Hello, ladies and gentlemen, and welcome to the first virtual capital market day of the Dürr Group. We have more than 90 registrations today, so thank you very much for your interest. My name is Andreas Schaller. I'm the head of Corporate Communication and Investor Relations at the Dürr Group, and I will guide you through the program today. We would have loved to have you with us in person today, but unfortunately, that is not possible due to the pandemic. It's a special situation, but safety comes first. Nevertheless, we did not want to run the capital market day without any show-and-tell session, and that's why we included a couple of short video clips in the agenda of today. Before I start, I would like to make some organizational announcements. I'd like to have the next slide, please. Please note our disclaimer for forward-looking statements.
I will not read through it in detail because I assume that you know the language. If you don't know the language, then please read the text carefully. The next slide, please. During this capital market day, you have the opportunity to address your questions to the members of the board of management of the Dürr Group. You can do so by either sending an email to cmd2020@durr.com, or you can dial in at the end of the presentations to our telephone conference and ask your questions directly to the board members as you would do it in a quarterly earnings call. The dial-in number and the email address are also available on the investor relations web pages of the Dürr Group. Please be reminded that today's capital market day is recorded on November the 16th, and a replay will be made available later today.
Now, let's have a quick look at the agenda on the next slide. After a brief introduction of the members of the Board of Management, we will have a short recap of the strategy, followed by a deep dive in digitalization. This session is followed by presentations about the divisions. After a short break, you will get an introduction to sustainability at the Dürr Group, followed by a presentation on finance. After a summary, we will then end with a Q&A session. Now, it's my pleasure to introduce the speakers to you. With us today is Ralf Dieter, the CEO of the Dürr Group, who is also responsible for the Woodworking Machinery and Systems division. Starting January 2021, he will also take over as CEO of HOMAG, the direct operational responsibility. Ralf joined Schenck as CEO in May 2003.
He then became a member of the board of management of the Dürr Group in 2005 and became its chairman in 2006. Most of you will already know him. He is joined by Jochen Weyrauch, the deputy CEO of the Dürr Group. Jochen made first contact with business activities of today's Dürr Group in 2003 when he became CEO and together with Ralf Dieter, a member of the management board of the Carl Schenck AG. In 2005, he led the buyout of Schenck Process from Carl Schenck and consequently left Schenck with the business. In 2017, he returned and has since then been a member of the board of management of the Dürr Group. He is responsible for the paint and final assembly systems, for Application Technology, and for Clean Technology Systems division. He also looks after sustainability, corporate development, and purchasing.
He became deputy chairman of the board of management earlier this year. Last but not least, it's my pleasure to introduce our new CFO, Dietmar Heinrich. Dietmar joined the Dürr Group on the 1st of August this year, and in addition, he took on responsibility for the measuring and process system division on the 1st of October. Before he came to the Dürr Group, he has been with the Schaeffler Group for many years on different assignments. Among others, he spent eight years in Asia as country CFO in Korea and as regional CFO. He was first CFO and then CEO of the European business of Schaeffler Group, before finally in 2017, he became the CFO of the whole Schaeffler Group. As you can see, we have all three members who will remain on the board of management from January 2021 onwards at our capital markets day.
We hope that the presentation and films will be valuable for you. Without further ado, I would like now to hand over to the first speaker of today, the CEO of the Dürr Group, Ralf Dieter. Ralf, welcome on the stage.
Thank you, Andreas. Yeah, welcome, everybody. And we're very pleased that many of you showed an interest in this new format of a capital day. And as Andreas mentioned, for sure, we would have liked to have you in person here, but we try our best to make it as live, to give a maximum live feeling as possible. In my first part, I would like to walk you through about our strategy and in particular also about our digitization strategy. And for that, I would just give you an overview about Dürr, but most of you know Dürr already, so I'll make it briefly. Short recap about our strategy and our goals and more detail about digitalization, including in video later.
You know our company, or most of you do know. We have next year our 125th anniversary, and we hope we can celebrate and that we have enough vaccines out there that we don't need to be so careful as we have to be at the moment. We have a diversified portfolio. I mean, when I started Dürr, we were basically an automotive paint shop and assembly business and some Schenck business, and today we are pretty much diversified. Just to remember, only 50% of our turnover today is automotive related. It's a very important business, but 10 years ago, it was 80%. Now, automotive, I mentioned, second part by the acquisition of HOMAG is our woodworking technology business. We'll give you later some more insights.
And the environmental technology, which has become now a decent business after the acquisition of Megtec, we are talking here about a real division with a good future. If you talk to our customers, our core competencies, they would tell you that we have very, very good engineers and know-how about our production processes. We have a very, very superior project execution capability. So basically, they say, when you give us an order, you can forget it, was one statement of a former Volkswagen board member. And I think that's a very important differentiator in this today's world. Quality was always our aspect. And I think the next point, which is really important, is that in all three regions, so in Asia, Europe, and in America, we are equally strong positioned in the markets, which is very important to cover some disruptions in some markets for some time.
I think very important to mention is that we have a high degree of localization. We are not an export or import model company. We have really strengthened our local companies with production, engineering, sales, service that they are pretty independent nowadays. So China, for example, nowadays is pretty independent. America was, always was, which makes us not so vulnerable against this trade wars, which are happening nowadays, which I think is a very good position to be in. And as we already are often underlining, we have a very strong financial position, which helps us in those times very to concentrate on the business and not to worry too much about financials. Our midterm strategy, our goals, very often communicated, just to remind you again, and here they are the main numbers, as most of you know.
I think the strategy is built on four pillars, which we have already published since some years. The global presence has to continue to be strengthened, and I just mentioned it. Innovation always is and was a key of our company to be in the lead of technology, but valuable technology for our customer benefit. Efficiency is more inwards oriented, and I'll give you later an example on our digital activities, which are in-house activities to be more efficient in the future, and service business nowadays, nearly one billion or one billion last year, further to strengthen that because this is a service business is very important to satisfy our customer, but it's also a source for higher margins, and that's why we will concentrate and continue to concentrate on it. We have some enablers here on this chart, which we think is an opportunity.
My colleague Jochen will later talk about sustainability, but we don't see that only as a must because we have to. It's an opportunity also to differentiate and to generate more business in the future, and he will talk about M&A, as we have just for since 2010, we had 32 acquisitions and two demergers, so we are very active on that, and we continue to be. And as you have seen, just recently, we announced one for HOMAG. So we are even in pandemic times busy and very focused on M&A to grow or to enrich capabilities or technologies we don't have so far. The finance organization, you will see later from Dietmar, that's a very strong focus to keep our financials together, to watch Net Working Capital, to help our organization to steer well through the business.
I think that's also an asset where we are very good in. Finally, but maybe most importantly, is to look after our people because our company is a people business. It's all about people, engineers, service people around the world, and here we are really continuing to do everything we can to expand this know-how of people, to grow further management potential for the future. It's a very important topic. This chart is not so much, which I have not said already, but I will come later to those points. I think the main message here is that on the road of digitization, we are becoming more and more a software company. We are not a software company only, but we have many more people in software.
We always had, but I think the understanding of the software business and how to transform that into customer value and also in differentiating our products. I think that's more and more in the DNA of this company here. In the future, it will be more and more difficult to differentiate by hardware only. So software is a key to compete or to be successful in competition. A little bit on the timeline, the journey of digitization, we made a very, let's say, a very condensed. I mean, since many, many years, let's say since the 1980s, maybe earlier, the machines and the equipment became more intelligent by PLCs and there were software already involved to program. This was a journey.
And in 2000, we started to develop our own Manufacturing Execution System, which we have successfully sold in the last years or since then to many of our automotive customers. To strengthen that acquisition and this capability, we acquired in 2015 the software company iTAC, also an MES specialized software company, very successful in the larger tier one suppliers, electronic companies. And both together is about a EUR 50 million business today. But you will see later some plans to exceed. Then IoT came up. So the opportunity to connect machines with the internet, and we started in 2016 already to understand this technology better. And in 2017, we then founded the ADAMOS initiative, which is basically a corporation of larger machinery and equipment companies because we all said in those days, it's easier to do this journey, this costly journey, and this also technically very demanding journey together.
It's easier, faster to learn than everybody tries himself. And today, this corporation is very successful. I will touch on that later. Out of that activities, we also internally changed, and we basically merged or focused all our software capabilities into a Digital Factory, as we call it, where we have all people together across the divisions to work on those IoT products and applications. And you will see later a film because this environment, which is on the fourth floor of that building, looks very different, very different to a normal machinery and equipment company. Many people we showed upstairs, they didn't believe that they are at Dürr. You can judge later after the film. Yeah, and we also successfully introduced the first applications to the market. And so we are now starting to ramp up a business out of that.
This will be the task force for the next years, but also to continue to develop a lot of new applications to the benefit of our customers. Here are some highlights. Just to get an idea about the Digital Factory, also the way how the people work there is different. It's now a very agile environment. You can see here 20 teams working on tasks. And what is also very new compared to the traditional way of working is that we very early involve customers in ideas we have for an application. So we test it. And not like in old days when you develop, develop, and then you are ready, and then the customer says, "Maybe not so much I need." And so we are really in tune with our customers in that software development.
We also learn about pricing because pricing a software piece is different from pricing hardware. It's not a cost-based model. You have to think about what is the value for the customer, and out of that, you can deduct pricing, which you're also able then to sell to the customer out of the benefit you create. Some more information about 350 people, which is quite a lot, I think, are working together here, shop floor of Bietigheim Darmstadt, but also Mondobau. We have started to expand that Digital Factory idea into our main markets, like in China, also in India and in Poland, and already in the first steps also in the U.S. This journey will go on. Just for you to be informed that it's not a German-centric thing. It's a global subject here we are working on.
We will also in future benefit from our colleagues around the globe about their ideas how to do that. This is a picture about MES. We have not so much time today, but MES is basically a software who controls the whole production. And that's why in the literature, you can read about MES as the backbone of the industry 4.0. That's why we were early in that, as I showed you, since the year 2000. And that's why we bought iTAC because we run with this software. You can see here more than 500 factories. And in the automotive world, more than 250 plants are controlled by our software, which is great, which is a great potential also to expand into customers which have not our equipment, which have competitor equipment. So I think the opportunity here is huge.
And we are going also here the next step because MES systems or software pieces are traditionally a little bit monoliths, and the new way how to program software allows us to slice it more into applications for the different tasks or the different function of an MES for the customer in the future. And this development project we started this year, and it's, by the way, quite an effort here, but we will be able to offer our customers an app store of MES functionality you can download. So it's much easier for him to configure it. And our benefit, we want to have the software much easier to configure to the customer needs that we have more scalable business because to introduce an MES is quite a piece of work for implementation and installation.
I think this we will start next year with the first version on the market and the first feedback, talk to our customers. It's very positive. I think we are here really on a leading edge, and even the Gartner Group, where we were sharing our ideas about this development, said that we are very visionary in this approach and has a great potential. ADAMOS, I talked about already. We have now more than 30 partners. Even PwC joined us as a shareholder recently. And the focus of ADAMOS today is to provide a horizontal integration layer for an end customer. When you talk about a company who is buying our balancing machine, they also have machine tools from different vendors and to offer them one board, one screen, one app store for whatever he has installed in his factory, not only Dürr equipment, but heavy equipment he has.
This is a unique capability. Together with the ADAMOS store, we are offering also an app store for those customers to download or to try apps or whatever. I think this is an offering which is quite unique at the moment in the industry. Yeah, internally, we also digitize. We don't want to make you advertising, but I mean, everybody more or less has Microsoft, but we are moved on this 365 platform, which is really a big, big Lego box of functionality for internal collaboration, communication, teamwork, office tools. We just recently decided for Salesforce as a digital platform for all customer-oriented processes. I think these two platforms will determine our internal digitization. We use out-of-the-box tools to be more efficient internally, not like in old days, buy software here, another software there, connect it somehow.
I think we have here a wonderful, strong platform for further ideas. And we have ideas here just for information. Robots called bots. We try to identify manual tasks which are basically following some normal rules and which are very hand-intensive or labor-intensive. And here we have some ideas and some examples for you how we use those robots we programmed and make those tasks fully automatic. We have here these shipment documents as an example or daily cash reporting, which was before two days for three people. Now it comes every day automatically. And we are now going through the company in the next years to identify where we can further optimize. So that's my first step or my first task. And I promised you that you have a view into our Digital Factory.
We have in our Digital Factory Yasmin waiting for us to show us around there. Hand over to Yasmin.
Hi there, Ralf, and a very warm welcome to all of our participants. Now, ladies and gentlemen, this is something you already know. Modern mechanical engineering has always been right at home here at Dürr. But today, I get to show you something you have most likely not yet experienced. We are now in Dürr's so-called digital factory. And as the name already gives away, this is the place where Dürr is driving digital change with the help of all new solutions. And to find out even more, I now look forward to Gerhard Alonso Garcia. Hi, Gerhard.
Hello, Yasmin. Nice to see you.
Thank you. Now, Gerhard, you have been developing software for robots for some years now. What has changed these past few years, and what's different today?
Yes, we developed machine-oriented software for automation tasks. With the DXQ products, we develop now intelligent applications, many based on artificial intelligence algorithms to increase the OEE, the overall equipment effectiveness for individual machines or the entire plant. As our customers increasingly install the software products on clouds or servers, we have to consider IT rules, and thus we have to be very similar to an IT company.
Which you are with the Digital Factory. Why does this require a Digital Factory in the first place?
In the Digital Factory, we pull valuable resources from our business units. As we harmonized our activities across the business units, we developed a software toolkit that business units can benefit from.
Closing up for our better understanding, could you explain to us how the Digital Factory is structured in terms of your employees?
In the Digital Factory, we work with 20 agile teams.
Each team is consisting of five to seven team members. The coding takes place at mutual partners in Europe. To make this work well, we installed on the fourth floor communication equipment in suitable rooms. The teams work in sprints. Each sprint takes exactly three weeks. After three weeks, we organize a review meeting where the teams present to the stakeholders the results of the sprint, and they also present their efficiency. The biggest asset of the Dürr company or the Dürr Group is the domain know-how in our applications and algorithms. We work in interdisciplinary teams with experts from the machinery and plant design, with process specialists, and with construction site teams. We involve in a very early stage our customers.
Wonderful. Thank you for these insights, and I hope to see you again soon.
Thank you very much. You're welcome.
Ladies and gentlemen, it's now time for us to check out the atmosphere in which all of this work actually takes place. An extremely interesting place, Dürr's Digital Factory. We're about to learn even more about it from the person in charge of the Business Development and Pre-Sales Digital Solutions Department, Dr. Annabel Linzel. This is the person who makes sure that here everything is produced and developed to cover all of the customer's needs. Hello, Annabel.
Hello, Jasmine.
Now, Annabel, I just gave you a very short mini introduction. Maybe you could use a specific example to explain to us what exactly is being developed here at the Digital Factory.
Sure. So we are, for example, developing a product called DXQ Equipment Analytics.
That's developed in two of our agile teams, one focusing more on Application Technology and the other team focusing on our process and conveyor technology. So the product itself aims at improving the overall equipment effectiveness, and it does so by using technology of artificial intelligence so that we can analyze big data. So with the help of the big data, we can, for example, identify wear models of certain components so that we can trigger condition-based maintenance tasks, or we can, on the other hand, identify anomalies in process data so that we can predict the production quality later on.
That does sound exciting. When was the software brought to market, and how have your customers been reacting towards it so far?
So it's quite new, actually. It has been launched in the second quarter of 2020. And the customer feedback is quite good so far.
So they said the software helps them to ensure inline quality and also helps them to plan maintenance windows individually and also to prevent downtimes. So, for example, one customer said that they could successfully identify worn-out and also defective components such as paint pressure regulators when using the software. So, based on our estimations, when used correctly, the software can help to create savings per year in a five to six-digit number at a particular process station.
Wow, that's impressive, and I'm sure the customers are glad to hear that. Thank you for this insight, Annabel.
Thank you.
Thank you for watching, ladies and gentlemen. Back to you, Andreas.
Thank you, Jasmine, for showing us around in the Digital Factory. And now we come to the presentations about the divisions. And of course, these will also include some examples about digitalization. Our first speaker is Jochen Weyrauch.
Jochen, the stage is yours.
Thank you, Andreas, for introducing. Ladies and gentlemen, in the next couple of minutes, I'll give you an overview of the business of Dürr Systems. Following agenda, I'll first talk about the automotive business, which is mainly the PFS and APT divisions, including market efficiency measures, digitization here as well, e-mobility. But I'll also talk about our environmental business, which is the business called CTS. Let's dive into the business. Dürr Systems is, in turn, over last year, about EUR 2.2 billion, which is itself about 60% of Dürr's total business. The businesses included in Dürr Systems are the three divisions mentioned before: paint and final assembly systems, including the paint shop business and final assembly, mainly for the automotive industry. We then have the division Application Technology.
That includes painting robots, but also sealing technology and gluing technology, again, mainly for the automotive industry, but also for other industries. Third, but not last, the Clean Technology Systems business, which is our environmental business. That comprises our exhaust air purification and more and more also coating systems around battery electrodes, as well as our silencer business that came with the acquisition of Megtec and Universal two years ago. If we look in the market overall, what drives the market this year? First of all, as you all know, the automotive production has significantly suffered in the first half of the year. It has a recent recovery, but is still, end of the third quarter, a bit less than 20% behind the previous year.
We have a strong EV business despite the decline of the overall production volumes, which, after nine months with around EUR 350 million, almost already achieves the volume of the entire prior year. The order pipeline has gone down in the first half of the year, but we see it catching up. It is not so much behind the previous year level. However, what we see is customers are more reluctant in taking decisions in order to release projects because of their uncertainty about the months to come. Nevertheless, what we see, and that's very positive and important, the bottom line is that the service business sees a rebound in the third quarter and has basically almost achieved prior year levels in the last few months.
The competitive environment overall is really best described with pricing pressure or budget pressure, even better, as our customers are in the midst of their transformation processes towards e-mobility, autonomous driving, and digitization. And on top of that, they now have to handle the impact of the COVID crisis. And as a consequence, we see some of our competitors trying to rather secure their utilization than earning money, which in the end is also for us creating a kind of a challenge, as we typically come from more technology edge and see customers act more and more price-driven, and we have to face that. And what helps us much currently is the focus program that we have launched two years ago and which helps us today on the bottom line and to defend our profitability.
What we see in Germany especially is one of our big competitors has gone out of the market, which on the one hand has helped. On the other hand, what we're seeing is that there is meanwhile a few smaller spinoffs entering the competitive landscape. If we look at the business, the automotive business a bit more by regions, what we see is in America a decline in the first three quarters compared to last year. However, we had strong order intake last year from EV customers like Rivian or Lucid, which we already assumed will not repeat this year. But still, the market in the U.S. has become a bit more challenging this year. What we see is more mid-sized brownfield projects, and unfortunately, we assume that customers released more projects now in the fourth quarter.
U.S. car sales are down about 20%, which of course is creating some cautiousness with our customers. Nevertheless, we believe some progress in the fourth quarter. If we look at Europe, the business for us is relatively flat compared to a year 2019 that was already a bit challenging. What we see more is brownfield opportunities. Greenfields are rare. We have achieved, and that's really good news, with a big German OEM, a large brownfield order in September, showing that we will see some more brownfields and some more modifications to come in the next years rather than the big greenfields. That's for us relatively good news. Car sales down 30%. We believe that we will see somewhat a rebound in the years to come. Our assumption is that still we will see some positive CAGR for the next three, four, five years.
China is the locomotive, if you will, and continues to be. Our automotive order intake in the first nine months is extremely strong. And actually, in the first nine months, we've exceeded the actuals of prior year already. So very strong orders, very strong order pipeline. So we continue to be very optimistic for the next foreseeable future in China, mainly driven also by the EV, not only EV, but a lot of EV orders that we're booking, like for example, with this new EV player, Evergrande, where we're building large paint shops in the next future for them. We see a positive sentiment along the OEMs with whom we talk, also with the Western OEMs. Some of them also have already, meanwhile, higher sales year to date in China than they did last year.
Overall, the market is still about 7% behind last year, but we assume that we will almost catch up to prior year levels by the end of the year. If we now give our efficiency measures a view, we had already in the first nine months measures implemented of roughly EUR 13 million. And we assume in the fourth quarter, with the main measures to kick in, that altogether we will spend roughly EUR 50-60 million in the efficiency improvement of our automotive business this year, assuming savings of about EUR 40 million next year, of which we assume a big portion will come through bottom line. Some of it we will have to use in order to fight in the market for projects. Nevertheless, we assume a big piece of this to hit our bottom line. You see some examples in the presentation of the measures that we implement.
It's about 600 jobs in Germany and Western Europe. We have completed for MPS, which is our Schenck business, already about 70 jobs in reduction, and there will be this year about 500 coming from PFS and APT only. If we look at digitization, Ralf was mentioning the Digital Factory earlier in this presentation. We are moving forward with big steps in order to implement really our digitization tools with the customers. What is the target we are following with the implementation of the digital solutions? First of all, we're looking at anomaly detection in order to increase product quality. We analyze the improvement potentials again with the existing equipment to increase productivity. We look at tools for predictive maintenance to increase the availability of the equipment and so forth.
In the end, it is all about increasing the availability of our customers' equipment on the one hand or to reduce quality cost on the other hand. Finally, it ends up in reduced OPEX or reduced CAPEX for our customers. In order to give you a little bit of an overview more, we're not only targeting our traditional applications in the paint shop or final assembly, but already today with our MES solutions, we are active in the body shop, in the press shop, and also in sub-assemblies like battery or engine. This is exactly where we will be targeting at also with our digital solutions using the same algorithms not only in the paint shop, but using them also for other process steps in the automotive production. We're already active for many years in the visualization in the human-machine interface.
We're active with our MES solutions, and we're now more and more going into our analytics tools and providing the relevant service for those. This is just an example to show you how practical our solutions are already. This shows you an EcoBell. This is the device that applies the paint on the body, rotating at about 50,000-70,000 turns an hour and very critical in the quality of a car. What we meanwhile have, we have systems and algorithms set up on artificial intelligence that at any given point in time define kind of a quality window for this EcoBell showing that it either works within a given frame of operation or outside and consequently sets alarms in case the system is not within the tolerances. That tolerance window is meanwhile entirely defined by algorithms around artificial intelligence.
We, for example, have a program together with BMW in their facility in Regensburg, where we meanwhile have 17 algorithms running that replace the traditional maintenance that is based on runtime or time itself by really a condition-related system based on those algorithms regarding artificial intelligence, which help the customer significantly to avoid downtime and have consequently better equipment utilization. Same in a different format, if you will, is true with our activities together with Volkswagen in their cloud with Amazon Web Services. They call that the DPP. There we already have algorithms running, for example, for filling systems in cars. E-mobility offers us a lot of chances, which we're already taking. You see on this chart that we have new customers through E-mobility. We've very early focused on those customers and their special needs and can meanwhile say in a satisfied way that we have 30 new customers.
We see customers who really have new plans. We see customers who probably more than the traditional OEMs depend on our experience and our approach and appreciate our experience, and that has helped us a lot with previous projects and the success in the market. As you see, we really appreciate the pragmatic cooperation, less complex project execution with those customers, and again, you see here the share in the market with a strong trend up, especially this year for cars that use either hybrid or full electric technology, and you see again here the chart in the bottom or the box showing that already in the first nine months of this year, we have almost achieved the order intake of the full year 2019 around E-mobility. This picture shows you that Dürr has more opportunities than we have exposure from the EV business in our applications.
As you can see, ICE, that's internal combustion engine, showing where we're active today around painting, final assembly, balancing, filling, and testing, and what that means for e-mobility, where most of the applications we have today are either neutral or benefit from electromobility. If you look, for example, balancing, yes, of course, with less turbochargers and less crankshafts to be balanced. We also have some reductions. On the other hand, we see more business in final assembly as many of the final assembly factories of our clients need modifications for the production of e-vehicles. There we see a lot of business more, plus all the battery business where we're in with battery cooling. We fill the battery and cooling systems. We are in battery assembly. We do supply systems for cell coating and so forth.
You will see that a bit more on the next charts and go a bit more specifically into that. The summary here is, in essence, E-mobility rather helps us than it creates any downside overall for our business. On the environmental technology, we have acquired Megtec Universal about two years ago, and this has been really a game changer for the business. Now the business is really a significant size of around EUR 400 million within our business portfolio with a very well-balanced global coverage. It has proven to be very resilient to the pandemic this year as our order intake runs very much at the same levels as it did last year. That's, of course, good news for our business. We see the positive trend to continue with all the legislation around environmental protection going up in the years to come.
You see here specifically the lithium-ion business, which is part of our environmental technology. And the film that we will show at the end of this section will show you how we coat electrodes with our very specific technology on double-sided coating. And we're the only player in this market of cell electrode coating that covers complete lines, including coating, drying, and that's very important to solvent recovery. We have recently announced a cooperation with Techno Smart in Japan that gives us access to, if you will, more simple technology for larger scale. And in addition, with our already existing double-sided technology, we can cover the whole spectrum of coating. So now I would end this episode here with a film around the two-sided coating of CTS.
So back to the capital markets there.
I think you could see in the film that there are a lot of other process steps around the coating of electrodes. We now come to the Measuring and Process Systems division. This division will be presented by Dietmar Heinrich. Welcome to the stage, Dietmar.
Yeah, thank you very much. Welcome to everybody. Glad to talk to you and to introduce our business activities. First of all, not as the CFO of the company, but as the head of the division, Measuring and Process Systems. Let's get started then with the first chart. First of all, going to the overview. I should push a little bit more. Maybe you can help me and switch to the next chart. Yeah, thank you very much.
Giving you an overview about the market, giving you then in the next step information about the efficiency measures that we implemented, then moving on similar to what Jochen already did on the Dürr system side. What are we doing in regard to digitalization? And lastly, then talking about future growth opportunities. Now switching on to the next chart, then actually starting with giving you an overview on the division. The division basically consists of two business units. One side is the balancing technology. The other one is the filling technology, both targeting on one side automotive customers, but also industrial customers. And as you can see on the right side of the chart, it's a diversified portfolio. Around 75% of the business is done in the original equipment market, and around 25% of the business is done in the service area.
And that's actually helpful then also when we talk about future development. And what I could say, this is also supporting then that we established ourselves here in this area as a world market leader with a high level of profitability. And with this being said, moving on to the challenges actually that we see in the market, as you can see on the next chart, then, so colleagues, move on to the next chart, please. Yeah, thank you very much. You can see actually that our business changed over the last years. Then the market saw a decline, not only starting from 2017, 2018, but now also last year then to a level that was significantly or is significantly influenced by the COVID-19 pandemic situation then this year. And you can see that actually this asked then for adjustments.
What we did in this regard is to establish efficiency measures, then starting first of all with capacity reduction, chiefly in Germany. The capacity reduction that we need to do here is agreed upon with our employee representatives. Basically, we are now already close to the completion then. Secondly, what we need to do is then also to change the internal process. Ralf already highlighted that this is a focus area across the group, and it's also a topic for the division as well, looking into the way how we are doing our business, optimizing our process, improving order execution, then doing performance-oriented plant layout and establishing a new base then in order to manage profitability even on change business environment. The other topic that is important in that regard is that we also change our production setup.
We already have strong setups in China and India serving the local market, but we also developed this to footprint locations further in order to be able to serve actually the global markets, then on the e-mobility balancing and spin testing equipment, but also with our Indian production hub actually to provide solutions for our suppliers related to tire and wheel, including balancing and assembly equipment, so this is, let's say, what we do with the normal course of business, and now let's move on also to give you some insights in regard to what we're doing in regard to digitalization, and you can actually see that already in the past, we started this way of moving forward into the digitalization. It started with establishing possibilities to connect machinery, to connect them to the Schenck IoT Gateway, and with this building a basis for further action.
The next step was to generate invisibility, going from visibility then beyond to transparency. This is actually where we provide apps already this year. And then moving on, the next two steps towards predictive capabilities, but also adaptability. And you can see on this picture that we did well with what we started. We can see with the green boxes that certain apps have already been released, so some more expected to be released in the remainder of this year. And at the very end, we have a app pipeline that helps us to drive revenue potential. And we are targeting within the next five years then to increase our sales with software and software-related products up to 7.5% of the divisional sales. And also giving you some insight in regard to examples that we are doing here, two applications that I would like to highlight.
The first one is the Machine and Cockpit Dashboard Application, where actually our customers then get information on the cockpit from the machine or even entire machinery, even at their fingertips. They can closely follow the machine production and quality performance indicators, and they can use the dashboard to see what is important in regard to the operation. And this helps them to organize and optimize the machinery while it is easy to use. The second example is going beyond using this information. It's going then actually into an area where we are providing our customer solution to help to run the whole lifecycle of their machinery.
So using the data that is provided, that is collected, and moving this over into planning, organizing, managing, and also the processing of the task so that actually they can not only track the performance over the whole entire lifecycle, they can also manage the development over the whole lifecycle. And this at the very end enables an efficient service management, but also reduction of downtime. And yeah, to summarize the chart, these apps enable access to efficiency potential that is there on the customer's sides that they can use then to further improve their operation. Yeah, and the last one that I would like to talk about is about the growth opportunities that we are having out of the framework that is established. Already today, we realize, maybe to some extent surprisingly, additional growth in the aircraft aviation industry.
We can see that China and Russia started to, yeah, actually implement their own aviation industry, going into the commercial airline operation, going also into the operation then of manufacturing of engines and also doing the maintenance. E-mobility is already playing a significant role of our business as well. We started with new players with the new technology. We are well positioned. Jochen explained earlier on already about these activities, and we're going to expand our business and our market share in this area further. And as mentioned, we want to use the global footprint also for the tire and wheel area and actually using the good cost basis that was established with our Indian operation then also to, yeah, realize further growth potential in a global market.
And lastly, what I would like to highlight here on this page is that also new technology that's coming up like fuel cell, actually we can tap growth opportunities there. There are components, parts there, which are pretty much similar to already parts that are used in the internal combustion engine and that will also play an important role then, as you can see here on the picture for the fuel cell compressors. So actually from our point of view, we are well positioned for tapping additional growth potential. Yeah, that's it from my side in regard to the division, Measuring and Process Systems. And with this being said, I would like to hand back then to Andreas. Andreas, please.
Thank you very much, Dietmar, for the presentation. And now there's one more division left before we go into a short break.
This is the woodworking machinery and service division, the systems division, which comprises the business activities of HOMAG. The presentation will be done by Ralf Dieter. So Ralf, welcome back on the stage.
Yeah, thank you. I'm already here. Thanks, Andreas. Yeah, ladies and gentlemen, let's talk about HOMAG and our business over there and our digital initiatives. The agenda for the next 20 minutes is about overview and the furniture market overall. The efficiency measures we discussed in many quarterly calls already. Some more insights here that you understand the complexity of what we have to do here. The digital activities and just very close to be finalized acquisition of China Golden Field and an opportunity for growth, which is a major trend.
Jochen will cover that also later in regards to sustainability, the solid wood construction where we recently acquired a company to strengthen our portfolio there. Let's start with the HOMAG house, let's call it. I think it's a nice picture because when we start at the bottom of the house, at the entrance, so to say, you see the major areas HOMAG is working on. On the left picture, furniture, mainly kitchens, but also drawers, cabinets, which are made out of not solid wood, but this plated wood. That's the mass market for furniture, but also for highly individualized, expensive furniture. But we also do in that you see in the middle part, you see a floor, a wooden floor. We have machines particular for producing those floors. Very strong business, by the way, in China.
You see a door, which we also have machines for producing doors. By the way, very complicated machines because to make a door is quite complicated. I'm learning this now more in detail, and it's really fascinating what the technical demand is to make a nowadays door and windows. All of that we have machines for. On the right side, the construction part, which I think is a very growing business in future, already starting, is for house building. You know already wooden houses when you buy in a, how you call that, ready-made house where you don't want to wait for constructing stone by stone. Those houses are mainly out of those elements you see later, and we have a film for that.
The HOMAG business itself, we have what we call business units for dividing and handling or edge or CNC that are product lines where we have our standard machines. But also when we put them together in lines and connect them with automation, then it's called the system business, which you see here. Consulting and software is very important. We have a consulting company which is quite unique in the world to advise our customers about an efficient production flow, about how to organize the manufacturing, which is a starting point of then system sales or machine sales. So that picture here talks a bit about the market.
I have to say that already in 2019, in the autumn, we anticipated for the woodworking market without knowing anything about corona in those days that we anticipated a 10% downturn in 2020 because the market, if you look at the history, has waves, and we saw such a wave of investment pause in some areas coming, so we underestimated 20%. Today, I can say HOMAG has a minus 13% order intake, so we are better than that downturn expected. That means two things. We are managing well, and we gain market share, and we are preparing for further growth, which you can see in the next years to come. The growth comes mainly out of the system business, larger projects which have been quite subdued in 2019 and 2020, but we see signs that they are picking up again. Our market share on the right chart, 30%.
The market has some major players, but also fragmented, very small players. As the whole furniture industry becomes more and more industrialized, my forecast is that the smaller players, which are under 31%, will more and more have difficulties to survive, and the business has to be taken by the others, more developed industrialized companies like us. The 30% market share today is not our goal. I think HOMAG has the possibility and the opportunity, and our target internally is 50% in the next years to gain here. And I think we have a good plan to get there. Yeah, here just a picture about the measures, very often communicated, right-sizing, sure, but I think streamlining here, the redesign of the process. I have a special chart for that in a second because that's very important to understand. This is not a quarterly chart or not a two-quarter chart.
It will take some time, and I'll give you an idea about that. Parallel to that, we are working on our factory production and assembly performance with the HOMAG production system. I think it's very valuable procedures to help the factories around the globe to improve their efficiency. And we are continuing to modularize and standardize our product portfolio, which was by history very, very complex, many, many custom-made machines, which we want to put more in modular designs in order to achieve the last thing, volume advantages in purchasing. And if we do this all right, there is no reason why we can't gain market share because we will be delivering earlier than competitors' machines, which is a main reason for decision. And we should have a better cost position, which means lower prices without losing margin to do that.
We continue in Poland and China to expand our facilities. By the way, no European competitor, which are our most important competitors, has any production in China. We have a very big factory. I think that's, and we will make it even larger. HOMAG China Golden Field. When we bought HOMAG in 2014, there was one point where we were hesitating to buy the company. This was the fact that we learned in the due diligence that HOMAG has no own sales channel in the most important furniture market, which is China. Even though we have a long-term relationship with China Golden Field, I think it was a major step in achievement now for the management team of HOMAG to come to the point that we can buy this company. We expect the closing of that transaction by happening by end of this month.
Major, basically fix of a strategic problem HOMAG had. I can also say that HOMAG really has a leading position with digital products compared to the competitors. No one is close to where we are, and I'll give you examples about that, and the last point comes when we do all right. I don't repeat our EBIT margin, Andreas, because we said it so often. I think everybody knows, and you will have first to deliver, and then we talk again. This picture is a picture we can talk for hours, but I do it in one or two minutes. Today, the way how HOMAG works, which is a traditional way many, let's say, machinery companies worked on, is a kind of a silo model for lots of reasons, but it's not state of the art anymore. We have the sales department, which has its own system.
You have the top part of the picture shows the actual situation. So when they sold an order, and they have their own numbering system. So basically, they have something sold where the next step, which is order engineering, has to translate in his world, numbering systems, whatever, bill of materials. This is a very complex, time-consuming, work-intensive process. And then order engineering creates an order to be able to be fulfilled in production. And the same happens again when they are finished, when they hand over to production, different IT system today, and then again, complex and labor-intensive mapping of what has been created as an order now being produced. You can see by this picture, maybe you get an idea by that picture that here we have a process which has a lot of interfaces, a lot of possibilities to make mistakes, very inefficient and very expensive.
And as I already last year, the last opportunity with some of you I saw, we are working on this seamless process in SAP from sales to manufacturing, yes, supported by CRM and sales, but the leading system will be SAP, that we have a seamless process like we work in Dürr, like we work in Schenck, and like companies work today, but it's basically operating the backbone of the company so we have to do it very carefully, we have to convince everybody in HOMAG that's the right way, which I think we are in a good way, and we are forming now the SAP template for that, and this system will go live in shop floor of the main plant, which is the most complex environment by January 1st, 2022, but we start already with the first installation in Poland by January 1st, 2021.
But it will take time. I just want to make sure, please understand, this takes time, but the effect is very, very strong and enormous. And that's why we can commit on 2023 performance numbers. Digitization. When HOMAG came out first, and HOMAG has the first step was tapio, the marketplace for the woodworking industry. When this was announced on the Ligna trade show in May 2017, there was a big, big bang in the woodworking industry. And we always have a big booth and special digital area. And our customers were impressed, mainly the larger ones. But we found out later that the smaller customers, which are very important to HOMAG, very important, the smaller ones found a little bit lost because when you have a carpenter shop, you are pretty much away from digitization. And we showed so many things that they were a little bit overwhelmed.
Understanding and addressing that, we took now the focus in 2019 on those carpenter shops to help them to digitize their production because they have a lot of problems to get personnel to find their materials. They don't have ERP systems like SAP. They have nothing more or less and not even order systems properly. And just to give them easy-to-access software without headache because all that what you see here is a cloud-based solution. So if something breaks, he has no worry. He doesn't need an IT department. He doesn't need IT infrastructure. He just goes on the internet and can use it. And it's basically from this picture from creating, in that case, a cabinet. So he can talk to his customers, "How would you like to have a cabinet?" We can draw it here on that.
This data comes into the ordering system, which we provide, then into the manufacturing system where we then transfer that into CNC programs to run those parts on the machine. And we have some assistance products here, which I'll give you in detail in a second. So now we are digitizing the carpenter shops and smaller furniture company. And the reaction is very, very positive that people see that really as a huge step forward. Nobody can offer that at the moment. Two examples. You see on the left chart down there, this mess of edge bands hanging around. This is normal life in a carpenter shop. And when they need, let's say, and you know that many, many colors are sitting there, maybe they have 150, 200, 300 of those edge bands. What colors needed? Go and find it. Can take some time.
And our solution, because it's a big problem every day, our solution is the right picture and proper drawn. It's totally to the cloud connected where we know where each band is in. We know when the band is running out. And an LED light is showing the user where is the edge band he needs now to pick it up. It's great stuff and really well received. And the service assistant also that he can do maybe his first machine stops or has a problem that he can maybe fix some of the problems himself, digital-guided. And if he can't do it himself, he will transfer to our service teams to help him. So that's great stuff to support and make easier the everyday life in such a shop. Tapio already mentioned.
It's really now an ecosystem of more about 40 business partners connected to tapio from machine suppliers to edge band suppliers, glue, whatever. You need tools, which gives a customer a whole environment, all what he needs for running his production. He can access through the tapio platform. And we are now also bringing that tapio knowledge because that's the knowledge not only for the woodworking. It's a general knowledge for an ecosystem and to build it. And our team has learned about that in the last years to bring it now to other industries. And in other contexts, a lot of machinery companies are interested now to use that technology, that principles, and to take to their special niche industry. I think that we have some potential here to grow that. HOMAG China Golden Field, I already mentioned. I think it was very important.
450 employees will join our group. And this is very important. By the way, this picture here, that's the location we have in Kunshan, which is the main location in China. Kunshan is close to Shanghai. I think that will really strengthen our market position in China, which is the biggest market, and it will be also in future and continue to be the biggest market. The rest you can see on that chart. I think it's very important. And I'm glad that we found an agreement with the owners of that company. Solid wood, just some words. I think that's a trend. Many governments are pushing for it. I just recently also learned that today you have the, or it's basically the rules are out there that you can even build houses up to 18-20 stories out of wood.
There are a lot of examples also in America where headquarters are now built out of wood or minimum hybrid wood and concrete or wood and steel. I think this will continue. The reason is very obvious because wood is a material which is not only sustainable, but it reduces CO2. Wood is a material which grows. You have, I think this number's interesting that in every five seconds in Germany, the wood is the whole forest are so much growing that you can take out, you can build a house from that. It's growing. It's a very sustainable trend here, and I think an opportunity for us. This is a closer look to this business or to this market. Also here, we anticipated a drop. I can say that at the moment, the business is continuing to be strong.
We see that the demand of our company, Weinmann, which you see on the right side of the part, and we bought this company System TM, which is in the timber processing. And so basically, we are enlarging our portfolio not only to build the walls and the elements of a wooden house, but also we start now when the timbers are coming out of the sawmills that we then use those timbers. And you can see what we are doing with it. We put them to the timbers are measured in a very fast way, screened. And wherever you have, I don't know that's the right word, but I would call it branch hole, Andreas. Is it correct? Just to prove that we are live here. So that these branch holes are not good because they have weak points.
We have to cut them out and it does them on high speed and join the timbers again to build the base for Weinmann to build those elements out of it. Just to explain that the growth of this business is here anticipated. It maybe has even higher potential of growing. So this I explained already. I think more details we don't need to know. The company is about €30 million. We are very happy that System TM is part of the family now. We have a great cooperation since some time already. And together with them, we will now in our company together as a team, we will go into that market stronger than we were before. That's about Weinmann. That's a company we already had. And just for ideas, it's about €45-50 million turnover. Very good margins.
By the way, System TM also has better margins than HOMAG on average. So it's not only a growth potential, it's also a profit potential. Yeah. And I think, Andreas, now it's time to move to this film where you can see how Weinmann is producing on our machines here and equipment, those housing elements.
Welcome back to the Virtual Capital Market Day of the Dürr Group. Sustainability. It's becoming more and more important for the society, but also for companies and for the capital market. We will now get an introduction to sustainability at the Dürr Group. And for this, I welcome Jochen Weyrauch back on stage. Jochen, the stage is yours.
Thank you again, Andreas. And let's jump into the topic with a film, a short film.
So, as you can see, we've spent some effort in the development of our CI, which shows the individual elements of our sustainability strategy, each representing, or together representing, a leaf and each representing a segment of the leaf. I'm going to show you in the next 15-20 minutes an overview of our sustainability approach, how we contribute to improve, just go back here, to improve resource efficiency, how we drive the transformation to a sustainable society, what examples we have to offer already with our sustainable financing, and what the next steps are. Five elements that you've seen in the intro are products and services, value creation, supply chain, employees and qualification, management and governance, and engagement and society, each with their individual elements behind them, like for our products and services, our global innovation as technology leader, creating sustainable products for our clients.
I'm not going to read each and every detail, but in essence, what we now bring together in an integrated approach is something that drives around the Dürr Group already for many years, as Dürr has already introduced sustainable products many, many years ago, and now, with this clear public direction towards sustainability, all of this is not a surprise to us. It just basically gives us the motivation to bring things more together, probably than we did before. You see here on this chart how we handle corporate sustainability from a governance point of view. We bring together our global sites that we have around the world through representation in our group functions, which are part of our sustainability council, and in addition to that, I have a team in corporate sustainability directly reporting to me.
And consequently, in very frequent points, we also report back to the supervisory board our efforts around sustainability. If you look at a paint shop at this point, there are many elements that really drive sustainability or probably don't drive them, depending on what you offer in terms of products. As a paint shop is, if you look at the whole consumption of resources in a car plant, is the element or the production step in a car production that consumes most of the resources. So it offers most of the opportunity for saving if you handle it well. And you see some elements that are used in a paint shop as a graph or a pie chart in the bottom. You see that 41%, so basically the biggest part in the paint shop, is material consumption.
Consequently, with all our products that we have, we have a significant leverage in reducing consumption of material. I'm going to show a number of examples in the following. If you look, for example, at a dry scrubber in a scrubber itself in a paint shop, this scrubber brings the overspray that naturally comes from traditional processes of painting cars in the air. In a paint shop, to get that out of the air, you need a scrubber. In the past, years ago, this was typically done with this wet separation. As Dürr today supplies dry separation systems that significantly reduce energy and air and also then VOCs that go into the environment.
If you see the graph here, for example, in our first generation of dry scrubbers, we already reduced the energy consumption by about 60% by simply keeping the air in the process rather than like it was done before in wet processes, continuously exchanging the air. And of that, a dry process avoids any requirement of wastewater, of course, but also a lot of chemicals that were used previously to get the paint out of the water after it was extracted from the air. So lots of efforts. By the way, we supplied our first dry scrubber already 20 years ago. So for us, sustainability is not just a buzzword or something new. It has always been part of what we're doing. And we're now just accelerating efforts.
If you look further in the process, to give you a few more examples, if you take an oven, which in our latest generation is called EcoInCure, this is a very special oven where, different to the past, cars do not drive in a longitudinal way through the oven, but in a 90-degree angle. That gives a lot of advantages to heat up the body from the inside and increase, by the way, the quality of the paint. But in the same time, we can make the oven shorter, which means better heat transfer, less energy used in the oven. You can see minus 25% energy, minus 50% oven length, which, by the way, also reduces the CapEx of such an oven.
Or our newest invention, the EcoPaintJet, that has received the German Innovation Prize, where we now have a way of bringing the paint on the body without any overspray. So all of what we said before in separation isn't even needed anymore in such a process. Or all our products around exhaust air purification that significantly reduce VOC emissions into the environment. Example from HOMAG, which we call IntelliDivide. IntelliDivide is a software that optimizes the cutting patterns of wood panels. And it typically saves about 10% of the material by intelligent arrangements. And if you look at a larger carpenter shop that does about a million or more in annual sales, the customer can, on top of saving material, really also save money of, say, about EUR 5,000 a month based on certain assumptions.
Another example around sustainability is our involvement in the battery production, where we're involved very much in the electrode manufacturing. I've explained that already in my presentation regarding CTS, covering the whole production process of an electrode from coating via drying to the recovery of the solvents. But we're also involved in the module assembly by our products around can painting, where we do the insulation painting of cell cans, but also glue battery boxes. If you look at battery pack assembly with our gap filling, we're involved in the electrical and thermal integration of battery packs in complete batteries. And last but not least, battery integration, which is basically the marriage, where in the past you were marrying an internal combustion engine chassis with the body. Here, you integrate the battery modules in the car, the where and how.
And on top of that, we're also very much involved with all our consulting services around the erection of e-mobility production shops. Again, HOMAG, we look in HOMAG, we look at the furniture production as a, if you will, as a whole process from forestry to timber house construction, where you've seen the example of Weinmann in the previous film and the acquisition of System TM that has brought us into the beam processing. So we're more and more investing around HOMAG into the sustainable product of solid wood. And by the way, 50% of the public buildings in France in two years should be constructed using wood. So we're really also sitting here on the right trend. Then totally different topic, but again connected with sustainability is we're also pioneering, if you will, sustainable financing. Already last year, we launched two activities.
One was a bond, a Schuldschein bond that we issued in 2019 worth EUR 200 million and rated to ESG, in this case, EcoVadis, and it was basically creating the momentum in the market for others to follow. Also last year already, we have refinanced our syndicated loan facility worth EUR 750 million, again linked to an ESG rating. This year, we first launched another bond worth EUR 115 million, again following the same mechanism as we did last year, and just recently, a convertible bond worth EUR 150 million that is also linked to ESG rating, so also big piece of our financing instruments are in a way already today sustainable. We've joined the U.N. Global Compact just a couple of weeks ago. If you will, naturally, as we already had in place the main instruments covering the 10 principles of sustainability.
Our code of conduct basically touches on all of the 10 principles. Our policy on human rights and labor relations covers most of the first up to the sixth principle. Our environmental policy basically seven to nine, and our anti-corruption manual, the 10th principle. So we're well set up. And so for us joining the UN Global Compact, we're proud to do that on the one hand. On the other hand, it is just a natural step following what we are doing already today. What are our fields of actions for the near future by element of our sustainability strategy? And I'm just picking out a few of them. First of all, if we look at products and services, it is simply extending our portfolio of sustainable products and make them even more environmentally friendly.
If you take our value creation and supply chain, we are defining as we speak our climate strategy 2025. On the other hand, we're rolling out the health and safety ISO 45001. If we talk about employees and qualification, we're completely rebuilding our internal idea management process. If we talk about management and governance, we've just achieved the TISAX information security certification, which we're now rolling out. And if we touch on engagement society, I've been talking about UN Global Compact before. That was all regarding sustainability as we speak. Thank you for the moment. And I would hand over back to Andreas, who then hands further to Dietmar.
Okay, thank you very much, Jochen. Thank you for the presentation on sustainability. I think it became clear that mechanical engineering can play a very important role in reaching the sustainability goals that we set ourselves here in Europe.
I mean, you could see that resource efficiency can be improved quite significantly. And on top, we are driving with new businesses also the transformation of the society to a more sustainable one. So it's becoming a more and more important topic. Another important topic, of course, is finance. And this is naturally presented by the CFO. And that's why now I welcome back Dietmar on the stage.
So Andreas, thank you very much. Yeah, finance. Now back in my role as CFO of the Dürr Group. And it's a role that actually I like as much as I also appreciate the divisional and operational responsibility. Let's get back to the, or let's get to the finance topics. Actually, what I would like to highlight to you is divided into five areas.
First of all, I would like to talk about where do we come from, what is the situation, what have been important developments over the last years to understand the business dynamics, but also to understand how can we now define targets and guardrails. Actually, we already define them, but how we want to achieve them. This means margin and cash management is important in that regard. Talking about the contribution, sorry, not distribution, the contribution of the finance organization, but actually going beyond what kind of impact will finally the finance transformation then generate and how does this support the development of the Dürr Group. And then talking about an outline that's first of all preliminary considerations regarding the future guidance methodology. Now let's start first of all with the historical business development over the last 10 years.
As you can see, actually, Dürr Group was able to continuously grow its business compared to 2010 directly after or within the financial crisis actually tripled the sales. There have been a couple of impacts important at that time during that development, which I will talk about. As you also can see on the lower left side of the chart, actually then after realizing a peak, our profitability then started to decline being caused by several reasons that I would like to explain on the right side. First of all, you can see the stronger recovery after the financial crisis. That actually going back to a level of EUR 2.4 billion in sales in 2012, which actually means almost double than the sales compared to 2010.
Then, actually, the group started the diversification, then moving more into industrial related areas, not purely depending for the future on the automotive industry and as such actually establishing a more diversified portfolio. Then, with the acquisition of the HOMAG group or subgroup, the woodworking technology, but also two years ago with going more into the cleaning technology with doing the acquisition of Megtec Universal. And at the same time also adjusting then the portfolio by doing disposals like we did with the Ecoclean back in 2016. First of all, the acquisition of HOMAG in 2014 and subsequently then generated an EBIT dilution because the profitability at that time was a level of 3%-4%, but then started to develop over the next years.
But what we could also see, especially during the years 2018 and 2019, that for the group and its core business, price competition became more severe and finally had the impact then on the profit line. And we also then needed to realize certain additional measures, started to initiate them, which actually caused then extraordinary effects on one side in 2019 for the reorganization, restructuring of HOMAG, but also from the last acquisition, bigger acquisition, Megtec Universal, then the PPA related impacts. This is in regard to sales and profitability. Now let's move on to what is important to us being active in the plant engineering part is the net working capital development. And you can see that actually over the last 10 years also the market environment then changed and had an impact to our net working capital characteristic and also the acquisition and incorporation of new business had an impact.
You can see that in the, let's say the best year of 2013, we even had a negative net working capital development, which actually was driven by high prepayments coming from the automotive industry and therefore causing not only the negative net working capital, but also causing a strong net cash position. Actually the diversification started, which means also that we need more inventories on hand for the mechanical engineering area and accordingly the net working capital demand increased over the years. This was accompanied actually then by a normalization of the prepayments from the automotive industry to a level of around 20%. Yeah, in regard then to the net financial position, we actually used the money that was available, then the available position that was there in 2018 to pay then the acquisition of Megtec Universal.
You can see then that additionally the adaptation of IFRS 16 then had an impact in 2019 on our net financial position as well. Actually to summarize, the net working capital development over the last years reflects a normalization of the situation. Normalization is not only what I want to talk about. I also want to give you an insight in how do you want to move forward. That's actually what you can see on the next slide. You can see here some of what Ralf already highlighted early on. In the medium term, from our point of view, we can realize growth of 2%-3% per annum plus on top than the growth that will be done or will be caused by our M&A activities.
We also see that with what is there, and I will give a little bit more of the insight of the levels that we are going to pull in that regard, how we get back to a level of an EBIT of more than 8%. And with, on one side, probably managing capital and on the other side improving profitability, then to get to return on capital employed levels of 25%. So actually what we are looking ahead is we are looking forward to continued growth at improved margins and also at returns. So this is in regard to key performance indicators, but giving guardrails is not only important for these indicators; it's also about the financial position, the financial stability of the group.
First of all, let's get and give you some insights in that regard here that you can see how the upcoming financial liabilities that have to be refinanced within the next four to five months are actually covered. You can see on the left side we have cash and cash equivalents plus money markets available, including cash credit facilities that are far going beyond the refinancing needs so that actually we have a well-covered maturity. You can also see on the right side of the chart that for the future we actually strive to better balance the financing position, our maturity profile with a maximum of €250 million per year.
You could see during the last weeks that the first measure in this regard to balance this with the issuance of the convertible bond was already done and that we are currently in the process of actually doing a Schuldschein transaction as well in the market. So we've now having discussed the situation regarding maturities, let's also talk about maintaining our conservative approach for keeping a solid financial position. You can see on the left side of the chart that actually the acquisition of Megtec Universal and then the adaptation of IFRS 16 led to the fact that our leverage increased. But you can also see on the right side of the chart that we have a history, so a successful history of operating at net cash or low net debt levels. And this is also what we are striving for when moving to the future.
We want to maintain our solid financial position with low leverage ratios. We also are continuing the ample financial flexibility that also gives us the opportunity then to move forward with M&A opportunities. So this is on one side focusing on growth, but also on the other side fully focused or fully committed to stay at low leverage levels in the long run. So now how do we get to this? And you can see actually when looking into the history going to 2018, 2019, and especially when looking into profit levels of 2019, that there are basically two areas that we target to improve before or going beyond that we need to recover to pre-Corona levels. And these two areas is the woodworking technology where we want to develop the profitability further. And it's also the Paint and Final Assembly Systems division where we are targeting additional profit improvement.
You can see on the right side it's not only believing in that somehow the profit will come back. Then, now we've been influenced significantly this year coming from the COVID-19 pandemic situation. What we are doing there is we are changing our setup for the organization. We started to strengthen our competitiveness for HOMAG. This was already announced last year in the fourth quarter for the remainder of the business, especially on the automotive side. We announced as per end of July of this year the reorganization that we are doing then in this area, especially on the European automotive business. We are good on track with this so that we should be able to achieve, but you should also understand what are the important levers. These levers are first of all capacity adjustments targeting lower cost base, but also targeting lower break-even point.
Secondly, it's a continuation of the localization of our global production footprint, of our global production process. So going more into the emerging markets, moving more into the markets where our customers are, where our business is, global supply chain will help in that regard. But also what will be important is to continue standardization of the product portfolio. As we discussed earlier on already as well, then to continue with lean and digitalized internal process and also with adapting our structure, our organization accordingly. So that actually with these measures we are able then to reduce our cost base and to improve profitability. In line with these measures are targeting to actively manage our portfolio. We have a decent service share already being established, being achieved, and we want to expand this then to level up to 30%.
So at the very end, you can see with pulling these various levers we are targeting to reach our margin targets. We are also targeting, as you can see on the next chart, to maintain a good net working capital profile. You can see on the left side actually that over the last two years on average we lost due to net working capital change around €65 million in cash flow. We established a target range within which we want to operate. This is 40-50 days net working capital. Actually, we have been in this range at the end of 2019 and during the whole of the years. This year we operated in this range.
So, measures that we need to further develop to be able to remain at the target area is then to balance our receivables and accounts payables to manage the inventory levels properly, to optimize them continuously and also to balance on one side work in process, contract assets, contract assets on the other side with contract liabilities. We already, in order to further enhance this with underlying activities, we started a first pilot project for net working capital optimization, which identified good opportunities and showed good results. We are right now in the phase of doing a second pilot project and will set up afterwards then a more comprehensive net working capital program. So, but what are we going to do then with these funds that we want to generate?
You can see here on the left side that the Dürr Group is having a history then to use the funds on one side for additions in plant property and equipment. This is the light blue area, but it also, as Ralf already indicated, we are striving for growth by doing M&A transactions. You can see with the dark blue part on the chart that we do continuously M&A activities, that we have some bigger activities, but we are also doing smaller activities. All our activities are based on a disciplined M&A process. This is consisting first of all of exploring the market for opportunities. We have a dedicated team working on this. They are doing the market evaluation, the evaluation of growth potentials. They are looking into entry barriers. What does help actually the business to be stronger coming from the Dürr side?
The synergies, but also looking into cyclicality and competition and the very end, sorry, identifying how can we do this business then even in a better way in the future. Based on this then, we are actually doing three kinds of M&A transactions. The first one is cross-divisional impact that is going to be generated. We are looking into technology, skills, competency that actually can be applied across all the five divisions that are helping us to advance the division. The second type of business that we are doing is looking into our transaction bolt-on acquisition. It's about expanding know-how, expanding market access, but it's also expanding the size and competencies that are actually helping the divisions to develop further. The third kind of M&A transaction is complementary type.
It's about reinforcing business or establishing then actually a footprint for being able then to grow up finally to also level then that are actually justifying a new division. Typically, we are doing up to two to three transactions per year and a maximum up to five transactions. We already did this over the last 10 years. So you can see we have a lot of experience with these kinds of activities and we can manage them very well. So to summarize, when we go into our M&A transaction, we focus on synergies, we focus on know-how, market reach, and diversification, then also to properly reflect the global industrial market in our activities as well. So this is in regard how do we use then our funds for then further growth, but we are also using our funds to continuously return then actually cash to our shareholders.
You can see over the last decade the development here on the left side, then that actually we also established a policy which is targeting a payout ratio of 30%-40% of the net income, and you can see that over the last 10 years we consistently had a payout at the upper end of the target range or sometimes even above, but this is also based on taking into account profitability and affordability, so just keep in mind then that we are also targeting to continuously return money then to our shareholders, and I already mentioned that I want to talk about the role that a finance organization is going to play in regard to further advancing the Dürr Group, and this is what you can see here, at least to indicate with some of the important topics there.
We have an initiative established that is called One Finance, and it's from my point of view, and maybe it's the CFO perspective, but I think we continuously also get our colleagues on board that they share our point of view. It's one of the most important. It's the key group-wide initiative for the digital finance transformation. And digital finance transformation does not only target then how do we work in the finance area.
Yes, it is an integral part, but it's also about how can we provide better decision support, how can we improve our integrated steering concept, how do we make sure that across the divisions, across the various businesses, actually the KPIs are comparable, how can we deliver the necessary information within a short period of time, and how can we enable our managers, our business partners that actually they can control their business by themselves, just everybody of us is doing when he drives his own car. But it's also, and this is the part that is related to the finance organization itself, driving efficiency, reducing complexity, harmonizing and standardizing, using automation as one of the important topics, and also about standardizing our SAP templates and at the very end lowering financing costs and lowering IT costs.
It's also about improving effectiveness in regard to compliance, managing risk in regard to the legal structures, the centralization of process and also their respective governance, and also leveraging the digital opportunities. You can see actually there is quite a lot to be done, but we are confident that with these activities we are then developing the group further and we are supporting our business in the best ever way. At the very end, it's about, let's summarize it with this statement, harmonizing as much as possible, but allowing differentiation wherever necessary. Yeah. With this view into the transformation of the finance organization, I would then actually switch over to my last chart for today and giving you a little bit of insight. As said, it's a preliminary status. Feedback from your side afterwards is also well appreciated.
But when Andreas and me just started now a couple of months ago, both new to the job, both new to the company, we also took the opportunity to look into how do we communicate to the financial markets, to the capital markets, what kind of insight do we provide and where do we provide guidance. Actually we, in the discussion with the various colleagues, we also realized that we see momentum for improvement there.
For the future, actually we want to focus our guidance on key financial performance indicators, starting with the incoming orders, which are highlighting the future level of the business activity into how do we realize then the growth, then what is coming out of the growth, what is the EBIT margin being adjusted for extraordinary effects to show the real operational performance and power of the group, to show how we are creating value with the return on capital employed, but always keeping, despite certain volatility on the net working capital side, focus on free cash flow generation and how this finally then actually is supporting the financial, the solid financial situation of the group. That's actually the framework. It's an outline for next year. As said, feedback is welcome.
Yeah, with that insight, actually I would like to conclude, complete my presentation and will then hand back to Andreas. Thank you very much for your interest and for your attention. Thank you.
Thank you very much, Dietmar, for the presentation. Now we are at the end of the presentations and we will have a quick summary of the focus topics and how they are linked to the new board remuneration system and also the key takeaways. For that, I ask our CEO, Ralf Dieter, to do the summary. Ralf.
Yeah, thank you, Andreas. I'm happy to do so. Now you have seen not only a lot of slides here, also I've seen that Dürr is working in many different areas, fields, our digital activities. So you can say, well, it's a lot of things, but I can tell you all what we do, we do very focused and that's the name of all our programs since quite a while, and I would like to show also what we are focusing as a management and a board. Definitely, we want to achieve our midterm targets. That's not only our obligation, that's what we are really striving for and we are very optimistic that we can get there. We have done it in the past in different environments and I think we are on track for the midterm to do that again.
And as Dietmar said, we always have a close look at our financials. I think that's also a strength of our company that we are very carefully managing our financials and Dietmar has lined that out and he's really on top of that. And as Jorunn already showed you, sustainability is not just a buzzword, we have to do something here. No, I think it's an opportunity also to differentiate and Jorunn has put together a very strong program and I think this will become more and more also as a decisive factor in the next years. Now, when we focus also, the question is how we are incentivized on that.
As you know, there have been some new regulations in corporate law in Germany and the corporate governance code, and we had to look at our remuneration system and they had to make some changes, to be honest, some smaller ones because we were already quite well in line with what's coming. This has been decided by the supervisory board and will be then voted for at the shareholder meeting next year. On the base salary side, there was no need to change short-term incentive. Here we had so far always EBT and now we have EBIT and also free cash flow to also have here a higher focus on cash flow and also on ESG targets. So sustainability comes into our short-term incentive. On the long-term incentive side, not much change, only that we have higher investments of the board members in Dürr shares.
So the portion of having and holding our own shares has increased or will increase. And also some little conditions like clawback clauses, which we have now in. So I think we are very much in line with what is legally, but also from the capital market requested. This chart has a headline key takeaways. This chart could also be named why to buy Dürr products or why to trust into Dürr or why to buy or to invest in Dürr. I think that's the same arguments, particularly in very difficult times for, and you know that one of our competitors went bankrupt. So I think for the customers, it's not only technology, it's also the question when I buy today equipment from HOMAG, Schenck, Dürr, is this company around in 10 or 20 years from now? And the answer is yes. And here are the reasons.
First of all, we are really leading in digital activities. We are, you know, we are normally very modest and continue to be, but we know what's out there and we know that we are very, very really advanced, if not to say far ahead in those activities compared to others. I think we also in the internal digitization, we are making good progress and have a very high degree of penetration already, and I think we will see further opportunities out of that. We operate in attractive markets. I think the portfolio split now between 50% automotive, 50% non-automotive is a very healthy one. Automotive will continue to grow and woodworking will continue to grow. The question is how fast and by when, and this we will learn over the next quarters and years.
The short-term measures out of the pandemic, our measures which we have taken now all end of last year, this year, executing some of them also next year. Those measures, by the way, would have been on the medium term necessary anyway, but in a slower time, in a slower motion, in a longer timeframe. We do it now all more condensed. I think that's good and then we move on, and I think it's also good for our people to understand that we do those measures at the same time we are buying companies because we are securing the future of the company with those measures. Sustainability becomes more and more DNA of Dürr, which we always have been in, but now we are more conscious about. We have now a focus program on it and I think we will make headway and benefit out of that. Yeah.
And at the end, I think operational management is also a strength of our company and we are closely monitoring margins and cash flows. And I think that's why we are sure that we can commit to our midterm goals. Yeah. Andreas, that's the summary from my side. Thank you very much for your attention.
Thank you very much, Ralf. That brings us to the end of the presentation part of today's Capital Market Day. And now would be a good time to dial into our Q&A conference call if you have not already done so. If you don't want to ask a question, but just listen to the Q&A, you don't need to do anything. You just can continue to listen to the webcast. And before we start with the Q&A, we will see a short film about the paint shop of the future. And then we have just a tiny quick break and we will be right back with the Q&A. Thank you.
Where's the team? Just you?
Just me and the paint shop of the future.
Sure. We've got tight deadlines. Let's get started. What's this? Modules?
Yes, modules. We think big. You can start small and scale up when the time's right.
Wow.
Central storage, car body sequencing, connection between levels, all in one place.
It's just 400 units. The updated requirement is 600 units. Do they know where to go?
Absolutely. Here it is, our digital brain, the DXQ control. See, everything's under control. DXQ takes care of the perfect route of each car body through the paint shop. Even the different model types don't slow down the production anymore. That's what we call an advanced control system, including data analytics. It's so easy to use.
Yeah? Wait, and it isn't a production line for two-tone painting. Are you crazy? You know what that means? Downtime for weeks.
Downtime? What a view. Let's call it a day.
Haven't you forgotten something?
Welcome back to the virtual Capital Market Day of the Dürr Group. I have the members of the board of management with me, and we are now ready to take your questions. And we start with a question that we received by email. And this question comes from Philippe Laurent from Berenberg. Philippe is asking, regarding your M&A strategy, is your current focus on everything excepting the establishment of a new division, or should we understand that you would be willing to purchase a new hallmark?
Yeah, I'm happy to take that question, and let me modify as follows. It is everything, including the establishment of a new division. It really depends on the opportunity. We don't feel being under pressure regarding a large acquisition, but we're always looking out. On the other hand, we currently have acquisition targets in the portfolio, which would be adjacent to our existing divisions and complete the portfolio. As we said earlier, we're rather looking, when we have the choice, outside automotive, more business with a stronger service orientation. But it really also depends on the opportunity, and I hope that we can report soon some news.
Okay. We have another question coming from Philippe Laurent, and this is, when it comes to a day's working capital guidance of 40-50 days, what would be the assumption for the contract balance to achieve such a target? Dietmar.
Yeah, actually, Andreas, thank you very much. And Mr. Laurent, also thank you very much for the question. We try to balance our assets on one side with the receivables, but as already mentioned during the presentation, it's fluctuating in there. So normally what we target is a level between minus 50 and plus 50, then to be in that area.
Okay, very good. And there's the last question of Philippe Laurent. The midterm EBIT margin target for CTS is set at above 6%. Does - oh, and now it vanished, the question.
Did you get away?
Sorry, can you show it again? Thank you very much. Does this exclude or include PPA amortization? Also, why is the target so low since you're already reaching around 6% in 2019 and 2020 and exceed the 8% threshold in certain quarters? Is there anything special to expect that could pressure margins going forward?
Yeah, we are probably a bit cautious around CTS, and yes, we have some PPA load from the acquisition, which is reducing over time. I would say achieving the 8% is already on an operational basis will be kind of, it's feasible, but still some work to do. And I think we have proven over the last two years with a very successful integration that there is still some margin possible upwards.
Okay, thank you very much. We have another question that reached us by email, and that is from Peter Rothenaicher from Baader Bank.
Can you specify the timeframe for your medium-term targets?
Yeah, this I will take, and this is a question which has been often raised, and here's the answer. We always said midterm. Midterm was, in our terms, always something between three to five years, so we can be more precise, so we expect to achieve that goal in 2023, 2024, latest, somewhere, 15th of January 2024, maybe.
Very good. Very good, and now I would like to hand over to the operator and check whether there are some questions from callers. Operator, could you please start the Q&A session?
Thank you. Ladies and gentlemen, if you would like to ask a question now, please press 9 and the star key on your telephone keypad. In case you wish to cancel your question, please press 9 and the star key again. And the first question comes from Ingo Schachel from Commerzbank. Please go ahead.
Yes, thanks very much. My first question would be on innovation and sustainability. I think you presented a few interesting products, especially on the paint shop side. Can you just talk a bit about the competitive advantage, pricing power that you have with that, and whether that has changed at all during the last years with increasing sustainability focus of your clients? Or does it really take more such as higher carbon prices, more regulation to really push clients to really pay more for it? And maybe also in context of the changes in the competitive landscape, because I was under the impression that also Eisenmann had a pretty good product portfolio in this area. Those new competitors that you're seeing, do you have the impression that they have a weaker offering in this area?
Do you think you have an even stronger competitive advantage in the new competitive landscape when it comes to sustainability?
Thank you for the question, Mr. Schachel. It was probably 100 questions in one sentence. If I miss out on answering completely, please ask again. I took a question regarding what's the competitive edge regarding sustainable products and what it means for innovation. Examples I was giving have sort of a different edge, more either towards cost, more towards technology. In the end, as I mentioned, our customers really then buy when they also have a cost advantage. To give you one example, the EcoInCure oven that I was presenting with a reduced footprint and less energy is also lower in capex than it is for the traditional dryers. If we look at our dry separation, we also have a cost-reduced offering in dry separation, which probably does not save as much resources as the one that I was presenting.
But again, a cost advantage and still better than the old wet separation. And we could go through the whole portfolio and discuss what is it more? Is it more technology? Is it more cost? But in the end, I can tell you everything that we do is with a view of reducing cost, either on the CapEx side or significantly on the OpEx side, because otherwise our customers, they just don't buy only technology.
Okay, that's very clear. And maybe a shorter one on the M&A strategy, just on software. Do you see any specific areas of software capability where you need to make acquisitions or have the need for an iTAC 2.0?
We are looking at further possibilities wherever we find an opportunity. We have, as you might have seen, done the Technostep acquisition, which wasn't a big acquisition, but it was key to our strategy to connect equipment, first of all, our equipment, even older equipment, but also competitive equipment, as in our customer plants, the installed base is not always only ours. And this is another example where we're continuing our way of really offering over the whole lifecycle software solutions for our customers. And we're working or continue to work in this area.
Any last one, if I may, on just the balancing market forecast? I think you've given a market forecast on one of those slides. I think you haven't really given any sources for that. Not sure whether that's an internal assessment or based on any market studies on slide 41. I think you were saying that that's one of the markets where you see less business in the electromobility world. But still, you see the markets returning to a 6% CAGR after 2021. Just wondering whether you have any specific, let's say, reasons why that's your assumption or maybe just based on an external market forecast.
Yeah, let me do, and Mr. Schaller answer on that question. Thank you very much. Then what we see, let's say, on the declining is definitely the internal combustion engine. Yes, we will see a recovery now coming out of the COVID-19 situation, but in the long term, the demand on that side will decline. You could see actually this was around one-third of the division's business last year, so equal to around EUR 80 million. On the other side, electromobility continues then to positively develop. We see opportunities there. As mentioned, then in regard to receding paths, there are also other interesting markets where actually we are confident that we can realize additional growth, then like in the aviation industry, then that actually engine development and engine production also takes place in the future outside of the established competitors.
Okay, thank you.
Okay, thank you, Mr. Schaller. And now we take another question from the email. And this comes from Will Turner from Goldman Sachs. He asked, what would it take for days of working capital to reduce from 46 in 2019 to say the average of 2010 to 2016? Is this possible? And if not, why not?
Yeah, thank you very much, William, for the question. Before I do an assessment on this, let's go this direction. We did a first pilot. This already shows, yeah, interesting momentum potential that we can do. We do the second pilot right now. Let us do these two exercises before we then do also an assessment from a quantitative point of view and define then, yeah, quantify targets as well. So give us then a little bit of time to get back then really to a proper answer.
How can we achieve this and how can we achieve this?
I think since the acquisition of HOMAG, our numbers changed because HOMAG as a machinery business needs more capital employed than our equipment business. Good.
There's another question from Will. Which regions is HOMAG seeing strongest demand? Separately, where is Weinmann experiencing strongest demand for prefab homes?
Yeah, the HOMAG demand in this year, as it's picking up again, as we already told you, it's in Germany, Northern Europe, the same level like last year at the moment. We have also in Eastern Europe, a good activity level. Southern Europe, pretty weak for obvious reasons. America is coming back and China on the level above last year. So that's the landscape a little bit about the overall business.
Weinmann with this construction elements or housing elements business, there's a strong market in Europe, definitely, because we all know those ready-made houses are ready to, how would you call it in English? I have no idea. Anybody know?
Prefabricated.
Prefabricated housing. But also in the U.S. now, a market which is picking up. Last year, we had a large project sold to a whole manufacturing line of solid wood elements, including Weinmann products. And also Australia is a very, and New Zealand is a good market. But I think it's coming up that soon in many markets we will see that.
Okay, we would now take another question from the phone. Operator, do we have further questions on the phone?
Yes, we have another question from Richard Schramm from HSBC. Please go ahead.
Yes, good afternoon, gentlemen. I have followed up on this M&A topic and especially here on the automotive-related business. Are there still activities in your portfolio? And obviously, there are also some which are under pressure from the structural change here in this sector, which might be on the divestment list. So not only adding, but also maybe sorting out some activities which have not a bright future ahead.
Yeah, thanks, Mr. Schramm, for the question. Simple answer is, as of now, we don't, but we don't exclude that in the future. Currently, we don't have an automotive asset in our hand where we would think about divesting. We're more planning to synchronize the business more, like you might have seen some publications regarding our approach to what we call next assembly. This is bringing together all our activities around final assembly, including end-of-line testing and filling, as we did under my wing as of the beginning of this year. So the approach is first consolidate the business and use the opportunities that we have. In a second phase, we might probably think about divesting too.
Okay, thank you. And then just a quick clarification on a question a colleague asked earlier. It's so that your EBIT margin targets are now on an adjusted level. And what exactly do you adjust? Is it always then PPA and let's say these M&A-related costs, for example, you strip out? Or what's your policy here for the future?
Yeah, basically what we are adjusting in that regard is on one side M&A-related topics. That's the PPA effects then on one side. And the other topic that we did now also 2019 and this year are the restructuring effects that are basically not to be continued over all the years. So these are the two classes of extraordinary effects that we are doing then in the adjustment.
Will you then also keep your guidance of, let's say, giving both as you have done this year, or will you just change to this adjusted level in future?
I think we'll, first of all, continue to provide insight into the extraordinary effects when we do our normal releases, and I think it's reasonable also when we do foresee already for the coming year then activities to include this as well then into the guidance statement.
Okay, thank you.
Okay, Operator, do we have another question from a caller?
No, no telephone questions at the moment.
Then we take another question that has reached us by email. This is again coming from Philippe Laurent from Berenberg. He asked, the new PFS segment combines the filling activities with the old PFS activities. This move has been accretive to margins. Yet you guide for larger 6% EBIT margins mid-term, which seems a bit low since you were guiding for 6%-7% EBIT margin for the old division as it. That means before final assembly was there.
Yeah, thank you for the question, Philippe. We have to look at least two things. First of all, the filling and the testing business together, yes, I agree, has higher traditional margins than the old PFS business. Nevertheless, also here we had to take a little bit of a hit this year from the pandemic and consequently a lack of orders. Nevertheless, we believe to rebuild that.
All in all, it might be slightly cautious. On the other hand, we must not forget that the competitive environment will not shortly change. So we will have to face still the situation that I was describing before, having some competitors that are underutilized. So yes, might be a little bit cautious, but we rather achieve or overachieve targets that we give than underachieving.
Okay, there's another question from Philippe Laurent. And this is, when you give the midterm divisional margins, is there a specific timeframe for these targets? I think we have already answered this, but nevertheless.
You can see if you want to. No, I think the answer is, as we said before, 2023, 2024. That's where we want to be there. Clearly.
Another one from Philip by email. Philip, you're really very active today. That's good to see.
Appreciate that.
During the Q3 conference call, you mentioned on some M&A deals you are currently working on. Could you shed more light on the size of these assets in terms of revenue? Where the EUR 50-100 million of sales will combine targets or for each target taken separately?
Okay. Let me try to be a little bit more specific compared to my previous answer on that. Yes, we're actively working on at least one very promising project that hopefully could conclude soon.
Okay, now we take another one from the email. This one comes from Christian Cohrs from Warburg. He says, you are eyeing 7.5% software revenues in percentage of divisional M&P sales. Where do you stand today in the current year?
Yeah, I can do it.
I have not the exact number, but since we see more opportunities and have sold more, so we should be above that, but not dramatically. I think it's, as I said before in my presentation, that the sale of digital products is just starting, and the ramp-up phase will take some time, so I would say it's 7.6% today, 7.7%,
and there's a follow-on here. Do you have a midterm target for the percentage of revenues from digitalization from software?
Actually, we don't have an explicit target because it's so difficult to predict. What we have is targets for each of the business, each of the products, how many we want to sell over time, and when you talk to machinery companies, we all had a very learning curve over the last years regarding what was every day in the news, how the business is picking up, and how then slowly, in some cases, it has appeared, so it's very difficult to predict, but when we have targets, we will let you know. At the moment, we work on without an overall target.
We have another question coming in by email. And this one is from Bertrand Cazalis from Trusteam. And he said, you mentioned that new players were interested in your global expertise. Specifically, is MES concerned or other examples?
Yes, we're interested in your global new players. I assume it was regarding E-mobility. And there, yes, many of the new players with a lack of expertise in automotive, for example, Evergrande is one of the biggest construction companies in China that has decided to enter the automotive sector. And consequently, we approach them with our large portfolio because there is no installed base of anything. And that includes MES or other digital solutions that we have. And let me probably add also to the question regarding software and the clear analysis, how many % we do of our revenues. I think very important is to know that for us, it goes together. The basis for the business is our domain know-how. And on the other hand, the software that we have in the market also protects our traditional business because we can differentiate. And this is very, very important.
This is something the typical software houses can't do. And this helps us to go on also with our traditional business because we add the software on our hardware.
I think Bertrand will take the next question. It's another one for me.
We are very fast here. That's good. Bertrand was asking a second question. Does your 2023, 2024 EBIT margin objective rest on lesser price pressure?
Yeah. First of all, we don't put guidance on less or more pressure. I think overall, we have always hard and tough competition. We always said sometimes in some quarters, it was more or less. Jochen mentioned if one competitor has not enough work, then he makes some crazy pricing for one quarter. Next quarter, maybe better. So overall, we assume the tough pricing, the tough competition we have in all business, by the way. It's not only paint shop, it's also Schenck and also in HOMAG. We have our competitors. As I said, we want to get more market share. They will not like that. So they will try to fight against that. So no, the answer is no. We don't have easier pricing on our guidance for 2023 and 2024. Business as usual.
Okay, we have a constant stream of questions coming in by email. But nevertheless, I would like to ask the operator whether there are further questions coming in by phone. Operator?
No, we have no further questions at the moment.
Okay, so this process has also digitized very quickly. Then we take the next question by email. This is coming from Sven Weier from UBS. What revenue level on a group level do you need for achieving the 8% margin in 2023 and in the divisions?
The first part is easier. It will be definitely above 4 billion again. And the second part we will answer when we have our budgeting finished for the next years. And we can answer that in February when we talk about our results. But more than today.
Okay, very good.
Sorry for being not more precise.
We have another question coming in by email, and that's from Peter Rothenreicher from Baader Bank. At HOMAG, you are targeting 9% EBIT margin for 2023. Is 2023 also the year you're focusing for the larger 8% group margin? And I think.
We answered it. The answer is yes, but I would like to add 23 to 4.
Exactly. Okay, I see that there are no further questions by email. Let me check with the operator. Operator, are there any further questions coming in by phone?
We have no further questions.
Okay, then I think this.
Sorry, just one second.
Yes.
We just got a follow-up question from Ingo Schachel from Commerzbank. Please go ahead.
Yeah.
Yeah, just one follow-up on your, let's say, yeah, Digital Factory. And I think you disclosed certain plans to build out your capacities in certain emerging markets. And in Germany, I think you spoke about Germany as this one block without specifying how much is Bietigheim, how much is Schopfloch, and how much in Darmstadt. I think it sounded to me as if really, especially Darmstadt, but also Schopfloch will play a pretty strong role. Can you tell us a bit how much that is the same more centralized Bietigheim thing for you, or whether indeed you maybe discovered even more potential in locations like Darmstadt, where obviously some of you have very strong personal backgrounds as well. So it just feels to me that I think those locations sound increasingly relevant in the presentation compared to similar presentations a few years ago.
Okay, Mr. Schaller. First of all, we don't want to be too precise because in those factories, and you're right, they are in Darmstadt, they are in Schopfloch, they are in Bietigheim, because those people are very valuable resources and everybody wants them. So we will not be more specific, but I can tell you it's centralized. For example, Jorunn did in the Dürr Systems world, where he centralized all these resources from three divisions in the Digital Factory here in Bietigheim. We have HOMAG, but we don't centralize all. We coordinate them, so they need to know what they are doing, how they can collaborate, how they can learn from each other.
And this works very well that the leadership teams and the experts are meeting that we can be sure that something we just need in HOMAG and Dürr has already developed, they are using it, or they know that it's there and using it and offers it. And we have those skills. And I think this pretty much works well that they are coordinating without big organization. And we don't lack overhead for those things. Darmstadt has a role, but Darmstadt is also very much has the task to increase resources in India and Noida for the group. And this is going well ahead. So that's a little bit the way how we do it. Is that understandable for you? Is that sufficient?
Yes, yes, it is. Thank you.
Pleasure.
Okay, Operator, do we have other questions from the phone?
No further questions at the moment.
Okay, I also don't see any further questions on the email.
You don't want to close. It was interesting and very nice.
Obviously, the presentation already answered a lot of questions. So this concludes our Q&A session and also the whole virtual capital market day of the Dürr Group. Thank you very much for your interest. We hope that the presentations and also the films have been valuable for you. Stay safe and healthy. And we hope to see you back again soon in person. Thank you and bye-bye from Bietigheim.
Thank you, everybody. Bye-bye.
Thank you.
Bye-bye.