Ladies and gentlemen, welcome to the Media and Investor Conference Call and Live Webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is 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. Webcast viewers may submit their questions in writing by the relative field. 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 Heinz Kundert, CEO. Please go ahead, sir.
Thank you very much. Welcome to the earnings conference, first half of 2020. I shortly go through four chapters, give you an overview on the total financial situation of the Group. We go into the financial review. This is being done by Nicola Rotondo. He is the Chief Financial Officer for financial control in Comet. We go into the outlook, and of course, you're going to have the opportunity to ask questions. Are we following with the slides? One more. As an overview, Comet has a solid first half 2020. We have significantly improved our performance versus the previous half year. Strong growth in semiconductors markets, the PCT division, more than compensated for lower demand in X-rays, which is the division IXM and IXS. Sound financial positions. High level of investment in R&D and strategic projects is maintained.
We had execution of strategic strategy in progress as planned. No relevant impact on operations from COVID-19, thanks to fast and stringent implementation of protective measures, and the top management completed reinforced a smooth transition to new CEO and CFO in June. We'll come back to most of these themes again. Going to the next slide. The half year result improved on semiconductor sector strength. You can see that we have increased the sales in the first half by 3%. This mainly came from the PCT semiconductor division. We could more than double the EBITDA to 10.3% compared to 4.8% in the first half 2019. The free cash flow is almost the same, a little bit less than 2019.
It's mainly because of a higher net working capital that is due to the build-up of inventory to safeguard our supply chain relative to our suppliers, but also in front of our own customers to make sure that there's no interruption in the supply chain. We still maintain a sound base on the equity ratio with about almost 50%. Well, next slide. Where does this come from? PCT owns more than half of the revenue and increased the revenue in the first half by 33% compared to the first half 2019. It's remarkable, and of course, it's also led to a higher EBITDA, which is in the range of 19%. As you know, my goal is to have a 25% EBITDA on the group level. 19.2% is good, but it's still not what we want to achieve. We have to improve that over the next quarters.
IXM had a reduction of 18% in sales and still could make a reasonable EBITDA of almost 14%, compared to 2019, where we had almost 28%. It's much lower, but still is reasonable compared to the reduction in sales they realized. IXS, unfortunately, fell back into the red numbers, after they had a positive EBITDA in the second half of 2019. They realized, in the first half, a minus of 2.1%, simply because their end markets were down quite a bit, and we are still in a transition to get away from low margin products in IXS. This is ongoing. Very positively, the EBT, the e-beam business, has slightly improved sales by 6%, not really remarkable for the size of the expenditures. The good thing is that we could almost break even. Financially, e-beam business is not an issue anymore in our group.
It's also carved out. There's no connection anymore to the core business. Next slide. Going to the PCT in more details. We have seen in the first half an excellent market situation from our customers. Data storage is improving a lot. We have 5G networks coming along, artificial intelligence, Internet of Things, and I could tell you all these end users, which were in a positive growth mode and have contributed to the increase of sales. We are also preparing the manufacturing site in Malaysia. We start manufacturing in Penang in October this year. This will again help then to improve our bottom line significantly. We also had significant spec wins with our main customers.
In fact, the strategy that we announced last year, by focusing on the core, getting out of e-beam, putting more money into the semiconductor-related activities, has been well received with our customers, and we are now in the situation where we get more inquiries for new products or for existing products in higher volumes. Very positive development. Going to IXS, the realignment is in full swing. As we told you before, that we are in transition. We have to get out of the low volume, low margin, high-mix product portfolios, and moving that to high volume, high margin, and low-mix products, which are mainly coming then from the semiconductor industry. The semiconductor industry, the semiconductor technology as such, and SMT, the leadframes, will contribute more to the sales in the next couple of years.
Unfortunately, due to the pandemic, as well as the transition, the EBITDA went down to -CHF 2.1 million, and is of course a concern that needs to be changed. We are positive that all the changes that have been enacted and are underway are contributing to an improvement in the next couple of months. IXM, as I mentioned before, had a reduction of 18% in sales, but still doing pretty well in EBITDA. We believe that, by the way, both IXS and also IXM has reached the bottom, and we expect a slight improvement of the situation in the next couple of months. Still hard to say because there are a lot of factors that influence the business, not only the pandemic, but also structural changes in the automotive industry and aerospace and the security sector that do have a negative or positive influence on our business.
We'll see in the next couple of months how these markets are developing. We are not negative. We see positive signs and believe that slowly it will go up. Again, EBITDA impressive, the reduction in costs. We definitely came to break even, and we are also carved out with this division. Yeah, have to go to the next one. You see that the cost savings and the restructuring that we did in the e-beam business, by reducing the manpower and cutting down the activities to meet the requirements of the future, has helped us to save costs. This will continue the next couple of months, and we expect that this business is going to be in a new constellation within the next couple of months.
Hopefully and expectedly, it's going to be by the end of the year at latest, that this division will be in new hands. With that, I'll transfer to Nicola Rotondo, who talks about the financial results in details.
Thank you, Heinz. Good afternoon to all also from my side. Before I start with the financial review, let me share some considerations. Like all companies also, we were hit by COVID-19. First, the supply chain bottlenecks from the pandemic were luckily less severe than originally anticipated. Second, we were forced to adjust our production lines and working shift set up to meet health regulations, which, in combination with the short lockdowns in San Jose and in Shanghai, caused for a few weeks a suboptimal execution of our production processes, and thus absorbing less fixed costs. Overall, both elements did not have a major impact on our financials. What had a major negative impact was the market-driven underutilization of our capacities in the X-ray businesses of IXM and IXS.
Nevertheless, both the growth of PCT and the cost reductions, which we realized in the second half of 2019, helped us to achieve a decent result. In addition, based on our ongoing strong balance sheet and solid cash position, we did pay back a portion of a loan, which is underlining that we don't have a pessimistic view of the near-term future. To be clear on this, we remain vigilant in order to react fast in case of a worsening situation in our market. Next slide, please. Even with only slightly higher sales of 3%, the profitability increased significantly, both in absolute and relative terms. The increase of net income is not visible in our free cash flow, which is slightly below previous year value. I will later explain these KPIs in more detail.
Next, please. Despite a slightly increased net debt, the leverage ratio on the last 12 months basis, measured as net debt to EBITDA, is still low at 0.6. The equity ratio with 49.2% is still solid and on a high level. Economic profit and return on capital employed increased significantly, driven by a higher NOPAT in combination with reduced capital employed. By the strong increase of the economic profit, this is still not meeting our expectations, and our goal is to be at least break even as soon as possible. Next, please. On this page, we see the P&L, and I'm going to talk about the items which will not be discussed on the next pages. The new orders are above prior year level. This is only driven by PCT. IXM and IXS are showing year-over-year a lower volume.
The same is valid for our order backlog, which is 30% higher compared to prior year or 14% higher compared to the beginning of the year. Looking at gross profit and comparing it with the sales increase, we see that we were able to increase it over proportionally. This was based on a favorable product mix. In fact, we have more high-margin matchboxes from PCT compared to the previous year. As a result, we did thus increase our gross profit margin by 1.3%. I would like to explain what happened in R&D. As you see, we did increase it year-over-year by roughly CHF 1 million, and the increase was in all three divisions. This is showing our ongoing commitment to maintain the pace to execute on our strategy. Looking at G&A, is showing the highest cost reduction of CHF 6.2 million.
From a divisional point of view, the main reductions was in IXS, followed by e-beam and PCT. Looking it from a cost item view, the main reductions was in consulting, travel, trade shows, sales commission, and also a favorable currency impact. In total, we reduced our functional cost by CHF 6 million, of which we do consider two to three to be sustainable, while the rest must be seen as a direct consequence of the travel restrictions. Next, please. Here I will explain what were the main driver of the free cash flow. First, driven by higher net income, we have a higher cash flow of CHF 11 million before the change of net working capital. This you cannot see on this slide. Second, while in 2019, we did reduce our net working capital by CHF 8 million.
In the current year, we did increase it by CHF 9 million, which is a cumulative difference of CHF 17 million. This was the driver that reduced the net cash provided by operating activities with almost CHF 7 million compared to the prior year. Third, we had a low spend for capital investments of CHF 5 million compared to prior year, which helps to have a free cash flow almost at prior year level. Looking at the financing section, while in the prior year we took a loan of CHF 9 million, in the current year, we repaid an amount of CHF 4 million. Net, we did reduce our cash position by CHF 11 million, from CHF 60 to CHF 49, which is still on a high and comfortable level. Let me say something to both capital investments and net working capital management.
As you can see, capital investments are at a very low level as we were very prudent due to the uncertainties caused by COVID-19. Having now a clearer view of the situation, we will start to increase capital investments again for both replacements and expansions during the second half of the year. Now to the net working capital. On one hand, net working capital requirements grew in the first half to support the large sales increase of PCT. On the other hand, as a percentage of last 12 months net sales, the average net working capital decreased to 23%, in fact, by 3 percentage points lower compared to the previous year. We are not yet happy with this and are aiming to further optimize our net working capital in the future. Next, please.
What we can see here is that our balance sheet looks very solid and straightforward, and so I will just highlight a few points. Current assets increased mainly due to higher inventory and accounts receivable and were offset partially by a lower cash position. On the liability side, you can see the reclassification of the bond, which is due April next year from non-current to current, and the higher customer prepayments of CHF 10 million coming from the division IXS. The equity ratio decreased slightly as a combination of lower equity and grossing up the balance sheet compared to the prior year end. Next, please. We will now see the breakdown for the sales, the EBITDA margin, and the net income. Let's start with sales. The positive volume effects at local currency was in total CHF 12 million or 7%.
While PCT had CHF 27 million higher sales compared to the previous year, which is a plus of 37% at constant currencies, the division X-Ray Systems and the X-Ray Modules had a shortfall of CHF 11 million and CHF 5 million, which is a minus of 16% and 14% at constant currencies. Total negative currency impact of - CHF 7 million is driven by a negative EUR impact of CHF 2 million and a negative USD impact of CHF 4 million. Next, please. On this page, we have the breakdown of the EBITDA margin. Let me guide you starting from the left-hand side. The higher sales, and actually mainly the better product mix in 2020, increased the EBITDA margin by roughly 4 percentage points. In addition, the lower functional cost base compared to the previous year, had a positive impact of roughly 2 percentage points.
Both on a comparable basis, the EBITDA margin was almost 6 percentage points higher than in the previous year. The negative currency impact was minor, with 0.4 percentage points, leading to an EBITDA margin of 10.3%. We can see here that the product mix, or ultimately the end market mix, has a major impact, which underlines why we want to focus also IXS on the semiconductor and electronic sectors. Next, please. As a last breakdown, we will see based on the same structure, how the impact was in million CHF at the level of net income. All impacts are always after tax. Positive sales and mix impact was CHF 6 million, the cost reduction was CHF 4.9 million, which brings us to a net income at constant currencies of CHF 7.8 million. Both on a comparable basis, the net income was almost CHF 11 million above the previous year.
The negative currency impact was CHF 1.3 million, which does lead to a reported net income of CHF 6.5 million. Here it is even more visible that the sales increase of CHF 5 million was only partially explaining the increased net income of almost CHF 10 million compared to prior years. With this last slide, I close the chapter related to our past performance, and I hand over to Heinz so that he can explain how our future performance will look like.
Thank you very much, Nicola. Let's move to the outlook. As we have heard and we all know, the fundamental growth drivers of the semiconductor industry is intact. Can you go to the next slide? No, that's too far. One back. Okay. These fundamental growth drivers are still intact, especially in the semiconductor industry, due to the acceleration in the digitalization overall. We also continue to focus on our core technology, RF power, and X-ray technologies. It's also very welcomed by our customers when we announced the new strategy to focus on these technologies, and markets has very much helped to intensify the cooperation and relationship with our key customers. We have a strong financial footing, as we have heard, that gives us flexibility to execute our strategy rapidly. Finally, the boost initiatives accelerate the growth and increase efficiency are continuing as planned.
A good message comes from the executive team. As we have already announced, Kevin Crofton will become new CEO of Comet by September 1st. On September 1st, he will start his duty. He already moved to Switzerland. He is living in Bern, we are very much looking forward to have Kevin with us. I know Kevin for 15 years, I know that he understands this industry inside out, has been doing that for his whole life. It will definitely contribute to the success of Comet. It was not an intention, it was a kind of coincidence that the new CFO is not only a woman, but is also an American citizen.
However, she has already been living in Switzerland for a year and has been in major functions at Raytheon Technologies in the U.S., as well as in France, where she had important functions in a joint venture between Thales and Raytheon. She's very much familiar with the global accounting system and situations in larger companies. I'm pretty sure that she will help us as well to become more profitable and more successful. Welcome to both of our new team members. Looking ahead into the second half of 2020, the driving forces, as we know them, are still dynamic and the industry is growing stronger than ever. This has been confirmed by our customers. We have weekly calls with our customers, and there's absolutely no change in what we have seen the last couple of months.
It's going even into the first quarter of 2021, where the order income is already very strong. We continue our current business environment in x-ray technology. We see, as I said, a bottom out of the orders. Should become better. However, still a fragile market segment because the main markets, as I said before, the automotive, aerospace, and security business at the moment is not in good shape. We have to wait for a certain recovery. Comet is pushing ahead with the numbers of promising projects and products in the group, foremost in order to move from the NDT, from the non-destructive testing, into more semiconductor-oriented technologies. Also in the back end, in packaging, where we see enormous opportunities for the company. Short-term trends in the global economy is much more difficult to forecast. There are uncertainties arising, not only from the pandemic, but also geopolitical turbulences.
You may have heard that Intel moves part or wants to move parts of the manufacturing to Taiwan. Taiwan is really the biggest manufacturer of microelectronics, and this, of course, raises some concerns. What's going to happen in the future in that respect, of course, we cannot influence at all. All in all, we are very positive into the second half 2020, and we are also looking positively into 2021. The latest estimations are such as the SEMI organization expects revenue of approximately USD 70 billion in 2021, up from USD 63 billion this year. We can expect a growth above 10%, if that is going to happen as planned. That's the outlook, and that brings me to the end of the presentation. Of course, you are now free to ask questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to choose only hands that's still asking a question. Webcast viewers may submit their questions in writing by the relative field. Anyone who has a question may press star and one at this time. Once again, to ask a question, please press star and one on your touchtone telephone. Star followed by one. Webcast viewers may submit their questions in writing via the relative field. Gentlemen, there are no questions at this time.
Fine. Thank you very much. With this, we conclude the session, and thank you very much for attending. Stay in touch. Looking forward to see you again. Bye.
Bye. Thank you.
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