all further expansion of the organization. I mean, we have grown a lot, so we stopped this personnel increase already. We flexibilized HR costs next to also our other OpEx that we have where we cut down on that side. We also cutting variable income, especially for management. We are working very tight on the capital working capital and the cash flow side in order to manage well through this transitional year.
As mentioned earlier, the dividend proposal is part of this package, is in line with this program. This whole program will already impact our P&L positively in the beginning of April. We have watched our bookings closely over the last, let's say, quarters and months. We were having this plan in the pocket, and we are now being forced to execute because of continuing low bookings in the first weeks and on the already almost three months of 2023. We see this, and I want to make this very clear. We see this as a temporary effect. We have experienced this before. Maybe it's stronger than what we have anticipated, but we have experienced this before. We see a market weakness combined with a bullwhip swing back from the chip supply.
Both come together now. We see a very stable European market, but we see in the rest of the world all the same effects in Asia, in North America, and China specifically is still suffering from the situation of the zero-COVID policy. Still everyone is waiting for a rebound, but at least in our markets, we cannot see it yet. This means for us, sooner or later, we the bookings will rise again. I mean, we are integrated in thousands of customers of machines and the business is for them, is all down, and sooner or later it will start again to grow.
This is why we believe in our four-year plan, the 2025 plan, where we want to achieve EUR 400 million in sales and be back on the sound profitability level of 12%. A sound cash conversion rate of 70% excluding M&A transaction costs. Having this said, we now have time for Q and A, and I'm looking forward to a lively debate. You can now ask your questions either in the chat or you can also jump in verbally. Whatever you like.
Hello from the, from the chat side. Adi, we have the first questions from Mr. Funderhorst.
Hi Funderhorst.
You can talk to us now. Yeah.
Hi. Thanks for taking my question. I have two actually. You said that the first quarter is somewhat in line with the guidance. I think you meant like is already reflecting the guidance, right? I would expect that especially the first quarter where you don't have short-term labor schemes implemented yet, I expect you want to have like a significant lower margin than the corridor you've targeted for the full year, right?
That's correct. Thank you for the question again. I was maybe not as precisely as I should have been with regard to bookings and billings, but absolutely on the profitability side, you are correct because the effect of the savings programs will start to kick in April, on April.
Okay. Perfect. Thanks. A small follow-up question. You mentioned that you'll be now more constrained on working capital to set free some cash, just to. How much room for improvement is there? As I understand it, especially the high inventories are mainly a result of shortages, which is something that you on an individual basis can't easily influence, right?
There is quite some optimization possible, I would say. When, I mean quite, I'm talking about EUR 5 million-EUR 10 million, so significant number. However, there will be a bit of a slack effect because we, let's say in our behavior of ordering, we slowed down already our ordering of material end of last year. We have still for many materials, very long lead times. We will see the effect. It will take some time and most likely, the majority of the effect, even if we are already working on all these elements to optimize working capital and adjust according to the market demand, it will mainly kick in in the second half of the year, the positive effect.
Until then, we are still in this crunch of getting material in, and the demand is going down at the moment. We also have to be careful with certain critical components because we still will run the policy to have higher safety stocks on these very critical parts because there is the risk in the market when the markets come back, consumer electronics comes back, automotive come back, China is coming back, that these critical parts again are getting short because the capacity has not been increased. It's a classic bullwhip situation at the moment, but underneath for certain critical parts, the situation is still the same. We also need to be careful envisioning what will happen when the markets come back.
Okay. Understood. Thanks. One last follow-up question. During the shortages, you have been quite forthcoming towards your customers when it came to price increases and didn't actually increase your prices if, you know, the material cost was basically driven by extraordinarily high spot prices. However, we are now in a situation where the cost increases you face this year in part are like wage increases. Will you be able to pass some of those who will, I think, be sustainable in some way onto your customers, and how do your customers react to those like cost or wage inflation related cost increases?
A clear answer. The time for cost increases in our markets are over on the demand side. Because the demand is cooling down, the shortages are getting out, so the customers are back to normal and they don't accept price increases. Especially because we have B2B customers, they don't expect price increases because our R&D for those sales people become more expensive. We need to become more efficient is the answer.
Okay. Perfect. Thanks.
We have some more questions. First is coming from Miss Anne-Marie Gursky . She's asking, are we disclosing our carbon dioxide emissions via CDP?
Yeah. Hello, Anne. The numbers, first time are really published in this report. I don't have them at hand at the moment. Yes, we are reporting these numbers in line with international standards. Please have a look at the report. If you have more questions, let us know, we come back to you.
Her second question is, have we joined the Science Based Targets initiative?
I'm not sure what you mean by that. Maybe we need to tackle this offline to give you a proper answer. I will make a note, and we come back to you, Anne .
We have Mr. Andy Lin with us, and he's asking, don't we think that on the electronic market part, of it will go away from China to Thailand, Vietnam, China and Korea? China will be a domestic market on its own, so China recovery may take more, say, time. Wrong or right? Can you elaborate?
I mean, this is the million-dollar question. In general, I mean, what we have seen is especially due to in the COVID times, that this decoupling between Western and Eastern world, or between Western and China, has been accelerated. For sure, this also means to us with a certain exposure. I mean, this exposure went down, this China exposure because of the weak market situation last year. In general, this also means to us that we need to watch this closely. We also believe that the decoupling trend will further unfold. This means for us, we need to watch closely what markets, how will the China market domestically develop, what maybe is, is starting to being built up elsewhere.
I mean, we see it in consumer electronics at the moment that the contract manufacturers invest outside China in order to prepare for the further decoupling. At the end of the day, we need to, let's say, maximize our chances in the world markets and invest wisely in that geopolitical game. I mean, with us, it's no different than with many other customers who have such a high Asia exposure than we have.
His second question is, it seems the semi market is reviving. Do you agree? The impact to Basler?
Yeah. At the moment, what we are seeing is that the electronics market, so CapEx machines for electronic assembly and also the semicon CapEx investment market is still down. We also expect these markets to pick up in the second half of the year, maybe in Q1 next year. There will be another wave kicking in. We have seen this. I mean, it's a normal cyclical market, but we are not seeing it yet, to be honest. We see some booming markets, battery production for automotive, solar. If you look at general consumer electronics, smartphone assembly, display assembly, and also the semicon CapEx investment at the moment, on a general base, the investments are low at the moment.
Due to the weak demand in combination with high inflation rates, high interest rates, but we expect this market to come back either second half of this year, latest next year.
Yeah. That's all for the moment here in the chat.
I thank you very much for your attention. In case some more questions will come up, please contact us. Mainly Verena. You will find her contact information on the website to maybe set up another call to give you more insights. Again, thank you for the participation. Looking forward for the Q1 report in six weeks from now, giving you also more insights how we run through the year. Thank you very much. Have a great day.