Good afternoon. Welcome to the 2021 half-year presentation from Bachem, our afternoon session. My name is Daniel Grotzky. I'm the Head of Group Communications at Bachem, and it is my pleasure to introduce you to our team today and lead you through the call. With me here today in the studio in Bubendorf, Switzerland, are Thomas Meier, the CEO of Bachem, and Alain Schaffter, the CFO of the group. Thomas will kick us off with an overview of the results of the first half-year, and then Alain will lead us through the highlights of the financial report. Thomas will then add some comments on the outlook and the overall market environment for Bachem, and then we'll go into Q&A. Without any further ado, it is my pleasure to hand over to Thomas Meier, the CEO of Bachem.
Thank you, Daniel, and welcome everyone to the afternoon session for the half-year results 2021 of Bachem. As you can imagine, it's a happy day here in Bubendorf. I've seen many smiley faces, and to everyone you talk, you feel the proud of the achievements we had in the first half-year, and it's a well-deserved pride. It is a very good result. The result is due to our leading position in a very dynamic market, a market that develops quickly and delivers new medicine for people in need. The result is also due to our strong commitment to become number one in every business venture we are active, and of course, to the detailed execution we do in our day-to-day operation and work. With that, we achieved the results we're going to discuss now in detail, and we start with the headline.
The headline, of course, is the revenue. We are at CHF 239.1 million, and that is 35% more than during the same period last year. What is more is growth is across all business categories and in all geographies. The growth we see is a profitable growth, meaning that the profit numbers, for example, EBIT, grows faster than the % of the sale. In absolute numbers, we achieved CHF 61.9 million EBIT. We're not only achieving good results, we're also investing in the future of the company. We're invested in 107 new colleagues across all sites and all continents we are active, and we invested over CHF 50 million in new buildings and new infrastructure and equipment. The detailed numbers here, we have talked about the revenue. EBITDA, our profit number, is at CHF 75.5 million, which is 31.6% of revenue.
EBIT is at CHF 61.9 million, and that's 25.9 percentage points. Net income is at CHF 53.1 million, 22.2%. All those profit numbers are up, and so is earnings per share, which stands at CHF 380. Cash flow from operating activities, CHF 59.8 million, and FTEs 1,580. If you look into the future, I'm very pleased to announce that we are confident that we can achieve the CHF 500 million revenue already in this year. That, again, is a pull forward of our target. Initially, we thought we're going to achieve that in 2022. Right now, we are confident, given constant circumstances like exchange rates, we will achieve that this year. The midterm outlook is good. From 2022 till 2026, we expect an average growth of 15% per annum. We also expect to grow profitably, and we will invest over CHF 500 million in the 2022-2026 period.
Looking at the product categories, you will see that we changed that slightly to give more transparency and to better reflect our business. The first category is Research & Specialties. That's CHF 22.6 million, a plus of 48.1% compared to last year in local currency. CMC development, that entails everything that is done together with our sponsors during the development of a new medicine or a new drug. This business category achieved CHF 68.3 million revenue in the first half of 2021, a plus of 35.1% compared to last year. The commercial APIs, those are drug substances that are sold to pharmaceutical company for approved medicine or approved drugs. In that business category, we achieved CHF 148.2 million revenue, and that is a plus of 40.3 percentage points. If you look at the geographies, we see that Europe/Asia is at CHF 116.9 million and North America at CHF 122.2 million.
It is well-balanced, and this year, Europe is growing a little bit faster at 42.2% compared to America that had an increase of 36.9 percentage points. We are all excited about oligonucleotides because they are wonderful medicines and many of them are in development, and Bachem stepped into that field and is very pleased to announce that we are progressing a little bit faster than we initially planned, and we are well on track. This will be a second very strong pillar for Bachem, peptides and oligonucleotides, I'm sure will bring this company in the future and will remain very attractive business opportunities and categories. Our goal remains to have sales over CHF 100 million within midterm, and we are expanding our commercial activities as we speak and throughout the year, and we get very positive and good feedback from our customers.
We will bring in line new manufacturing capacity that will be used for manufacturing latest in Q4 2021. Sustainability is very important to everyone at Bachem. We are very pleased that our products are inherently sustainable. We produce active ingredients for our drugs and those drugs help people in need. That is a sustainable business per definition. In addition, to conserve our resources and we defined four goals. Those four goals are reduction of energy consumption, reduction of global greenhouse gas emission, improvements in occupational health and safety, improvements in diversity and equal opportunity for the workforce at Bachem. For all four areas, we have very clear and measurable goals. Each area has an action plan how we're going to achieve those goals.
In addition, we get rated by an independent rating agency, EcoVadis, and we got rated across the group, every site, a silver medal. Whoever is interested to learn more what we're doing for sustainability and on our expert assumptions and ideas is invited to join the deep dive webinar that will take place on the 31st of August at 5:30 CET. With that, I pass it on to Alain Schaffter, who will dive deep into our financial numbers.
Thank you, Thomas, and also welcome from my side. Let's go a little bit deeper into the numbers. The first slide as a quick reminder of the key figures that Thomas already talked about. Let's go directly to the margin, the EBIT margin, and the bridge from last year, first half year 2020, to the actual margin. When we start with the 22.7% margin, then we have several aspects where we grown. There is a contribution from our production cost with a 1.8%, which is mainly driven by our favorable product mix, but also from ongoing optimization of processes, and especially also from the economy of scale, volume-driven. Secondly, we have the marketing and sales, also positive contribution, but there we have to be careful because of COVID. We still are not able to travel, we still are not able to be present at fairs or roadshows.
We expect that these costs in the near future will increase further. On the R&D, we see that we have a stable number in % of sales, which clearly indicates that we invest in our own innovation, in our own projects to secure the future of Bachem. Last but not least, our overhead, the G&A portion, we have kept the cost stable below our percentage on sales. We are also a positive contribution to the margin where we end up with a 25.9% for the first half year, and we expect that there is still some room to improve with optimization and cost measurements that we can improve this EBIT margin also in the near future. On the next slide, very important number is the cash flow.
It went up CHF 1.1 million from the first half year 2020, which at the first sight doesn't look that impressive like the other numbers. Let me go one step back and compare the operation cash flow before the change in working capital of CHF 68.7 million to the last year. We increased our cash there by CHF 18.9 million to the CHF 68.7 million. Last year, the change in working capital was mainly driven by a prepayment of customers of more than CHF 20 million, therefore last year we had an increase in working capital. This year it's the opposite. We are growing. We didn't have such a prepayment from customers, we invested in our inventory, mainly starting material to make sure that we can produce, but also have our finished products ready in our stock to deliver our high-quality products on time to our customers.
On the payables and accruals, we have increased mainly in personnel expenses on the overtime, vacation, bonus, and 13-month salary. The base on the FTEs we have seen Thomas spoke about has increased during the last 12 months. There is also this impact on the working capital. The operating cash flow, CHF 59.8 million. What have we done with that cash? We have invested it in our capacity, but also maintenance. It's a CHF 54.6 million we have used in the first half of 2021. Of course, we also paid out the dividends, and we had a change in external debt, which at the end led us in a net change in cash of -CHF 3.5 million in the first half of 2021.
Talking the next slide on the debt, we have increased our debt by about CHF 38 million, and this was mainly driven by our main shareholder, Ingro Finanz AG, who left a big portion of the dividend in the company as a loan and also took over a portion of a bank loan also with Ingro Finanz. We have still no commitment fees. We have no covenants, so we are still in a favorable situation to bridge our cash need for CapEx. On the equity ratio, we see the equity increased by CHF 12 million, but of course, was driven by the cash out of the dividend in the first half, but still the 63% equity ratio, which is a stable number within the Bachem. On the last slide, the CapEx Thomas talked about, we invest more than CHF 500 million in 2022-2026.
In 2021, we have already spent CHF 50 million in the first half, we expect a higher number than CHF 100 million in 2021, the full year. You clearly see it's about the 21% of our sales that we invest in our CapEx. With that, I would like give back to Thomas for the outlook on 2021.
Thank you, Alain. Very crisp and exciting look into our numbers. I want to talk now real briefly about what are the factors for this dynamic growth we have seen over the last years, and I am looking at that from a market perspective. Of course, important for a company like us is the pipeline, and we are proud of the quality of our pipeline and also the numbers. We currently work on over 150 projects where we are certain that those will yield additional approvals. In the first half year of 2021, we received four product approvals. That means that four products with Bachem drug substance were approved by the U.S. FDA.
We are proud about that because it was achieved in a period where the FDA could not visit our sites for pre-approval inspections, but due to our quality documentation and the trust of the FDA in Bachem operations and execution, they approved those products anyway. We see the success of our oligonucleotide offering in all clinical stages, and we feel a very strong business dynamic there, and those are factors that really drive our business right now. We also see positive signals and action in securing captive market. That means we are able to produce molecules for already approved drugs, and those are typically sold to larger pharmaceutical companies that did in-house manufacturing and now are able to also source from Bachem. Capacity investments in all GMP locations for future need.
As I mentioned, we invest heavily in capacity. It's great to see that we have a very strong expertise in that field with a strong engineering team. Those investments are always on time. The quality of the equipment is such that it gets used the first day it's released and it works seamlessly over the period, over the life cycle. We also have external factors, of course. We see a strong outsourcing trend in pharma and biotech. We see market expansion for peptides in new indications. We see new formulations, especially orals, that have very nice launches in the market. I believe that there is a bright future for oral peptide delivery. With that, we come back to our overview slide for the outlook. As I said, we believe CHF 500 million is possible in 2021.
We see 50% average growth for the next 5 years, 2020 till 2026. We want to grow profitable, and we will invest over CHF 500 million in this 2022 till 2026 period. With that, we are already at the end of our prepared slides, and we are happy to answer any questions that there might be. Thank you.
Let's have a look at the Q&A. Let's see what we have here. We have one question right now from Sibylle Bischofberger. It's about EBIT. EBIT outlook is growth by % ahead of sales. Is this only meant for 2021 or also for 2022 through 2026? Who wants to tackle that?
I guess that's mine. It's not only for 2021. That's our target also for the whole period, to always grow above the sales number.
Okay. Do we have further questions? Feel free to ask any questions in the Q&A function. We have numerous attendees, so I'm encouraged. Here we go. Maria Policarpo asks, "Growth accelerated significantly in the last 24 months, and you referred to product approvals for last year and the first half of 2021. Can you give more color on these and the size of the indication?" The question is around the product approvals, both for the last years and the first half of this year, and around the size of indication, what we can say around that.
Unfortunately, we cannot disclose the precise indications and sponsors. That's due to the confidentiality of our business.
Are there any more questions? Sibylle Bischofberger asks about oligonucleotides. "How will sales development be in the next years? Strongest growth from 2022 due to capacities?" I'm not quite sure I fully understand the question. Let's start with the, "How will sales development of oligonucleotides be in the next years?" I guess the add-on is, will the strongest growth be in 2022 due to capacities? I guess the reference is maybe to the Bubendorf capacity expansion that you mentioned, Thomas.
It's certainly true that the relative growth in oligonucleotide is by far larger than in peptides. The capacity is limiting the oligonucleotide growth. If that is the question, yes, and we will continue to add additional capacity as we build more.
We currently don't have any more open questions in the function, and here comes the next one. Yes, keep them coming. Carl Brown asks, "How does the 150 projects compare to one year ago? Does this include commercial projects or just development projects? Has the mix shifted between early and late stage?" Thomas, what can you say?
We call it pipeline because for us, it's about the new products that go through the clinical phases. Whenever one is approved, it jumps out of the 150, and it's a commercial product but not a pipeline product any longer. We do the very precise pruning and counting of the pipeline at the end of the year, so the very precise figures and the clear analysis we will deliver with the full-year call next year in April.
If there is another question, feel free to ask it. Carl Auffret asks, "What are the terms of the Ingro Finanz loan?" Alain, that sounds like a question-
Yes
For the CFO.
The Ingro Finanz is at arm's length. We compare with the banks. We have an average interest rate of 0.3% for all bank loans together, and this includes Ingro Finanz. It's at arm's length, and there is no advantage or preferences for Ingro Finanz to lend the money to Bachem.
Any more questions here? My screen says, "No open questions." We still have some time on the calendar, so anything you would still want to ask, you can pose a question in the Q&A function. I'll just wait a moment or two. Sometimes people are madly typing away and something pops up, or you might have a sudden burst of insight and interest. If that is not the case, we would close the call and there we go. Carl Brown actually, here we go, used the opportunity to ask another question. One more question here. "How many commercial products do you manufacture API for?" Is trying to get a sense as to the materiality of the four additional approvals.
Okay. I think we state that we have around 40 Drug Master Files ready for our customers. That would mean, for 40 chemical substances, we have the filing. Commercial products, typically on one molecule, we have several. For commercial product to go into a higher number, I would guess that that's somewhere between 100 - 200.
Okay. Anything to add with regards to the materiality of the four additional approvals? I think it's a question also of how significant those four approvals are within the context of the broader product portfolio.
I wanted to highlight the four approvals, especially for the quality reasons, the trust that the FDA has in our work. I think four approvals in half a year is a very good number. It's not something that's totally out of the expected or average. We work towards approval as we speak and always. It's a sign of a healthy company and our product portfolio and our top 20 products, it's very diverse, so nothing out of the average, I would say.
Okay. There are no more questions. If a question happens to cross your mind. There we go. Another question. I think I should just keep saying there are no more questions, and a question will appear. Maria Policarpo asks: How are you building up the 15% CAGR growth rate for the future? So the annual average rate.
Okay.
Sorry, it's a combined question in two messages. How are you building up the 15% CAGR growth rate for the future, given that 40% is so much higher than what we were discussing last year? I don't know.
Well, I think I understand the 15% rate. We build it up from bottom up. We look at the products we have, we look at the forecast and our expectation, and then we count that all up, and then we look at the growth rate, and we do that for a five-year period. I'm not sure I fully comprehend the 40% here.
Yeah. 40%, half one organic growth.
Oh, the 39% at the current exchange rate. Yeah. I think that's an exceptionally good first half year.
Okay. Anything else? Ernest Van Tuyl asks: Have your CapEx plans been impacted by inflationary pressure yet?
It is correct that we see some price increase in steel and other commodities, but we will see how transient this will be.
Just waiting one more moment to see if we have any more inquiries. I think now we're out of questions, and so I'm happy to thank everyone who has joined us on this call. If you do have anything else that you would like to know or ask us, you have here the email address, so shoot us a message at ir@bachem.com or for media@bachem.com, and we'll be happy to respond. Other than that, I thank Thomas Meier and Alain Schaffter for their time and presentations today. I wish everyone a wonderful remainder of the day wherever you are currently based, and look forward to seeing or hearing or reading from you again at the next full year results. Thank you.
Thank you.