Ladies and gentlemen, welcome to the presentation of Dätwyler Annual Results 2021 conference call and live webcast. I am Paul, the Chorus 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 via the relevant 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 Mr. Dirk Lambrecht, CEO, and Mr. Walter Scherz, CFO. Please go ahead, gentlemen.
Yeah. Welcome to today's call. My name is Dirk Lambrecht, and here with me is Walter Scherz, our CFO, and Guido Unternährer, our Head of Corporate Communication. First of all, we really regret that we cannot meet in person for our annual results conference. However, it was great to see many of you at our Capital Markets Day in September last year. Now I will move forward with our agenda. After our presentation, Walter and myself will be happy to answer your questions. In 2021, all our continuing businesses enjoyed a strong demand and contributed to the currency-adjusted 50% revenue growth. We were able to achieve a record revenue of around CHF 947 million, thanks to our strong position in attractive markets and leading core competencies.
Thanks to our robust growth, continuous efficiency improvements, a strict cost management, and support of all Dätwyler employees, we have managed to improve our profitability. Our EBIT increased over proportionally by 23% to CHF 160 million, despite the difficult situation in the automotive market and rising costs. Walter and myself will come back to this later. As a result, the EBIT margin improved significantly and ended at 16.9%, and the net result rose by 17% to CHF 123 million. In comparison with 2019, our profit figures for our continuing operations are well above pre-pandemic levels. Here you see our current organization with the two market-oriented business areas, Healthcare Solutions and Industrial Solutions. They are supported by the two group functions, Technology and Innovation, and Finance and Shared Services. We successfully completed our strategic transformation in 2021.
Dätwyler is now a focused specialist for system-critical elastomer components for attractive markets. We achieved a book profit as we sold our last remaining online distribution company, Reichelt. Walter will tell you more about this. Now I would like to move forward with comments on the performance of our business areas. We will start with Healthcare Solutions. This business area offers high-quality system-critical elastomer components for containers and delivery systems for injectable drugs. We are proud that we can support leading vaccine providers in the fight against the COVID-19 virus. Our employees are doing an excellent job here, despite some very difficult boundary conditions. The Healthcare Solutions business area generated a currency-adjusted 16% revenue growth to a record level of CHF 467 million, with a stronger growth of our pharma business of close to 18%.
The HS EBIT increased by 32.1% to CHF 104 million. The EBIT margin significantly improved from 19.6% in 2020 to 22.4% in 2021. This is due to the good utilization of our production capacities and a positive product mix change. As of the year before, we enjoyed a tailwind as a result of the leading COVID-19 vaccine manufacturers' demand in the reporting year. Revenue deriving from COVID vaccine components amounted to some CHF 55 million. On this slide, we have summarized some important actions taken in 2021. This will continue to strengthen our competitiveness and support our future growth in the healthcare business. We are continuously expanding our product portfolio through NeoFlex products and needle shield designs. Our enlarged R&D and innovation team is intensively working on new developments for coating components.
We are confident that we will be able to expand our offer for coated products by end of this year at the latest. 2021, sorry, saw early investments in the expansion of our production facilities above the long-term average. By doing so, we could support the worldwide fight against the pandemic. At the same time, we laid the foundation for our future growth because the new efficient facilities can be used for all of our product categories. Based on the experiences gathered during the pandemic, we also further enhanced the collaboration of our plants worldwide. We are improving our process standardization and agility at all plants through a new structure of the global engineering group. This will enable us to serve customers even better in the future and to prepare us for further growth.
I will discuss the acquisition of the Yantai Xinhui Packing in China, another highlight in 2021 in the outlook. I will now switch to the business area, Industrial Solutions. This business area offers customized system-critical components for demanding applications in the mobility, beverage, and general industry markets. Here, in comparison with the pandemic hit in 2020, the Industrial Solutions business area achieved a currency-adjusted revenue growth of more than 13%. The absolute revenue reached CHF 488 million. The business units, Food and Beverage and General Industry, grew above or slightly below 20%. The business unit, Mobility, reached an 8% growth. With this result, our mobility unit grew significantly more than the global 2.2% growth of the light vehicle production in 2021.
The EBIT increased by 10.7% to CHF 56 million, thanks to the higher capacity utilization rate and consistent cost management. This corresponds to an overall 11.4% EBIT margin. The sharp slowdown in the automotive industry in the second half of the year prevented a margin improvement. The Food and Beverage business unit recorded strong revenue growth for all customers as planned, thanks to the implementation of the planned price adjustments to accelerated growth in 2020 and 2021. The General Industry business unit enjoyed a strong demand, particularly in the final quarter of 2021. It was able to acquire many promising development projects for smart elastomer components. We also implemented some measures to support future growth in the Industrial Solutions business area. When it comes to the Food and Beverage business unit, we invested in the expansion of our production capacities.
This is based on our global customer specific growth plans for portion coffee in the coming years. Despite the slowdown in the automotive market, our mobility business unit proactively approached the market by means of webinars and major customer events, like in China. This resulted in a record number of new projects and new customers, and this will drive revenue in the future. To promote growth in the General Industry business unit, we are expanding our sales and engineering sources in the three key global regions of Europe, the USA, and Asia. With that, I would like to hand now over to Walter, which will give you our financial review. Walter, the floor is yours.
Thank you, Dirk, and hello, everyone. My name is Walter Scherz, and I'm happy to present Dätwyler's annual financial results for the year 2021. Let me start with the reported revenue and results. As Dirk already mentioned, we have completed our focus on system critical elastomer components in 2021. As of the end of September, we divested our last online distribution business, Reichelt. As a consequence, our reported revenue, CHF 1,102 million, contains CHF 154 million from Reichelt. Reported EBIT increased to CHF 234.2 million, and the reported net result reached CHF 194 million. On an EBIT level, Reichelt's total profit contribution amounts to almost CHF 74 million and positively influenced the results you see. The reported figures from the previous year were impacted by the book losses from the divestments of Distrelec and Nedis.
Please note that for your calculations, for your assessments, the starting point for the future are the revenue and profit figures of the continuing operations on which I will elaborate right now. Let's have a look at how revenue developed in the year 2021. You can see that Dätwyler generated a significant organic revenue growth. For a change, the currency effect was almost negligible. Coming from the prior year's figure of revenue, which was CHF 1,069.2 million, our turnover for the whole group reached CHF 1,101.7 million this year. Excluding the divested businesses, the continuing operations turnover was CHF 823.3 million in the previous year, which is actually the third pillar on that slide you see.
Healthcare Solutions organically grew by 16% or CHF 64.6 million, while Industrial Solutions organically grew 13.9% or CHF 59.3 million. Dirk has explained the reasons or the commercial reasons for these developments. On Dätwyler level, this led to a 15% organic revenue increase. Continuing operations thus generated a revenue of CHF 947.6 million. In the second pillar from the right, you see the revenue that Reichelt contributed during the first nine months of 2021. With that, let's move on to some elements in the profit and loss statement. The consolidated income statement discloses continuing operations and discontinued operations, actually the divestments, separately. This facilitates the assessment of our operational performance. The continuing operations are the basis for the future development. I would like to make two remarks here, too.
First of all, the gross profit margin for continuing operations increased to 26.1%. This was achieved despite the raw material price increases and driven by an improved capacity utilization, actually leading to a beneficial operational leverage. Gross profit increased by almost 20%. Second, thanks to our strict cost management, we were able to minimize the increase of G&A costs for the continuing operations. The global expansion, and Dirk mentioned that, of our research and development capacities caused an increase in corresponding costs. Other operating income was lower than in the previous year due to less transitional services to former subsidiaries. Moving on to the EBIT development in 2021, you can notice that the reported EBIT was again impacted by divestments. This year, the impact was positive with the operating results and the gain on the sale of Reichelt.
The continuing operations EBIT in 2020 amounted to CHF 130.2 million, and this is again the third pillar from the left. As you can see, then moving to the right, both business areas continued to strengthen their profitability in 2021. The organic EBIT increase in Healthcare Solutions amounted to 31.4%. Industrial Solutions grew its EBIT organically by 11.1%. The currency effects are insignificant this year. The EBIT from continuing operations reached CHF 160.4 million in 2021. This represents the basis for that year going forward. The improved profitability actually demonstrates the operational leverage of our continuing businesses. When you move on to the next slide, thank you very much. That year's EBIT margin development illustrates a resilient operating performance in a challenging environment.
The group's EBIT margin, obviously, is a combination of the EBIT margin of the two business areas. The figures from 2018 indicate the potential of our focused elastomeric businesses. Healthcare Solutions has continuously strengthened its profitability during the past years and has potential for further advancements. Industrial Solutions has managed to keep the EBIT margin at a stable level of around 11.5% during the last three years, despite the negative pandemic impact in the mobility and general industry business units and against the automotive industry slowdown. Once the market environment normalizes, we will see an improvement in the business area, Industrial Solutions. On this slide, you see the development of the total interest and finance expenses and the weighted average tax rate compared to the prior year.
Net finance costs significantly decreased to CHF 2.4 million, with a slightly lower interest expense and due to less volatility on unhedged currencies. We had that volatility experience in the COVID-19 year, 2020. With the improved results, the group's income tax expense increased to CHF 37.8 million. Nevertheless, the weighted average income tax rate remained stable at 21.7%, of course. Looking at the balance sheet, total assets increased by some 14%. The main reason for this is the CHF 110 million increase in cash and cash equivalents, which you see here on the left side, and that's obviously after the sale of the online distributor, Reichelt. Inventories increased by some 16%. The higher inventory levels on raw materials helped to ease the bottlenecks in the supply chains.
On the liability side, on the right side, we continue to repay interest-bearing debt. Corresponding to the lower levels of liabilities, the equity ratio rose to a level of over 75%. Combined with the higher liquidity balances, this resulted in a net cash situation at the end of 2021, which we see on the next slide. As illustrated here on the left side, free cash flow continued to grow to CHF 160.4 million. Cash from operations and from the sale of subsidiaries finally led to a net cash balance of CHF 129.1 million at the end of 2021, with the total liquidity exceeding interest-bearing debt. Our strong free cash flow and our net cash balance will enable Dätwyler to pursue further strategic opportunities and investments. A short word on the overall cash flow.
The net cash flow from operating activities was more or less stable at around, let's say, CHF 180 million. Cash from operations was mainly used for capital expenditures and to repay almost all of the remaining debt, except for the bond. Net cash used in investing activities overall was lower due to the sale of Reichelt. Net cash used in financing activities decreased to minus CHF 130 million, with a somewhat higher dividend payment, but lower repayments of debt than we actually had last year. Overall, as you can see here, the liquidity situation at Dätwyler has further improved. Let's move on to the ROCE development. The return on capital employed or ROCE for Dätwyler Group increased to 22.5%.
The ROCE development at Dätwyler Group is influenced by recent growth investments at Healthcare Solutions, but also by the stable profitability of Industrial Solutions. For Healthcare Solutions, we see an improvement in ROCE to 26.4%. For Industrial Solutions, ROCE slightly improved to 17.8%. We expect a further increase to former levels in the years to come. Let me have a closer look into the capital expenditures, and many of you know that graph already. The capital expenditures in 2021 were above the long-term average due to attractive growth opportunities. For capital expenditures, it is still our midterm goal to reach more or less the level of depreciation. However, we invest in attractive markets with long-term structural growth trends, such as healthcare or with long-term contracts, such as food and beverage.
Some 75%, and you see that on the right side of the slide, of our expenditures are still assets under construction. The main project here is the second manufacturing building at our existing healthcare site in India. Production in this new building is scheduled for the summer of this year. Further assets under construction include additional production facilities for food and beverage at our plant in Schattdorf. We come to the dividend increase or the dividend proposal. This slide actually illustrates the dividend proposal to the annual general meeting. The proposed dividend of CHF 4.20, the bearer share, represents an increase of more than 30% as compared to the previous year. With this proposal, the total distribution to our shareholders will amount to CHF 71.4 million.
To conclude my presentation, I would like to give you an overview of the price increases that we see in the market. All five graphs here show the price development from beginning of January 2021 until the end of January 2022. On the left side, you see how the price for our main elastomer raw material, EPDM, increased by 60%. The price of aluminum rose by almost 50%, and also various silicon grades increased in price up to 50%. On the right side, you see the electricity and natural gas price developments. Also, these two energy sources show the slight price decline in January. It is not certain whether this trend will continue. The rising price increases for raw materials and energy already had a negative influence on our margin, especially in the fourth quarter of 2021.
We presume that this will continue also into 2022. With this slide overview, I would like to hand over to Dirk, who will comment on the guidance regarding Dätwyler's outlook for 2022 and beyond. Dirk, I hand back.
Walter, thank you very much for these financial insights. Well done. Now I will continue with the outlook, which is quite important under this frame condition of what Walter explained. Let me start with the outlook for our mission. We materialize ideas for a safer, smarter, and more sustainable world. We live in a world of constant change. The demand for powerful and complex technological products is clearly rising. We support our customers to efficiently implement ideas and innovation from the idea to industrialization. We have a global presence and manufacturing footprint. This enables us to deliver consistent high-quality products from local plants in three main economic regions of the world, Americas, Europe, and Asia.
I can tell you, during such uncertain times, such as the pandemic, our local presence took on a new additional value for our global clients. Our pharma business is specialized in primary packaging for injectable drugs. As a result of bottlenecks caused by the pandemic, we were contacted by many new potential customers. We aim to further tap into these potential revenue sources with targeted measures. In order to cope with the high demand and the projected growth, we are investing in the expansion of our production capacity. With the faster growing share of high quality and high margin first line products, we should be able to further improve our profitability. The market growth forecasts encouraging rates for the next five years. This is especially true for the emerging countries.
Let me allow to spend some words here. Here you see the so-called Far Eastern countries in the center of the slide. In these countries, the demand for up-to-date medication is growing over proportionally. The reason for this lies in the strong structural growth drivers that are independent of economic trends and the COVID pandemic. Examples are the rapidly growing middle class asking for more modern healthcare, the increasing rates of chronic diseases such as diabetes or the use of injections as a preferred method for administering medicines. Dätwyler has implemented several strategic measures over the past couple of years to benefit from the strong growth in the Far Eastern countries in the future. With the announced acquisition of the Yantai Xinhui Packing, Dätwyler will gain direct access to the rapidly growing healthcare market in China. Xinhui offers a modern plant with excess capacity.
By bringing in our expertise, we will be able to significantly accelerate our sales growth in China in the near future. The closing of the transaction is planned in the first quarter. As regularly reported, we are doubling our existing Indian plant with a new hall. Production will start this summer. A couple of years ago, the Chinese health authorities introduced extensive regulatory reforms. Thanks to our early initiatives, we are market leader in component approvals for all application types in China. Parallel to investing in production capacities and component certifications, we also invested in our customer support in the Far Eastern countries. We have recruited additional sales and technical support specialists who work locally in the Far Eastern countries. In China, we will have additional resources from the Yantai acquisition. Now I switch to the next slide. Here you see our largest business unit, Mobility.
Here we are specialized in system-critical components for the automotive industry. We are well-positioned to help our customers transition towards new mobility. Our strong market position is based on our co-engineering capability, broad technology portfolio, and advanced production standards. All three aspects are crucial for our participation in new vehicle application with the scope of expanding our addressable market. The growth prospects of the auto market look promising in the next year due to the recovery from the pandemic. In summary, we will address new vehicle applications with an expanded portfolio and new technologies. We will exercise cost discipline and optimization in our traditional market niches and aim to move into attractive adjacencies. This slide summarize our current main focus and the new additional focus applications in the car of the future.
We hold leading position for system-critical components for brakes and emission control with more than 50% market share, which is to see on the left side. Here, we will continue to serve these applications. In the brake segment, we are successfully supporting the technology transition, and we are providing components for hydraulic boosters and brake-by-wire systems. At the same time, we are enlarging our product and technology portfolio to apply new applications in the car of the future. The main new applications include electrified powertrain, battery systems, fuel cell, and vehicle interiors. In addition to new products and technologies, we also be systematic targeting and winning new customer, which are as well new entries in the market like Huawei or Rivian.
There are two main technologies that will support our transition to the new focus application in the near future. Electroactive polymers and electrically and thermally conductive ETEMI materials. The EAP technology, or electroactive polymers, helps realize multiple applications in the area of human machine interaction and vehicle thermal management in electrified and hybrid cars. Electroactive polymers have several unique characteristics. They are noise and maintenance-free and offer a minimal packaging size and low energy consumption, which is especially for electrified cars, very important. ETEMI stands for a material portfolio providing electrical and thermal conductivity and electromagnetic interference shielding. These functionalities are needed in the area of battery systems, electric and electronic housing. As an advantage, our standalone solution allows to recycle battery packs.
On the right side, you see some of our existing customer projects for application in the car of the future. Besides the earlier mentioned components for brake-by-wire, we provide housings and ceilings for advanced driver assistance systems, foldable gaskets for battery systems, and multi-component parts for e-motors. Based on the current status, we are confident that we will be able to utilize the transformation to electric mobility to increase our component number and revenue per vehicle. Yeah, we will continue to focus on our strategic priorities in order to drive the successes of our organization. In 2021, we launched our enhanced sustainability strategy with 12 specific focus topics. I'm happy to share some highlights of our recent achievements in this area. As you may know, sustainability has always been a high priority at Dätwyler.
For example, we have been a member of the UN Global Compact since 2009, and have published a sustainability report in accordance with the Global Reporting Initiative guidelines since the same year. At Dätwyler, we don't just talk about sustainability, we also take actions. You can see some highlights of this proactive approach on this slide. In order to reach our vision of climate neutrality for scope one and two by 2030, we have started to systematically procure electricity from renewable sources. The absolute amount of green power has more than doubled in 2021, and already accounts for more, for some, 38% of our total electricity consumption. In the graph on the lower left, you see that our relative CO2 emission per revenue unit has reduced for the fourth consecutive time.
With regard to our water consumption, we were able to reduce the absolute and the relative figure for five consecutive years now. Also for the fifth time in a row, we were able to increase the recycled waste in percent of our total waste. Of course, we still have some work to do to reach our sustainability visions, but it's encouraging to see that we make tangible progress. As mentioned several times today, Dätwyler is now a focused company. In the next phase, we will concentrate on organic and profitable growth, leveraging the investments of recent and future years. To support our growth strategy, we constantly evaluate acquisition targets to strengthen our existing business and core competencies. The M&A priorities vary depending on our business units and the market is offering us several opportunities. Let me add some comments here with regard to our business units.
Regarding healthcare, we have closed the geographic gap in China. In mobility, an acquisition should open up new technologies and/or boost our transition towards electric vehicles. In the relevant market segments of General Industry business unit, we want to act as a consolidator. In the Food and Beverage business unit, we will further leverage our installed capacity. However, I would like to emphasize once again that we will also be very disciplined regarding possible acquisitions and that the strategic fit must be given and not dilute to our financial figures. Now I would like to come to the next slide. Here you see the tables with our midterm targets that we introduced at our recent Capital Markets Day last fall. All our growth and EBIT margin targets for 2022- 2024 are still valid.
Looking at the 2021 results of the continuing business, we overachieved the growth targets in both business areas and as a company. With regard to the EBIT margin, we exceeded the lower end of the target range for Healthcare. In Industrial Solutions, the sharp slowdown in the automotive industry in the second half of 2021 prevented an improvement of the margin. Price increases for raw materials and in energy also negatively impacted margin development, as Walter has shown in his graph. Yeah, this leads me to my, to the specific outlook for the year 2022. We have started the new year with a high order backlog in all our businesses. Regarding Healthcare and in Food and Beverage, new production capacities will become operational in the course of the year.
The strong demand from our customers makes us confident that revenue growth should exceed the upper value of our midterm target range of 6%-10%. With regard to the EBIT margin, we are a bit more cautious. As Walter explained, inflation and thus rising prices of our input factors become a challenge. Despite this, we aim to achieve the lower value of our midterm target range of 18%-21%. Price increases and a strict cost management should help us to achieve this target. If the price of our input factors should decline in the course of the year, then this would, of course, have a positive impact on our margin development. To conclude my presentation, let me summarize the five elements of our investment proposition. We focus on system-critical elastomer components, meanwhile, without compromise.
We offer superior customer value based on our recognized core competencies. We have leading positions in markets driven by mega trends. We are dedicated to talent development and sustainable growth. We have a track record of strong performance and financial stability. Yeah. With that, I would like to end, and thanks for your attention here. Now, Walter and myself are happy to answer 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 their 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 handsets. Webcast viewers may submit their questions in writing via the related field. Anyone who has a question may press star and one at this time. The first question comes from Serge Rotzer from Credit Suisse. Please go ahead.
Yes, sir. Good afternoon, gentlemen. Congrats to your results in these circumstances. Probably the first question is on CapEx. You have been guiding CHF 120 million-CHF 140 million CapEx. You even increased it at the Capital Markets Day by CHF 10 million at that time, and now you have a CapEx run rate of CHF 100 million. Could you please explain to us what does this mean, also on capacity, or is it only due to the appreciation of the Swiss francs, and what does this mean for 2022, 2023?
Thank you, sir, for your question. Actually, you know, the Capital Markets Day figures are in kind of the overall view still valid. We actually have kind of ideas of up to CHF 130 million. Always, again, investing actually in Healthcare Solutions when kind of the customer demand is there, and also food and beverage. That kind of general guidance did not change compared to the Capital Markets Day. I think it's noteworthy to say we do those investments based on customer demand, and that kind of general rule did not change.
Yeah, still, for this year, the CapEx will increase by CHF 20 million-CHF 40 million, so this is CHF 140 million-CHF 180 million. Is this true? Point two is where had you stopped investments then, in which environment or in which segment, which business?
Again, we invest in Healthcare Solutions, and we also invest in food and beverage. Obviously, I mean, those are growth investments. We have also kind of maintenance investments in the remaining areas. You know, I don't know where your CHF 10 million comes from, but the general outlook basically is the same as we stated in the Capital Markets Day.
Okay, I'll ask in a different way. Have you been affected by supply chain bottlenecks that you were not able to invest the money, or did you really stop some investments?
No, neither is the case. You know, many of our investments are actually not done within a month or a week. Many of our investments take some time. Take, just as an example, our SAP investments. That's something that is not done within a few weeks. The same for, let's say, the bigger investments, as an example, Elephant, our project in India. That is something that actually piled up over the last couple of years. That's kind of the environment we are moving in.
Okay. If I may add another question to the dividend also, to holding cash back. Your payout ratio is now at 37% on continuing operations. In the past, on continuing operations, it was 52%, 46%. You are declining your payout ratio steadily year by year. On the other hand, you are full of cash. You showed the change from debt to net cash. What's the strategy here on the payout ratio? Or, as Dirk also mentioned, M&A, or you need the firepower now in the short term. In the past, we've always heard about China. Have you a new buzzword for us? Who do you want to acquire?
Let me give that over to Dirk, please.
Yeah. I think first of all, thank you very much, Serge, for the question, and welcome to the call. I think when it comes to our dividend payments, I think for us more important is the absolute figure. As you have seen, we have increased that by some 30%, so it's a significant step forward. It's our target, even in the future, to step-by-step to increase those absolute figures over the next couple of years. Maybe should not to focus too much on the payout ratio from that perspective. Let me say our dividend payments is independent of what we are having in front of us with possible acquisitions.
I think we have a couple of ideas how we could spend the money, what we have, let me say, in our pocket. As I said before, we will be very distinctive in what we and where we invest in the future beside the organic growth. From that perspective, there is nothing that will hold something back. If you calculate the dividend based on, let me say, the continuing business, the payout ratio for the year is much higher than what you have mentioned here.
I think it was even, but okay. The last question, I will leave the stage to my colleagues. It's about the guidance. You reiterated your midterm guidance, but at the same time you made acquisition in China. We don't know exactly how much sales it is, but I guess let's say CHF 15 million. You will double the capacity by this year, so let's make it easy to CHF 30 million. The fifteen million, that's 1.5% gross to your existing sales numbers, so from 10% to 21%. If you even double that, basically you have reduced your guidance for the underlying business. Is this true, or are you too shy to increase the midterm guidance due to China?
No. I think as you know, I think the current circumstances what we are facing with all the uncertainties, of course, we would like not to give a value which we maybe cannot hold at the end of the year. First of all, the Yantai is not included in these figures. We will do that when we have finally the closing, and we will communicate it during our half-year result. That means in July this year. From that perspective, it's up to you how you would like to calculate that, but you have the total year turnover with such a company. That will not be dilutive to our EBIT margin. That is what we cannot tell you as well.
I think that is what we are foreseeing. On the other hand, as I said in my outlook, it is very dependent on how much, especially, the auto market will develop. We overall see currently that the first half year it seems for our customers is more a challenging market, compared to the second half of this year. Most of our customers are giving a more and a higher demand for the second half of the year. Maybe we'll learn something different in the next couple of months.
Okay. That's fair enough. Thank you so much, and maybe I'll come later on.
Yeah. You are welcome.
With some additional questions.
There are no further questions on the phone at this time. We now have a question from Sebastian Vogel from UBS. Please go ahead.
Hello. Can you hear me?
Yes. Hello, Sebastian.
Hello. Great. I got three questions. The first one is related to healthcare revenues and COVID-19. You said, if I'm not mistaken, CHF 760 million you have seen in that regard, for the full year 2021. Can you remind me how that was split between H1 and H2, and how do you expect that to evolve into 2022? Second question is on price increases. Given the raw material price increases you have seen, can you remind me there what have you done so far in terms of your own price increases and how much has that already worked through your portfolio in that regard?
Last but not least, with regard to logistics costs, is that something you keep you have in mind that is also a bit of a burden for your margin? Can you a little bit elaborate further on this topic? That would be great.
Yeah. Let me first of all start with COVID. We foresee as well for the next year increase in the turnover. That is what we have in our books and we have no other indications from our customers. Even if we are looking into the year 2023, that is still increasing. However, I would not exclude that maybe a dip would happen, but so far we can't see that. We have to know as well, even let me say in COVID, a dip would come. I'm sure that the pharma companies and we especially as well could close this gap with our original plan for growth. I think I said that even during the last year several times when we talked about our long-term perspective.
From that perspective, I think, based on the information that we have in hand, we do not see any risk to the COVID plans for the year 2022. With regard to the prices, of course, we have set already some measures in place. It's not only pricing, it's as well linked to productivity and other, let me say, measures that we have in our company. We have so far implemented price increases in the lower single digit range, which is a huge percentage already executed.
When we come to the logistics point of view, of course, yes, it is right that the logistics costs are increasing, but I have to say, if it comes to the logistics cost from us to the customers, in most of our markets and our business units, sorry, the customers are carrying the logistics costs. Yeah. So I think we have our logistics costs from the supplier to us, but to the customer side, most of that is linked to the customer's cost. So I think that is quite helpful during these times. Is that answering your question?
To follow up, if I may, in that regard. With regard to the first one of the COVID, can you split the CHF 60 million to H1 and H2? That would be great. With regard to logistics cost, how about availability? Was the availability of capacity on the logistics side constraining your business to some degree or at all?
We have from the COVID, we would not like to disclose what is coming in the first half year and the second half year. I think that is now like from our side is not helpful. What we see with the logistics costs, let me say, is maybe it's not directly a logistics problem, it's more the duration of a cut-off. Typically, what you are having, if we have, let me say, on the goods on the way to the customers, we can just bring that into our accounts when the goods are received and confirmed by the customers. Due to the logistics difficulties which we have worldwide from time to time, the transport system, we have a higher turnover of such products on board compared to previous years.
That will be visible for us then in this year. Nobody knows it will be the next situation by end of this year to 2023. We have to see if that will have a positive effect or will that be the same.
Understood. Many thanks.
Yeah, you're welcome.
The next question comes from the line of Michael Inauen from Stifel. Please go ahead.
Thank you very much. Good afternoon, everyone. I also have a couple of questions, but I may take them one by one, if that's okay for you. Just to follow up on what Serge has on the guidance or what Dirk actually answered here on China. Did I understand it correctly, Dirk, you said so 6%-10%, to the upper end of actually 10% growth, or above the 10% growth does not include China. It means China is basically on top of what you already guides. Just that I understand it correctly.
That is correct, Michael.
Okay, perfect. Thank you very much, Dirk. Just a quick question on the CMD. I mean, at the CMD, you gave a guidance for the continuing business that you now actually not completely reached. You were a little bit below that guidance. Is that really automotive related and basically cost increases lately related that happened in the I have to say probably the last two months of the year? Is it that you couldn't take any countermeasures probably to go to the 17% EBIT margin and to go to the above CHF 460 million revenue level. It's really those two effects, basically, nothing else.
Yeah. No, I think there is nothing as mainly that is what you said. That is absolutely correct. What has slightly affected us was a portfolio change in the last quarter in our healthcare business from FirstLine to Advanced. You know, our COVID business is 80%-90% linked to our Advanced production line. And so if we have a higher value there, then of course that has some influence to the total turnover and to the EBIT margin as well. But all three, let me say, components here that had led to a situation that we were below the target we set during our September session.
Okay. That's clear. Thank you very much. I have just two remaining questions, and then I'll stop. One is on the FirstLine. You just mentioned that you switched some capacity from FirstLine to Advanced due to COVID. Can you give us an indication, FirstLine, how much percentage it now makes of your healthcare revenues? We heard also from Lonza. They are very bullish on the biologics and biosimilar market. Is that still something that we really have to, you know, be aware of that the growth will really come from FirstLine?
I think I would not like to disclose this FirstLine turnover. What I can tell you is clearly that is a clearly above-proportional growth year by year. We are absolutely happy with that, and that is what you can see in the financial figures on the EBIT margin that is very helpful here. Yeah. I think that is from that perspective. We are in line, more or less with our internal targets, what we have set for this FirstLine concept.
Perfect. Thank you very much. Just the last one on Nespresso. I mean, with yesterday, Nestlé reported that their figures, they were actually pretty strong, of course. It's also visible in your food and beverage division. Nespresso has also launched Nescafé aluminum capsules now for the Nespresso systems, and they seem to be extremely successful already with these capsules, grabbing some market share where they enter. I was just wondering, Guido actually answered that question already to me, but I was just wondering, you know, producing the Nescafé capsules, is that also split between you and alupak? Or how does it work actually, if Nespresso brings basically a new capsule to the market? How can we think of it when you have a 10-year contract?
Okay. Maybe I can support you in such a way to understand that, Michael. Is that if you're looking to the growth figures what Nestlé has presented last year. Yesterday, sorry, not last year. Yesterday. You compare that with our sales growth, you can see a significant difference between them. Although we are on a much higher level, as I said at the beginning, of around 20%. We are clearly above that. That is, which I explained to you and all of you at some in earlier meetings. We have decided to accelerate the growth, and therefore we have decided to come in two phases of price reductions. One, the first one was in 2020, and the last one was in 2021.
From now onwards, that was in the half year of 2021. Now, from now onwards, I think the prices will be stable. With this price adjustment, we as well got, let me say, a higher market share. That, of course, is now what is visible in the turnover. That is what I always said. Now, from now on, our absolute EBIT should now increase year by year. Okay? That is what was the concept. On the other hand, we have a second customer, and his success is quite impressive. That is what we see as well for this year. As from that perspective, I think we are having quite a successful combination for this year.
That means the growth rate, what we are foreseeing here, is not just coming from one customer, but it's coming from two customers. The capacity is mostly installed. We will have to adapt it maybe next year. It depends on the outlook for the year 2023 and 2024. That's the actual situation. Hope that helps.
Yeah, no, that's very interesting and helpful. Thank you very much. Just one, sorry, one last one. I know it's always the last one, but I mean, I was just wondering, your second client that you have and that you actually introduced to us at the CMD, maybe you cannot answer it here, but still, you know, I was wondering, how is it possible that Nespresso allows you to even serve that client? I mean, basically, it's a competitor, no?
Of course. Every other company which is, let me think, bringing coffee capsules to the market is, yes. But you have to understand. The other customer is not producing coffee. So he is. That is Capsul'in. He is just producing coffee capsules.
Yeah, yeah.
He is selling the capsules to the market. I think that is the point. Of course, that was always the question with our customer, Nespresso, should we have an exclusivity right, yes or no? Finally, we decided not to have it so that we could go to the market. Of course, that is as well in their favor. That is, let me say, as well, a combination of the price adjustment, what we agreed with Nespresso, of course, is due to the higher volume what we overall have in this sector, so they can benefit from that as well.
Great. Thank you very much. All right.
Yeah. You are welcome, Michael.
The next question comes from the line of Christian Obst from Baader Helvea AG. Please go ahead.
Yes, thank you, and good afternoon. I have a question concerning or around the issue of capacity improvement, utilization rates and spare capacity. Can you give us some kind of an idea, maybe again, for what is the actual situation in India as a timeline, and what are your current utilization rates there? At what kind of utilization rate do you think you reach your targeted margin? This again is a question for the U.S. pharma plants and the new installed capacity for the capsule plant in Switzerland. Is that possible?
Yeah, partly. Let me start. We will not disclose everything, but I can try to explain it to you. In India, we have some delays. That's absolutely right, more than what we have expected. But that is only linked to the COVID situation. Our starting point for the production should be in the summertime. Then, shortly after that, we should start the commercial as well. I think it is quite important to understand that we will not really have a slow ramp up. The ramp up will be very fast. Due to the bottlenecks that we have generated in India, we had to move some of our products to the U.S. and to Europe.
Currently, we have some of the products what we have foreseen, we are producing them in such regions. Of course, you can imagine, to a higher cost level. Now, when the factory is ready in the second half of the year, we will move such products back. Then, of course, this factory will get having, let me say, some further idle capacity, which we will use for organic growth, as well in the coming years. Let me say that is what I can tell you here to India. Pharma, our pharma company in Delaware, I think that is where we're referring to. We have another one that is in Pennsauken, which has covered a part of this business from India. We are here, let me say, in a production Verbund. What is this?
Network.
Thank you, Walter. Production network. That here, I think that is more important for us to balance out where we produce which product, which has the best benefit for us. That is the reason why we started not to disclose figures per site. That means, when it comes to, as I said, to Michael, when it comes to the production capacity for our coffee business, most of the machines or the equipment which we need for the next years, we have installed or ordered, and the implementation will come in the next couple of months that we would be able to cover the needs for the next years.
Maybe if they are more successful than they have planned, you know, we have to, let me say, to adapt that, but that we will see in the record of the next 12 months. Okay?
As a result, in the end, when you're moving your production from the U.S. back to India and ramping that up, and you don't have additional costs there, and optimized mix in the U.S. and ramping up coffee in Switzerland should lead to rising margins going into 2023.
Yeah.
Of course.
Yeah, that's right. That is what I'm saying. That is what I said. That is the reason why I believe that our long-term plan, what we have communicated, I think that we will be able to achieve that, yeah.
The main risk there is that maybe there is some kind of delay or some kind of a dip from the COVID side.
Yeah. I would say the main risk is currently the market development, so I think we are prepared. If there are any issues in the market, of course, we need the market to sell our products. That is a market point. It's not a topic that we are having any weak points internally. I think we are well prepared.
Okay. Thank you very much.
Yeah, you're welcome.
The next question comes from the line.
Maybe they can move on to-
Yeah. Sorry.
Okay, sorry. There are still a few questions on the phone. I just thought we would actually move on to the written ones. Some of them have already been answered, so please move on.
The last question from the phone comes from the line of Daniel Koenig from Mirabaud. Please go ahead.
Yes. Hello. Do you hear me?
Yes. Hello. Hi, Daniel.
I had two additional questions, the questions that I've written, and that would be first, Middletown. I remember there was always the statement, 2021, Middletown would be breaking even. Has that happened?
We do not disclose any figures for a dedicated plant, as I said before.
Okay. Mm-hmm. Okay.
As I said, we have a production network, and for us it's the most important point to have the right setup for the individual sites.
Okay.
We need all capacities what we have currently, yeah.
I saw you had electricity in your presentation pack. I was wondering how much impact electricity has, how much electricity are you consuming? I'm just wondering how this is in terms of costs.
Sure, Daniel, just let me take over. I mean, the impacts are twofold. On one side, it's actually the energy consumption or electricity consumption that you use for, you know, the whole production process, from mixing to molding, et cetera. Those are the figures that they've presented, or we also presented in the sustainability highlights.
Okay.
On page 30, 34. You see that, and you also see that in our sustainability report, it actually in detail. On the other side, kind of the other impact is obviously the raw materials, like EPDM, as I explained, are also getting more expensive because also energy is used to actually transform them to the state where we need them.
Okay, thanks a lot. Thanks.
You're welcome.
You're welcome. Should we move to the written questions?
Yes, let's move to the written questions. I think some of them have already been covered. Let me just go through. Dirk, maybe there is one I would dare to tell or to ask you. You know, are there plans for further acquisitions in what business areas and global regions? Are you looking for M&A opportunities? There is also another one, a little bit going the same direction, from Richard, from Tech AB. Potential use of available cash. How does that look like?
Yeah, let me start with the acquisition. As I said, when we discussed aggressive organic approach and supported by focused acquisitions, we have closed our gap in the healthcare sector. I think there is currently, what I can see, not really a need to acquire a further company. I think it is clear that we are investing, let me say, to support our long-term strategy. Whether there will be maybe any opportunities, we will have a look at that, but it's not clearly visible today. In the mobility, as I said, we will move forward with our organic plan, so that means our strategy is clear and straightforward.
We are looking to the market, are there opportunities which could boost our plan forward in the direction of electrification of cars, whether there are maybe products which would fit to our product portfolio and customer portfolio. There we are in discussion with several companies as what we always are doing. In general industry, of course, there's a broad band of opportunities in the market. We have continuous discussions here and as you know, for an acquisition, you always need two persons or at minimum two companies which are willing to go forward. So there's a lot of discussions over the last year. Sometimes it takes some more time. The food and beverage sector, I don't see a need for an acquisition. I think that is what I said.
We have a huge number of ideas. I think we will not just spend money. I think the money what we have in cash and why that describes that. Of course, we will have a clear focus how and what we will spend there. We will be very disciplined with that.
Thank you much.
Yeah.
Thanks a lot, Dirk. The next one I would answer immediately. There's a statement, you know, in half year 2021, we said that the revenue growth will be above CHF 1,150 million. What happened that we could not reach that? That's obviously the Reichelt divestment. Three months of Reichelt's revenue is actually missing. So that's the reason why. We are nearly there. There is a question of the ideas of, hey, what happened between half year one and half year two? Because the margins and the revenue was lower than in half year one.
There, Dirk, allow me to respond in a way that we always said that the second half for the whole Dätwyler group, be it Healthcare, be it Industrial Solutions, actually normally a little weaker in the second half. The reason is, first of all, you have the summer months and the Christmas break. In total more or less a month of less revenue with the same cost structure. Then we also foresaw already in half year in the half year presentation that, you know, there will be some price increases coming along the way. This is more or less I believe what we also announced. Then we are coming to an end here.
Maybe, Dirk, there is a question, you know, how do we see, you know, the COVID vaccines and the COVID growth going forward? How will that really continue growth in this area?
I think I answered that already in my talk about the outlook in 2022 and 2023, yeah.
Wonderful. That means we are at the.
Yeah, I think there's a question.
End with that.
Yeah, with the Ukraine.
Oh, yes.
I think we should say something to that.
Yeah.
I think we have a location that is absolutely right in the Ukraine, but we have taken all the measures so that would not influence our business and that is a very small portion of our business, which is, let me say, in the very low percentage below 1%. That is really not having a significant influence here. Yeah, I think with that, thanks to all of you and your continued interest in Dätwyler. I think it's good to see that COVID-19 minimum seems to come, let me say, how to handle with that, especially in Switzerland, more easy. Hopefully we will have the opportunity in the next weeks to see us as well personally without any mask.
From that perspective, I wish you a great day. Have a fantastic weekend, and looking forward to see you in person as soon as possible. Have a great day. Thank you.
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