Ladies and gentlemen, welcome to the presentation of Dätwyler Annual Results 2020 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 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. We regret that we cannot meet in person for our annual results conference this year. I do sincerely hope that these things will change in the course of this year, and that we will be able to meet in person again soon. I will directly move on our today's agenda. After our explanations, Walter and myself will be happy to answer any questions you may have. As announced one year ago, we reorganized our company to strengthen our market focus on our core competencies. The new organization has been implemented successfully and has already proven itself during the COVID-19 pandemic. The increased focus on the respective markets helped Dätwyler to respond in an agile way and quickly to changing market developments and customer needs.
During my part of the presentation, I will focus on the continuing business as shown on this slide. Our CFO, Walter Scherz, will talk about the transition from the former to the current Dätwyler Group. In the pandemic year 2020, we proved that our focus on system-critical elastomer components for attractive global markets brings added value. Currency adjusted, the continuing operations generated an organic revenue growth of 1.2%. Walter will provide you more details. The healthcare business, food and beverage, and our online distributor Reichelt business enjoyed a strong demand throughout the year. The other units had to accept a significant revenue decline during several months. By taking action early, we were able to adapt cost structures quickly. At the same time, the healthcare business and the online distributor Reichelt improved their profitability.
As a result, Dätwyler was able to increase its operating results by 10.9% to CHF 148 million. The EBIT margin improved to 14.6%. The net results from continuing operations rose by 20.7% to CHF 118.9 million. Now, I would like to comment on the performance of our business area. We will start with Healthcare Solutions. This business area offers high-quality system-critical components for containers and delivery systems for injectable drugs and diagnostics for the pharmaceutical and medical markets. The Healthcare Solutions business area increased its sales to CHF 403.4 million. This has been adjusted for the strong CHF impact. This equates to an organic growth of 11.8%. In the fourth quarter, the organic growth was close to 20%. The operating result improved by 24.1% to CHF 79.2 million. This results in a significantly higher EBIT margin of 19.6%.
Included in these figures are expenses for managing the impact of the pandemic, start-up costs for new production capacities, higher depreciation, and negative currency effects. To meet the strong demand for high-quality products, we implemented several measures to increase our production capacities. That is through further automation, a 24/7 work regime, and the installation of additional equipment. The expansion of our facility in India, where we will double our capacity, is continuing. Unfortunately, the pandemic has delayed the construction work. The new building is now scheduled to be operational in the second quarter of 2022 at the latest. I will now switch to the business area, Industrial Solutions. This business area offers customized system-critical components for demanding applications in the mobility, food and beverage, oil and gas, and general industry markets. In the business area, Industrial Solutions, we sold the civil engineering business in May 2020.
Therefore, we present you the figures of the continuing operations of this business area without civil engineering in the reporting in the prior years. Due to the substantial negative impact of the pandemic, revenue fell to CHF 427.5 million. This corresponds to a currency-adjusted decline of 11.4%. Thanks to the quick adjustment of the cost structure and the encouraging performance of the food and beverage business, the EBIT margin improved slightly to 11.8%. The operating results amounted to CHF 50.4 million. Towards the end of the reporting year, Dätwyler extended its strategic partnership with Nespresso. The new multi-year contract will run until 2030. It envisages continuous volume and revenue growth. The third quarter was also supplied to another customer. To serve the forecast demand, we will invest in the expansion of our production capacities at our Swiss plant in Schattdorf.
Besides the two business areas that are part of our core business, the online distributor, Reichelt, completes the Dätwyler Group for the time being. Based on the competent technical support, high availability, and short delivery times, Reichelt supplies more than 100,000 electronic products to more than 1 million business, government, and private customers. Reichelt was able to increase its market share in the reporting years, thanks to its attractive price-performance proposition. The online distributor achieved a currency-adjusted growth of 12.7% in a challenging market environment. Reichelt also increased its revenue to CHF 188.8 million. The low cost base helped to increase the operating result by 16.2% to CHF 17.2 million. The EBIT margin improved to 9.1%. Reichelt benefited from the trend towards online shopping that was boosted by the pandemic.
There was a particularly strong demand for electronic devices and accessories for use in a home office or homeschooling setting. With this, I conclude my review and hand over to our CFO, Walter Scherz.
Thank you, Dirk. Hello, everyone. Very pleased to have you here. My name is Walter Scherz. I'm presenting the annual financial results 2020 for Dätwyler Group. I'm thankful for your interest in Dätwyler. As Dirk explained, Dätwyler focuses on the system-critical and systemic components. This has been implemented in 2020. The reorganization, therefore, amongst other items, included the sale of the distributors Distrelec and Nedis and the civil engineering business. This affects the reported results as already communicated a year ago and in the half-year results. This will not be a surprise to you. Dätwyler Group's continuing operations improved, but reported figures for financial year 2020 are influenced by divestments. The reported EBIT is minus CHF 315.9 million, and the reported net result stands at the minus CHF 346.3 million. This actually includes a loss of CHF 464.5 million from the sale of these subsidiaries.
It is important to note, though, that this loss does not affect Dätwyler's current liquidity and the overall equity position, which I will explain later on. We start here with the sales bridge, you can see that Dätwyler was able to generate organic revenue growth in this difficult year, but we also see a negative impact of the strength in CHF. Coming from prior years, CHF 1,360.8 million, this is actually the left side column, our turnover for the whole group reached CHF 1,069.2 million this year, which is the right, the bar on the left. Excluding the divested businesses, Distrelec, Nedis, and civil engineering, the 2019 continuing operations turnover was CHF 1,050.5 million, which is the third pillar on this slide. Healthcare Solutions organically grew by +11.8%, or CHF 45.1 million, while Reichelt even grew by +12.7%, or CHF 22.1 million.
Industrial solutions, on the other side, organically lost -11.4%, or CHF 57.5 million on the top line. Dirk has given you the reasons for this development. All those effects led to an organic increase of +1.2% in sales, of which the strong Swiss franc took some 4.8%. The Swiss franc further strengthened relative to all currencies Dätwyler is exposed to. This brings me to the profit and loss statement. The consolidated income statement is a functional income statement as in the previous years. It shows continuing operations and discontinued operations, actually, the divestments. This allows you to better assess our operational performance. The continued operations is the basis for the future development. I would like to make three remarks to this consolidated income statement. First, the gross profit margin slightly reduced to 24%.
The Swiss franc led to a decrease of around 4%, while raw material prices helped to support the gross profit margin. The turnover decrease in industrial solutions also affected this ratio. Second, general and administration expense was reduced due to the reorganization and previous years' divestments effect. In addition, some of our IT costs are recharged external, actually to third parties now, thus resulting in higher other operating income for this year. Third, the lower income tax expense of around CHF 20 million contribute to the weighted average tax rate of 21.8%. The income tax expense dropped again in 2020. One of the reasons is the reassessment and capitalization of tax loss carry-forwards, which could be saved operationally. You see the major impact in the detailed reconciliation in the annual report. I will talk about the finance result in a separate slide.
Moving on to the EBIT bridge, you will have noticed again that the reported EBIT is impacted by divestments. The continuing operations EBIT 2019, again, the third pillar, was CHF 133.5 million. As you can see, Healthcare Solutions and our online distributor, Reichelt, further strengthened their profitability in 2020. Healthcare Solutions organically grew their EBIT by 30.6%, and Reichelt by 20.9%. This actually shows you the operational leverage in these businesses. Industrial Solutions organically declined by -12.2%. The EBIT 2020 from continuing operations reached CHF 148 million. This is the basis for the Dätwyler Group going forward. Here you see the various EBIT margins. Dätwyler's EBIT margin shows the resilient performance in a challenging environment. Continuing operations alone delivered an EBIT margin of 40.6%, or CHF 148 million. In Healthcare Solutions, the EBIT margin reached 90.6%, or CHF 79.2 million. This actually includes the Middletown results.
As you can see in our alternative performance measure documents on the Dätwyler website, this is considered as part of the normal business going forward as operations in the U.S. are running. Industrial Solutions adjusted EBIT margin excludes the divestment of Civil Engineering, it results to 11.8%, or CHF 50.4 million. This is quite the reasonable result given the massive top-line decline in some businesses. Last but not least, Reichelt increased their EBIT to 9.1%, or CHF 17.2 million compared to previous year. As Dirk mentioned, we are continuing to optimize the firm's value. A short word on the finance result. It shows that we paid less interest on bank loans and other finance charges. On the other side, as in the half year, it includes the development of the unhedged currencies such as Indian rupees, Brazilian reais, or Czech crowns.
During the Corona year, these currencies actually depreciated quite strongly against the Swiss franc. The finance result is basically CHF 2 million higher due to the strengthening of the Swiss franc. You see that the balance sheet overall has shortened by -4.7%. Please be reminded that Distrelec and Nedis balances already have been impaired in 2019. This means that the development you see here on the asset side at least, is less pronounced as you might have expected. Trade accounts receivables increased due to the strong development in the fourth quarter. On the liability side, Dätwyler further shortened the current liability positions, mainly by repaying interest-bearing debt. By streamlining the liability side, this further reduced net debt and gearing. While liability is reduced over proportionate, the equity ratio actually is above 60% again.
Our strong balance sheet and liquidity allows us to pursue further strategic opportunities and investments even beyond these Corona times, especially in Healthcare Solutions and Food and Beverage, as Dirk will explain in our future plans and the outlook. You note that the equity ratio increased to 66.4% from previous years' 58.1%. The increase of the net cash surplus, which is the last line, net cash surplus is actually cash less short-term bank debt. The increase to CHF 169.5 million is due to the fact debt further reduced to CHF 35.7 million. On the left side, free cash flow could further be increased and stands at CHF 115.7 million in 2020. The improved cash flow from operations and less investing activities improve free cash flow, which I will show you in the cash flow statement on the following slide. Net cash flow from operating activities further increased to a level of CHF 185.3 million.
The team put really good emphasis on the accounts receivable position and the rating in this special year 2020, as you can read in footnote 11 of the annual report. This positive and increased operating cash inflow was used for investments on one side and repayment of debts on the other side. Net cash used in investing activities reduced to CHF 69.6 million, mainly helped by less CapEx than in 2019 and disposal of subsidiaries. Net cash used in financing activities, though, increased to CHF -132.7 million, mainly due to repayment of debt as you can see in the development. Overall, the liquidity situation at Dätwyler Group remains solid. Important to mention is the fact that the majority of the investing cash flows are investments into the future, that is, healthcare solutions and food and beverage. Capital allocations happen in growth areas.
The return on capital employed, or ROCE, for Dätwyler Group only slightly decreased to 22.1%. As you can note from the individual graphs, the ROCE developments at Dätwyler Group is influenced by recent growth investments in healthcare solutions, but also the absolute profitability drop in industrial solutions. The ROCE varies between these business areas. Healthcare solutions ROCE of 23.7% is driven by increased absolute EBIT and relatively spoken, more increased capital employed. Industrial solutions ROCE stands at 17.1%, which will increase again with growing turnover and EBIT. Reichelt's ROCE is driven by higher EBIT and only slight increase in capital employed, mainly related to inventory. The capital expenditure in 2020 is slightly above the long-term average due to attractive business growth opportunities. It is still the mid-term goal to reach more or less the level of the depreciation or around 8% of net sales.
However, due to investment opportunities based on additional orders and demand in healthcare solutions and food and beverage in the coming years, we were and are ready to invest further. Dätwyler allocates its capital into growing markets where we see potential. Last but not least, let me talk about the dividend proposal. The reported net result is negative, as you have seen. However, due to the strong balance sheet and the solid continuing operations net result, the board of directors proposes to the AGM an increased dividend of CHF 3.20 per bearer share. The payout ratio stands at 45.8% of the adjusted net result. This is slightly above the normal payout ratio as in previous years. With this, I would like to hand over to Dirk to talk about Dätwyler's outlook for 2021 and beyond.
Yeah, Walter, thank you very much for these financial insights. Now I will continue with the outlook. Yeah, first of all, let me start with 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 rising. In many cases, our system-critical components are essential and make technological progress possible. We support our customers to efficiently implement ideas and innovations from the idea to industrialization. We develop and manufacture our components in a global network of more than 20 plants. We produce more than 90 million components every day. It is crucial for our customers' success that they have access to our material specialists and engineers in the main economic regions. The components we focus on have a critical impact on the safety or performance of a system.
We engage in advanced systems with demanding and complex requirements that can only be fulfilled by a handful of global suppliers. These high-tech components make a decisive contribution to the success of our customers' products. At the same time, they account for only a small portion of the other against the COVID-19 virus. smart rubber components with integrated sensors for new active assistance and safety systems in vehicle and other applications, and multi-material components for the electro-mobility of the future. The of global mega trends is providing opportunities in existing and new markets. These are demographic and lifestyle changes, an increase in safety and regulations, more efficient use of resources, and the digitalization of all areas of life. By applying our core competencies for these global mega trends, we create growth opportunities in existing and future markets.
We are able to support customers from the design study and the prototype phase up to the global serial production. Our pharma business is specialized in primary packaging for injectable drugs. The estimated market growth over the next five years will increase due to an additional demand for vaccines and therapies to fight the COVID-19 virus. As one of the leading players in this market, and based on our core competencies, we are able to provide best-in-class quality. Our FirstLine production standard offers customers the possibility to reduce particle contamination by up to 50%. Our strategic priorities are focused on aggressively growing in the U.S. and in the attractive biotech market, increasing the number of new drug development projects we are involved in, and pursuing opportunities to expand our footprint in China and Latin America.
Among other applications, our system-critical components, such as stoppers and plungers, are used to provide the COVID-19 vaccines. We are proud to be able to support the leading pharmaceutical companies in the fight against the pandemic. During the intensive phase of the COVID-19 pandemic in the second quarter of 2020, we proved that we can make an important contribution to our pharma customer business contingency. This is thanks to our presence with standardized plants on three continents. Our mobility business unit is specialized in 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 the broad technology portfolio and advanced production standards. Both aspects are crucial to manufacture components for electrified and emission-reducing systems. We continue to invest in the development of new customer projects. We acquire further new projects for electrified vehicles.
Electroactive polymers or smart rubber open up new interesting applications in the fields of digitalization in vehicles and driver vehicle interface. Customers achieve higher quality in shorter time to market due to our co-engineering approach. For housings for electrified vehicles, customers benefit from our leading expertise in simulation and in multi-material components. We will continue to focus our strategic priorities in order to drive the success of our organization by driving profitable growth, accelerating the digitalization, increased agility, and advancing sustainability. With our focus on increasing agility and accelerating digitalization, we have been preparing ourselves for unforeseen events in the VUCA world. During the corona pandemic, we are benefiting from this groundwork. The progress achieved has shown us that we can react faster and better to unexpected impacts. In the fall of 2020, we added the advancement of sustainability as our fourth strategic pillar.
With our unique shareholder structure and more than 100 years of corporate history, sustainability is part of our values. Since 2009 already, we are a member of the UN Global Compact, publish a sustainability report according to the guidelines of the Global Reporting Initiative, GRI, and a CDP disclosure. Motivated by the good ratings, for example, from MSCI or EcoVadis, we want to take sustainability to the next level. By 2030, we want to achieve carbon neutrality for our own activities at all our sites. To define the milestones, we will use the science-based targets concept. Already today, we purchase 35% of our global electricity consumption from renewable energy sources. This amounts to an annual reduction of CO2 emissions by some 15,000 tons. Also, we were able to reduce our relative resource consumption in three consecutive years.
A good example is our Swiss plant in Schattdorf, where we already produce carbon neutral since 2013. We purchase the electricity from hydropower sources, and the process and heating energy is supplied by a nearby wood-fired heating plant. This brings me to the specific outlook for 2021. Dätwyler expects a significant double-digit revenue growth in the healthcare business in 2021, and a strong development above market average in the following years. Strong demand for high-quality coated components from our FirstLine production will have a positive impact on the product mix and the average margin. In the business area, industrial sectors will lead to a high single-digit revenue growth in 2021. After a strong 2020, the online distributor is likely to achieve low middle single-digit growth in 2021.
For the group, we expect the increase in revenue to be considerably over CHF 1.1 billion and an EBIT margin of around 15%. All of these forecasts assume that there will be no additional unforeseen negative impacts caused by the pandemic and the current lockdown will not proceed in the second quarter of 2021. To conclude my presentation, let me summarize the five elements of our investment proposition. We focus on system-critical elastomer components. 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, and we have a track record of strong performance and financial stability. I'm convinced that we set things on track in 2020 for sustained growth and long-term success in 2021 and beyond.
Based on our clear focus and strategy, we will continue to lead the way with technology and unlock our potential for future growth. Thank you very much for your attention.
The first question comes from the line of Mr. Michael Foeth with Vontobel. Please go ahead, sir.
Yes. Thank you. Good morning, gentlemen. Two questions from my side on your margin. In the first half for you, 2020, you showed a 21.7% margin for healthcare on an adjusted basis. My question is, what was that margin in the second half? Somehow it looks a bit weak, considering the 19.6% margin that you show for the business, for the full year. I struggle to understand what the dynamic is there. That brings me to a question on your guidance for the margin as well. Your 15% group margin guidance. Also here, it seems a bit conservative to me, considering that your highest margin business is obviously also growing fastest in 2021, I would have expected a little bit more upside on the margin there. That's the margin question, and then I have a follow-up on the healthcare business after that.
Yeah, Michael, thank you very much for your questions. First of all, with regard to the healthcare margin development in 2020. In the second half year, of course, we have seen an improving margin, which is cited in higher margins in the fourth quarter finally. Due to the fact, as you may remember, that we had not a strong half year in 2020, the second half year was much stronger. What I can say today is that based on the orders that we have in hand, that we will see some further positives to a lower margin in 2021. Which is as well driven by the FirstLine concept, what we have, that means that our products, what we are bringing to the market is going in this direction more and more, this FirstLine product is having a higher margin overall.
Is it correct to assume that your margin should move above 20% in healthcare in 2021?
Yeah, I think that is a fair statement. Yes.
Okay. The second question would be also regarding your healthcare business. Were you able to gain any new customers in healthcare as a result of the COVID-19 situation and the demand for stoppers and plungers for vaccines and other medics? Are those market share gains maybe helping you also for the first-time business?
Yes, I think that was always our target, as I said some minutes before that, we are striving more and more in this biologic market and of course FirstLine is helping us in this respect here. We have every year new customers on board. The most important point is that we would like to increase our market share, with the leading pharmaceutical companies over the years. The FirstLine concept will help us here, and that is what we can see in the strong orders in hand, what we have already today.
Okay. Thank you very much.
Yeah. You're welcome.
The next question from the telephone comes from Richard Frei with ZKB. Please go ahead.
Good morning, gentlemen. Thanks for taking my question. First of all, also healthcare. Looking at the medical segment, which was declining, I guess most of it was due to FX, I guess. Still, there was not huge growth left organically. As I have in mind, you once put the attribute of an attractive growth potential into that segment. May you shed some more light on what is going on in this still small segment? Secondly, regarding mobility. When it comes to the transition from combustion to e-mobility, may you help me a bit, on understanding what your potential there is? Is the business more or less the same size, or are there bigger growth potentials ahead when it comes to that transition? Thank you.
Yeah. Richard, thank you very much for your questions. First of all, with regard to the performance of Medical Solutions, you are right that is mainly by the FX exchange rates as well, in 2020. We expect that we will see some further increase in 2021, as you know, these products, what we are having here in this segment or the business unit, is mainly delivered into the hospitals and of course, due to the COVID crisis, a lot of hospitals had to reduce, let me say, their treatment of the patients. That means overall, there was not a high demand as what we have experienced in the last years before. We expect that during the course of 2021, that will recover in this direction and that we see a slight increase of growth here as well.
With regard to mobility, I think, as we said, the electrification of the cars is still at the beginning. What I can tell you that the content, the value per car, what we have today, we see that as well in the future for full electric vehicles. For some hybrid versions, we see a higher content in the future. Overall, the growth will depend on the number of cars which we will sold to the market. Let me say, that is where we are in. We believe that we can grow with the market. Yeah.
Thank you. That helps. Thanks.
Yeah. You're welcome.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Serge Rotzer with Credit Suisse. Please go ahead.
Yes. Good morning, gentlemen. Congrats for the results. I have a question on the healthcare. Basically, I'm a little bit puzzled because last year in the slide presentation, you mentioned an adjusted EBIT margin for healthcare of 20.9%. Now you disclose 16.8% for 2019. The same is true for industrial solution. Last year, you mentioned 13.3%, and now it's 11.9%. Can you help me to understand this? This would be the first question.
Yes. Hi, Serge. This is Walter.
Hi, Walter.
It's basically coming from the adjustments. Before maybe Michael's question on why did it actually decrease to 19.6%, it's not a decrease. Keep in mind that until half year 2020, we adjusted for the Middletown loss. At half year, it was CHF 8.1 million. In the 19.6% that we see right now in the margin, actually, that loss is included. It's obviously still a loss, but nevertheless, we still believe that in the fourth quarter 2021, that operation, that U.S. facility, will actually be at the break-even point. That means going forward, it will get better and better, and obviously, it will also help the margin improvement. Same actually for the civil engineering part. There, continuing operations actually exclude the oh, sorry. Industrial solutions part, sorry. There, actually, the civil engineering divestment is adjusted.
You see that in that document, alternative performance measures, where you see the reconciliations.
Okay, I will have to dig again, but this would mean that civil engineering has been very profitable, and I believe that this was not true, or effort, this was not true.
No, civil engineering was certainly below the market or that value group's EBIT range. Yeah, clearly below it.
It's not crystal clear yet, but I will call you later again in that case. The next question would be on the CapEx in healthcare. You mentioned that you increased production facilities. Can you tell us how much CapEx do you spend there, or how much incremental sales potential you will build up there?
Please understand, Serge, that we would like not disclose such figures. As I said, we will be in the position to grow over the next couple of years in the double-digit range organically. On one hand, that means independent of COVID. With COVID, we are currently seeing some additional tailwind. What we have prepared with our facilities around the world, we will be able to cover that with an overproportional growth in the FirstLine sector.
Okay. Can you give us an update on F&B about the new customer, about the sales development, and also of the margin level, where we are currently?
Are you talking about healthcare on?
No, food and beverage. Sorry, F&B, food and beverage.
Okay. Sorry. Okay.
Sorry.
No, no problem. First of all, we are not disclosing any special customer figures here. Overall, and maybe this question is coming up, I think we will see as well in this sector, a good growth in the next couple of years based on this existing contract, what we have. This new contract until 2030 with our biggest customer, Nespresso. On the other hand, this new customer has already started in the fourth quarter. We are constantly increasing our capacity in the next couple of months so that we'll have constantly an increase of sales there as well. The margin is in the average of that what we have with our existing customers. That is what we are striving for.
Okay.
The orders in hand for this area, for the beverage is very good. We see that as well, a strong growth over the next years.
Okay. A question I always get from my investors, what about Reichelt? excuse me, divestment plans this year, next year, target multiple, can you tell us something here?
That is not foreseen to sell Reichelt this year. As I said, every year we will review that together with the board, and then we always discussing how to proceed for the next year. So far, we see that we can add additional value with Reichelt to the group, as that means to all our stakeholders. When somebody approaching us and asking for this company, then of course, we will go into discussions. We have not started a process of selling Reichelt.
Margin are expected to decline due to the rollout in Germany and Switzerland and Austria. Is this correct?
No.
No. Okay.
No. I think the margin development with Reichelt will be around this level. There's always a question, will we push them more for growth and with a slightly lower margin, or we are focused on margin. That is always how we have to deal with it.
Okay, perfect. Many thanks.
You're welcome, sir.
The next question comes from the line of Rolf Renders with Helvea. Please go ahead.
Yes. Good morning, gentlemen. Thanks for your opportunity for the questions and the presentation. Looking at the strength of your balance sheet and the confident outlook for this year, how far do you think you want to go with increasing the dividends?
I think, as you have seen, we have a payout ratio at currently around 45.8%. Of course, when everything is going right, our target is always to increase the dividend. To stick to an end payout ratio around 40%-45%. If everything is going right, I could imagine that we next year will have as well, again, an opportunity to increase the dividend. It will be always around 45% payout ratio.
Okay, thank you. In that context, how do you see then the ideal balance sheet structure? You're running into a net cash situation if you don't find any significant to buy.
Hi, Rolf. Well, first of all, to maybe add to Dirk's statement, the payout ratios should be kept stable, so to speak. When we continue to develop well, which is the plan, obviously, the payout ratio nevertheless will stay stable. On the balance sheet structure, we obviously are investigating, further investigating into further options. On one side, we will invest in future growth in areas where we actually see that benefit, where we bring value to our markets. Healthcare solutions is one example. Food and beverage on the other side. Not yet touched, but actually acquisitions are not off the table. Actually, there is a dedicated team in Dätwyler looking at potential acquisition targets.
As we just discussed in our view, in various road shows, is also that we want to really focus in particular areas, growth areas where acquisitions are still on the plate, so to speak.
Okay, thank you. Final question on the competitive fields to the market leader in healthcare and opportunities in COVID. Can you explain a bit more of what you see there from clients and what their decisions are, what is important for them? That would be interesting. Thank you.
Thank y.ou very much. Rolf, I think what we can see currently, as I have explained in our presentation, that more and more customers are recognizing that our processes, especially what we have in healthcare, are bringing a real benefit to them. That means, if we are looking to the cleanliness, what we have with our production environment and of our products, which is clearly in favor of the future of our customers. What we are recognizing in the last one, two years is that more and more customers approaching us, especially for new drug developments, which is important for us. We have significantly increased our share already in 2019, 2020. As I mentioned before, that was in the previous years before that, close to zero. Now we are seeing a significantly increase here.
That makes me very confident, and that's the reason why I'm saying that we will be able to grow on an organic way, as well with the healthcare sector in the double-digit range over the next couple of years, independent of COVID.
That's great. That's very encouraging. Okay. Good luck for this year. No more questions. Thank you.
Thank you very much.
The next question comes from the line of Sebastian Vogel with UBS. Please go ahead.
Good morning. Can you hear me?
Yes. Good moorning.
Perfect. Morning. First one would be a quick follow-up to the questions earlier asked about the healthcare margin in the second half of 2020. You mentioned that you are not specifying dedicatedly the ramp-up cost for the U.S. facility. If I would like to have a number there in mind, what would be the sort of number that I would need to pencil in for the second half or for the full year? That would be my first question. The second one would deal with the auto business. Can you shed a little bit more light how the fourth quarter has developed over there for you in terms of demand, and how the first quarter in 2021 has sort of started, and what you see there? The last one is on the guidance.
You mentioned there that you see or that you expect significant double-digit growth and considerable growth as well for the Group. Can you also explain a little bit more what you understand under significant and considerable?
Yeah. First of all, we decided not anymore to disclose any costs dedicated to our greenfield plants, for example, like what we have in the healthcare for Delaware. Of course, you can imagine that the cost, which we announced in the first half of 2020, was slightly increased as well in the second half of 2020. That means even we were able to cover most of the costs here, and as I said, we had, of course, some additional costs for fighting against COVID internally, which was partly leading to extra efforts to run the facilities during this crisis. I think, but I said that we have increased the margins quarter-over-quarter. Now we can see more than 15 months in a row that we are able to increase the margins in the healthcare sector.
If I'm looking to the orders in hand, I expect that we can follow this successful path as well in 2021. If it comes to the automotive sector, we had much better turnover in mobility sector in the fourth quarter 2020. As what we sought during the half year conference last year, that was clearly better. Currently, we see something similar, still stable in the first quarter in 2021. I have to say that this market is still very volatile, and it's quite difficult to predict what will happen in the next couple of months or by end of the year. What we are getting from our customers overall, if we are looking to the forecast of what they believe that cars, which will be used in 2021, there should be a significant increase of that, maybe more in the second half of 2021.
Due to the fact that we are having seen a lot of volatility in this market, we are in our forecast quite conservative for the year 2020, and 2021, sorry. Let us have a look in six months with the half year, maybe we can have a better outlook, and then we can talk about, again, the full year outlook for the Dätwyler Group. Do I miss something?
We lost connection with Mr. Vogel. If it is fine, I will proceed with the next question, which comes from the line of Daniel Koenig from Mirabaud. Please go ahead, sir.
Yes. Good morning. I had also a couple of questions. First, I was wondering if you could say something on carbon neutrality. You're going for Scope 1 and 2. I was wondering, similar to Glencore, what you can say in terms of Scope 3. That's my first question. I was wondering if you could give me some indication what you expect in terms of raw materials. They have gone down a little bit in 2020. The underlying raw material has gone down much, much more. What can we expect in 2021? Yes. Finally, I just had a little question on CapEx in healthcare. It went down CHF 10 million. What can we expect in 2021 for healthcare solutions for CapEx? Thanks. That's it.
Walter will be happy to answer that for 2021 for CapEx healthcare. I will start with regard to the Scope 1 and 2. As we announced last year, I think it's our target to go clearly in this direction, and that we set in carbon neutrality for the year 2030. We have defined an internal group, which is working on this topic so that we can give you a better indication what does it mean year by year. Of course, there's always discussions about Scope 3, but we decided first of all, that we are starting with Scope 1 and 2. Over the time, we will as well, going back as well internally, with further targets for Scope 3.
First of all, we said we are focusing on Scope 1 and 2, which is already a challenge, as you can imagine, to make it happen by the year 2030. That is the actual duration. If we have a look to the material increase, material costs, as in our mindset, we believe that there will be some material increase, cost increase in the year 2021. Yes, that is considered in our forecast. How much that will be is quite difficult to say. That depends on the market recovery, especially in the automotive sector. Today, we are calculating slightly increase in the first six months and maybe a little bit higher in the second half year of 2021, which maybe lead us to a slightly below the first-digit range over the full year.
So that we will come back to the level what we had in 2019, something around that. Yeah. Walter with the CapEx?
Sure. Healthcare or CapEx in healthcare solutions. You know, Mr. Koenig, that we also talked about the expansion in India. You see on one of the slides that the work in progress or construction in progress is CHF 65 million. A large portion of that is obviously and in further capacity. With that, I expect actually that the CapEx went down by CHF 10 million. I expect that it will only slightly increase in 2021, given those elements that I just mentioned.
Okay, thanks a lot.
Yep, you're welcome.
Once again, to ask a question, please press star and one on your telephone.
We've received some questions via internet. Do we have to expect extra cost weighting on the operating profit due to the expansion of capacity in U.S. and India? Overall that should be in line with the year 2020. There should be not a huge difference. The next question is, you predict sales growth of about 9% or more for 2021. What makes you optimistic despite the ongoing uncertainties due to the pandemic? As I said, what we today have in hand and there is orders in hand, especially in the sector of healthcare and food and beverage, that makes me optimistic that we will achieve this target. Can we go beyond this CHF 1.1 billion? Yes, if the mobility market is proceeding as we have seen in the fourth quarter.
That should be possible, let us see and wait what will happen in the next couple of months with regard to that. I think the next question is by Westford of Ryford. Some interested parties last summer, can we expect an announcement already in half year one or rather in half year two? Already answered that. No, there is not foreseen to sell Reichelt in this year. Maybe if somebody is jumping in and give us a great offer, then of course we will consider that. The next question would be, would you possibly keep Reichelt within the Dätwyler Group? As we said, that is not foreseen in the long term. As long as we can see a clear additional benefit to all of our stakeholders, that means that we can add value, we will keep it. The next question is coming from Peter Sande.
How much were the one-off costs in healthcare in the second half year? If we assume CHF 5 million, then the adjusted EBIT margin for healthcare in the second half year would be close to 24%. Is that a fair assessment? As I said, we will not disclose the quarter results, but correct is that what I have said before, that we see a constantly increase of our margin in the healthcare sector. Based on the orders in hand and with the increasing share of FirstLine products, I believe that we will further improve in the year 2021. The next question is coming from Dominic Felkess. says that, how much is Dätwyler going to invest in Schattdorf and with which aim? Will you also hire additional people?
[First of all, yes. We will hire additional people in Schattdorf that is due to high order in our end for what we have especially for the food and beverage business. For the new costumers and existing ones which will lead to efficient growth in 2021 and following years. The amount of [guess] in Schattdorf is around 20 million and 21 million, but mainly in equipment which is related to orders of what we have in hand. Product question is coming from [guess]. Could you please provide an update on the following topic pricing [guess] just a hand fall of competitor around the world. We have really specialist on our field. I think, we have good market position here to defend our prices.
Next question from [guess] due to quite difficult situation was COVID in the year 2020 was not easy to blow in context [guess] company especially [guess] that was quite difficult but however, we have still a long list of companies in our portfolio and we are approaching them and we are on discussing several companies [guess] but I cannot announce here. Today, [guess] in the marketing [guess] for 2021. I think if I'm looking for over all [guess] some area, we will spent more money especially in healthcare sector [guess] and partly as well in he mobility sector that we have good opportunity to benefit from the trend in different market [guess] food and beverage. There's a need to bring further [guess] involved which will help us [guess]. Thank you very much, Walter. There's another question from .
Is there an intention for share buybacks? No, there is no intention for that. That is not foreseen. That is the list what we have received here. If there are no further questions, it seems so, then I would like to close the meeting. I would like to thank you again for joining us today and for your interest in the Dätwyler Group again. I would like to take the opportunity as well to thank all employees of Dätwyler for the great job in 2020. I think we did some significant steps forward for a future of the Dätwyler Group as we have described, and I'm confident that we can bring further value to all our stakeholders. Now, I wish you a good week, and thank you very much for joining us here. Goodbye. Thank you. Goodbye.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call. Thank you for participating in the conference. You may now disconnect your lines. Goodbye