Ladies and gentlemen, welcome to the Annual Media and Analyst Conference Call and Live Webcast. I am Alice, the corporate operator. I would like to remind you that all participants will be listening only mode. Any conferences being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Alexander Hagemann, CEO. Please go ahead, sir.
Thank you very much, Alice. Ladies and gentlemen, thank you for attending to our webcast today. It is for me, kind of a special day because the 2022 results are the first where you will see the first results from the growth strategy that we have announced in mid-2021. Therefore, I'm really glad that Peter Neumann, our CFO, and I can present our results 2022 to you. For those of you, there are still a few who don't know Cicor that well. Very briefly, what are we doing? We have three core markets which are the vast majority of what we do, which are medical technology, aerospace, defense, and industrial applications.
In medical, for example, in hearing aids, Cicor has a very strong position from components to assemblies with many of the major hearing aid manufacturers worldwide. Actually, one out of three hearing aids uses Cicor technology. Aerospace and defense, the fastest-growing application that we have after the acquisition of Axis Electronics, where, for example, we provide components for ejection seats for the vast majority of planes. Cicor technology helps saves life, lives every week. Industrial one application example here, is EUV lithography, where Cicor provides critical technology for the next level of miniaturization, 3 nm chips. We support our customers to keep Moore's Law alive. When you refer to Cicor and you talk about EMS, Electronic Manufacturing Services, this is actually only a fraction of what we do.
We start our collaboration with customers in the development of products from the concept, really from the first beginning of concept development to hardware, software development. That is. These are services that we provide. In industrialization, we do not only talk about prototypes, test concepts, we also talk about validation, which in the case of medical products, can easily mean 1,500 pages of documents to get a medical product of our customer to market. Production is also much more than assembly. It's assembly plus, plus. It's assembly plus substrates or PCBs, plus precision molding, plus printed electronics. Here we differentiate from our competitors through additional and more advanced processes that we use. After sales here means lifecycle management for our customers. For example, managing obsolescence of components.
What we do, we support our customers from cradle to grave of a product. Now we are having a footprint that brings us always close to our customers. With the recent acquisitions, we have come much closer to customers in Germany and in the UK In the meantime, these are 15 sites, 2,500 employees, and we have increased our manufacturing space more than 50% through acquisition and also purchase of factories. We need to do that so we can follow the growth that our customers demand from us. The map is therefore more populated than it used to be. Our traditional home market, Switzerland, we now add Germany and the UK, as mentioned. In Asia, historically, Cicor is very strong in Southeast Asia compared to China, where we only have a small location.
This is very helpful with the trends that we see today in supply chain management. Romania is a very strong, our largest European low-cost operation, and I'm extremely glad that through the acquisition of Phoenix Mecano EMS activities, we can now add Tunisia to our footprint. Let's talk about 2022. This is the third year of unprecedented challenges that started 2020, and no need really to remind anyone of what has happened. Let me only say that there is no playbook that exists. Our colleagues had to take decisions on the spot, had to develop new strategies, how to deal with inflation, supply chain shortages and other issues. At the end of the year, we can say we have done well with strategic successes.
It is our organic growth coming from a strong pipeline we are reporting about for a few years now, and the acquisitions of Axis and SMT, of Phoenix Mecano, EMS activities and AFT, the two latter ones, completed in the first months of 2023. Operational successes were mostly the mastering of the challenges, product shortages, supply chain disruptions, and pricing actions to counter the cost threats from inflation. The financials that Peter will report about in a few minutes, this is just the result of the successes of the above. Record financials are the result of the strategic and operational achievements of the last year. Cicor has a clear strategic focus. Clear strategic focus on the three core markets: medical, industrial, aerospace, and defense that I've already mentioned.
Of course, we have tailwind in aerospace and defense, but not due to the actual developments in Ukraine. It is much more that a few years back, European nations started to invest finally again in their security, and that leads to a long-term growth of that market. In medical and industrial applications, we could also see more than 20% growth, much of that organic growth. We are very satisfied with how these two markets have developed. Regionally, we have grown our Swiss business by 18% through organic growth. We have grown the US business by more than 20%, again, through organic growth. In Europe, we have, of course, vastly increased the business as a combination of organic growth and M&A.
The only region where we see a very slight decline of 2%, roughly, is in Asia, very much coming from us giving up low margin businesses that we feel don't fit to our strategy and our objectives anymore. Very briefly about our two divisions. The EMS Division, of course, now is by far the largest division. It represents more than 85% of our business, and is the one where we see strong acquisitive and organic growth. Almost 40% growth, both, as I said, through M&A and also organic. We are very satisfied with that. We are also very satisfied with the margin of 10.7% EBITDA margin, the highest ever recorded. You will see that in a few minutes in the multi-year overview that Peter will show.
This very satisfactory EBITDA margin has been the result of pricing actions, especially in the H2 , adding of high-margin business through acquisition, but also through the new customers we have, and shedding some of the low-margin customers. These 10.7% EBITDA margin also position Cicor as one of the most profitable EMS providers worldwide. That is the best jump-off point for our growth strategy moving forward into the next years. From an operational perspective, it is important to note that we have more than doubled, actually, our capacity in Vietnam. We have acquired a factory last year. We are moving into that factory since January of this year, making very good progress and the move is about half completed.
That gives us the well-needed capacity because we have many new programs that our customers ask us to ramp up in Vietnam this year. The AS division, Advanced Substrates division, has strengthened its market position and technology leadership through the acquisition of the thin film activities from AFT Microwave in Germany, making Cicor the strongest and most technologically advanced provider of thin-film hybrid substrates in Europe. On the printed circuit board side, in PCB, we have seen very good progress in the excellence program, which is there to drive and to push operational excellence forward. Unfortunately, we have suffered from some postponements of orders towards the end of the year, therefore, overall, we have a slight contraction of top line, about 1%, the operating margins did not fully reach our objectives.
That leads me to hand over to Peter, Peter will discuss the financial results in detail.
Thanks a lot, Alexander. Let me lead you through some of the financials. Let me start with long-term view. Here you can see, we are breaking some records. I'm very pleased about this, especially if you start with the top line, that we have a combination of a very strong M&A performance plus an organic performance that is very healthy. You can see that in total reported, we are +31%. You can see that our organic, our excluding acquisitions performance has been 12%. As you can see as well, this is after a negative FX impact. As we all know, the strong CHF against EUR, GBP and others has been hurting us as a lot of other companies. The second record is around profitability.
We have again progressed in terms of our margin by 60 basis points, reaching 10.3%, and within this even we have accelerated from the H1 to the H2 . A comment on something where I got often questions, as both the Phoenix Mecano EMS acquisition as well as the AFT carve-out asset deal have been in 2023. There are really no impact on our 2022 financials. Let's dive deeper into 2022. First of all, the book-to-bill ratio has been very healthy. Across the H1 and the H2, we have remained a book-to-bill of 1.15. That gives us a higher absolute order book now and a lot of confidence as we go into 2023.
Revenue reached a record of CHF 313.2. This includes a negative FX impact of 4.7%. It's really significant. As you can see, on our profitability, we have been managing some of these challenges well, and have progressed on EBITDA 40% and on core EBIT even more than 65%, which shows the strong conversion that we had from top line into bottom line. All this, clearly, the Cicor teams have managed to overcome a lot of supply chain disruptions, cost inflation and FX headwinds. Let's talk a bit about our divisions and the divisional performance. EMS is now 86% of the Cicor revenue, so, the largest portion, and had an excellent year with a strong margin progression.
Both Axis and the SMT acquisitions that we consolidated in 2021 and 2022 were in EMS. As you can see, we are now at a great performance also from a margin standpoint. With 10.7%, we are really at the top of our peer group, top class of, in terms of profitability. The AS division, we saw the positive is we saw some improvement from the H1 to the H2 , but clearly some pricing actions as well as some of the postponements of orders were giving us very softer result. Looking at the sequential, I mentioned it, you can see here first, strong growth across the H1 and the H2.
Also I think what is even more interesting is that we really accelerated our profitability and our growth on our profit numbers. On the EBITDA, we reached 11.1% in the H2 versus the 9.5% that we had in the H1 . If you dive into the details of our P&L and the income statement you see here, first you can see the EBITDA progression from last year, 9.7% to 10.3%. You can see that this comes from, you know, we are using our capacity, much stronger operational discipline. Material expenses percentage-wise went up, but this is partially driven by broker costs that are diluting our, this percentage. Here you can also see nicely the impact of why we have the alternative measure core.
You can see here the amortization of M&A goodwill intangibles that are CHF 9.2 million. In an IFRS environment, which would be only done via impairment testing. To make this really comparable for our wider investor base, we have the core EBIT and the core net profit numbers and take out this impact. You can see here on the core EBIT numbers that we had a great progression with +65.1%. You also can see that financial results were negative. This is mainly because we had higher interest costs and also we had some negative FX impacts there. Some words on net working capital.
First, on AP/AR, you see that they remain in days on hand, relatively stable. You see some improvements on the AP side as we are extending payment terms. On inventory, our focus has really been over the last 12 to 18 months to secure material supply for our customers. This came with incremental inventory. It helped to avoid major disruption for all our customers. As the supply chain normalizes, we will adapt our inventory levels. Our focus is always to serve our customers best and in an efficient way. On CapEx, here you see the absolute CapEx spending in Swiss francs as well as the depreciation, the ratio of current CapEx spending to depreciation.
You can see that we are within our target corridor. This includes even a major capacity investment we have taken by the acquisition of a new site in Vietnam. That is that you can see here. Taking out this one, we would've been even at 2.5% of revenue and below at 0.7, 0.8 in terms of CapEx to depreciation ratio. We ongoingly want to remain at 3% CapEx or even below, as we are kind of focusing on our external growth strategy. The balance sheet increases as we acquired, obviously, SMT. We issued the MCB and increased our inventories. Overall, we have a very strong position with a high equity ratio and low leverage. You can see the 40% equity ratio, 1.4 leverage, so really moderate.
You can see from a financing side, we are now ready for further bolt-on acquisitions to continue our growth strategy. Cash flow. Looking at our cash flow statement, you can see the choices we made on inventory to secure materials. This is probably one of the biggest elements here. You see changes in working capital with negative CHF 33 million, that have been obviously absorbing a lot of our cash. Secondly, further down, you can see also the acquisitions of SMT and the excess earn-out in the acquisition of subsidiaries. Last but not least, you see the net cash from fund financing, where we had the inflow of the net CHF 59 million from a mandatory convertible bond and obviously some of the repayments of our syndicated loans.
I wanted to draw on the cash flow statement on the H1 versus H2 performance, because, as you can see here, the inventory and the supply chain challenges were probably more important in the H1 . You can see as we all reach the normalization of some of the supply chain. You really see a bit of a normalization of this trend. You can see in the H2, while the most of the changes in working capital, the CHF 28 million, was in the H1. In the H2 , we came more to a stable trend of CHF 5 million cash that we invested there. Also, you can see that then our operating cash flow from operating is really strong and, also as we go further, we expect the trends to continue.
Last point, it's nice to see the effects of our growth strategy in our 2022 results. Now if you take into account all the acquisitions that we have closed, also in the beginning of 2023, as well as the full impact of SMT, we are already a step ahead. Looking at our results, you see on the left the Cicor reported results. If I include pro forma, all acquisitions that are closed at this point in time, fully 12-month basis, you can see we obviously have the four months of the beginning of 2022 of SMT. We have Phoenix Mecano, the EMS business that is considered as of 1 January 2023, and we have AFT that closed on the 1 March 2023.
We would be only CHF 353.3 million revenue and adjusted EBITDA of CHF 36.2. We are also on track with our acquisitions delivering positive cash flow and further synergies in 2023. I think nicely leads over to Alexander, which provides the outlook to the current year.
Thank you very much, Peter. Before we talk about the short-term outlook, let me illustrate some of the changes in our industry that are quite significant and that will continue to shape the EMS industry in the years to come. We see that OEMs, so branded manufacturer of electronics, machine tools, medical devices, and so on, that due to some of the challenges of the past few years and due to inflationary pressure, the shortage of labor and other effects, are shifting more and more towards their own core competencies and increasingly outsource the development and production of electronics to partners.
We see that, from market research, that's from last summer, New Venture Research, that the share of electronics that is manufactured by outsourcing partners like Cicor, which has been, in 2021, at 36%, is expected to grow to 39% by 2026. That doesn't sound like a very big change, but in reality, it adds almost two percentage points growth to our sector. Geopolitics is massively affecting supply chains, and it requires agile actions by the players, by the manufacturers. Proximity has become more important. This is why we are so delighted to have Tunisia now also in our in our footprint. Moving out of China is becoming important for cost reasons, for risk reasons, and to avoid punitive taxes, for example, in the US. At Cicor, we are really well positioned to work here.
You know, everybody was talking. We were talking about nearshoring and China +1 . The latest term and the newest term is friendshoring. Have your products manufactured in friendly, stable countries where you can rely on delivery. That has become, for many of our customers, more important than cost, only providing the pricing power we need to maintain and expand our margins. Supply chains have become really complex. You all have seen the pictures of large container freighters stuck in the Suez Canal, of shortage of containers and freight capacity. You all know about the issues of ship shortage. What does it mean for the electronic industry? It means that those who are specialized in solving these problems, companies like Cicor, we do have an advantage not only over smaller competitors, we only have the advantage over our customers.
That will further drive outsourcing and make customers decide to move production to companies like us. These are three trends, the three most important trends that I see for our industry for the time being, and they provide a very strong tailwind for the future growth of Cicor. Let's talk about the new year, and we are two months into the new year already. Peter has mentioned the order book. We have by far the highest order book we ever had in history. We were able to announce some orders. We did not announce too many orders because we have an extremely well-balanced customer portfolio. Therefore, no individual customer and no individual order plays a dominant role for the business of Cicor. Our order book, almost equivalent to one year's sales, is at an unprecedented high level.
The new project pipeline I referred to earlier remains very well filled. We see not only new business from new programs from customers, we also see that some customers who were dissatisfied with performance of other manufacturers are shifting their projects to Cicor. You have heard Peter Neumann talk about the pro forma numbers, including the Phoenix Mecano EMS activities and the other activities. We also believe that there is organic growth that we can expect if the overall economic environment does not deteriorate further worldwide. We can now provide a bandwidth of CHF 350 to 400 million in revenue for 2023.
This is still a rather broad band because at this time, we have no information, of course, where currencies will develop, and we'd also need to be a bit careful about some recessionary developments that may happen in some parts of the world. We are confident that we are able to keep our operating margin very robust, and therefore, that we will achieve also double digit EBITDA margins in 2023. On an operational side, we are very busy, and to integrate the three EMS sites in Germany and Tunisia that we've acquired from Phoenix Mecano to implement the new programs, especially in Vietnam, but also the new programs we have in other parts of the world. We have our hands full, but we are moving into the new year with a lot of optimism.
Thank you very much, to allow us to present you our 2022 results. We would be very happy to answer to your questions now.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only enhances while asking a question. Anyone who has a question may press star and one at this time. Our first question comes from the line of Emra Bašić with Baader Helvea. Please go ahead.
Yes, hello. Thank you. Can you hear me?
Yes, perfectly well. Thank you.
Perfect. Hi. Well, thank you for taking the question. I have a couple. I will start with the first one on sales. As you just mentioned, the guidance for 2023 is quite wide. Now, just doing a bit of back of the envelope calculation, including M&A for 2023, that potentially... Is it correct to assume that the organic growth is still somewhere could be between 5% to 15% almost?
Yes. That's correct.
Where does this on the organic growth side does this gap come from? I mean, it's still pretty positive, right, on the low or lower end, your 5%. Is this more gonna be more volume driven or price driven or a bit of both?
There will of course be some pricing effects also in the new year, definitely. You know, base inflation is here to stay. We're here in the Euro zone, 5% roughly we have this year, so of course significantly less in Switzerland. On the other hand, we also see the Swiss franc appreciating over the euro a little bit with an annual rate of the inflation differential. We do see the organic growth. Some is related to... and that's why it's a bandwidth, to the timing, how ramp up of new programs are really happening. It is the effect if customers are becoming more cautious on ordering materials. This is why at this point in time, we are providing a pretty wide bandwidth for organic growth.
Okay. Perfect. Thank you so much. If you reach, let's say, in a best-case scenario, CHF 400 million in sales, are you reaching also potentially full capacity? Do you need to do further investments for the 2024 and go on, go alone?
A very good question, because we have just recently integrated new businesses. I can tell you that we have truly significant capacity in Asia, still, good capacity reserves in Romania and, I would not expect us to be at full capacity at CHF 400 million, no. We should still be able to do more.
Okay. Thank you. In terms of regions, where do you expect the most of the growth to come from this year?
We are very focused. We are always very clear and focused with our business model and we are focused on customers that are headquartered either in Europe or the US. I would expect the majority of growth to come this year, in absolute terms from Europe, because that's by far the biggest market. In percentage terms, we see strong indications for growth in all three regions, North America, Europe and also Asia-Pacific.
Okay. That's Thank you very much. Very helpful. Just one or two last questions on the EBITDA margin, if I may. Could you be able to quantify now in 2022 how much you gained from the Axis acquisition in terms of margins?
It is, we haven't singled that out. What we can say it is a few 10 basis points that we gained. It's significantly less than 1 percentage point. Significantly less, but it's a few tenth basis points.
That's very helpful. Thank you. Now the last one on the EBITDA margin guidance. I think last year you said that you expect for the full year, margin, EBITDA margin slightly different than in the H1. And in the H1 was 9.5%.
Yeah.
Now you reached 10.3. Is this something, is there something that changed, or was this wording chosen like this specifically, i.e. did you know already that it's gonna be in this sort of, in this, in this range?
We are let me put it that way. We are extremely pleased with our ability to pass on cost increases to our customers. That is the most important effect, that our pricing actions were more successful than we had initially thought.
All right. Thank you very much, and thank you for taking so many questions.
You are most welcome. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Star followed by one. The next question comes from the line of Patrick Steiner with Kepler Cheuvreux. Please go ahead.
Oh.
Mr. Steiner, your line is open. You may ask your question.
Sorry if you go mute. Can you hear me now?
Yep. Yes, we can hear you.
Okay, perfect. Good afternoon, gentlemen. Congratulations on the good results. There's basically just a question left for me. Could you give us some more information on the margin compression in the AS division? I mean, you stated that you were not able to pass through input cost increases to the full extent. Is this rather a timing issue, or should we expect margin pressure to prevail going forward?
We are really working towards margin expansion in the new year, which is the element of pricing and operational excellence measures, especially in the PCB part of the business. It will be the effect of both. But it is true, as we were, and we've commented that in with the half year results, as we were able only to pass on cost increases with a longer delay. When we had done so, new cost increases had already piled up. That is what was challenging us, plus some volume effects as we had some push outs of deliveries towards the end of the year. These are the effects. We're not satisfied with the margin in the AS division, and we work towards significant increase in the new year.
Thank you. Perfect. Thank you, thank you very much. Very clear.
Thank you. Thank you, Mr. Steiner.
Once again, to ask a question, please press star and one on your telephone. Star followed by one. We have a follow-up from Mr. Ba šić with Baader Helvea. Please go ahead.
Hello, Mr. Bašić.
Excuse me. I was on mute. Sorry.
No worries.
Just a quick one on net working capital. For 2023, do you expect overall somewhat a reversal or can we assume kind of like the 2021 level of, let's say CHF 10 million increase in net working capital?
Look, You can definitely see more normalization, but we are not through with supply chain. I just saw recently also a couple of chart. Yes, we are improving, but we are not back to the original levels where we've been pre-COVID and pre some of the other distractions that we had. I think, we're working towards a reduction, but it will take time over the future, and we see how the supply chain normalizes. I think what we learned is the most important element is agility. Agility helped us to protect supply to our customers, and agility will also help us to come back on the net working capital as we see the supply chain normalizing.
Okay. Perfect. Thank you very much.
There are no more questions at this time. This concludes our conference call. Thank you very much for connecting. In case you have any closing remarks, sir?
Yes. Thank you very much for attending. We are aware that today is a busy day for you because many, many Swiss companies are announcing their results. Just 1 date that I'd like to make you aware of. We will start for the first time and this year to provide a brief business update per quarter. The next date you will receive an update from Cicor will be April 17 with the Q1 sales order book and some comments on our business. Again, thank you very much for attending. We wish you a fantastic day and hope to see you again at a live event later this year. Thank you.
Ladies and gentlemen, the conference is now over. Thank you for choosing Cicor c all and thank you for participating in the conference. You may now disconnect your lines. Goodbye.