Morning, ladies and gentlemen, and welcome to the Yanoptic Conference Call regarding the Q2 Results 20 21. At this time, all participants have been placed in a listen only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to Doctor. Stefan Tregga.
Thank you very much and a very good morning from our end here as well From Lovely and Sunny Jena. With me today is Andreas Schumacher, our CFO. We're more than happy to welcome you to our earnings call. Before we get into the details, please let me draw your attention to our Safe Harbor statement, which you can find on Page number 2 of our presentation. Not going to read it out, but please do pay attention to say to our safe harbor statement.
Well, I'm very pleased to say that the first half of the fiscal year twenty twenty two 2021, sorry, 2021. And in particular, the Q2 has been very, very strong for the company. As a matter of fact, Q2 and indeed H1 is the strongest in the recent history of ENOPT. We can show and demonstrate and post record figures for both order intake and revenue, and in particular, Very significant increase in our profitability. 2nd quarter has seen rising demand really Across the board and in almost all of our businesses, in the second quarter, we have almost doubled the order intake of the group.
With €213,300,000 revenues also clearly exceeded Prior year levels and grew versus the Q2 last year by almost 30%. You've seen a significant improvement of profitability, as I already pointed out, to an EBITDA margin of now 25.2% in the second quarter. That does include a one off effect of €16,000,000 caused by It's an effect in the acquisition of Trioptix, and we're going to explain that in a bit more detail in a minute. Well, as I said, the first half has seen significant rise of demand, surge of demand in many, many businesses and many, many marketplaces. Not only in semicon, everybody is talking about semicon.
And obviously, we benefit big time from the search in semicon. But also in our other businesses. We've seen demand in our biophotonics business coming back big time. We've seen new orders in our AutomotiveLight and Production business. We have a strong order intake in Life and Safety, our traffic solutions business.
So across the board, really very pleased with how the market has been developing And quite frankly, how our businesses reacted and responded to the market development and the fact that we could capture a lot of Orders and gross sales as a result of that. On Page number 5, we've Put together a list of sort of highlights and major steps that we've been taking in the last 6 months. Before I go there, though, I would like to point out that the sort of the foundation for success this year actually has been late, if you want, In 2020, last year. Last year, we went through a crisis that has been, yes, almost like Unseen before since World War II, as I say, and I think the steps and the measures we've taken last year Have been instrumental in success of the company this year. In the last 6 months, we've significantly Thanks.
And again, our financial power. We boosted our financial power with a debit report of €400,000,000 And for us, as Management of the company is very important to note. We've linked that to certain ESG criteria. We do want to make our company more sustainable in many ways. We do want to contribute to a sustainable way of doing business, And we want to be measured by that.
And we are committed to be measured by that. We're committed to be measured by How we helped, pleased to make this world a bit of faith. So Financial Power boosted with a significant ESG component. We have delivered on our promises to make Genoptix Leaner to drive further consolidation of sites and businesses. Following the consolidation of our plants in You might remember, there's a few who follow us in the wild might remember that in 2020, we've actually closed one plant in Berlin and consolidated one of our Places and businesses in one plant in Berlin.
Following that, this year, we have sold A small business in Kuringia, a small business that's growing and deals with crystal growth. And we found a very good home for that business. We've also disposed off our parts of our non optical Process metrology for certain machining processes, in particular for the automotive industry, with Revenues of around €1,000,000 in 2020, and we found a new home for that business with MaPods, a Company's position in this marketplace. So you continue to deliver on our strategic promise to consolidate sites, to Consolidate businesses and to make MENA obviously easier to understand and quite frankly also easier to manage. Very importantly, we do invest in our future.
We do invest in future growth. And in May 2021, We acquired property in Dresden, Germany. We do have a site in Dresden since a long time actually, and it's a very Instrumental side in our semicon business, we do produce parts for EUV Lithography In the Staysen factory, and that factory is completely grown out of space. So we have acquired a site there, and we We are committed to build a new factory in what folks call silicon Saxony. Again, it's not a new business for us.
It's An investment into our capacity in case to deliver the on the requirements of our customer, one single customer in particular that's Instrumental in EUV lithography, so very important investment into our future. So a lot happened in the last 6 months. And I did point to the foundations that we've laid last year. And one of the most important steps we've taken last year was actually the acquisition of TriOptics. I guess when we announced the acquisition of ArpTEX in the middle of the crisis triggered by COVID-nineteen, Some folks might have been a bit surprised that we were sort of brave enough to Manage an acquisition, the largest acquisition that Genoptic has done in the recent history.
And we've committed a lot of money to that business. We're now Benefiting from it, we're now earning, as you want, or picking the fruits and taking the harvest of that investment. Triaptics, as you know, really is producing the gold standard when it comes to measurements and testing of optics For mobile devices and thus benefits big time from the digitization of our world. And TriOptics is indeed a growth driver for us in NeonOptics. We foresee and forecast for OpEx to grow by at least 20% in 2021 compared to 2020.
And to produce an EBITDA margin, which is clearly above group average. TriOptics I've contributed almost €50,000,000 already of order intake already in the first half of this year, and we see that to accelerate in the second half And around €41,000,000 in sales in the first half of this year, Trabtix has contributed to the group's figures. And again, We do see that to accelerate in the second half of the year. We are very pleased with how Trioptic develops. Nevertheless, you will remember, those of you at least who follow us, you will remember that we have negotiated A significant earnout and bonus malus component into the second tranche of Trioptix and Very steep burnout profile to be achieved in 2021.
And yes, although Vertex will grow very nicely and a lot To our profit and to our growth, we now foresee that due to Operational issues, we'll have a hard time to achieve that very steep earnout target and we can get a Positive EBITDA gains from that, which we booked in the Q2. With that said, let me hand over to Hans Dieter, who is going to Explain the numbers in more detail.
Yes. Thank you very much, Stefan, and hello to everybody In the call, please follow me on Page number 8. Here, you'll see our KPIs. We're looking a little bit ahead, The order intake and the order backlog figures. And as already mentioned from Stefan, you see on the order intake side A huge increase of more than 50%, 52.2%, ending up at EUR 508 €400,000 after the 1st 6 months in this year, including €49,100,000 first consolidation impact of TriOptics, But even under the consideration of the high growth and increase in the order On the oil intake side, and it's driven by all Photonics businesses.
Stefan will explain to you our division We'll know development later on, but I can already say that all divisions showed a strong increase on the order intake side, With the exception of Vincorion, which is our mechatronics business, there we had some project Postponed on the one side and on the other side, it's still a little bit a disciplined Circumstances around Aviation Business in these days, yes? So all in all, In Q2 alone, stand alone, our honor intake almost doubled compared to Q2 2020, And our book to bill grew up to 1.31 compared to 1.02 last year at the same time. And if you then look on the right side, you see the order backlog as an outcome is also strongly Higher than at the year end 2020. So with €586,000,000 27.4 First and above the year end, in both figures, you will see TriOptics because we consolidated Cryoptics already starting at the end of September 2020. So in the €460,000,000 it's €27,000,000 and the €586,000,000 is €36,000,000 So it's an increase of 30% in order backlog at TriOptics as well.
All in all, we think that we can convert 67.5 percent of the €586,000,000 order backlog Revenue in this year, which also underlies our further growth In the months and the quarters to come. If we then go to the next slide, you'll see our revenue development split Throughout the quarter and cumulated for the 1st 6 months, €389,300,000 plus 18.3 Including €41,000,000,000 first consolidation impact of cryoptics, still even under consideration a Strong growth, especially in Q2, you see this CHF 213,300,000, which is At least in the younger time, all time record for Q2 in a year for a year in Optic. And the growth is coming from the division Light and Optics, where we have Not only the anorganic growth with TriOptics, we also see a strong and Stefan will explain it later on in more detail, A strong development on the semi business, semi side as well as biophotonics. In Slide in production, we have seen a slight 7.5% growth, so slightly starting recovery of the business there in our Mainly Automotive business. And even before we reported a smaller growth in revenues, We see at the moment a decline in Light and Safety, which is coming from delayed Placement of orders and pandemic related delays in delivery of electronic components, which we have solved in the meantime at Flight and Safety.
So This is why they have ambitious targets for the rest of the year. Finally, they want to end up with a growth compared on a 12 month basis. So I'm very proud that especially in Asia Pacific, Our market rise in revenue is significantly there, obviously contributed by TriOptics Because they are roughly 50%, 60% of the business in this region. All in all, our revenue generated abroad is a Similar like last year, at more than 70% at 74.2%. If you then come to our Earnings figures, EBITDA and EBIT, you see a significant improvement in both figures.
Let me explain some Special impacts in both figures, a little bit more detailed by now that you can have a clearer picture, So more like for like, so to speak. In the EUR 73,700,000, which This is an increase of 94.6% compared to last year at the same time, the 1st 6 months. We have on the one side in the EBITDA, we have on the one side still a negative slightly negative impact from the purchase price allocation Coming from the inventory step up from TriOptics with EUR 1,800,000. So it's a negative impact there. In the prior year, we had no negative In fact, anymore.
And on the other side, you see that we have Had in the prior year, the EBITDA minus EUR 4,400,000 coming from So in portfolio measurements, we have taken into account in the last year. All in all, we ended up at around €19,000,000 at the year end. But This time, after 6 months, it has been minus €4,400,000 So the prior year figure operational has been higher by this. But all in all, it's a very, very strong development. And then As Stefan already explained, there is also a one off effect of around €16,000,000 In connection with the conditional purchase price components from the acquisition of TriOptics booked because our forecast showed That they will not reach the maximum turn out, so to speak.
So we adjusted this a little bit. All in all, we are still very, very positive development of the TriOptics business. But even if taken into account all these special impacts, our operational performance It's much, much better than a year ago. Just to point this clearly out. In the EBIT on the EBIT side, it's even better Because the negative impact of the purchase price allocation has been much higher in the 1st 6 months of this year, Because here we count €8,900,000, the fully impact of the purchase price allocations from TriOptics in the 1st 6 months of this year, 0 in the last 6 months in the 1st 6 months of the last year.
So compared to EUR 3,600,000, a clearly increase of the minus The effects from the purchase price allocation side in the EBIT. But even taking this into account, We increased it very strongly. And of course, it's also boosted by the €16,000,000 to make this clear From TriOptics, but even taking this into account here, also very strong organic increase there. So we are quite happy with the development on both key performance indicators for our group. If we then have a look at Page 11, Where we see our P and L of the group a little bit more detail, you see a slight increase in functional costs, Obviously, also driven by the first consolidation impact of more than 400 colleagues at StryOptics.
We have had then the impact that our financial results There's a little bit increase. This is clear because it's coming from our financing exercises, so to speak, around The new East Yealink bond and on the other side and the payback of the bridge financing, which we Look into our books when we started the acquisition process of TriOptics in the prior year. So all in all, a strong development even till the earnings before and after taxes. And here, it's important that you know that the €60,000,000 coming from the cryopics deal It's not tax relevant. This is also positively influencing our earnings after taxes and therefore also our earnings per share, Which has reached already €65 per share compared to You were 10 per share, which is a strong very strong increase, more than 3 times higher than a year ago.
So all in all, we are quite happy with the development of the group, even taking the special effects into account. And then the next slide show you our big Sure. Combining the balance sheet development and the P and L in the cash flow, free cash flow statement of our group. And here, you see that If you look at purely at the figure, we have realized a little bit lower free cash flow compared So a year ago, that has been up for 6 months, EUR 16,000,000 compared to EUR 11,600,000 in this 1st 6 months. But this is mainly driven and exclusively driven by the working capital increase, which we have taken Into our books, it is the preparation of the very, very strong Q3 3 and Q4, we are anticipating for our group.
And to make sure that we can deliver the promised Product offering solutions to our customers, we have built up stock inventory as we have started already to work on the projects for our customers. So Mainly driven by inventory, our working capital increase, but Even taking into account that we have financed our investments, it's still a very positive signal. So we have added Positive cash flow to the good performance of the 1st 6 months for our group, yes? With having said this, I would like to hand over again to Stefan Sager, our CEO, who will guide you now through the divisional business development Thank you.
Marcio, thank you very, very much. And let's start straight away with Slide 10 Optics on Page number 14. Our optics business has indeed seen a very positive operating performance and yes, record level of figures. The Revenue has been driven across the board really by all businesses that we have or markets we address, Within the Light and Optics division, obviously, semiconductor equipment has been a strong boost to the performance of Of light and optics, I mean, everybody talks about the ship shortage and about the significant investments into that marketplace. And yes, as I keep saying, every new factory that's built around below to build chips, Equipment is needed to fill the factory.
And if equipment is needed, our optics is required. So revenues with the semiconductor equipment at a very, very high level. Indeed, what also came back is our biophotonics business. You might remember that last year, we had been a bit surprised on how strong that business declined when the crisis Rolled out. And equally, we're now almost a bit surprised how strong it came back.
And I mean, Obviously, a nice development, but we see very strong order intake and sales in biophotonics. And TriOptics contributed already €41,000,000 We do clearly experience an even stronger H2 Based on the good order intake of Trioptix, pointed out that already, Trioptix has almost €50,000,000 of order intake in the 1st 6 months alone. EBITDA, as a result of the good operating performance As well as obviously, the trioptic effect grew significantly. Overall, you do see the numbers on the page. We are very, very happy with how this business develops.
Obviously, even if you take out the onetime effect of minus €1,800,000 plus €16,000,000 If you take out that, the EBITDA margin, which is reported at 31.5%, but even without Those extraordinary effects would be at almost 25%. So very high margin development, Order intake grown by almost 91% in the 1st 6 months. Sales grown by almost 49% in the 1st 6 months. EBITDA Growth by 180.5%. So yes, very, very good performance across all figures.
Let me take you to Light and Production, our automotive business, on Page Gene, land production obviously has been the business that's up the most last year from the crisis. And I think it's very notable How strong the recovery, in particular in the order intake, has been in the 1st 6 months versus, granted, a very small It's a very weak Q2. Q1 last year has already been strong actually, but Q2 has been weak last year. Overall, though, if you integrate over those 2 quarters, Q1 and Q2, the order intake in our Light and Production division grew by 73 percent to now €109,600,000 Sales also grew by Quite significant 7.5 percent to €78,000,000 So clearly, a very high book to bill ratio of 1.4. And as a result of the Increased volume, but even more significantly, as a result of the reduction of headcount that we have had Implemented last year in this business, we do see profitability rising.
Last year, The Production division has been actually EBITDA negative in the 1st 6 months. This year, it is back on a positive Right. We do see good growth in EBITDA margins. We do expect 3rd, a positive development in the EBITDA margins in the second half of the year. And again, let me point out that The majority of around 5% headcount reduction that we had implemented in 2020 actually have been in light of production.
So We did do a significant structural cost takeout in our Leiden Production business last year as promised and indicates. With regard to Page 16, our Leiden Safety division, I. E, our traffic safety business, We do see order intake growing significantly by 54.3%. Let me remind you, this is a fairly lumpy business typically with large tenders coming in and so on and so forth. So nevertheless, we're very happy with the order intake development.
There is though a significant time lag between order intake and sales. That's pretty typical in this business. It takes a while on the execution side to work across into sales. And in particular, though, here we had problems in the beginning of the year with our supply chain, which we have been able to fix, But we do still see the effects on the sales side. Despite the very strong order intake development, sales is actually down 23.2%, which does also lead to missing volume and therefore missing cost coverage Resulting into a decline in the EBITDA margin.
Let me again point out that this is a time lag. It's not as if sales are lost. Yes. So there we have to execute and we're very confident by now that we can execute in the second half And we do see much better business and actually strong growth in the second some growth actually in the second half of twenty twenty. Last but not least, let me go to Vincorion, Page number 17.
Vincorion has Difficult market conditions. There's no doubt about that. The effect of the aviation crisis is there. Yes, we do see, like everybody else, first signs of recovery. Apparently, the amount of flights, At least in North America, are back on 2019 levels, but big Parts of the aviation industry is still suffering from the COVID-nineteen crisis, and that does have an effect On MYCORON, we do see order intake declining by almost 25%.
We're Great for the business and the management of the business has been able to grow the revenue nevertheless by at least 2.1%, which is yes, it's a good result given the circumstances. It's Great to see that the EBITDA margin actually expanded remarkably. So we do see better profitability That's again a result of the cost reduction measures that we have implemented already last year. Overall, if we take it all together, again, we have seen a very, very strong H1, very strong, in particular Q2 in 2021. And I would like to again point out that we've laid the foundations for that Strong performance actually last year already.
We've implemented significant cost cutting exercise and cost cutting measures. We Consolidated sites, we structurally took cost out by reducing our headcounts. We got the backing by our Supervisory Board also to exercise and pull off the largest acquisition that the The cash pulled off in the last years actually in its recent history with the acquisition of TriOptics in the middle of the COVID-nineteen pandemic At the time when a lot of people were saying we need to keep the cash together, we did keep the cash together in many ways, but We also did spend it very cautious growth, and we can see some harvest of that. And we can do see we do see the positive effects of that investment now, which we're really As a result of all of that and also the very good pipeline that we have going forward, we raised our guidance In a few days back, we now believe that revenue will come in At between €880,000,000 €900,000,000 We do believe that the EBITDA margin will be to 19% and 19.5%. That does include the one off effect, which we already talked about.
We do see, as I say, the effect of the restructuring measures taken in 2020 already bearing fruit, and we're very Convinced that the second half will be even stronger for us. Let me Take you to Page number 20 though, because we believe that Enoptic is not just a short term interesting investment, Well, we do believe that we are actually very well positioned for long term further growth. There are several megatrends that drive the demand in our industry That drives the demand for more light photonic solutions into the future, and we are well positioned to capture A lot of that additional business. There's the digitization of our world, and we all know that the growing demand for chips for various applications really Is there for years to come, we do see the increasing usage of augmented and virtual reality tools. And in particular, with the acquisition of Claraptics, the Balta, with our very strong micro optics and optics business in the semicon world, we are well positioned to support that digitization of our world.
There is indeed a trend for more spending in health care. And with our diagnostics and bioimaging modules and components, We help large customers to capture that trend and to support that trend. And we do see good performance in our Health Care and Life Science businesses, and we foresee that to continue to be strong for foreseeable future. Smart manufacturing is needed. As I said earlier, we are committed.
We actually want to be measured by how much we can contribute to make the world a better place. And it does include not just, but also And partly, the ability to produce goods and products with less resources. And for that, Smarter ways of manufacturing are required. And with our technologies, we can help and support that. And there is a need for mobility.
We all talk about The increasing need for e mobility, for the electrification of car fleets and all of that, we benefit from that, But not just from the electrification of car fleets, but also from the right of more smarter ways of mobility For smarter infrastructure, we can capture business from that. We can capture growth and profitability from that. So therefore, we believe that, yes, we do have a record breaking Q2, a record breaking H1. We believe we will have a record breaking 2021. But I think even more importantly, we are well positioned to grow margin expansion for the years to come.
With that, let me pause here, and we're very much looking forward to receiving your questions. Thank you very much.
And the first question comes from Craig Hallum, Kepler Cheuvreux. Please go ahead with your question.
Yes, good morning, everyone. Yes, I'll start off with a couple of questions, please. First was just on the material cost inflation outlook in general for the group. We're hearing basically from every manufacturing firm about supply chain tightness and potential supply disruptions, you mentioned you had resolved the supply disruption issue in light safety and didn't mention any other Particular factors looking ahead. Could you maybe just shed some light here?
Do you Have good visibility on how you can pass on higher input costs or if you could update us here, it would be very helpful. And then just briefly on Light and Safety to follow-up there. You mentioned you had resolved this issue. I mean, did you just simply exchange Suppliers, that would be one question on that. And secondly, did you lose any orders during that time, I.
E. Market share or was this an issue that sort of impacted Your peers as well. Thank you.
Greg, thank you very much for those questions. I mean, as a matter of fact, it's basically One question bundled together, I would say. Well, I'll try to answer it in a broader sense actually. So on the material cost, Yes, of course, we do see cost. We foresee the cost to rise over the months like we all read everywhere.
I think we've discussed that last time already. We have typically have long term contracts, both with our suppliers as well as with our customers. So in both ways, it takes us a while until it flashes into our P and L. We do foresee costs to our suppliers to increase, in particular, in the second half. Haven't seen much effect in the first But I think the more it sort of goes on, the more we will see an effect there.
By the way, we would think that Personally, at least, we think I believe that these issues are going to be with us definitely for the remainder of this year and maybe for the first half of next Yeah, even. And equally, we do have long term contracts with our customers, so we can't just pass it on as it arises. But Over time, of course, we try to always raise prices. So no short term effect. What I will say Changed a bit compared to the beginning of the year.
At the beginning of the year, we had particular problems like, dare I say, isolated issues, Which were, though, very significant. We talked about this one particular problem that we had in life and safety. And to Include your second question basically in the answer, we just work with that particular supplier on a technological problem that supplier had. We still get This is from the same supplier and together and jointly we've solved the technical problems. While we had a number of those sort of bigger events, I would say that by now, We don't we have those bigger issues under control much better than the beginning of the year, but we have more No, it's if you want.
So overall, the pressure is rising. It's like The tide is rising, but we don't have bigger waves, if that makes any sense. So the same effect, but not in isolated, bigger events, but more Smaller but spread out in a more spread out way. I hope that kind of like answers your question. Everybody talks about challenges in electronics and God knows what.
But on the other hand, of course, our supply chain group, our purchasing group is Better prepared now than the beginning of the year in the discussions with our customers and suppliers.
And Stefan, maybe I can support you with one, I think, not important sentence But all this happening fuel just described very, very good is already priced in our guidance Yes. Just let me highlight this. It should be no negative impact coming to our figures in this year anymore, yes, just to Good point.
Thank you. It's very helpful. Just on the open question still on light and safety. During that time, do feel like you lost any market share traction or do you
No, I don't think. No, no. It's been so isolated Significant but isolated. No, I don't think we've lost any market share there. It didn't have an impact on our order intake.
Okay. Thank you very much.
And the next question comes from Stefan Meisel of BBW. Please go ahead with your question.
Stefan Meisel from EBITW. Good morning, gentlemen. Also a couple of questions from my side. The first one is On Life and Safety, if I understood you right, it's right you guided for sales growth for the full year for this division, which might imply Over 20% growth in the second half. Might this growth reach the 5% to 9% outlook provided with the full year figure 2020 for 2021 or is it less?
You're right. We guided for sales growth for this particular division, which does indeed imply A very strong second half. I can confirm that.
Not more, only sales growth. It could be over 1%, 1% or 5%, depending on your project execution. Correct.
I think it's going to be given that we need to produce ship In store, well, things and all of those executional things, I think it's probably a, let's say, low single digit trigger sales growth We're going to see until the end of
the year. I would say something between 15.
And the rest might actually spill into 2022 then.
But Stefan is right, it's a strong increase in sales in second half, which we are forecasting.
Okay. The second one is on incurring. Incurring has showed really strong margin improvement in the first half despite only 2% sales growth Probably. And you mentioned cost reduction, but a second point might be a product mix effect with less aviation business. Now we have seen Airbus might increase Deliveries in the second half, should that change that mix and therefore put some pressure on the margin in the second half?
And The question is could you keep that margin over 10%, 10%, 11% in the full year 2021?
That's a very good question. I think you're first of all, you're right. There is also a mix effect. There is a significant cost takeout effect, but there's also a mix effect there You're absolutely right. If aviation comes back, does it put pressure on the percentage margin?
Maybe. Then on the other hand, if aviation comes back, volume goes up as well. So that's the counter effect of the mix effect. It's
just higher margin
business. So We it's a bit difficult to put a number on it, but I think we will see Good margins for Vincorion, but yes, maybe more on a sort of steady state sort of That's where it is at the moment. We have to see how it ends up at the end of the year. But As I say, there are 2 effects. Yes, there's the mix effect and there's the volume effect.
And if we get more aviation business going forward, mix effect Our mix is a bit less favorable. On the other hand, if it's more service and the mix becomes richer basically. And if you get more volume, you have better overhead coverage. So it's probably going to be a sort of a wash.
Then the 10% could be likely with that wash for the full year?
Well, as you know, Midyear, we hesitate to guide on margins for particular businesses, but maybe it's a bit higher than what you just mentioned. But That shouldn't be seen as any guidance in any way, shape or form. Okay, understood.
Then looking ahead to next year, you have guided some quarters ago 16% EBITDA margin for 2021. Now taking together all your given comments for this year, even if you take out this 6,000,000 TriOptics It's a onetime effect. You might end up at around 17%, still above your 2022 target. So when might you think about to not to change or To make it more visible for us, which margin might be in 2022? Sure.
Yes, absolutely a fair question. Look, I mean, we communicated our strategic plan for the strategic period going until 2022 Years back, obviously, and at the time, I did say you might remember that, I did say I don't Like this guidance, through the cycle or above the cycle or below the cycle. And I said at the time, whatever the cycle is going to be, we promised A bit more than 16% EBITDA margin. No, you're right. We will deliver on that promise a year earlier despite the fact that we did have a Significant crisis.
And we are currently working On our strategic plans for the next strategic period, which actually starts next year, but we will pull this forward a bit because Obviously, if we would say that next year we might reach 16%, that would be quite a disappointment, I think. So we're working on that. We will combine that with a new long term outlook, which we intend to Communicate later this year sort of towards the end of the year. And we already, I think, have at least penciled in Some time for a Capital Markets Day in yes, towards the end of the year. And if I would be following the optic and I would come to the Capital Markets Day in 2021 and wouldn't get a more Long term strategic outlook, I would be disappointed, let's say.
I mean, that's the first statement. So please, we do please do understand and bear with us. I mean, we would rather want to come with a Substantiated 2022 figure and a long term outlook than just chewed from the hip here at this moment. But what I can say is that, I mean, look, I mean, I don't think we will say 16% for 2022. That would be a disappointing Yes.
That would be interesting.
And then some housekeeping questions. I mean, you have booked in the first half about €15,000,000 of PPA on an EBIT level no, euros 9,000,000 PPA on an EBIT level. For the full year, you have given us a guidance of €15,000,000 Ian, €15,000,000 is this guidance still valid?
Yes. Yes. Yes.
Yes. Okay. Next one on tax rate. It was very low
in the first half due to
the The point Stefan, the point is that you cannot Calculate times 2 is because the one off the inventory step up is gone now for the year. So the EUR 1,800,000 is not EUR 3.6 For the year, it's just 1.8% for the whole year. This is why it's not you cannot
take it The PPA effect in EBITDA is run by the end of February. But in EBIT, obviously, It's also gone for the future, but it's
in also now. So this is what I wanted to explain. This is why you cannot say 8. Something times 2 It's the right figure. This is why it will end up in EUR 50.5 billion, I think, is around EUR 50.3 billion.
EUR 50.3 billion. EUR 50.3 billion. EUR 50.3 billion. EUR 50.3 billion. EUR 50.3 billion.
EUR 50.3 billion. EUR 50.3 billion.
Okay. Then on tax rate, it was rather low in the first half of twenty percent due to the one time of TriOptics. What should we expect for the full year on the P and L level?
Yes. And this year, it's probably Our estimation right now is not too easy to do a tax calculation because of the separate tax issues. But I talked to our Head of Taxes Because I wanted to be prepared for the question. We are assuming around 15% in this year because this one off It's also there for the whole year, and it's not tax relevant. But it will increase in the years to come, yes?
So the 15 years Excuse me, the 15% is the last time we see 15%. We are acknowledging our forecast For the next year, it's step by step increasing tax rate and it's still very strong.
Okay. And my last question is on divestments.
We have
done some in July. Should we expect any onetime issues from These divestments and are further short term M and A activities likely?
Yes. I mean, the divestments we've done are important, but I would say it's Not as if we do get a bit of a gain, we will value gain. We will book
it in Q3, because it was after the 13th June.
Cash flow comes Also, cash flow
cash payment, we already did partially in July. We will collect the whole money probably in the whole Q3 and book our impact in the PML, and we will have book Book value gains, slightly some book value gains. Not really material. Not a big amount, Yes, not comparable with the one off of TriOptics, for example, but we will gain some book.
And your question further sorry, go ahead, Jurgen.
Yes. The cash in, is it double digit or Single digit million?
Well, I think what I'd consider that was it's not at the same Amount of or level of the TriOptics one time effect, and it's not 0, so somewhere between. It's a single million. It's a single million figure. Single digit, I think, it's a single million figure.
Okay.
Yes. And then I think The
total divestments, yes.
Total divestments,
Which points, I guess, towards what status of the discussions around Vincorion. As always, I mean, we are in discussions with interested parties. We always have been in discussions with interested parties. At this moment, none of these discussions represent the status in which It is more likely than not because otherwise you would have booked it under IFRS 5 as wholesale sales. So at this moment, the discussions that we are we have been in and we are in Not at that status, but we continue to talk.
And at this point in time, I can't disclose any more details.
Okay. And thanks for your answers. I wish you all a relaxing good summertime in Vienna. Bye bye.
That looks quite good. Thank you, Stefaan.
And the next question comes from Malte Schallman, Marbork Research. Please go ahead with your question.
Yes, hello. My first question is on gross margins.
I saw, if I take the
gross margin, it was Below 32% in the first half, exclude the one off, then it's still 32.4% something. Actually, that's the lowest gross margin for a 6 month period in the past 12 to 10 years. In environment, they have pretty high Where do you share semiconductors in Light and Optics Business? So it puzzles me a bit, what really is keeping gross margins down? I mean, you said that you Did not really see cost increases come through that might come in the future.
So maybe you can add some more color on that line and then Provide some more thoughts how that should then develop going forward if there will be some catch up effect in the second half and Maybe some, yes, midterm views. I mean, initially, the idea was coming from a 35% to further expand margins to the higher 30s level, No, at 32 in the first half, that's quite a difference.
Yes. I mean, there is when it comes to gross margin, we do have significant mix effects in the business. The more we do, for example, in lighter production automation integration, we have higher gross margins and therefore Sorry, lower cost margins, but less OpEx and still good EBITDA margin Due to the basically the business setup, there are a lot of purchased goods that we mark up and then sell on.
So a lot of the poly items included.
So typically mix effect, I'd say and then we had a PPA effect, Which is significant.
And in the beginning of the year, in the 1st 6 months of this year, Chevron Light and Safety has been Under pressure, you have mentioned it, the reasons. We will have a stronger Q3 and Q4. This will improve our Of course, the margin, but the gross margin in Identifi was relatively weak In the 1st week of March.
So again, a mixed track of reasons. Mixed effects, Typically, Light and Safety is a gross margin rich business with a lot of OpEx though. And if we have less light and safety, but more, say, light and production, for example, or even light and optics, we have In average for the group, less gross margin, yet less OpEx percentage of sales leads to higher EBITDA margin.
Okay. So with the catch up in Light and Safety in the second half, you would expect Gross margins also to recover and would you foresee kind of an increase or a lot of flattish gross margin development this year in comparison to last year?
Yes. I think in the same region, yes, flattish, yes. No increase.
Yes. In traditional Malte, in our Gross margin, you see the operational cost of our business. You see the fabs, people working in the fabs. Our production It's more expensive maybe than in machine valves business regions, yes. But therefore, we don't have Higher OpEx later on.
This is why we have higher EBITDA margins, yes?
Yes, right. OpEx later on was quite good. Okay. Then the next question is on CapEx. You recently acquired The real estate in Dresden for the new site should we expect over the next year is kind of inflated or higher CapEx levels?
Or is that then kind of the normal ups and downs you would expect every year?
Yes. Well, Maher, it's a good question. By the way, it's a very good question. And we balance this out, The financial needs and the free cash flow, we need to finance our investments there. But This big project will last over a period of 1 year.
So the building, the construction of the factory will last 1.5 years because it's the highest category of clean room, which is on the market. This is not technical and construction wise, not too easy to build up. But yes, you are right. Probably Under the line, we will slightly increase our investment levels all in all over the years to come. I think it's also part of our strategic exercise right now.
So we will communicate about this planning when At the Capital Market Day, when we present our ideas to all of you. But yes, you can already assume that we will slightly increase Our company, our group is now starting a growth period, and we have to follow this with investments In our core businesses around the world, yes? And it's around the world, yes? So it's not only in Dresden, we are also starting here in Vienna to Investments in production and L and D, so to speak, but also in Americas, we will see higher investments in U. S.
And obviously, also in Asia. So all in all, yes, you are right. You will see increase in investment, but it's not Every year double. It's not doubling every year. That's not We
will be mindful. We will be careful, but we do foresee Investments to go up to finance the growth that we anticipate and plan.
Yes. And therefore, we will keep an eye on our ROCE development, our return on Capital employed. This figure will be more and more important in the next strategic period Because we are investing so much money now in the purchasing of companies and in the investment in our business, yes.
Okay. And on the other, I mean, you're investing quite a lot of money, I guess. And when you're making a long term commitment For your main customer, especially for your main customer, do you get a return kind of a long term commitment and assurance for them that will last maybe over the next couple of years Regarding, yes, like the orders, business, etcetera?
We typically have long term contracts in particular with that business and with that We have long term frame contracts. And let me also point out that in particular, the investment in Dresden is for EUV and for our contribution there in terms of micro structured nano structured optics for those particular sensors that You know about and we all know about. And again, it's So I don't see any other company that is actually able to do that type of technology at that level On an industrial scale, obviously, academic institutions can do that. The Trent, it's Ranulf here. We would be able to do that, but I think on an industrial level, we are a sole supplier.
And for this particular Technology and it's hard for me to see that anybody can sort of pull it off out of the blue.
Yes, makes sense. Okay, quick last one. You announced 2 small disposals. Should we expect further deposits in second half of the year? Or is that mostly done now?
You referred to smaller ones?
Apart from incoherent, I'm referring to smaller ones.
Not at the moment. I think that was the remember when was that in November 2019, when we our level of Capital Markets Day, we were showing this bridge of, I think, a total about €40,000,000 of business that we believe we Should lose over the years, there were €20,000,000 has been lost. It's already realized. And it's already realized And then another €20,000,000 more or less is what we've realized now. So we're Kind of like done with that exercise for the strategic period of disposing of businesses and cleaning up the portfolio.
Okay, good. Just a final one. Yes. Okay, thanks.
Thank you.
And the next question comes from Richard from HSBC. Please go ahead, Richard.
Yes. Hello, gentlemen. I have Follow-up on Vincorion. So I can remember that you mentioned that there might be some measures necessary if the Situation does not really improve. Now agreed that the margin development has improved.
However, if I look to the order situation. This looks pretty worrisome and does not Sounds too optimistic for the quarters ahead, yes. Is there any need to adjust Capacity and should we expect, therefore, some extra costs in H2?
Yes, good question. I mean, first off, we do have a fairly high order backlog for the business, And we believe that we still have, yes, things to execute on. And we do believe that the orders Will improve significantly. The order inflow will improve significantly in H2. Nevertheless, there is Activities in terms of structurally cost takeout, some of that's been booked already in the first half.
I don't think there's going to be a lot still to comment second half from the Columbus project, but there's ongoing restructuring activities in Wing Coriant as Well, which by the way, our some of that we've spent already last year, but most of it is actually Some of it is already
the main part of the year end and now it's realizing and the
rest will come out the year.
All in all, not so bad the outlook from our financials.
Okay. And we should not expect that there is some, let's say, Impairment also necessary for preparation for a possible divestment here?
As I said earlier, at this moment, We are in discussions, but we, at this moment, are not in a position to disclose any further detail.
Okay. And then one question concerning the margin quality of the orders in the automotive business. How would you judge This and is the backlog you have now clearly better quality than, let's say, Quarter or 2 ago? Or is this still not the case and you have to struggle and keep a clear eye on Cost reductions, Mohr?
It's getting better. What's coming in is getting better, but we have to So through and managed through the period with very poor, from a margin perspective, poor orders that we've booked To keep the business going to fill the factory, we have to plow through that effect and manage through that effect. What we take now has richer margin components, But what we still have is fairly poor. So it should get better or with as the time goes by.
So it sounds a bit that you are not able to be Selective on the order info at the moment, right?
We have not been able in the last few you were asking for like And I was referring to basically compared to the beginning of the year and the end of last year. So the second half of last year, And in particular, in summer last year, it was really difficult. And then Q2 last year was a complete disaster. And then now with yes, I think getting better, we can become more selective and we are becoming more selective, But we still have orders in the books, which, yes, we have taken in a very desperate situation in order to get work, Basically. But as much as we manage through it and execute through it, what we take now has a better margin quality.
Okay. Thanks a lot.
You're more than welcome.
And we have one Follow-up question coming from Craig Abbott, Kepler Cheuvreux. Please go ahead.
Yes. Thanks again. Just one last one please from my side. We've talked about this in past conference calls, but I think in the meantime, the Boen's plan For phasing out combustion engine vehicles has been accelerating further since the last call. And I think it's the Fit for 55 program.
And I just would like to know if Yes. This timeline for the phase out has been accelerated further, if you might then have to take Further measures to again adjust your capacities down in the metrology activities And or whether this might spark fundamental rethink in terms of whether there might be a better owner for these activities Yes. And perhaps further developing the business in other applications faster than they might be able To do better within the Anoptic Group? Thank you.
Yes. Yes. We did talk about that in the past already. You're right. I mean, at the moment, I think we don't see any further need for Capacity reduction in this business, frankly, we have reduced capacity quite a bit Last year and beginning of this year and at the moment, we're getting orders and we need to be able to execute.
At the moment, we actually need to make sure that we still can execute the orders that we get, but I do think there is a Penned up demand effect that we see. I mean, we're not we don't think that we will get back to Historically levels in this business. At the moment, there is a lot of there is some pent up demand that we do see as an order inflow, And we need to make sure that we can at least execute on those orders. But overall, to say in the short term to midterm, we don't see any further needs to restructure. And your long term question as to what extent this should be and is a Core part of portfolio of ENOPTIC is another question.
And at the moment, I We do not intend to or have active plans to We'll have even active processes to sell that business. And quite frankly, I think at the moment, it's not the right time for it. I don't see that anybody would give us any, I would say, Decent price for it. If somebody would give us a Decent price for it, then we will certainly talk. But at the moment, I don't see that.
And I think it's our duty to Look after the business and turn it around, which we're working on, and we'll have to see what the future is going to bring.
Okay. Thank you.
At the moment, there are no further questions.
Okay. Well, then thank you very much again for being with us today. Let me again summarize. We're Obviously, very proud of the numbers, the performance in the first half, 2nd quarter, in particular, really record breaking figures for Genoptix, first half record breaking figures for Genoptix in the recent history. Let me point out again that this has been made possible by, yes, a very good Market condition in many places in many of our businesses, but also by the measures we've actually taken last year.
I think we talked about that last year a number of times. We talked about our restructuring efforts. We did spend a significant amount of money of our shareholders on making the business better. We did spend In the middle of the crisis, a huge amount of money on acquiring a business that we do foresee to bring a lot of growth in the future. I think those bold actions that we've taken in 2020 pay off now.
And again, I'd like to thank all the representatives on our advisory board of shareholder representatives as well as Workers' representatives both sides of the aisle are backing us up last year, because I mean it was not an easy decision last year to Deploy 100 of 1,000,000 to acquire a company In the middle of COVID-nineteen. And again, it's paying off now. We do post record breaking figures. And I think, As I said in the end of my of our presentation here, yes, we have a record breaking Q2. Yes, we have a record breaking H1.
Yes, we have or do foresee a record breaking financial year 2021. But even more importantly, We've used the time to make the business better for the future, and we believe that we can and will capture On those long term transfer for tonnage, we believe that we will grow this business for years to come And expand margins. And looking forward to also talking with you and explaining to you our long term plans, Hopefully, in the Capital Markets Day towards the end of the year. Thank you very