Good morning, welcome to CTT's earnings call for the second quarter. We take page number two. It's me, Torbjörn Johansson, that make the presentation, on my side, I have our new CFO, Markus Berg. We take the next picture number three, go straight on to page number four. The highlights for the second quarter was that we had sales in line with our forecast. We met SEK 37 million, that's in the center of the forecast. The best thing with the quarter was that the aftermarket sale did increase for the third consecutive quarter. That is exactly to the plan. The order intake also increased, that was for the fourth quarter in a row. Now we have the highest backlog since the second quarter 2020 when the pandemic started. We take the next page number five.
The financials in short, if we compare to the second quarter last year, the net sales was down. The quarter last year, we still had higher OEM sales because the OEM production rate was not taken down as quickly as the aftermarket. The EBIT margin was good, that's most thanks to a one-off in the OEM segment. Even without that one, we would have had a positive EBIT. The cash flow was also good, that was also affected on this one-off item. We take the next page number six. If you look at our sales mix, we still have the situation that the OEM sales are historically low. We are down at 21% of our total sales, the aftermarket is very strong, 65%. The retrofit was 0, VIP was a little bit less than normal. We take page number seven.
If you look at the sales bridge, net sales bridge, here you clearly can see, compared to last year, that the OEM sales was down and also VIP. Retrofit was very weak also the last year. On the aftermarket, as I said, it has come back, and the aftermarket was decreasing very quickly last year when the pandemic hit, and the aftermarket was immediately very low. We take the next page number eight. Here we look at the EBIT profit bridge. First of all, we had an effect of the currency. The U.S. dollar was very strong the second quarter last year. I think the U.S. Dollar was about 16% higher that year than this year. Even though we had a positive effect over accounts receivable and our accounts payable, we still had a negative effect of the currency. The one-time effect gives us SEK 5 million on the EBIT.
On the operational performance, you can see that our cost-saving program, we have reduced the cost with SEK 4 million compared to the quarter last year. We take page nine. Now I take it a little bit slower so you can get it in the right flow. If we look at the cash flow, that was also, of course, positive thanks to the one-time effect. The EBITDA gave us SEK 13 million in contribution, we of course have paid the dividend of SEK 22 million. That means that we have a closing balance of SEK 24 million now. Without the dividend, we would have had the positive cash flow of SEK 7 million. We take the next page, that is page 10. Here you can see the order intake and the order backlog.
As I said in the beginning, we are constantly increasing the order intake, and it's mostly driven of consumable or aftermarket sales. The total backlog now is the highest since Q2 2020. Especially the aftermarket, we can say we have this bounce back as we have talked about, and the aftermarket continues to grow. We see that on the order intake also. We take the next page, and that is page 11. We go straight into page number 12. If we look at the accumulated, the first half year of 2021, of course, the comparison compared to the year before is affected by the first quarter last year, which was the pre-COVID quarter. Therefore, if we compare those two quarters with the last, we have lower net sales. Of course, we also have a lower EBIT.
The cash flow is 0. I think that is good because the last year we had a negative cash flow, because we invested in inventory at that time. We take the next page. That is page number 13. If we look at the sales mix, it is the same situation on the half year as on the quarter. The aftermarket is very strong, 65% of our sales. The OEM is very weak. We take the next page. That is page number 14. If we look at this net sales bridge, here you clearly see that we have an effect of the lower production rates at both Airbus and Boeing. The OEM sales on the half year is down SEK 43 million. You can also see that the VIP or the private jet segment was not so good this year.
We are in the end of a couple of programs. Last year, the VIP was a strong two quarters. Retrofit is about the same. The aftermarket is very positive. We compare here with one quarter without COVID and in last year, and now we have two quarters with COVID, and you see that we are almost at the same level as we had last year. It's clear here, we have lower sales in OEM, as expected, and the aftermarket has recovered very good. We take the next page number 15. If we look at the cash flow, over this half year, you can see principally, we have a little bit more in cash by the end of the half year as in the beginning. The profit has given us some headwinds, but principally, we have balanced the dividend payment with increasing our borrowings.
We take the next page, that is page number 16. We go straight into 17. Here we look immediately at the net sales bridge for the rolling four quarters, here it's very clear again, we have lost on the OEM sales, we have also lost still SEK 50 million in the aftermarket. There you can see where we have the potential because the aftermarket can grow quite a bit to be back to the pre-COVID levels. We take the next page, that is page 18. Now we go into the outlook. We take the next page number 19. If you look at the aviation industry in total, you can see on the left diagram, there you can see the number of flights per day. The red line is the flights during 2019. It means before the COVID.
The blue line is during 2020, there you see the steep decrease, in April. A good recovery during the fall or the summer. It has been relatively flat. The black line is the number of flights during 2021. There you can see we were a little bit at 75,000 flights at beginning of the year. We had the second and the third wave of the COVID, and it dropped a little bit. With vaccination, the number of flights has constantly increased again. If you look at the right diagram, that is the number of travelers per day in the U.S. Here you can see that we had the very big drop in the beginning of the pandemic. You can see the recovery, and then you have a little bit of a drop again with the second and the third wave.
Since the people in the U.S. have been vaccinated, you see that we have recovered very good. We are almost back in the United States where we were before the pandemic. I think this is a good illustration on how we think that it will also be in the long-distance flights. Of course, when the vaccination will be covering more parts of the world, I'm very sure that we will have a similar development on long-distance travel, which is, of course, the most important part for CTT. We take the next page 20. As we have said, the aftermarket is in recovery at CTT. Here you can see in the left diagram, the aftermarket sales, the last quarter since beginning of 2019. You see we had the big drop in aftermarket sales the second quarter last year, and we bottomed out in the third quarter.
Since then, the sales has increased a lot, and we are slowly coming up to the level we had before the pandemic. If we look at the right diagram, there you can see the aftermarket per year, and you can see 2020 was very low. It was less than half of the 2019 level. Already now, after half a year, we are coming close to the sales of 2020 and of course, we will try to come up to the sales of 2019 and we will continue to grow. The aftermarket, as I see it develops exactly as we have planned, and the next step in the aftermarket sales by CTT will be pushed by the recovery of the long-distance travel. We are lucky that 787 especially has been used on a lot of middle-distance traffic and has kept our aftermarket relatively good.
The next step we will really have when the long-distance traffic starts. We know many airlines are planning now to start to fly international again. They will open up the destinations again. I think especially the traffic between Europe and the United States will increase a lot the next coming quarters. To Asia, perhaps it will be the next step. Between Europe and U.S., I think we will have a totally different situation at Christmas than we have now. We take the next page. That is page 21. Here it's the same picture as we showed you a quarter ago. I have put in a little bit of comments what has happened since then. If we look at 787, there we, of course, are dependent on higher production rate to increase our sales.
It's a little bit hiccupping now because Boeing has problem to deliver the 100 finished aircraft that they have. The FAA has found some problems in some of the aircraft, so they have to rework them. Boeing has put priority on getting those aircraft out. I think they will stop production for a month, either now during the third quarter or beginning of the fourth. That could affect our deliveries on the OEM temporarily. We are talking about a month of deliveries. Unfortunately, I think, because Boeing is not delivering those finished aircraft in the same pace, perhaps it will take a little bit longer before they increase the rate. I expect that they increase the rate in 2022 because the 787 is generally a very popular and suitable aircraft for these times. This is a perfect aircraft to open up long distance travel again.
If we look at A350, Airbus don't have that kind of production problem as Boeing has had. They are indicating to the suppliers that we should be prepared to go up to six aircraft a month during the fall. On this platform, we are more dependent on penetration than we are on rate increase. Therefore, we always will have some fluctuation in our deliveries from quarter to quarter. It's positive that Airbus sees that they need to go up in production rate. A350 is also a very suitable and popular aircraft for long distance for the next coming years. If we look at 777X, of course, you all know that Boeing delays this program. They have some problem with FAA, I would say. I think because of the MAX disaster, I think FAA is very critical, and they are very demanding in this certification process.
Perhaps it's not that critical because the 777X is a big aircraft, for the moment, it is not needed by the long-distance airlines. Be sure, I am very positive on the 777X in the long run because the 777X will be needed when we have more passengers coming back on long-distance travel. You know that 777X will replace three types of aircraft. First of all, the 747, that we have four engines, you have the A380, four engines, big aircraft, and you have about 1,500 777s that are old. All those aircraft that is really needed when they need more capacity, means when the tourist traffic internationally come back, the 777X is the aircraft.
For the moment, it's better for the airline to fly 787 and A350. Believe me, in three to five years, the 777 will be very popular because that is a possibility for the airlines then to grow capacity, especially in the tourist class, which I think tourists will come back perhaps quicker than the business traveler. For the moment, it's a little bit delay in the program. It lowers our sales in the OEM, or we do not get the increase we perhaps had hoped to have because delivery rates will be low. Again, here we are really focused on getting as much penetration as possible. It means we are actively working very hard with customers for the 777X that they should select our options. The MC-21, nothing special has happened.
We have not got orders from that program, but I think it's coming closer to certification, and when they ramp up the production, we will increase our OEM sales. We take the next page 22. Here we have our retrofit business, and again, it's the same slide as for the quarter. What has happened here, we said that we were positive to have sales in the retrofit, and this quarter it has happened. We have got an order from Pobeda, which is the domestic part of Aeroflot in Russia. They have taken over 10 737-800 aircraft from Aeroflot, and they will have 40 more coming in the next two years. Pobeda, as you know, they have our Zonal Drying System in all their 737 aircraft.
Now we will deliver the 10 aircraft in the third quarter, and we expect to get the orders for the extra 40 that will come to Pobeda during 2022 and 2023. This is a clear example that we have the possibility to sell drying system in the retrofit market. We have more customers that have our drying system, so they are the most obvious one in this situation. I strongly believe in the drying system for the future. If you look at humidification, of course, we have not taken an order, but we have discussions with airlines to install cabin humidification in premium class. I think the biggest possibility we have here is with airlines that have selected the options for the new aircraft and they are retrofitting older aircraft, which they will keep, for example, for an additional 10 years.
There we have a real chance to sell humidification into the cabin as a retrofit system. We have started the activities to get the Boeing 737 MAX system certified. We have SunExpress in Turkey as a customer. They will install the system in one of the first MAX. We will run the certification. We can say that retrofit business is looking more promising than it did half a year ago. Pobeda is a good example on that it's possible to sell quantities even if we have some hard times. We take the next page. That is page number 23. I think perhaps this is the most promising or exciting part of our business for the moment. It's during the private jet. Again, it's the same slide as for the quarter. I have marked in the pictures now what has happened since then.
Airbus did launch the enhanced A320 Corporate Jet. They did it in June. It was a big conference with a lot of VIP owners, they presented our system very, very good. They also informed us that they have the first customer that will take an advanced humidification system into the A320. There we are pretty sure that we will get an order. This is a big step. I've been working very long time, I think it's 20 years since I've tried to convince Airbus that they have to have humidification in premium class. The Airbus Corporate Jet was not that interested at that time. Now, as you know, the CEO of the Airbus Corporate Jet, he says an Airbus Corporate Jet is not a good aircraft without the humidification system.
It's a totally different attitude from Airbus to humidification for long-distance VIP flying. If you look at the middle picture, that is the Global 7500. You know we have worked very hard at short terms to make a system for this aircraft. We have looked into this segment of business jets for many years, and we got the opportunity. That is the main development activities we have done during the pandemic. The system is now flying. 1st of July, it took off, and it is flying test flights, and we are very happy. We have no issues with the system. The test flights will continue in the summer, and I hope they will deliver this aircraft early in the fall.
That is the first time CTT has a system flying on a business jet, and as you know, business jets is a much bigger market than the bigger VIP aircraft. Bombardier will build 40 of these aircraft a year, and Gulfstream has similar aircraft, and they will also build 40 per year. I'm really excited to see what will happen now when Bombardier and also the business jet customers realize that they can get decent air during those long business jet flights. On the right picture, you have the ACJ220, and that's the next one. That is a business jet aircraft, or it's a passenger aircraft from the beginning that Airbus has taken over from Bombardier. Bombardier was not able to market and support that in the market, so they did sell it to Airbus. Airbus decided then to make a business jet out of this.
The main production is, of course, for passenger, but some of them will be sold as business jets. Here again, Benoit, the CEO of Airbus Corporate Jets, has said this aircraft should have humidification. We are in the selection process now. Of course, I'm very optimistic because we have the cooperation with Airbus Corporate Jets on the A320, and now we know what kind of a system they would like to put in. It will be a system with four humidifiers, but also a drying system, and I think we are in the perfect position to win this deal. The private jet segment has not been suffering from the COVID. We have put our resources to develop system for this market.
I think after the pandemic, we are much, much stronger, and we have a much better offering into the private jet than we had before the pandemic. We take the next page, and that is page 24. If we look at the forecast for the third quarter, we expect sales between SEK 35 million and SEK 40 million. We will have some increase in retrofit, but we will have a little bit decrease in the sales of the private jet. It will be about the same sales as we had in the second quarter. If we take the next page, that is page 25. Normally, we never give a forecast for the full year, but we said we make it this time, and we forecast the full year to be between SEK 140 million and SEK 160 million.
We have a little bit of a risk on the downside with the OEM, especially the 787 production stop, which I think it will be, and we have a potential in the aftermarket. On the diagrams, you can see how our net sales has developed in the different segments over the last quarters, from beginning of 2019. There you see the orange piece is the OEM sales, and we have, of course, been suffering from that. You can also see the blue part of the diagram. There you can see the aftermarket was very, very good, and it declined, but the aftermarket is coming back again. I can say that on that diagram, that now we are through the pandemic. We start to increase sales again. I think for the next report, I hope we can see it also on the rolling four quarters.
We have been going down for some time now. It will flatten out, and then we will also increase sales for the rolling four quarters. That will be fueled by, first of all, the aftermarket that is more or less taken for granted. I think we will have good development in both retrofit and VIPs in mid-term. The OEM, we will see some increase, I suppose, during 2022, but it will increase much more 2023, 2024. We take the next page, and that is page 26. It's a little bit like we are writing in the report. I'm really optimistic now. We have had a tough time in aerospace. It was really tough to reduce the sales. We have reduced it a lot, and we have, so to say, spent our time to develop our VIP system, to develop things for the OEM and so on.
Now I think we have a real chance to have another development, and it's based on really the aftermarket will continue to grow. The last step we have to take is that the international, either intercontinental traffic comes back. I think it will start now with traffic between the United States and Europe, and then it will be between Europe to Asia. I'm sure we will continue. If we look at the business jet segment, we are breaking into business jets. I think the VIP sales will also increase, thanks to the ACJ320neo. The business jet makes our market much bigger, and I really look forward to try to get into Gulfstream. Perhaps we can get into Dassault. They also make a new business jet. I think we will make some noise in the business jet segment with the Global 7500.
On midterm, I think the private jet or business jet or VIP will grow. On the OEM, we have said it's tough now. The OEM will grow. It's only a question when. It will take some years perhaps. We will have a strong growth in 2023. You should remember that our OEM products, they are mainly on 787, A350, 777X, and also as a joker, the MC-21. These are platforms that are very modern, that are the correct platforms for the future. They consume less fuel. They will be big sellers when we are out of the pandemic. There our focus is to get more sales on each aircraft, especially on the A350 and the 777X. The retrofit sales, I think, will rebound. We have a really good chance to sell drying system. The next discussion in aerospace will be the environmental footprint.
The drying system saves fuel. This must be positive for the future. If we look at the long-haul traffic, the most important thing for the airlines now is to get the passenger to be confident to travel again. It means they have to make everything they can do to reduce the risk that you get infected during the flight or after the flight. I think the humidification system we have, that is optional on many aircraft, but it could also be sold as a retrofit. I'm very optimistic. We are through the COVID-19. We have start to increase our sales, and we have good possibilities to have a good development in all our segments. It's a little bit different pace in the different segments, but every one of them, I think, is on the way to increase sales. I think that was the last page.
Page number 27 is question and answer. Now I'm ready to take some questions.
Ladies and gentlemen, if you have a question by phone, you have to press 01 on your telephone keypad. It's 0 and one on your telephone keypad. We have our first question from Karl Bokvist from ABG. Please go ahead.
Thank you. Good morning. My first one has to do with the comment you made about hopes of improving retrofit sales. I'm just a bit curious here if we should continue to be on the lookout for public press releases or in case you feel that you have a retrofit business that will progress even in the absence of orders that you want to or are forced to release due to more reasons.
Yeah, I think when we get retrofit orders, you know from historically, if we get low volumes, one or two aircraft, perhaps we don't send out the press release. It has been the case with Jet2, for example. Substantial orders in the retrofit market, of course, we will send out a press release, and especially if we break some new ground to sell humidification as a retrofit. That would be a big thing. You can be sure it will be a press release. We are not shy to send out press releases, no.
No, understood. I was just curious about if there is any kind of underlying activity that we might not be able to follow. On retrofit and also VIP, what is your assessment on your own capacity here? Is it still the case that you yourself feel that you have the ability also now that when you're a bit fewer people as a result of the temporary reduction program into, if we assume that VIP and retrofit might begin to improve?
It's always two parts of resources when we take new orders. The first part is the engineering. If we have retrofit orders on Zonal Drying System, for example, it's no engineering work, more or less. It's systems we already have certified, and so that is only a matter of production. If you look at, of course, we have downside our production capacity, but the retrofit order is not so intensive for our CTT workforce. It's a lot of board items, and we have a constant production of, for example, Zonal dryers. If it goes good, of course, we have the possibility to hire back people that we had to lay off. I would be very happy if we get that amount of orders that we can start to hire people back.
I think most of the people that have been working at CTT and had to leave the company are very happy to come back. So I see no limitations on the retrofit. On the VIP, of course, it's a little bit different. There it's a little bit more engineering for each order, especially if we would get into Gulfstream or something, then it's a bigger effort. As you know, we have been very careful. We have not reduced the resources very much on the engineering side. We are through, for example, a program like the 777X, so we have engineering capacity, and we are happy to spend that on VIP and private jet orders. I see no problem with capacity. We are eager to have something more to do with CTT.
Understood. On VIP, maybe you're unable to specify any particular customer or model, but in general, let's say that you are officially selected for delivering commercial volumes for a business jet or private jet program. How long is the cycle or the lead time for you from being confirmed, selected, you have done your test flights, now it's the time for you. You've been officially confirmed to deliver actual sales. How long will it take for you before you can actually begin to deliver two aircraft and see those being installed and for you to start booking revenues?
I think the private jet segment is both VIP and the business jet. We have the Global 7500. In the first step with the growth, I think it's not a big issue. The Airbus Corporate Jets, they now market our system for the A320 family, and I think that Airbus has the mindset that every aircraft that goes out without our humidification system is a mistake. I think they will really try to get us on board on every A320 corporate jet aircraft. That by itself would give us significantly increased sales in the VIP. That's the most obvious increase that we have. That is from now. I expect an order soon, but that is from now. I think Airbus will push that very hard.
If we look into the A220, there we would have to make development of the system, but it will be, so to say, a semi OEM program because they take a part of the aircraft they produce and send them to completion center. That would be a business that would be a little bit between our standard VIP business and an OEM business. We would deliver the same system, but it will not be at the same, so to say, qualification requirement as if you work to put it in on the production line. That situation we also have on the Global 7500. We can deliver the system. We have delivered now to many aircraft that goes out of production, and that could be on short term.
If we would integrate us more together with Bombardier and get the system on the production line, that would perhaps take two years. That would be then additional sales. It would then be because the business jet, if you look at that compared to the VIP, the business jet, they don't have any market for passenger aircraft. If you get in there, you would have the system on the production line. That will never happen on the big aircraft. There we have another situation. Some business we can make very quickly, but on the long term, the best thing is if we get into the production line on both Bombardier and Gulfstream, and then we're talking about two or three years perhaps.
A follow-up on that. Let's say that things go well and that you, to a large extent, are able to deliver these solutions into the production lines. One more kind of reporting aspect of it. Will we still be booked in your VIP sales segment? The follow-up, just I think previously you've mentioned that the profitability potential for a system might be a bit higher in VIP. I was just wondering if that's also the case for these VIP business private solutions that you're now highlighting.
I don't exactly know how we will book it. The first thing is to get the contract with Bombardier and Gulfstream. We can decide if we book it as an OEM sale or a private jet sale. If you would ask me today, I would rather like to have it as a private jet sale. We will have to come back to that. Regarding prices between OEM and private jet, of course, we will be very careful that we don't sell our humidification system into business jets on the production line with too low margin. We have a totally different kind of pricing when we talk private jet compared to a commercial aircraft.
Understood. I have a few more, but I'll get back in line first. Thanks.
Thank you. Ladies and gentlemen, if you have another question, please press 01 on your telephone keypad. 0 and one on your telephone keypad. Ladies and gentlemen, we don't have any more questions for the moment. If you have another question by phone, you have to press 01 on your telephone keypad. We have a new question from Karl Bokvist from ABG once again. Please go ahead.
Yes. Thank you. If we look a bit on the aftermarket side, you mentioned that the key driver now will be a return in flight hours for the long-haul segment. I'm just a bit curious in understanding, the aspect of the installed base as well, because this has continued to grow throughout the pandemic on the humidifier side and been fairly stable on the dryer side. Shouldn't we also see a bit of a support from the fact that the installed base has continued to grow?
Yes, of course. The first goal we have is to reach the aftermarket sales we had during 2019. As soon as we have reached that, we will continue to grow. That is for granted in our business model. The aftermarket sale is in correlation to the complete installed base. You are correct, the installed base did grow during 2020, not to the same extent as before. It did grow. As soon as we pass the 2019 levels, we will continue to increase the aftermarket sales, that's for sure.
We have a growing installed base, and then just, has there been any changes to pricing lately in either the OEM or aftermarket channel? One part of that being kind of your regular ongoing pricing discussions, if there's been any form of change there, but also the second part, what you've been able to do now given the fact that we've seen quite a lot of rising raw material costs and also rising freight and transportation costs.
I think the pricing situation, there is one pricing life, so to say, to the OEM, where you normally have very long-term agreements with the OEM. The aftermarket, we follow the price increase that Airbus and Boeing put into the aftermarket. The whole aerospace industry is living on the aftermarket. Normally Airbus and Boeing, depending on the indices and so on, they decide what kind of increase in price we are allowed to give in the aftermarket. It has happened that we have a 0 year. It has happened that we have had a 6% increase in the aftermarket, but I think normally it's something between 2% and 3% that we increase the price every year. If you take the question, raw material and so on, we are an industry that is very lucky. The raw material part of our cost is relatively low.
We have a very big value adding in our industry. Raw material is less sensitive for us in the aerospace.
All right. I might have missed it in case you commented on it early in the call, but the one-off item you take this quarter, a positive sort of income effect of + SEK 9 million and then an impairment of - SEK 4 million. First of all, is there any kind of granularity you can give on that? The second one, will this be a one-off occurrence, or will we see anything more related to this event going forward?
No, a one-off is a one-off, that's for sure. This is a special one-off. It's a one-off, and I cannot give you any more comments on this one-off. It's related to OEM, and it's normally sensitive to discuss those things. I cannot tell you anything more about this one-off, but it's for sure a one-off.
Understood. Finally, just I want to say welcome to your new colleague, Markus Berg. First quarter as new CFO. I was just a bit curious to hear your first impressions as new CFO and your view on what you would like to see happening in the future.
Thank you, Karl. My suggestion is that we book a meeting call and talk about my first impression. Is it okay to do that?
Yeah, sure. Okay then. That's all from me. Thank you to both of you.
Karl, I can say that Markus did start to work at CTT 1st of July. He is sitting next to me. He has worked very much with his report and everything. I think he has made a very good start at CTT. I am impressed how quickly he has captured our business. I think you will have a nice talk together.
Thank you. We don't have any more questions for the moment. Ladies and gentlemen, if you wish to ask another question, please press 01. It's zero then one on your telephone keypad. Ladies and gentlemen, if you wish to ask a new question by phone, you have to press 01 on your telephone keypad. Seems we don't have any more questions. Back to you for the conclusion.
Yes. Thank you very much for listening to us. We take a little bit of a break. The summer is very nice. I really look forward to talk to you by the end of October for our next earning calls. I'm very confident that our development to rebound will continue. I look forward to talk to you again end of October. Have a nice summer.