Good afternoon as well as good morning, ladies and gentlemen. My name is Andreas Schwitzauer, Head of Investor Relations of Knoebremse. I want to welcome you to Knob Ramsey's conference call for the Q1 2021 results. Webcast and conference call will be recorded and are available on our homepage, www.knor bremze.com, in the Investor Relations action. Here you can find today's presentation and later a transcript of the call.
It is now my pleasure to hand over to Doctor. Jan Michael Mosek, our CEO and Frank Marcus Weber, our CFO. Please go ahead, Doctor. Mosek.
So yes, thank you very much, and I would like to welcome everybody to our conference call today. I really appreciate you joining us, and I hope that you and your families in these very difficult and unusual times to remain healthy and safe. Today's call is made up of 2 parts. First, I'd like to present the highlights of the last quarter, and then I'll hand over to my colleague, the CFO of Frank Weber, and he will provide more details off the financials in the 1st 3 months, followed by the guidance for 2021 and some final remarks. And afterwards, as usual, we look forward to your questions and comments.
Allow me to walk you through the group's highlights the Q1 2021 on chart number 2. Knoebremse generated revenues worth of €1,700,000,000 which represents an increase of 6% organically an EBIT margin of 14.9% in the Q1, which is up 110 basis points year over year, continue to see a very strong recovery in the truck markets. PVS, our truck business benefited greatly from this development, and this was our key driver in Q1 reaching record revenues of €886,000,000 which is an increase of 22% year over year. Corresponding EBIT margin came in at 13.1%, which is also a significant improvement compared to last year's level of 10.4%. Our Rail business, RBS, developed as expected in the Q1 2021.
There, we expected that the Q1 would be probably the weakest in the year, and it generated revenues of €805,000,000 which is a decrease of 7% year on year organically Annette at an EBIT margin of 18%, which is despite the top line development and improvement our 50 basis points versus the previous year quarter. I've noted that ESG is a very important topic at Knobr Ramsay, as we have highlighted several times already in the past. And to underline this priority at the upcoming Annual General Meeting next week, a proposal will be put to the vote that 20% of the short term management bonus will be dependent on ESG in the future. I would also like to highlight that we have taken further steps since the beginning of the year to strengthen our corporate governance. And in a moment, I will provide more details exactly on this topic.
To that. Let me continue with Chart number 3. We know and understand that the topic of Mr. Thiele's legacy is very important for the capital markets. Therefore, I would like to give you an update on this.
The signals we receive from our anchor investor, the Thiele family, including Julia Thiele Schuhof after the passing away of Mr. Thiele are characterized by stability and continuity. This can be seen by the joint press release, which was published a few weeks ago by the Tiede family together with Knob Ramsey, which was stating that the 59% stake in Knobrense is to be transferred to a family foundation. The creation of this foundation is now being initiated. Julia Thiele Schuhof, the daughter of Ms.
Bethille, who will continue her mandate as Supervisory Board member, which she has held since 2016 already. As a visionary entrepreneur, Heinz Herman Thiele placed the management of the company in the hands external managers almost 15 years ago. The company is led by a highly Experian's supervisory board and the management team, which will continue Knob Ramsey's successful course. An important element of the aforementioned stability is the extension of the mandate of our Supervisory Board Chairman, Professor Doctor. Mangold by 2 years.
This period should be sufficient to find and induct a suitable successor for him. Over Doctor. Vohmer, a former CEO of ZF, Friedrich Sarsen, who will take over Mr. Thiele's mandate Arthur the upcoming AGM. He has many years of industrial experience and in-depth knowledge of the truck industry.
With Doctor. Claudia Meifert having joined the Executive Board on May 1, 2021, very happy to have another very experienced manager complementing our management team at Knorr Bremse. And the expansion of female leadership with Knorr Bremse will be very supportive for the whole company. You to the next chart. On Slide number 4, I would like to give you an overview of the current market situation and the outlook towards year end.
Overall, we see a continuing strong market recovery in the truck industry and that the underlying market fundamentals in rail are unchanged. The rail market does not face any cancellations of projects, but what we see is postponements and shifts on tenders of tenders that are still ongoing. This development is also reflected in the financials of our customers, the rail OEMs or original equipment manufacturers. In addition, the rail industry has also not experience any meaningful supply shortages, driven by the fact that not many mass products are used here. COVID-nineteen persistently results in less train traffic and fewer trains on the tracks, which affects the whole rail aftermarket business.
However, due to the large fixed cost base of train operators, it makes financial sense for them to use at least 80% of trend capacity to generate a contribution margin. In addition, there is an explicit political will to keep public transport running during the pandemic. 5th in demand in APAC, especially in China and India, but also partially in the EU, our putting pressure on the rail market currently. Nevertheless, we expect long term that global investment programs, specifically for rail transport will support demand. The main keywords here are global decarbonization plans, the Green deal in Europe and ambitious infrastructure programs in the EU as well as in the U.
S. Nevertheless, regarding ridership, we do not expect that pre COVID-nineteen levels will be reached before 2023. Now coming to the truck market, which experienced a very pleasing demand currently. Key sales markets of our Truck division in Europe and North America have continued their significant recovery paths, showing strong truck production rates despite first impact from the challenging supply situation. The current Chinese truck market remains a class of its own, supported by good underlying demand and pulling effects from the second half of twenty twenty one.
Please keep in mind that as of next July, it is planned to introduce the new CN6 emission standards to result in a probable decline of market demand here because investments have been pulled forward due to this effect. The development of the truck production rates in Europe and North America until year and will depend heavily on the development of the shortages on the supply side. However, market research companies currently expect truck demand in Europe and North America to increase significantly overall in 2021, and we share this opinion so that overall we expect across the year an increase in demand of truck production rate overall. So that's the underlying overall the effect for 2021. Chart number 5, let's have a look at that and see what these market environments mean for our divisions.
We will start with Rail. The order intake development Q1 'twenty one was rather low, which was fully expected in that sense. The main drivers have been contracts in the rail industry are very difficult to put into a quarterly corset. The option spans several months and tends to be lumpy sometimes. Tender activity is more pronounced in the second to 4th quarters in 2021.
Knowing this, we are not concerned about the rather weak performance in the past quarter. Additionally, after a strong order intake in quarter 4 'twenty, we already anticipated the Q1 'twenty one order intake to be weaker, which we communicated already during the presentation of our fiscal year 2020 results in March. The lower intake was recorded in all regions, but predominantly in the Asia Pacific region, especially China, high speed and aftermarket, but also in India and that particularly LHB coaches were the drivers there. The quarters ahead, we expect a better development of RBS order intake, still depending on the unknown COVID-nineteen impact. Nevertheless, we expect that the full year book to bill ratio should be above 1.
The aftermarket business is still affected by the lower rail traffic. Please keep in mind that the number of trains in service is more important than the actual ridership. Trains that run on tracks or return to service after brakes must meet all regulatory obligations. Therefore, trains must be maintained regularly. Despite the fact that the number of trains on tracks is at a solid level, it is lower compared with the situation pre pandemic.
This continuously impacts our service and spare parts business. In addition, rail operators in China extend overhaul cycles, also as a result of lower mileage of high speed trains driven since the pandemic started last year. On the positive side, countries which see fewer infected people monitor significant uplifts in train utilization. We believe that the the market business will improve when the tensions from the pandemic will decrease and rail mobility returns to normality. I would now like to turn to China, a topic on which we always receive many questions from you.
Overall for the Chinese government, train transport is an important pillar for the nationwide mobility of the population. Accordingly, the country is investing in the expansion of rail network and in new trains. Even China is not immune to the effects of COVID-nineteen. And after years of sometimes extreme growth rates, we are seeing a normalization in many areas. The rolling stock industry in China is getting mature and the country is adapting to the market conditions of other countries an expected normal and healthy development.
Knob Ramsey has a strong market position in China, and we are one of a few non Chinese suppliers in the rolling stock industry. Obviously, our products can make a lasting impression in terms of quality and above all, innovation. The 2 Circuit policy in China exists and will remain. However, I believe RBS is well positioned, and we are aiming to find creative answers to deal with these imponderabilities. Moving to our Truck division on Page 6.
The Q1 has seen an extremely positive development driven by strong demand in Europe, the U. S. And China. The strong freight market with high transport volumes means that the transportation industry renews and expands fleets to fulfill increasing demand, which is expected to continue in Europe and North America until year end 2021. In China, we expect, as previously said, a significant slowdown of the truck production rate following the introduction of China 6 mentioned before.
Last year, China was the only large market which saw production rates going up. Please keep in mind that this regional outlook for the remainder of the year we'll also be heavily dependent on future developments in the COVID-nineteen pandemic. Content per vehicle is one of the key drivers of CBS, which is not really impacted by cycles. Due to the extraordinary increase of truck production rates in Q1 'twenty one, the good development of content per vehicle was led visible, but content growth will continue to be an important pillar our CVS future growth path. The global shortage, especially of semiconductors, this had already a noticeable effect on our truck business in the last quarter, but we were able to keep the impact low by introducing measures very early.
In addition to the semiconductor crisis, however, we also see that the supply of other components such as metal, plastic has become more difficult. This is a condition that usually occurs during cyclical recovery phases, and our Truck division is very experienced in dealing with such circumstances. In the coming quarters, we expect the global supply chains for semiconductors and other components the Semiconductor situation, in particular, should not change quickly. Accordingly, we expect CVS second, but even more pronounced, the 3rd quarter and potentially beyond to be negatively impacted. Nevertheless, we still expect solid sales growth for our Truck division for the full year.
The COVID-nineteen pandemic continues to create uncertainty, and it can still lead to additional restrictions that could impact us both in our Rail and our Truck division, our business partners and our customers. Knoebremse very closely monitoring the situation and is prepared to act quickly if necessary. Let me now continue with Page number 7 and the operating highlights of our both divisions. To prepare our Truck division for the coming generations of the e vehicles, we have launched the group's internal so called incubator as an agile think tank, 60 in house and external specialists work on innovative future oriented solutions at Knob Ramsey's Munich and Budapest locations. CVS announced to enlarge its Stallion plant in China to meet the ongoing booming truck demand there.
The start of the production is scheduled for December 2021 2022, excuse me. CVS has signed a major contract with 1 of the world's leading global truck OEMs worth €1,000,000,000 to continue the long term partnership with this customer. The new supply contract was signed for new generation of braking and air treatment systems, which used the next generation technology developed by Knobremze, the so called global scalable brake control system and the global scalable air treatment system. On the other side, RVS won 2 major contracts, which will be executed together with Stadler, 1 multi system order in Berlin to equip 6 0 6 Metro Cars and one in Atlanta for 254 Metokars. In my view, one order is particularly noteworthy with regards to potential future business models in the aftermarket sector.
Knoeb Remse has signed a framework agreement with Deutsche Bahn, which will enable our Rail division to develop projects based on condition based maintenance of rail vehicle fleets. Data driven projects like these open up the opportunity participate continuously in related cost savings of our customers. With this, I would like to hand over to my colleague, Frank, CFO of Knorr Bremsel.
Yes. Thank you very much, Jan and a warm welcome from my side as well. Thank you for joining us today despite the fact that this today we have chosen is a bridge day. I do already apologize in advance for that. Let us talk about the numbers on Page 8 now.
Considering the ongoing challenging economic environment around the world, our quarter 1 financials once more confirm the robustness of our business model. Given that, we do believe we have achieved a superb performance overall. Nevertheless, KB was not fully immune to the still ongoing impacts related to the pandemic. Order intake increased significantly by 13% to €1,800,000,000 The order book grew once again by 9 Zendesk to a new record level of almost €5,100,000,000 Revenues increased by 4% to €1,700,000,000 an EBIT margin or return on sales from 13.8% to 14.9%. Please note that we will focus more on EBIT than EBITDA from this year onwards.
Free cash flow could be improved versus the previous year, but with minus €23,000,000 still slightly negative, Resulting in a cash conversion rate of minus 13% versus minus 43% in the previous year. Let me dive deeper into our order intake and order book on Chart 9. Compared to the same period last this year order intake on group level increased significantly by 13% to €1,800,000,000 in quarter 1. On an organic basis, the increase was even higher at around 16%. Year over year, we had some FX headwinds, mainly from U.
S. Dollar and Brazilian real, Russian ruble and Indian rupee. So basically, all brick currencies plus U. S. Dolla.
Accordingly, the book to bill ratio also improved year on a year, reaching 1.06 this in the previous year's quarter. The development of the order book at the end of the Q1 was also particularly pleasing as it rose for the Q3 in a row. It grew very solidly by 9% to €5,080,000,000 this record figure provides us with a generally very good confidence and is the foundation of our guidance. Let me continue with the revenue development on Chart 10. Revenues on group level in the Q1 increased by 4% to €1,690,000,000 On an organic level, we saw an even better performance with an increase of 6%, but also face some headwinds from FX effects as already explained.
This development was very pleasing as our Q1 2020 2020, the APAC region continued to develop particularly well and showed 9% growth on a year over year basis. Europe returned to the growth path driven by recovery demand and posted an increase of 3% above previous year's level. Europe still accounts for the biggest part of our total revenue with a share of around 47%. North America is still not quite recovering completely and therefore the company faced a slight decrease by minus 2%
year over year.
Let me continue with the development of our profitability on Chart 11. In the Q1 of 2021, group's EBIT amounted to €252,000,000 after €224,000,000 in the previous year's quarter, which is a strong increase of €28,000,000 percent after 13.8% in the quarter 1 of 2020. This significant increase clearly shows the profitability resilience of our business model and our ability to get out of the crisis with higher profitability. As growth of profitability as well above was well above the revenue increase in the quarter. Knobr Ramsay benefited predominantly from the operating leverage.
In addition, we were still able to benefit from cost saving measures, the company's financial results. Although this effect should diminish to some extent as the year progresses, it is our goal that the cost base will develop under proportionally as our business activity and revenues increase. The aftermarket revenue share decreased year over year by 3 percentage points to around 34% in the Q1 of 2021 on group level, mainly driven by the strong growth of the OE business. In absolute figures, aftermarket was not immune to the effects of the pandemic that is still ongoing, especially on the rail side, and recorded a decrease of 6% to €569,000,000 This decrease was solely driven by the RBS division and basically COVID-nineteen related. The EBITDA margin developed strongly in line with the EBIT margin and improved as well by 110 basis points year over year to 18.9 Selle.
Let's continue on Chart 12. In 2020, we have initiated a CapEx management program, and we prioritize and monitor ongoing spending very closely. Accordingly, investments in absolute terms decreased from €81,000,000 in the Q1 2020 to €62,000,000 in Q1 of 'twenty one. In relation to sales, investments reached 3.7%. However, we do expect this ratio to increase in the upcoming quarters and think it should reach a level of 5% to 6% for the whole year.
At the end of the Q1 2021, net working capital stood at €1,080,000,000 This is a slight increase compared to the previous year in absolute figures due to higher stock levels to secure the supply chain and to remain a high level of flexibility in regards to our operations. But with our measures, we were able to improve the scope of days of net working capital, which shows a clear relation to the revenue situation. In the current fiscal year, we expect that the net working capital should the overall higher, again, in absolute terms due to expected sales growth. Realized operating ROCE improved from 26.7% to 28.2%. This increase was supported by a higher profitability level and a well managed stable capital employed.
Let me continue with our free cash flow on Chart 13. The free cash flow in quarter 2021 came in at minus €23,000,000 which is €38,000,000 better compared to the previous year's quarter. But please note that the free cash flow in the past quarter benefited from the final payment in the context of the sale and leaseback transaction of the Munich North Gallente amounting to around €50,000,000 But even without this extra payment. Free cash flow was remarkable at only minus €73,000,000 given the general seasonality of this KPI at Knob Ramsey and the great figure of free cash flow of more than €500,000,000 that we generated in the 4th quarter of the year 2020. Consequently, the cash conversion rate defined as free cash flow divided by profit after tax improved significantly to minus 13% compared to minus 43% a year ago.
Let's move on to the divisional view, starting with RBS on Slide 14. In the last quarter of 2021, all the intake of the Rail division was at €714,000,000 a decrease of 18% in total and 16% on an organic basis. The decrease compared with the previous year quarter is driven by the following topics. First, the rail industry is still impacted by COVID-nineteen, facing postponements of projects. The lion's share of the shift that occurred in China, high speed trains and aftermarket and in India on the passenger coaches side.
2nd, timing of award winning tenders in 2021 is more favorable in the second to fourth quarter the results of this year. 3rd, order intake in the Q4 2020 was very strong and above €1,000,000,000 Last but not least, Keepit did not win a contract in Germany, which would have amounted to a mid double digit €1,000,000 figure. In 2021, we expect RBS to book significantly more orders in Q2 to Q4 than in the Q1. As we have already pointed out, 41 of 2021 will be the weakest quarter in 2021 in that regard, affected by lumpiness business which does not always go well with quarterly reporting as Jan already figured out. The book to bill ratio showing quarter 1 consequently came in at €0.89 versus €0.98 a year ago.
The order book, on the other hand, increased by 2 present year over year at €3,600,000,000 This level provides a good visibility and is the basis for the solid revenue growth we expect for RVS in the full year 2021, driven by the upcoming quarters. Now moving on to revenue and profitability for the Rail division on Chart 15. In the Q1 of 'twenty one, RBS recorded revenues of €805,000,000 which is a decrease of minus 10% year over year, organically only minus 7%. Compared with the Q4 of 2020, the division capital momentum and achieved an increase of 4%. RBS recorded declining sales in both OE and the aftermarket business of a similar magnitudes in quarter 1 year over year.
The aftermarket business in absolute terms declined by around 9 present why the share remains stable at 44% year over year. As Jan mentioned before, the trains in service a much more important than ridership levels. Nevertheless, most important operators still have a lower number of trains in service since the beginning of the pandemic and therefore currently need less service in spare parts. Having a closer look at the regions, it is noticeable that they are affected to different degrees, strongly depending on the respective COVID-nineteen situation. Asia, an important market for KB with unchanged future potential was affected more than in previous quarters due to COVID-nineteen.
Especially India and the aftermarket in China posted lower revenues year over year. It is worth mentioning, however, that China roughly 15% of the revenue decline of RBS in the Q1. It was affected from a noticeable declining light rail vehicle business and from lower revenues in the local and the metro the European aftermarket business slightly increased in quarter 1 2021 as it also did on a full year basis last year, despite the ongoing tense situation for all rail operators. In North America, we recorded an overall decline in both segments, OE and aftermarket. Our North American OE business is still seeing postponements, although passenger numbers are recovering slightly.
For example, the metro in New York is now running around the clock again. The $1,000,000,000 support for Amtrak by the U. S. Government is helpful, that it will only have a positive impact on our business over the time to come. On the other hand, the recovery in the freight business will as well take some time.
We expect that in 2021, overall, RBS revenues should grow solidly, predominantly driven by the OE business. Due to the lead time between order intake and turnover of at least 6 to 9 months, we expect that revenue development in the second half of the year will be stronger than in the first half of the year 'twenty one, especially you to the slow development in the very first quarter. The aftermarket demand going forward should be rather stable, strongly depending on the development of the pandemic going forward. The profitability of RBS in the past quarter developed nicely despite the noticeable revenue decline. I think this was again a clear example and proof of our countermeasures the resilience of our business model in Rail.
Based on that, EBIT of RBS came in at €145,000,000 in Q1 of 2021. The EBIT margin increased from 17.5% to 18% and the EBITDA margin went up solidly from 20.9% to 21.7%. These margin improvements are also driven by cost measures, which we started to implement already last year, and we are still continuing them, they are still having a positive effect on the quarter. We do believe that our profitability will slightly increase for the full year as overall, we anticipated the quarter 1 situation accordingly. Us continue with the development of our Truck division on Slide 16.
Incoming orders of CVS were again remarkably the strong and one of the highlights in the Q1 of this year. At €1,090,000,000 the overall figure was 52% higher than in the previous organic development of plus 54 was even slightly better. Compared to the Q4 2020, which was already an exceptional quarter in this respect, the order intake even further increased by 9%. Europe and North America could continue their recovery from the severe COVID-nineteen hit of last year. The underlying demand in both regions should stay strong, but it will presumably be more impacted by turbulences in the supply chain.
Trade volumes of industrial and consumer goods in both regions continued to grow in the Q1. The COVID 'nineteen driven increasing e commerce trend among customers drives freight volumes and is not expected to face a downswing. In APAC, the development of order intake was again well fueled by China, but the recovery in Japan was supportive as well. The strong increase of infected people in India has not impacted the order development yet, but is expected to do so. In terms of order intake, in the full year 2021, CVS has probably already seen its strongest quarter.
We do not assume a trend reversal on a full year basis, but driven by component shortages on the supplier and customer side as well as the lower truck production rates in China from the second half year, we expect a less positive development. The order book of our Truck division amounted to €1,470,000,000 at the end of March, which is remarkable the total revenue of 32% higher year over year. The order book of CVS, therefore, reached a value again, which is well above the pre COVID-nineteen levels. As a consequence, book to bill stood at 1.22. Let's move on to Slide 17.
CVS posted €886,000,000 in revenues in the Q1 2021, a new record in the quarter. Compared with last year's figures, this is an increase of 21%, in line with the organic improvement. In Europe and North America, CVS saw positive development in auto channels. The supply situation impacted the division, but countermeasures had an overcompensating effect overall. The APAC region also posted a strong revenue growth in quarter 1, well supported by China and India.
Share of market sales increased from 29% in the previous year to 24%. This is driven by the extraordinary OE business growth in the Q1 as in absolute terms, the aftermarket remained rather stable. As mentioned before, in terms of revenue development on a full year basis, CVS should be able to post a very solid increase year over year, strongly depending on potential supply constraints, we expect that our Truck division should have a stronger performance in the first half of this year compared with the second half. In that respect, we do believe that the last quarter could have been the best quarter for this year. In the Q1, CVS achieved an EBIT of €116,000,000 which is 51 sell higher than the previous year.
The EBIT margin amounted to 13.1% compared to 10.4 1 year ago. CBS has thus returned to pre COVID-nineteen margin levels despite higher freight costs due to global container and harbor shortages, but compensated by benefits from cost measures and the operating leverage. EBITA margin improved from 14.6% to 16.8% and in absolute terms by €41,000,000 to €149,000,000 in the Q1 of 2021. Given all that, what I just outlined. We do think that the full year 2021 should show solid margin improvements of our CVS division.
Let me continue on Chart 18. I would like to give you an overview about our recent ESG activities as this topic is very important for us at Knob Ramsey and me personally. For our group, corporate sustainability means striving for economic, social and ecological goals equally and simultaneously. This is based on the foundation of good corporate governance. We want to create long lasting values, offer good working conditions and feed the environment and resources carefully.
Knob Ramsey recognizes climate change as one of the most pressing challenges of our time. As an internationally operating industrial company, you. We do consider climate protection as a key corporate responsibility and aim to make a significant contribution to climate neutrality. We are fully on track with our ambitious climate strategy and are continuously working on improving the energy efficiency of our production using more self generated renewable energy and expanding purchasing of renewable energy as a whole. Following the Sustainable Development Goal 5, Gender Equality, Knob Ramsey advocates for gender equality and intends to create more space for this within the company.
Within this initiative, we intend to promote women in management roles and support them in their careers. With the addition of Claudia Mayfeld, we have achieved the goal we set ourselves, namely 25% female representation in the Executive Board. We strive to continuously improve the group quota of currently 13.2% of women in leading KEB positions in the near future. JB is well aware of its duty to carry our due diligence on human rights and and its commitment of fulfilling this at all times, including the value chain and our operations. With the establishment of a new human rights policy among the group.
We strengthened our efforts in this respect as it combines all human rights related provisions previously contained in various guidelines in one policy, which is being rolled out at KB sites as we speak. Bramza's global and local care initiatives also contribute immensely to positively the impact society and our employees. In the past quarter, the issue of education was a top priority for us as it has become a major problem for many children worldwide, especially as a result of COVID-nineteen. As already mentioned in the previous calls and outline Brian, we plan to anchor ESG targets in the management's compensation system to underline the importance for us. The final vote will take place at the Annual General Meeting of Knob Ramsey next week.
Jan has mentioned before how important the topic of good corporate governance is for KB. We believe that we are generally on a good path, for example, with the improved reporting time lines of last year's annual report by 23 days and results of the Q1 by 14 days, following the German Corporate Governance Codex and the Development in the Supervisory and Executive Board of KB. Earlier reporting is a key project at Knob Ramsey, and we have already achieved meaningful improvements with our quarter 3 report last year as well as the annual report and the quarter 1 report of this year. This will continue, which is why we have also brought forward the quarter 2, 2021 publication date from 3rd September to now 13th August. I'm also very happy to announce that we are working on sustainability strategy for Knob Ramsey, which we will publish in course of 2021.
You. Last but not least, I would like to give you an update on our guidance. As always, the outlook for 2021 the company's under the disclaimer of a stable political and macroeconomic environment as well as no further significant setbacks driven by the pandemic. In addition, the shortage in the semiconductor sector should be kept in mind when looking at our outlook for 2021, as we expect that this topic will also remain with us at least until year end of 2021. At this point in time, We assume that it will be possible to largely compensate for the decreases in revenues in CVS resulting from current supply bottlenecks for electric the components of the semiconductor industry within the course of 2021.
We will be continuously monitoring the situation. For 2021, on group level, we do confirm our guidance given in March and continue to expect revenues between €6,500,000,000 to €6,900,000,000 an EBIT margin between 13% 14.5% and an EBITDA margin between 17.5% 19%. In addition, we expect ROCE in between 25% to 30%, and we believe that headcount should stay within the range of 29,500 to 30,500 employees. Needless to say, of the cost driven by potential revenue generation.
On the
scope of today's net working capital, our plans are 45 to 50 days and CapEx, as already said, should be between 5% to 6% of revenue. We have the financial strength to continuously master this crisis well and emerge from it even stronger. One sign of this is the the uncompromised continuity of our dividend policy to distribute 40% to 50% of our earnings directly to our shareholders. Therefore, we propose a dividend of €1.52 at the upcoming AGM, which represents the same payout ratio as in the previous financial year pre COVID. Thank you.
I now hand over to Jan again.
Thank you, Frank. Let's move to the last slides of the presentation. I'm proud of the strong execution by the whole team in the Q1 despite an ongoing challenging environment in both industries. The solid financials in the last quarter were again a good evidence all the resilient business model in both divisions as well as the company overall. This year and maybe even beyond, we will still to be faced with a pandemic.
And as a consequence, we also assume that the 10th supply situation will continue to accompany us for some time to come. We at KB are closely monitoring all developments and are ready to take countermeasures quickly, if needed, as we did last year. Continue to lean to the strong megatrends in rail as well as in truck and remain committed to executing on our strategic plan. Our efforts on corporate governance and ESG, we are on a good way to improve our company further and to be on a good path into a more sustainable future. That.
I'll turn back to the operator to begin the Q and A session. Thank you. Welcome
welcome
welcome.
And the first question we Steve from Svennmeier of UBS. Your line is now open, sir. Please go ahead.
Yes. Thanks for taking my questions. Good afternoon. And thanks for the color you already gave also on the divisional outlook. That 5% 10% organic growth, so
implying quite
a bit of a steep recovery in the remainder of the year. I was just wondering, do you see already some evidence for that in the second quarter now that the quarter is almost half over? Should we already see some tangible signs for that trajectory in the second quarter? That's the first one. Thank you.
Hello, Sven. Thanks for raising this question. I do think that we have had so far a good month of April in our books. As we can see, it's still preliminary, as you know, but we do think that it speaks for itself. What we are, let's say, currently seeing on the performance side of our business.
And there is no indication that based on what we have in our books in the new quarter, this expectation should not Sten Steadfast.
I would
like to add to what Frank has just been saying. So the situation in RBS Karim characterized by aftermarket, let's say, a slow aftermarket development due to low riderships. And in the 20% of trains on average not going throughout the world right now. So that's one thing. Secondly, postponement of projects where no cancellations have happened so far.
And the third thing is that, obviously, China, we had Chinese New Year, which made the Q1 slow in terms of OEM business there. And after Chinese New Year, some OEMs in China closed down factories for a while and stopped their production, so that also left their footprint note in our numbers. So that's obviously an extraordinary fact that we saw in quarter 1 compared to other quarters and underlines again, that obviously quarter 3 to 2, 3, 4 will not see that effect.
Okay. Thank you for the additional color on that one. The second question, if I may, is just on the Truck division. I don't know if you just unintentionally upgraded the guidance there, but you said you will see a very solid growth development. I don't know if that's better than the solid one you had before.
And the other question I had on CVS is also, Obviously, the order intake has been quite, quite strong. I was just wondering if you had any evidence in the division that there was a kind of a double ordering, safety ordering from the OEMs or whether this is all kind of an underlying demand development as far as to Ken actually see that. Thank you.
Yes. What we're seeing what they're seeing thank you very much for this question. What we we usually know in the industry is what the order books of the OEMs are. And from there, from these order books, we can judge the numbers that we can expect and the orders that and call offs that will come in the frame contracts into our books. What we have to keep in mind, so that's a clear understanding and transparency that we have in the market.
However, what we can't judge at this point in time, that's what we already pointed out during the course of the presentation is to what extent this the demand that's there on the end customer side can be satisfied by the OEMs due to the supply shortages that have been stated quite a few times.
Sven to also answer the first part of your question. I know you all very carefully listening to when we are basically saying something. I would say note it's better it should be better than solid what we currently think, but I have to always say and I note that you are listening to this as well carefully and look at our disclaimer as well. It's, of course, still depending on the situation in regards to the supply chain semiconductor issue. That, but we at this point in time see that it's very solid.
This is what I would say. Slightly better than what we have seen in the very beginning of the year. And I mean, as the year gets more mature, we will keep you updated, of course.
Thank you. And very finally, also thank you for the color you gave on the shareholder situation. And I mean, in the meantime, we had this article in the German press about the family having to make a record inheritance tax payment, and I think the market is concerned that maybe the situation or the statement could have changed with regarding having not to sell any KB shares in order to pay for that. Did you also get an update from the family on that? Or basically the guidance on that very much unchanged.
That is very much unchanged. I would say that's the good news. So everything that you just mentioned is what we still have to say at this point in time. So
The next question received is from Akash Gupta of JPMorgan. Your line is now open, sir. Please go ahead.
Yes. Hi, good afternoon, everybody, and thanks for your time. My first question is on China Rail. If I look at the Rail segment overall and Your backlog is more than 12 months of revenues, and I believe you may be having higher visibility than your backlog because backlog at your customers like Alstom, Stadler is significantly higher in terms of visibility. The question I have is that when it comes to China, can you give us how much visibility do you have compared to the sector as compared to the segment overall?
And just wanted to gauge that if something changes on ground there, then how long it will take you to respond to the shift in customer preference, both in favor of you or away from you.
Yes. What we usually know is a very long some kind of projects. As you might appreciate, the rail market is a very long term market where projects as well as maintenance activities are known long term and there's hardly totally unexpected developments that we see in this market. Therefore, we can see into the general order or let's say project situation quite a few years into the future. What comes at this point in time, and this is a very specific well and very, let's say, one time kind of experience is that the pandemic causes the very unusual situation for all rail operators around the world.
First of all, low ridership actually the cash situation of rail operators to be below expectations and has continued to do so for a couple of quarters in a row already. And then on the other side, we're seeing that due to the COVID pandemic itself, the closures of factories occurred. And this causes kind of a dent in this, aside from that, very stable kind of market development overall. We are very confident that going forward and by the way, just as I pointed out before, one example for this is the behavior and the situation we were faced with during Chinese New Year, where not only the 2 weeks of closure happened, but some OEMs closed down the factories for another 2 to 4 weeks in a row so that these 4 weeks have resulted in lacking call loss and therefore also a dent on the OA side of our business. Generally speaking, the market there is intact, and we expect this to cover soon and the clear evidence of that is that there have been no cancellations of projects so far that means the mechanisms that I've been talking about right in the beginning of my description and my speech here our intact the market as such the projects that have been piling up are still fully intact.
They're just going to be a little bit postponed. And moreover, we are seeing during the course of the pandemic and even beyond that clear statements from governments in Europe, in the United States after the change of the administration there, but also in China that build out of rail infrastructure is going to continue, and therefore, we are convinced that the future prospects all these markets are fully intact and show a very, very attractive growth path.
Thank you. My second one is on Alfa China on truck business. So you said you expect this demand pull forward because of welcome CN6 standard. Can you tell us should we expect any content growth when China will be moving to CN6? And if there will be any content growth, can you give us Whether it could be mid single digit or high single digit that may be able to offset your revenue decline against
Yes. What we're seeing is that we need to take a world perspective. And what we're seeing is that we expect in quarter 3 quarter 4, demand to go down because of the effects that investments have been pulled forward. By the way, this is not kind of a unique effect. We see this very often when legislation or any guidelines in China are changing and in other countries, then investments are being pulled forward and that causes a dent in the demand for a couple of months.
By the way, we're still in a situation where we're seeing an upside adjustment on on Chinese stock production rate across the months. So situation is there even if demand will go down, still something where we are going to stay on a high level in China. That is our expectation. And at the same time, we see that truck demand in both Europe and North America will continue to increase. By the way, expectation is also that in India, in the CIMDA investment situation will take place.
However, there, the pandemic this in a very, let's say, uncertain stage of the development, as we all know. And if you just keep in mind that generally trucks in Europe and in North America are more valuable as far as content per vehicle is concerned. You might appreciate that this is also kind of a positive tailwind for our CBS business in that sense. So overall, we see a favorable development of the market.
In regards to your content per vehicle part of the question. We still definitely see what we have always said since the IPO as intact. And also here in regards to Asia Pacific and China. We do see that the content per vehicle growth is as well Intact and
we believe when we come into
the mature technological maturity of respective markets, we do think that it should be above the average on our content per vehicle story what is contributed from the Asian Pacific region to Ned.
Thank you. And the final one is on raw materials. I think in your remarks, you also highlighted some tight supply of certain materials, and we see that prices are going up. And as much I know, you have some pass through mechanism, It takes with some time delay. So is it fair to say that there might be some impact of raw materials, particularly in second half quarter Or maybe in Q3 before you can able to pass this to your customers?
Yes, you're right. There might be some interim effects in our P and L, due to that time lag of the price sliding clauses that we would have with suppliers and the customers that that might occur, but we are very confident that we will be able to pass it through fully.
Thank you very much.
Welcome, Akash. Thank you.
Our next question received is from Ben Uglot of Morgan Stanley. Your line is now open. Please go ahead.
Good afternoon, everyone. I hope that all are well. I had a couple. Jan, at the beginning in your opening comments, and I didn't manage to write it all down fast enough, but just on China aftermarket, you. Can you elaborate on this sort of postponement or change in the kind of maintenance terms?
Ask what are
you seeing there? Can you just explain that a bit more, please?
Yes, Ben. No problem. Thank you for that question. What we're seeing in China right now is on the aftermarkets two effects that play a role there. First of all, the number of trains that's been running on tracks is reduced compared to normal situation.
And there's two reasons for quarter 1. The first one is that Chinese New Year usually results in kind of a mass travel situation in China, which this year obviously did not take place. Secondly, general ridership is lower than in usual times. And these two effects lead to less wear and tear on the train side, which also results, on the other hand, in a extension of maintenance cycles in China. So the intervals are being increased and therefore there's less kind of maintenance activities going on.
Something that we expect to change after the COVID crisis has gone and normal wear and tear sets in again. Yes, that's probably the major effects that we're seeing there.
Okay. And just following up on the aftermarket in China. Can you give us a sense between the sort of, let's call it, cooling down or normalization in high speed this is obviously a very strong level of OE orders. Does that for me, in metro, does that increase on the metro side? Does that have any implication for margins?
Or is it not meaningful?
Generally speaking, the margins both on the high speed side as well as on the metro side are quite satisfying and are levels so that we would not see too much of a profit impact from a shift of one segment to another. Okay, good. That's helpful.
And then on the CVS side and the chip commentary, Look, I'm always trying to read between the lines and what are you guys trying to signal. It does feel as if you sound a bit more cautious to me about the chip situation. Am I over interpreting this? When you talk to the truck OEMs, what feedback are you getting from them about how long this is going to take to resolve?
Yes. I think what we what I said in my speech pretty much hit the nail on the head. So let me quickly summarize. There was already a shortage of components in the market in quarter 1. However, there has been ways and means to overcome that, either through, I'd say, getting the required share of deliveries from the original suppliers Oref by making available sources from independent brokers.
And that just Scott up into a situation where we've in quarter 1 been able to deliver at any given point in time. So we could in fact manage. What we are seeing here is, by the way, this is an ongoing kind of day to day management work that we need to undertake. And there's a triple digit number of people within Knob Ramsey, just to give you a flavor of this. On a daily basis actively chasing electronics components and other material shortages.
So that's quite a material task that has to be performed here. And you might appreciate that this is a continuous events where we have successes on a day by day basis in terms of securing supply whenever we get the opportunity to secure it. We see the situation over time now becoming more tenants. And therefore, we are we have been saying what we have been saying, that we see a continuous continuously strenuous situation on the supply side here. And again, very hard to forecast how much that in terms of numbers would be.
But on the other side, quarter 1 was very good. We see a high truck production, at least a high demand going forward. And our expectation is that and our assumption at this point in time is that we'll be able to secure a the lion's share of what we need, and that's the assumption of our forecast for the current year.
Just quick final question. I realize it's absolutely early days and you may or may not have any insight into this at all. But in terms of the family foundation that's being established and discussed. Are you able to tell us anything about the let's call it the mandate of the foundation? What is the purpose beyond simply holding that 59% interest?
Is it simply a holding vehicle or could it be doing certain things?
Yes, Ben. This is something where you might appreciate that this is something we can't comment on. That's we have to observe what's going to happen. And then at the right point in time, I'm very sure that the family will give the appropriate information.
The next
question we received is from Arsalan Uvalde Drorala of Deutsche Bank. Your line is now open, sir. Please go ahead.
Thank you very much and good afternoon. First question is on, I think you commented that in terms of more broadly rail passenger ridership, you see returning to sort of pre COVID levels by about 2023, if I'm correct. Just wanted to understand in terms of the sort of assumptions behind that. I guess the 2 driving factors are obviously less direct activity from sort of people now working from home and that dynamic that's taking place, But on the flip side, increased encouragement from governments to use rail from, I guess, from a decarbonization perspective. I'm just wondering if you could give a bit more kind of color on your assumptions for that sort of idea to return to 2023, please.
Yes, Aswan, thank you very much for that question. I think we always have to keep in mind whenever it comes to public transportation that roughly 50% of traffic, and this I'm talking about metro and to some extent also high speed is caused by daily commute. A lot of people are simply don't have cars. They go to town in order to do their shopping requirements. The travel maybe on their leisure on the weekends, and this constitutes at least 50% of the traffic or more.
And therefore, we have kind of a balanced picture. Certainly, home office will play an increasing role in the future going forward. On the other side these effects that I've been talking about play a role. Secondly, we see a clear development in a lot of countries and a lot of cities there that individual transport is discouraged by not making available enough parking space anymore. We all know the restrictions that you get into town and you have to pay for it.
The amount there will increase. By the way, the European Union and particularly in Germany, by the way, strong programs have been put in place. The climate push has just being again emphasized by the German this relation in place in due course. And all of this will lead us inevitably into a situation where public mass transport is going to be further emphasized and traffic is going to be pushed onto these systems. So in the short term, I think home office welcome all the other activities around shopping, leisure traffic, traffic that is not work related will play a major role and additional people will jump on trains because of these long term perspective.
We don't foresee and we're not that optimistic that we're saying the COVID pandemic will be forgotten very soon. That's why we're saying once the situation will bounce back worldwide until 2023, and then we are going to see a train ridership and public transport ridership equaling pre COVID times because of these effects that I've been talking about, but in general, I firmly believe that long term ridership train utilization investment in these transport systems is going to increase. And therefore, we are in a very, very good long term market. And by the way, always keep in mind, that's why I keep on saying, talking about goods now and GDP growth, whether goods are being transported via train or via truck is something where we benefit from both sides. So I think our position there is quite unique.
Okay. Thank you very much. And another question is on sort of in the U. S. And obviously the stimulus bill, which certainly there's a benefit for yourselves.
I just wanted to get an understanding of just your thoughts on sort of how that can how would it sort of expected to play out? And then on the other side, whether you've got some idea of then the offset with the increased taxation there and whether you think you'd still sort of be a net beneficiary or this sort of thing, something more neutral because of that. What are your thoughts on that?
You mean taxation of Walter to the broader
corporate tax increase in the U. S. And if there's any impact from yourselves operating there.
Thank you for that question, Asdelan. I mean, I have to say that I'm expecting this not only for North America, but also to be precise for Germany and for some other countries going forward since quite some time, that's something that we deal with in our corporate planning. To be clear, I mean, this should just say the respirators give us a kind of headwind, all companies, by the way, that's just a matter of fact. That it's nothing that I think we that will materialize within the next month, but it's definitely something that we have to deal with. Yes.
That's the answer from my side. How much this will be neither in North America nor in Europe or Germany, I Kante, but we have to deal with that, I think, all companies, all industries, all countries.
I get and then I said do you sort of see the offset in terms of the increased stimulus investment or do you see that as a
Yes, this is definitely true, Asaland, your expectation. I mean that the stimulus packages, the 1,000,000,000 of dollars being put on the Amtrak support side in North America, the Green Deal, 100 of €1,000,000,000 once this is properly sorted out where the money directly goes, that should have and will have, we are all very much convinced an additional tailwind effect on our business that is anyhow already kind of on the green path, if I may say so. And we do definitely expect to benefit from that going forward, you know the ways and means how those decisions where the money should go what will be made what's going into the infrastructure was just supportive, what really goes to the systems and the component business. That's not clear yet, but we expect that to happen over the next 1, 2 years. And due to the lead times we usually have when it comes also to tenders and then in the end, the revenue generation.
With us, you. You should not see revenue hits in our P and L before within 1.5 years or so, us in a nutshell.
Thank you very much. That's very helpful. Thank you.
To take the while. So budget needs to be freed up first, then we all know the planning starts planning phase starts, rail tracks need to be defined, programs need to be defined, then RFQs are being sent out, then the OEM is going to be identify it and then later on the OEE defines who's going to be the sub supplier. And you might appreciate that this take the said one and a half years. I think it's more kind of the shorter version of how long that takes until it really hits our books that could well be 2, 3 years and more. So these are all long term projects that make our market in the long term extremely attractive, but don't expect in the next quarters any kind of revenue updates because of exactly these mechanisms.
Great. Thank you very much.
The next question we received is from Ingo Schachel of Commerzbank. Your line is now open, sir. Please go ahead. Gorr. Mr.
Schafer, your line is now open. You can ask your question now.
Can you hear me?
Yes, we can hear you.
Okay, great. Sorry. The first question would be on the China autonomous policy, and I'm trying to understand whether your assessment has changed at all in the last I think at the Q3 stage, you said consultant studies were showing a good year risk. Q4, you said you think it could be a key challenge. I I think this time you're saying you see very limited short term impact, of course, it might mean the same thing just from a different perspective.
But the tone tells us that you're a bit more positive on this challenge, also more positive on your ability to mitigate it. So just curious to understand whether your assessment has changed. Also when you spoke about creative ways of tackling this, in which areas this creativity would be directed, should you primarily think about your go to market and the sales that go through your John Venter, for example.
Yes, Ingo, thank you very much for this question. I think China's business development on the Knobremze side has a couple of different aspects to it. The first one is the consideration about the aftermarket. When it comes to aftermarket, we always need to keep in mind that assets in the rail industry, and you know that very well, I'm just mentioning this for complete mistake, are staying on the rail tracks for 30, sometimes 40 years or more. And during that period of time, they need to be maintained, and they're usually being maintained by the one who supplies the equipment.
And this is the major basis of our aftermarket business in China. And even if a couple of rail systems rolling stock has been put into operation just recently, it now comes into the time where maintenance is being required, and that will continue as a stable business for quite a while. On the OE business side, there's the two aspects of high speed, where we all know that investments in China to some extent are saturating. And also, this is a lower part of our current OE business in China. And their autonomous policy obviously plays a role, and there's a clear political will to become as much as possible independent from external parties.
And then there is a business in the metro fields where we're enjoying a very good position and market position because of our a very convincing and technically advanced and very reliable product that will dynamically also develop in welcome, as we know, that's one of the key areas where Chinese infrastructure and rolling stock investments well go into and that's a part that we're also closely looking at when we are participating in market development. So what are we currently doing? We're obviously in discussions, keeping our strong technical and innovation position in mind with the yes, government entities in order to find rising creative ways to mitigate the risks that emanating out of that, and that's ongoing as we speak. And that's obviously, as we all know, with all political kind of aspects and discussions to take the time it needs in order to come to conclusions. But I think it's very important to state that a very important part of our business is extremely resilient in terms of its long term perspectives.
And the other parts there, we are in active discussions.
Okay. That's very clear. And just maybe on your M and A strategy. Can you clarify on and I think we haven't spoken about this at least with you Jan, on rail signaling. Is that an area in which you would consider opportunistically bigger M and A opportunities to provide a more holistic contribution to digitalization and efficiency improvement of rail traffic or would you rather not compete with the clients in this area?
You might imagine now that the statement there would be that we are looking into each and every opportunity that presents in the markets on a continuous basis, and we're looking into all opportunities that fit together with our business well, both on the rail and the truck side. I think it needs to be close enough to our business to justify that we are the better owner of such kind of configuration, and it needs to fit with our business model and the profitability expectations. And under these preconditions, we're looking into any kind of opportunity that presents itself.
Okay. Thank you.
And the next question received is from Alstrik Glade Otto BHF, your line is now open. Sir, please go ahead.
Yes. Hi. Hello. Two questions actually. One is on your cost management.
So you said that you welcome you from cost savings in Q1. As you indicated before that this is going to be fading out over the next few quarters. Can you update us on what you. What do you expect in terms of cost base evolution for the rest or for the full year compared to last year? And then I had a question on the rail market outlook again.
You said you do not expect traffic to get back to pre COVID levels before 2023. This might look a bit pessimistic. Where exactly do you still see underperforming market as such until 2023?
Thank you. Maybe I'll take the first part. You know, we've been, several occasions been talking about our countermeasures, especially what we initiated in 2020. We have been reducing our budgeted cost levels across the board by EUR 160,000,000 by the full year 2020. I back then somehow occasionally said that I still believe in that, that it should be possible going towards the normalized phase in the future to keep roughly 25% out of that overall amount or 4th sustainable for the time to come after such a crisis, and this is definitely what we are working on.
You know that we still have not in each and every part of the business already normalized levels, But in some parts, we do have even more. So if you look, for example, at the truck business with revenue growth rates of 50% year over year, it's very hard to not open the gates to a certain extent and you can't keep potentially your cost levels on the absolute same amount, so you have to accept some cost increases. But I do think that this 25 and somehow going into the business, something that we as a management are continuously striving for, not completely opening the gates and be very strict on all kinds of especially when it comes to fixed cost our ingredients going forward.
Regarding the second question. I would it is indeed, Alfred, a very, very difficult exercise to exactly predict when ridership will be back to normal pre COVID levels. And but the general thinking is that there is 2 effects that working against each other. The one is the Corbit's related ridership reduction, which yields into a situation where at the end of the day, more people will work from home than they did previously. There will be a recovery in that space.
If you look at Knob Ramsey, in Munich, we have 2,200 people roughly usually working here in our headquarters. It's currently roughly 300 that come each and every day. So that gives you the order of magnitude of the and I think that's probably representative for a lot of office related working environments that we see. Manufacturing plants, this is obviously different. Most of the people go to work.
But that tells you something about the mode of magnitude that things go back. We expect also judging from Knob Ramsey as a company that we'll probably reduce another 10% to 15% in the medium to long term in terms of home offices. So that's an effect where people we'll not commute to that level anymore. On the other side, we'll see an increase in general economic activity, so the GDP goes against it. And therefore, more people are going to work there, so that increases ridership.
Urbanization is going to increase the number of people that who worldwide use public transport and CO2 and the likes will do the same and push in our direction in terms of more mass transit, in terms of more public transport. So now the question is, how are going to these effects going to add up? Our conclusion at this point in time is that probably the old ridership levels are going to be regains by 2023, but you're right, can be debated in length, whether it will be earlier, could be that some domestic forecasts are going to be earlier. And if it was earlier, then we would not object against it.
Okay. Thanks for this comprehensive answer.
The next question is from William Mackey of Kepler Cheuvreux. Your line is now open, sir. Please go ahead.
Hello. Good afternoon, Jan, Frank and everyone. Thank you for the time. So a couple of questions to follow-up. Firstly, with regard to M and A, I mean, your balance sheet and capital Could you perhaps provide a little color on the sort of realistic range or opportunity set of inorganic growth opportunity that you see across both divisions after the Sheppard deal and a number of other smaller deals you've CVS.
Just with respect to your comments on the aftermarket development, it sounds like you're being quite When we look at the opening up of economies and the rising level of freight rates and truck movements in the transportation sector, I would have expected your aftermarket growth this year to be quite healthy. So maybe you can comment a little bit about the framework of how you expect the aftermarket to develop. And then the last question, and we've talked a lot about China. It's critical for your business around it. In RBS, in China, scoping the level of business in OE versus aftermarket would be quite helpful.
Thank you.
Hi, William. Thanks for asking this question. Let me at least tackle the very first and the second maybe jointly with Jan. So on the M and A side, and you mentioned the balance sheet strength that we're having. So maybe someone somebody Ted before that he is always trying to read between the lines.
I have some news for you in that regard. If you read the lines of our quarterly report. There is already the indication that we have, so to say, signed on an M and A transaction on the rail side, but we can't disclose at this point in time as the closing is still outstanding and we have confirmed that we will not do so. So we have already done something on the in the recent past. I can't mention too many details on that, please forgive me.
But here you can see that in a high double digit amount we are going to acquire a company soon that is perfectly fitting into those the kind of characteristics that we usually mention when it comes to adjacent fields, broadening the product portfolio of Knob Ramsey, Etzerodra, which feels kind of really good and adjacent to the existing businesses. So that's one thing, and that doesn't limit my answer to your question to that we are only looking into kind of double digit million purchasing companies, but purchase of companies. But I would say we are open for everything that makes sense. As Jan just rightfully said, we have certain criteria. That what we're looking at, of course, we want a certain margin, want to avoid a certain margin dilution.
We want to be in segments that are future oriented, that are really adjacent and etcetera, etcetera. We're also looking at aftermarket opportunities, software opportunities, whatever also and whatever that brings with it, we are open for everything and our balance sheet is strong enough. If we would go for certain rating criteria as kind of Sealing. We would be able to finance 1,000,000,000, as you know that. But we only do something if we are really strategically certain.
On the aftermarket development. I think your comments are right on the spot. On the other side, we have to keep one thing in mind. When it comes so first of all, even truck mileage has been, to some extent, influenced negatively by COVID, and therefore, the wear and tear also the to mention here as well is whenever it comes to supply shortages, the big question is given the fact that a limited number of pieces and therefore, reduced parts is available, where to ship it. Do I ship it into the OE channel in order to get trucks built?
Or do I ship it into the channel for aftermarket business where it goes into the spare part pool. And this is the consideration where it's hard to predict how the shortage of electronics components is going to hit us in the next couple of months, as already pointed out, and secondly, how the effects of the pandemic are going to influence economic development within specific countries when it comes to usage of trucks welcome and therefore the requirement to get spare parts and to get the trucks maintained. And therefore, we are rather on the cautious side here as far as the outlook for the aftermarket business concern. I might give you a little bit of a background as to why the numbers are as they are today.
Thank you. And on China, so the strategic I'll pose the question on China welcome given the importance it has in your strategic priorities. Could you just help us understand how you see your market position in China developing or changing rather, over the next 2 to 3 years, since it's called up the strategic agenda, it would be interesting to you your insights as to how the strategic position is at risk perhaps. Thank you.
So as I said before, the answer has 3 components. The component of 1 is that the aftermarket is a rather stable long term business with long term contracts the delivery of the services is usually taken over by the one who shipped and actually produced the products that went into the system. And welcome that's a topic of decades rather than quarters or years that I'm talking about here. Secondly, high speed in any case is a market that used to be very hot in China for the last couple of years. And there there's a kind of a even if the build out is continuing, the importance of that market in terms of percentage of the overall infrastructure and public transport activities in China is going down.
And Metro, the Metro market is the one where strong investments are going to be undertaken in the years to come. These two aspects and areas that's where we are having the discussions now with the responsible institutions in China. Given the fact that the policy has just been released a short while ago, I would say it's too early to talk about now a clear quantification of potential impacts here. But keep in mind that a huge part of our business is very, very stable and resilient for the future to come. And in the other part, the creative solutions have to be put in place and the negotiations that need to take
place. William, just one quick addition to what Jan said in regards to facts and figures, profit and loss, so to say. I mentioned to Sven before when we talked about the solid versus the very solid kind of growth aspect in regards to our revenues. And I have to say, I mean, the very solid figure doesn't come if aftermarket wouldn't also grow on that level somehow, we shouldn't be able to have that figure. So aftermarket, we expect to increase somehow in not fully in line with, but in the direction of OE Business.
Thank you very much for the clarifications. Very helpful.
Welcome. Welcome.
And the last question for today is from Iris Tsang of Credit Suisse. Your line is now open. Madam, please go ahead.
Thank you very much for taking my questions. And if I could squeeze in 3, if I may. The first one is on your comment on the rail traffic not expected to go back to the pre COVID level until 2023. And could you give a bit more color on that? So more in terms of the indications for your RBS divisional revenue because Do you think that your RVS revenue should be able to recover back to the 2019 pre COVID level before 2023, Maybe by 2022, which I think is currently the market expectations.
And secondly is on the truck side, And apologies if this has been asked before because I missed the first ten minutes of the Q and A. Because it sounds like you are suggesting Maybe a slightly weaker Q2 for Trucks, but then for the full year, it's looking still very solid and just quoting your words. So can you give a bit more color on maybe the Q2 indications that you are so far seeing in your channels? And last but not the least, a bit longer term looking question is on the hydrogen, because you operate in both rail and trucks, the 2 like earlier adoption for the hydrogen technology. And I think in the past, you've mentioned that the accounting for vehicles for trucks.
When it comes to hydrogen powered trucks, it could be dependent on which the system you go for. And can you give maybe us a bit more update on that and if there's any progress? And also similarly on the rail side the hydrogen trains as well if there's any different patterns that we should be aware of. And thank you.
I would like to start with the first question, then hand over to Frank and let me take the last one as well. So obvious ridership, what we always need to keep in mind when ridership is being translated to our business. We need to always understand that for KnobrBremes, the most important factor in this whole business is the question, how many trains are actually running on the track? The good thing about a empty train is that also an empty train needs to use the brakes. And whenever it breaks, it's a brake is being used and friction is being applied whenever a door opens, whenever an aircon system is being used, when any of the other systems of Knob Ramsey on the train are being used, they need maintenance, they need to be overhauled, they need spare parts and they need to be, by the way, even if a train is not being used, time wise, be recertified them in order to keep their license.
So that means ridership is even if it might take a while and one might debate whether it's going to be sooner or later. What really counts is the number of trains that are being used. And as ridership goes up, as public transport is being used because of increased commuting activities and travel by people. We all go on holidays probably in summer this year. And at least that's being suggest that by some politicians in Germany, I hope that this comes true and that in other countries of the world, this will apply as well to some at least where the pandemic is not too bad, then the number of trains being used is going to increase.
And that will then result into a, let's say, relaxing situation as far as our aftermarket business his concern. So always keep in mind, it's not just ridership. There are even more important kind of factors KPIs that are more important to our business than that, and we believe that these might even recover sooner than the ridership itself. Now coming to the second question, Frank.
Yes. Maybe one addition to the first. You had a concrete question in regards to the growth scenario in regards to pre COVID levels. We think that in the Rail division, we should be able within the full year 2021 that we can achieve the pre COVID levels in terms of revenues already in this year. I think given that situation that was now outlined in detail, we do think that that this will happen the next year.
In regards to your CVS question, where the direction would be quarter to full year. I think we elaborated also a little bit about the uncertainty in regards to the semiconductor and the supply situation in very general. Let me draw your attention maybe to our disclaimer. The beginning of the year or in March, again at our annual press conference, we had the disclaimer where we said we do, due to different knowledge, assume at this point in time that all potentially lost revenues due to the supply chain issue of semiconductors we'll fully be called back in the year 2021. And now we are saying that the most of it should be called back.
That means implicitly an improvement in the quality, I think, of our forecast, respectively, the guidance. We are knowing things better on a daily basis in regards us to what really the supply situation is with the availability of parts from brokers, etcetera. And we can't clearly say what the quarter 2, quarter 3, quarter 4 situation will be. So give us some time. The more we know, the more visibility you have, the more we will share with you and towards the disclosure of quarter 2 in August.
We will be sure updating somehow our guidance on narrowing down the guidance for your further thoughts. Thank you, Iris.
On the hydrogen side, I think it is very important to mention that a lot of the components that we deliver into truck and railway ends are pretty much independent in terms of whether they're being used or not or whether they're necessary or not are independent of the way how the, let's say, way of acceleration is concerned, so how the drivetrain technology that is underlying is being built. So a lot of the products need to be, of course, adapted to the new applications and the way how they're being used. But a break is necessary in a new scenario, a climatization is required, it always being required. Just a few examples that would indicate that our business model is also quite resilient as far as changes in the development of the underlying drivetrains is concerned. And only a very small fraction of our business would be affected there.
To the contrary, what we're seeing with both electric drivetrains as well as hydrogen drivetrains dependent on how they're being operated. They're in fact also electric drivetrains by nature, we're seeing opportunities coming up there with a higher content per vehicle, with attractive content on trains, and it might well be that there will be that there could be. And we're looking into this currently new kind of product areas and product ranges where we can use our core competencies in these future hydrogen scenarios as well. So one could, for example, be just to mention example, valves that for hydrogen flow in these systems where we have a high level of expertise involved today already, and one could probably think of transferring our shortage and know how in that field into the new area and into new system. But once again, this is something that we need to look at, investigate very thoroughly before we do the investment.
We see this Jerni as an area of additional opportunities. Okay. So thank you very much for your time.
Thank you for
your analysis.
Yes, we hope you stay safe, healthy, and we wish you a very, very great weekend. Thank
you. Good weekend. Thank you for your time. Bye bye.