Hello, and welcome to the RHI Magnesita Half Year 2022 Results webcast with Stefan Borgas, CEO, and Ian Botha, CFO. The webcast will consist of a presentation followed by Q&A. If you would like to ask a question, please click on the Questions tab above the slides on the webcast. We will also be operating a video bridge, the details of which have been shared with analysts only. If you would like to register a question on the video bridge, please use the Raise Hand button at the bottom of the screen. Until then, please mute your audio and video. I would now like to hand over to Stefan to start the presentation. Stefan, please go ahead.
Thank you very much, and welcome from Vienna on this beautiful summer morning. For the half year, I want to start with the three main takeaways. First, we have delivered a very satisfactory top line and EBITDA performance. Second, we are making even better progress on our recycling initiatives than our own ambitious plans. Third, following our investments and the restructuring of the company over the last four years, we are now a much stronger, more resilient, and more agile business. We are much better able to deal with the volatility that's there to come. Let's go into the details. In the first half of 2022, we achieved significant price increases, and we gained market share to restore our historic positions. We were able to do this because we choose to invest in building inventories in 2021 to keep our customers supplied with our essential products.
Today's results show that this was the right decision. Our steel business outperformed with a 4% increase in refractory volumes. It further restored our market shares in this area. We have realized EUR 293 million of price increases since the first half of 2021, reflecting the pass-through from the increased cost in almost all areas of the business. The price increases exceeded the cost increases in the first half by EUR 60 million, and that helped us to restore our EBITDA margin to a more acceptable 11.8%, EBITDA, which is the level that we're aspiring to at least from the 10.7% last year. I'm very pleased with the performance of our teams in terms of volumes, market share, and demonstrating the pricing power that we have and the rigor that we have utilized to get there.
We told you we could deliver this, and we have done so. Turning first to health and safety. Ladies and gentlemen, this is our core value, and here we have maintained our strong overall performance. Injury rates were broadly in line with the very low levels of the first half of 2021. Our target, however, is to reduce lost time injuries, the more serious accidents to zero. This year, we are focusing on leading indicators in order to measure this better and to prevent accidents before they occur. On the financial highlights, I would highlight the 33% increase in reported revenues and the 47% increase in EBITDA to a level of EUR 188 million.
Our margin has been restored to 11.8% from the 10.7% last year, and we are able to pass on almost all cost increases very quickly now. It's the speed that has improved considerably since last year. We have a negative operating cash flow in the first half because the value of the inventory on our balance sheet has increased. In fact, we have been successfully reducing inventory volumes. Therefore, this will have a positive cash flow effect in the second half of the year. Gearing is broadly in line with the year-end and with our expectations as we have guided that it would be because of this cost and value increase of inventories. We are then, of course, targeting to reduce leverage step by step during the second half of this year. Let's go into our different businesses.
In our steel business, we saw a strong increase in both revenues and gross margin, not only due to the benefits of our price increase programs, but mostly because of it. We have made clear market share gains, or at least retained our market shares in every single region of the world. This shows also that customers have turned to us to meet their needs through a period of uncertainty. We are the largest scale global player in this industry, with the ability to deliver when supply chains have been disrupted. Let's look into the regions. The strong performance in steel can be seen in every region. Our volume growth has been strongest in the Asian markets, with the price increase program delivering significant benefits there. It's good to see continued strong revenue growth in our target markets of India and China, which is exactly in line with our strategic goals.
In the industrial business, we've seen similar levels of revenue growth, 28% compared to the first half of 2021. Gross margins are traditionally higher in this business than in steel, and they are up versus the first half of 2021. The slightly lower margins compared to last year are due to a longer time that is needed to pass through price increases before they are completely seen in the PNL. This process takes longer in the industrial sector due to the project nature of the business. It's just a longer cycle. I'm very pleased, ladies and gentlemen, to report excellent progress on recycling. Please be reminded that recycling is the single fastest and the most impactful lever that we can pull to reduce our CO2 emissions in the short term. It's very important to us every day.
It's also an additional source of raw materials for us, which increases our vertical integration and strengthens the local for local supply chain, especially in the EU, where we've made the most notable progress. We announced our new joint venture with Horn & Co. Group in March, and the benefit of this joint venture, which closed shortly thereafter, is already starting to come through. In the month of June, we exceeded our 2025 target of 10% recycling content, and we achieved 9.3% over the whole of the first half of this year. Our EUR 50 million R&D program on new technology for carbon capture and other solutions is progressing well. We have 9 pilot projects in various stages of development. The EcoVadis renewed our Gold rating in June.
This is an important rating for us because it's linked to the interest payments on our debt facilities. We have strong scores with other rating agencies also. They recognize our sustainability leadership within the refractory industry. I want to give you a little bit more details on our joint venture with Horn & Co. Group, as this is a really positive development, and it could become a model in other regions of the world also. Horn & Co. Group has been the largest collector of secondary refractory raw materials in Europe. Prior to this joint venture, RHI Magnesita was already a major customer of Horn & Co. Group. We have now taken a 51% stake in this company and run this operation as a joint venture in exchange of cash and our own recycling assets, which have been injected into the company. We are, in addition, investing many millions of EUR of R&D money into technology.
How to make refractory products with recycled content without reducing any of the performance of the refractory product. The next bottleneck for us was going to be how to get hold of enough secondary raw materials to increase our usage rate. This joint venture helps to solve that problem in Europe, and that's why we have been so able to accelerate quickly. The joint venture will also offer raw materials to the market. Please see a technology example here. Our joint venture opened our new recycling facility at Mitterdorf in Austria officially in April. The event was attended by the Austrian Vice Chancellor. The government is very supportive of our recycling ambitions.
Recycling is not just about having the technology to make the final product, but to do it well, you need to collect, separate, store material efficiently, and to recycle it as soon as possible after it has been finished using by the customer. This gives the best results. With this, I would like to hand over to Ian, who will lead us through the numbers. Ian?
Thank you, Stefan. Good morning, ladies and gentlemen. The earnings performance in the first half of 2022 represents a strong improvement on the first half of 2021, when we began to see material cost increases, but there was a delay before we could realize the benefit of price increases. We are now seeing the positive effects as pricing has caught up with costs, and we are negotiating price increases on a more frequent basis. Reported revenues are 33% higher, mostly driven by pricing, with a small contribution from additional volumes, which were up 5%. The increase in revenues, combined with higher gross margin of 23.4%, delivered an increase in gross profit of 37% to EUR 373 million.
EBITDA at the first half is EUR 188 million, with the EBITDA margin up to 11.8% from 10.7% last year. Going below the line, our net finance charges of EUR 19 million compares to full year guidance of EUR 30 million + EUR 6 million for pensions and are in line with management expectations. Finance charges in the first half of 2021 benefited from one-off interest income of EUR 12 million on a refund of previously overpaid tax in Brazil. The adjusted effective tax rate increased to 24%, the midpoint of our full year guidance range of 23%-25%. The increase is largely as a result of the reduction in our deferred tax asset as the Austrian corporate tax rate is to be reduced from 25% to 23%.
In line with our policy to pay an interim dividend equal to one-third of the previous year's full dividend, we've declared an interim dividend of EUR 0.50 per share. Moving to the revenue bridge. Here you can clearly see the impact that our price increases have had with a EUR 293 million increase versus the first half of 2021, with a currency tailwind of EUR 73 million. Sales volumes were up 5%, but this was largely offset by mix. This is very much a story about increased pricing. The same pricing improvement of EUR 293 million flows right through to EBITA, as can be seen here in the EBITA bridge. The price increases more than offset cost inflation of EUR 233 million.
Overall, we are pleased with the EBITA performance in the first half, which puts us in a strong position to meet market expectations for the full year. Moving to the cost performance. Our weighted average cost of goods sold increased materially in the first half, up 19% year-on-year in constant currency and constant volume terms. Nevertheless, we have been successful at passing on these cost increases to our customers. We've set out on this slide the key drivers of the cost increases. Starting with third-party raw material. The weighted average cost of third-party raw material increased by 29% year-on-year. While we are largely vertically integrated into the production of magnesite and dolomite, purchased raw material is the single largest category of costs in our COGS and reflects the higher production costs faced by our raw material suppliers, particularly for energy and freight costs.
We are working on the basis that third-party raw material costs will remain at elevated levels in the second half. Secondly, our energy cost is up 60% year-on-year, representing the highest increase. We continue to see high gas prices, most notably in Europe. We are over 60% hedged for our European energy requirements for the second half, which will partially mitigate against the spot prices that you see on the chart. It is likely that gas prices will remain high for the foreseeable future. Finally, on our outbound freights. Outbound freight was up 18%. Rates for our routes have been stable in the first half at elevated levels. We continue to experience poor sea freight reliability, but importantly, we are able to pass these cost increases through to our customers.
The negative impact from the freight situation is an inventory issue, and we will find it hard to materially reduce inventories until freight reliability improves. Turning to raw material prices. Raw material prices are up year-on-year, but for magnesite and dolomite-based raw material, you can see that we are still some way off the highs experienced in 2017 and 2018. We, as RHI Magnesita, seek to maximize the volume of raw materials obtained from internal sources as we have a cost advantage over other producers. Turning to our EBITA margin. Group EBITA margins were stronger at 11.8% in the first half, with a 3.4% contribution from vertical integration and a refractory margin of 8.4%. Both the vertical integration and the refractory margin increased in the first half of this year.
The refractory margin increase to 8.4% reflects the successful pass-through of higher production and freight costs to our customers. We do expect the vertical integration margin to soften in the second half due to higher cost of production, particularly for energy as well as currency movements. We continue to aim to increase the group EBITDA margins towards the mid-teen level as we see the benefits of our strategic initiatives coming through. Moving to working capital. Working capital increased in the first half by EUR 322 million - EUR 999 million. This is driven by an increase in the value of inventories and accounts receivable due to higher costs and higher refractory prices, as well as non-cash currency translation increases, which totaled EUR 57 million. This given the strength of the U.S. dollar and the Brazilian real.
Our inventory volumes reduced in the first half, with finished goods volumes down 12% and our raw material volumes down 5%. This as we have sought to improve supply chain efficiency across the network, even though freight conditions remain challenging. We will always be conscious of the trade-off between seeking to reduce our inventory volumes and maintain security of supply for our customers. This has enabled us to both increase market share and raise prices in the first half. Moving to net debt. As guided at the full year results and in our first quarter trading statement, gearing remained elevated at 2.7 x at the thirtieth of June, broadly in line with the 2.6 x level at the 2021 year end. We continue to expect a reduction in gearing in the second half towards 2 x EBITDA, driven by working capital reduction.
We have refinanced EUR 600 million of debt facilities during the first half, extending the maturity profile significantly. Our average cost of debt is now around 150 basis points, with around 70% of interest at fixed interest rates and over 90% denominated in euros. Available liquidity is now EUR 1.1 billion, comprising both cash and committed, but undrawn facilities. I'll now hand you back to Stefan.
Thanks, Ian. I wanna talk a little bit about our strategic initiatives, our sales strategies first. Flow Control sales have grown by 23% to almost EUR 250 million in the first half. It was difficult to make progress during the pandemic, but now we are conducting a lot of new trials with customers. We have held more than 270 successful trials in the last 12 months with a success rate of over 85%. Our share in the Isostatic market, a sub-segment of Flow Control, has increased the most. Solution contracts have increased to 32% of revenue, continuing the steady growth towards our target of 40% in 2025.
These contracts are very useful for us to keep market share, get really close to our customers, and use our most advanced products and services to generate cost savings for our customers in their plants. In new markets, both India and China have delivered significant revenue growth of 40% and 32% respectively as we build our market share and increase prices in these target markets. The performance in China is encouraging, and it was delivered during a period when COVID-19 lockdowns held back many activities in the country. This photo is from our recently constructed Flow Control Academy in Leoben in Austria in our global research center. We bring our customers to this facility for training in the use of our products and in the discussion of new products to develop.
It is very popular and is part of our strategy to increase Flow Control sales. Let's turn to the production optimization plan. We have been updating you regularly on the major projects that are part of our production optimization plan. Today, I wanted to remind you of everything we have achieved since 2019. We have closed four plants, expanded or upgraded four plants, and we have three projects remaining to be completed at Radenthein, Brumado, and Contagem. At Contagem, we have redesigned certain elements of the project to fit with new local parameters, and it is now due to complete in the second half of 2023. At Brumado, the project has been affected by supply chain delays and higher costs, but the eco-economics are still very attractive, and we expect to complete in the first half of 2023.
In Hochfilzen, we officially opened our new dolomite production hub in Austria in April of this year. This project has been a real success, completed on time and on budget, which is a remarkable achievement given what has happened between 2019 and today. Radenthein is following close behind Hochfilzen, and it will become our flagship automated and digital plant in Europe. Most of the individual elements of the project are now completed, with the final stages being the integration of all of the new control systems and benefits occurring thereafter. You can see one of the new automated vehicles in operation here, which is delivering significant operational efficiencies and replacing forklift driving. The global growth outlook, ladies and gentlemen, is facing a number of challenges. Against this background, I wanted to make a few points about the resilience of our business in previous business cycles.
Refractories are an essential product. They are vital for industrial production. They are not a discretionary spending item. Our business is correlated with our customers' production volumes, not with the prices of their products, for example, the steel price. Our customers' margins are much more volatile than ours due to their pricing volatility. You can see from this chart, which goes back to look at RHI only before the merger in 2017, the company remained profitable and solid even in the deepest of downturns. It sustained an average EBITDA margin of around 10% at all times. The profitability of our steel customers over the same period was much more volatile. On top of this natural resilience, we have also made major investments in optimizing our production network, cutting SG&A, and driving growth through our sales strategies.
All of this puts us in a strong position to face volatility in the future. In summary, we are continuing our strategic transformation across all of our targeted areas. We are confirming our position as a sustainable leader in the refractory industry through our efforts in recycling and R&D on carbon capture and storage. We are well positioned for future developments in the steel industry. We are also a technology leader in our own industry, constantly developing new products and services such as our innovative Heat Management Solutions offering. Thank you for your attention. We're now very happy to take any questions that you may have.
Thank you. As a reminder, if you would like to ask a question on the video bridge, please use the raise hand button at the bottom of your screen. When it is your turn to ask a question, please unmute your audio and video. Our first question comes from Mark Davies Jones from Stifel. Mark, please go ahead. Your line is open.
Thank you very much. Morning, Stefan. Morning, Ian.
Morning, Mark.
To start with, lots of moving parts. Obviously, a very strong first half recovery. Looking through the back end of the year, you've made a few comments. I'm just trying to work out how they fit together. You think you can sustain margins at around current levels was the suggestion. Is that gross margins or operating margins? To get to the sort of full year expectations, I'm assuming that means a noticeably weaker second half in terms of volume, especially as you try and I guess, shift through some of that inventory. Could you just give some indication of visibility, volumes versus pricing? How much of the pricing is already in the run rate so we don't see any further benefit of that in second half? That sort of stuff.
Okay. Yeah, margins should be sustainable. There's still some pricing to come because some cost has increased since the first in the second quarter. That is still to come, especially in the industrial business. Volumes, of course, are the big question mark. Our order book looks pretty good until the fall. We have six-month order book outlook in the steel business, more like 12, 15 months in the industrial business. We're actually pretty confident about this. There is a risk, certainly in the fourth quarter, therefore, we are careful about the volume guidance for the rest of the year because we don't know ourselves.
Understood. On the freight and logistics side of things, we've heard from some people some suggestion of improvement or beginnings of improvement anyway. You sound a little bit more cautious on that. What are you seeing in terms of progress towards a more on time delivery and more stable cost situation?
Yeah, it's an interesting question because there are so many moving parts here. There is a bit of a release on ocean freight costs from Asia to some regions, or at least it looked like that during the second quarter. Very recently, this has come up again, though. There's a very significant increase, a really very significant increase in Europe, in North America, in South America, and in China on land freight costs. Trucking costs is going up very significantly. Overall, I wouldn't expect very much release this year.
Okay. Thank you very much. If I'm allowed one final one. We talked previously about how much you can plan ahead for potential disruption to gas supply in Europe. Where are you on that? I know you've been putting some contingency plans in place.
Yeah. Obviously, this is an area where we're working very, very closely together with our governments, especially in Austria, but also in Germany. We are investing over EUR 6 million at the moment. Just as we speak, the construction's already happening in order to replace 20%-30% of the fuels that we get from gas, of the energy that we get from gas to other fuels in order to get a little bit more independent. We're also participating in the build-up of gas storage in Austria. There's relatively significant storage capacity available. We have booked some of this in order to build buffers here together with the government. This is very much a hand-in-hand activity that's happening here. It, of course, depends on how much gas we can at the end get to flow into these storage facilities.
At the moment, with these two measures, we're relatively confident that we can get through shortages in the level that they are being discussed at the moment. Okay. Thank you very much.
Thank you. Our next question comes from Harry Philips at Peel Hunt. Harry, please switch on your audio and video.
Yep, good morning, everyone. Just a question on the recycling, please. Obviously Q2, you're saying, Stefan, you hit your 25 target of more than 10%. How do you take the strategy forward here in Europe and then elsewhere in the world? Do you need to do more Horn-type joint ventures, or can you greenfield? Just really the dynamics and the possible financials around that, please.
Yeah, great question. Actually, we're just discussing it ourselves. Obviously, our target for 2025 now is achieved in 2022, so we need to increase, and we will. We're just debating on what is the right target for 2025 because it depends on all these moving target, targets. How fast can we bring technology here in Europe? Europe is the leading region now, clearly. How much can we translate the learning from Europe and the infrastructure from Europe into other regions? In Brazil, this is already working quite well. We've made great progress in China. India anyway is very strong. North America, we still are a little bit behind here because it's a big country. It's difficult to say.
I wouldn't expect that we will make many more of these kinds of joint ventures because those businesses that we have found with Horn are not broadly available in Europe. We'll have to do more of our own investments. A little bit of CapEx will move into this segment. It's not dramatic, but we will probably accelerate the CapEx spending in order to move up to 15% or something higher than this. But we're, again, as I said, debating the 2025 interim target. Then 2025 is not the end of the road either. Recycling is gonna become a technology game, not anymore a waste management logistics game.
Then just a second question around market share gains. I mean, clearly those look pretty punchy, and clearly the outcomes you achieved in the first half in steel is very impressive. I'm just wondering where those market share gains come, and I'm sure you saw last week, obviously, you know, other companies talk about market share gains as well. Trying to sort of work that one out in its conclusion, if you like, as to if two companies are gaining market shares, who's losing?
Well, as you know, the refractory industry is relatively unconsolidated, so there are many small players, and they suffered a lot in this entire volatility of the last three years, and I think they will continue to suffer. It takes cash to manage through this properly, as you can see in our own balance sheet. Ian, I think, has pointed it out quite well. Customers value this delivery reliability and the fidgeting on the edge with a quick, cheap offer of refractories, that's not worth the risk anymore. That's why you see the large players gaining and the small players probably struggling a little bit more.
Just as a very final one, just in that context, obviously, you saw a transaction last week of Calderys and so on. How do you sort of view that? Do you view that as a potential threat? Obviously, it's gone to private equity. Just your thoughts around that transaction and was it an asset you were interested in?
Obviously this was clear that Imerys was gonna sell this asset. This has happened now. We have to see what happens with the new owner, what they want. It's not a bad message at all that the reputable private equity gets involved in our sector. That might help the consolidation. I think that will serve the entire industry. In principle, we look at this positively. Of course, we like very much the valuation. We like it a lot that a relatively simple mixing business is valued at that multiple. This is good news for our Magnesita shareholders.
Fantastic. Thanks very much indeed.
Thank you. Our next question comes from Anthony Plom at Berenberg. Anthony, please go ahead.
Morning, everyone. I have three questions, I think. The first one is just around the refractory services, which look like they're up very, very strongly year-over-year. I'm just wondering how much that's been kind of just underlying volume growth from your customers, how much has been new customer wins or sort of winning more share of the existing customers. Second question was just on, I guess, factoring and forfeiting. Looks like factoring was up, forfeiting was down in the period. Just wondering where that potentially lands for the full year. Final one. I'm just looking at the risk section in the update this morning. You talk a little bit about challenges in retaining talent. I'm just wondering whether that's a regional thing or in a certain part of the business and how you're kind of addressing that.
Thanks very much.
Let me take the last one first on talent, and then I hand over to Ian for the other two. Yeah, retaining talent is a true concern, especially in North America and Europe. In the other regions to a little bit lesser extent, although also there, the situation is getting tighter. This has broadly to do with changing demographics. In Europe, we have many more people retiring in the next 10 years than people coming into the workforce, so there will be a shortage, a structural shortage. In the U.S., the reasons are a little bit different, but it's similar. This is a concern. We don't have a problem. When we look at the numbers, we managed to fill all the open position. It takes a little bit longer.
We have reduced the fill time now with making some operational changes in our talent management, so that works well. Structurally, for sure, the things that we're doing in Radenthein, that we have done in Urmitz, and that we will do in other plants help because we need to replace simple labor with machines, like this autonomous driving vehicle that you saw that replaces forklift and therewith a forklift driver. We're gonna have to do much more of this over the course of the next years. That's the answer, really the structural answer to this. The second piece that goes with that, of course, is the education and upskilling of our workforce in order to be able to manage the more complex and sophisticated environment.
At the end, it's good for the people, but we'll eventually have a little bit less people than now in our business. The other two questions, Ian.
Thanks, Stefan. Anthony, starting with factoring and forfeiting. As we've discussed in the past, this is an important source of low-cost liquidity for our business. We have a cap of EUR 320 million for both factoring and forfeiting, and we would not expect that to increase or decrease at the end of the year. In reality, we have more capacity, both in terms of the liquidity and the underlying instruments, but we do keep a cap of EUR 320 million. We would expect to be there at the same position at the end of this year. On the growth of our services business, this is fundamentally associated with the strategy that we have to grow our solution services business to 40% by 2025.
You've seen, over the last year, that grown from 29% to 32%.
Sorry, just on that, has there been a sort of a notable amount of new customer wins, or has it been kind of winning a greater share within your kind of existing customers?
Both.
Maybe some of the other sides.
Both.
It's very much a combination.
Okay.
Of both. Of our existing contracts increasing in activity as well as gaining new contracts in both North and South America.
Thank you very much.
Thank you. Our next question comes from Mark Fielding from Royal Bank of Canada. Mark, please unmute yourself. Mark, please start your video if you can. Your line is open.
Sorry. I'm afraid my mic, they said my video won't work. There we are.
No problem.
Sorry, guys. A couple of questions. Actually, first one, just to follow up please, in terms of the question you were talking about labor. Just talk about wage inflation this year, how you think that evolves next year and how you continue to think about the offsetting. 'Cause I'm assuming that some of the inflation that's going on this year is gonna be more of a factor in next year's wage negotiations than it actually was in 2022. Then a second question, obviously, you talked about reducing net debt/EBITDA towards 2x at the year-end. Can you just. That's based around a scenario where also you assumed potentially slower demand. How do we think about the net debt/EBITDA evolution if, say, actually demand remains strong and the business continues to grow?
Does that have to make changes to accommodate that from an interest rate perspective, et cetera? Thank you.
All right. On the wage inflation, Mark, yes, you're absolutely right. We've seen the highest labor cost increase in 2022 than compared to the last 20 years. We are quite convinced that 2023 will be above 2022. This is not stopping. This is a bit of a concern for our cost of goods, but this is more of a concern for SG&A. We're looking at this very, very carefully. We're careful on SG&A, especially, and we're having lots of efficiency discussions in this area as well. We don't know what the percentage will be, of course, because these discussions are just starting in all the different countries. This is not very different to other areas of cost, of course, that could still materialize next year.
Our pricing rigor, the transparency that we have with our customers on all of these cost items continues to be super important. Our sales force is very focused on this so that we don't suffer under this and that we can invest the money into inventory and good solutions and good technology rather than in having to absorb inflationary elements in the company. We don't want to do this, and we don't intend to. On the Ian Botha?
Yeah. Mark, this high level of debt that we have is going to pass. We expect our business to deleverage over the course of the next 18 months. The levers to deliver that are very clear, and we've run a number of scenarios, all of which confirm this. There are two areas that in particular we point to. The first is around working capital. We're sitting with working capital intensity at the moment very high at 29.3%. We expect that to reduce in the second half towards 25%. That comes about because firstly, we expect our accounts payable to increase with our capital expenditure weighted to the second half of the year. Secondly, as we further reduce our physical inventory levels.
In particular, in the second half our focus is on our raw materials, where we currently have a raw material coverage ratio of just below three and our optimal in a more stable environment is two. We see the opportunity to reduce some of the very high cost electrofused magnesia, the alumina, the graphite to lower levels. We can do that even in a situation where demand remains unchanged. The second key lever is we continue to expect to have a strong second half to this year. We've seen nine consecutive months of delivering stable EBITA around EUR 30 million a month, and that supports our leverage reduction. If the market backdrop weakens later in the year, that will facilitate further working capital reduction.
You just need to go back and look at how the combined business performed during COVID or go back to the global financial crisis and you see over those periods working capital reduced by around 30%, releasing cash and supporting a reduction in net debt.
Thank you very much.
Okay. Thank you. Next question.
Thank you. As a reminder, if you would like to ask a question on the video bridge, please use the raise hand button at the bottom of your screen. We will wait for just a moment to give analysts a chance to register their questions. I would now like to hand over to Stefan for any closing remarks.
Well, thank you very much. This was a challenging but interesting first half of 2022. We will have more such challenges coming. We don't know what we don't know, but we're prepared for this now. I think this is the major difference compared to the last decade in which we did business. RHI Magnesita is set up for volatility. We're resilient, we're strong, we're much faster and agile than we were before. We delivered very good results in the first half of this year, and we are looking forward to delivering results of the same quality again in the next quarters and semesters and years to come. Thank you for dialing in and for listening. Of course, we're looking forward to interact with you over the course of the next days and weeks. Goodbye from Vienna.
Thank you.