Good morning, welcome to today's call. I have here with me on the call for the first time, our CFO, Walter Scherz. I will directly move to today's agenda. After our explanation, Walter and myself will be happy to answer your questions. I will start with the business review. This year's figures are impacted by several significant factors. Besides the impact of the COVID-19 pandemic and the strong Swiss franc, we also have the divestment of three businesses. Despite the COVID-19 pandemic challenges, we did implement the known strategic focus on system critical elastomer components. We therefore sold the two distribution companies, Distrelec and Nedis, at the end of February, and the civil engineering business at the end of April.
On this slide, you can see the key financial figures of the old Dätwyler Group, including Distrelec and Nedis for two months and the civil engineering business for four months. With regard to our revenue, we are short of some CHF 60 million compared with the previous year. This is due to the only partial consolidation of the three companies sold. The EBIT and EBIT margin are adjusted for the loss on sale of the subsidiaries and for the start-up cost for the new U.S. Healthcare Solutions plant. The net result is adjusted for the loss on sale of subsidiaries only. The COVID-19 pandemic has led to a massive decline in the automotive and oil markets and to a stronger Swiss franc. Despite the negative impact, we have managed to deliver a solid operational performance. Walter will come back with more details during his presentation.
As announced in February, we reorganized our company to strengthen our market focus and 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 help Dätwyler to respond quickly and agile to changing market developments and customer needs. This slide gives an overview of the key financial figures of the continuing operations or the new Dätwyler, consisting of the business area's Healthcare Solutions, Industrial Solutions, and the remaining online distributor, Reichelt. The divested businesses, Distrelec, Nedis, and civil engineering, have been excluded for both periods. On this base, we were able to limit the organic sales decline to 5.2%. This is thanks to strong demand in the Healthcare, food and beverage, and the Reichelt business. Due to the strong Swiss franc, the reported revenue declined by 10.3%.
The COVID-19 pandemic led to a sharp sales drop for Industrial Solutions and additional costs for Healthcare Solutions. Reported EBIT came in at CHF 64.5 million. This corresponds to a 13.2% EBIT margin. Adjusted for the start-up cost of around CHF 8.1 million for the new U.S. Healthcare Solutions plant, EBIT was at CHF 72.6 million, and the EBIT margin reached a solid 14.9%. Some CHF 3.5 million of the year-on-year decline in EBIT was due to the strong Swiss franc. The reported net result reached CHF 43.5 million. The high resilience of our business was supported by early cost-saving measures in the affected plants of the mobility, general industry, and oil and gas business units. Our diversification into several market segments has proven itself in difficult times, such as the COVID-19 pandemic.
With the healthcare, food, and beverage businesses and the online distributor, Reichelt, we generated more than 70% of our sales and less cyclical in solidly growing markets. I would now like to comment on the performance of our business areas. We will start with Healthcare Solutions. This business area offers high-quality system-critical components for containers and delivery systems for injectable drugs for the pharmaceutical and medical markets. During the COVID-19 pandemic, the first half of the year, we proved that we can make an important contribution to our pharma customer business contingency. This is thanks to our presence with standardized high-quality plants on three continents. Thanks to our leading market position, we see strong demand in the healthcare business. The COVID-19 pandemic has further stimulated demand. I will talk more about this in the outlook.
Currency adjusted, we managed to grow our revenue by 5.7%. The stronger Swiss franc compensated for some CHF 12 million or more than 6%. The reported revenue is more or less in the strong prior year level. The fact that we are not able to show more growth is due to the negative impact of the COVID-19 pandemic. Although all Dätwyler healthcare plants were considered as essential manufacturing activities, government measures reduced the manufacturing capacity for several weeks. Our plants in Northern Italy and India were closed to hotspots of the COVID-19 pandemic. Due to government restrictions, our plant in India, for example, was limited to 50% of its capacity for several weeks. Since the end of April, productivity has been rising steadily and sales growth is accelerating accordingly. In parallel, the product mix is changing positively with the proportion of higher margin coated components increasing significantly.
The COVID-19 pandemic has also led to higher costs to overcome the negative effects. Additional costs came from many sources, for example, from protective measures at the plants, additional logistic efforts, and even accommodation for our employees near the plants. In addition to the one-time COVID-19 costs, there were higher amortization and start-up costs for the new healthcare plant in the U.S. Adjusted for the start-up cost of CHF 8.1 million, the EBIT margin reached 21.7%. Now, the reported EBIT margin was 17.7%. 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. Contrary to the healthcare business, our business area, Industrial Solutions, was hit with full force by the negative economic impact of the COVID-19 in three out of our four business units.
Automotive and general industry customers had to close their plants around the globe for several weeks. The number of oil rigs also fell dramatically within a very short time. The business unit Food and Beverage benefit from the COVID-19 effects as a result of the worldwide regulation to work from home. Revenue growth accelerated compared with the previous year. Overall, the business area's revenue declined to CHF 208.7 million. This represents an organic decline of 18.4%. Thanks to the rapid implementation of cost savings measures at the affected sites, we were able to adapt our cost structures to the changed demand situation. Adjusted for the non-cash loss on the sale of Civil Engineering business, the EBIT margin of the business area reached 10%. Considering the harsh market condition in three out of four business units, this is a very respectable result.
We have adjusted our cost structures and investments due to the lower demand caused by corona. However, we will proceed carefully and continue to invest in the development of new customer projects. Besides the two business areas of the core business, the remaining online distributor, Reichelt, reports directly to me. Reichelt has always distinguished itself by a lean organization and a low-cost base. This has proven itself during the corona pandemic. Thanks to its attractive price-performance proposition, Reichelt was able to profit from the accelerated trend towards online purchasing due to the corona pandemic. The introduction of working from home and online schooling led to an increased demand for electronic devices and accessories. The strong growth in the business-to-consumer segment more than compensated the decline in the business-to-business segment. In an overall shrinking market, Reichelt achieved an organic growth of 10.8% and increased its sales to CHF 89.6 million.
Operating profit rose by 15.8% to CHF 7.5 million and the EBIT margin improved to 8.3%. With this, I conclude my review and hand over to our CFO, Walter.
Hello, everyone, and I'm very pleased to have you here. My name is Walter Scherz, and I'm presenting the financial results half-year 2020 for Dätwyler Group. Thank you for your interest in Dätwyler. When we start with the first slide with the net sales, you can see that divestments and original market developments led to decreasing turnover. Half-year 2019 turnover for Dätwyler Group was CHF 706.3 million. That's the first column. Excluding the divested businesses, Distrelec, Nedis, and Civil Engineering in 2019, and this is actually for six months, the 2019 continuing operations turnover was CHF 544.7 million. This is the third pillar from the left. The reorganization now shows the three business pillars, Healthcare Solutions, Industrial Solutions, and Reichelt, and their respective development. I'll dive into that now. Healthcare Solutions organically grew by +5.7% or CHF 11.6 million.
Reichelt also organically grew by 10.8% or CHF 9.2 million, actually benefiting from the corona crisis and the demand for home office supplies. Industrial Solutions organically lost -18.4% or CHF 51.7 million. Food and beverage held the line and increased their sales, business units, mobility, oil and gas, and general industries suffered from the COVID impacts, as some customers even ceased their operations. Given the relative pre-crisis position of Industrial Solutions, all those effects led to an organic decline of -5.2% overall. That's the first arrow. The Swiss franc further strengthens relative to all currencies that it is exposed of in the continuing operations, which contributed another -5.1% decline in the amount of some CHF 25 million. This leads to the half-year 2020 revenue for continuing operations of CHF 488.6 million, which is the third pillar from the right.
Adding the revenue of Distrelec and Nedis for two, and Civil Engineering for four months, leads to the total revenue for the whole Dätwyler Group in the amount of CHF 545.7 million. If we continue to the next slide, to the earnings before interest and taxes, you will have noticed that the reported EBIT is heavily impacted by the divestments, as communicated earlier. The sale of Distrelec and Nedis also affected the 2019 results, with an impairment charge in the amount of CHF 169 million, so that these non-operational effects have been excluded on this overview to compare the actual operational performance. That pillar showed a resilient performance in a challenging environment. The EBIT for the whole Dätwyler Group in this year of change, before the loss of sale of subsidiaries, reached 11.9% or CHF 65.1 million. Continuing operations alone delivered an EBIT margin of 13.2%.
Taking into account the start-up costs within Healthcare Solutions for the new site in Middletown, Delaware, the adjusted EBIT stands at 13.4%, or CHF 73.2 million. As you can see in our APM document on the Dätwyler website, half-year 2019 had not yet seen impacts from the divestments. That only came end of 2019 with the announcement of the sale of Distrelec and ADES. Healthcare Solutions reported an EBIT margin of 17.7%, or CHF 35.5 million. Adjusted by ramp-up cost in Middletown, this resulted in 21.7%, or CHF 43.6 million, despite various COVID-related costs and production constraints, for example, in India. Industrial Solutions reported EBIT margin includes the divestment of Civil Engineering, thus the 6.2% or CHF 13.2 million.
The adjusted 10%, or CHF 21.2 million, do not represent great, but still a reasonable result in our view, given the massive top-line decline in some businesses, as explained by Dirk before.
On the bottom right, you see Reichelt. Reichelt increased their EBIT to 8.3%, or CHF 7.4 million compared to half-year 2019. We actually expect this trend to continue until year-end. Dirk will talk about that in a minute. If you continue to the next slide, the balance sheet, you see that the balance sheet overall has shortened due to the divestments. However, please be reminded again that Distrelec and Nedis balances already have been impaired at year-end 2019 in the amount of CHF 169 million. This actually means that the development you see here on the balance sheet is a little less pronounced as you might have expected at first sight. We were able to increase the equity ratio to above 60% again. It stands at 61.1% compared to the 58.1% at year-end 2019.
We shortened the current liability positions, mainly by repaying interest-bearing debt in the amount of CHF 26.7 million. This further reduced net debt and our gearing. The gearing ratio currently stands at 0.13. Our strong balance sheet allows us to pursue further strategic opportunities during these COVID-19 times, especially in Healthcare Solutions, as Dirk has mentioned before. Our liquidity and liquidity planning actually allows these investments, especially since we focused on cash conversion, particularly during the last two months during those COVID-19 times. End of July, not June, end of July, so it's actually last month, we had cash balances in the amount of around CHF 200 million again. If we move on, we see that the average capital employed only slightly decreased, while the absolute EBIT decreased compared to the last years. The ROCE, therefore, is driven by lower absolute EBIT, more or less constant capital employed.
This results in a ROCE of 14.7%, which is below our expectations in regular years. It is driven by lower absolute EBIT. For 2020, we see an increase by end of the year, but only by end of 2021, we expect pre-crisis levels on the ROCE. This is an area where we definitely will have a focus. First half 2020 showed that our strategic investments in FirstLine and others come to their end and reach more or less the level of the depreciation. However, due to the investment opportunities based on additional orders and demand in Healthcare Solutions, but also food and beverage in the coming years, we are ready to invest further. We see opportunities in these areas and can further support our customers in their fight against corona. Therefore, our capital expenditures this year will only be slightly less than in 2019.
This is important, Dätwyler allocates its capital into low cyclical but growing markets where we see future potential. Midterm, the range of capital expenditures should come back to some CHF 60 million-CHF 70 million, as communicated earlier. On this slide, you basically have the consolidated income statement, and this is a functional income statement, as you can see. I have three remarks there, too. First, the general administration expenses increased due to some reallocations of position during the reorganization that we had, and also due to IT services to the divested businesses. These costs are recharged to third parties now, not internally charged, thus resulting in higher order operating income. These actual costs are recharged externally and not internally as before, when the position G&A was shown net. It is a gross consideration here.
Second remark is that the finance result includes the development of the unhedged currencies such as Indian rupee, Brazilian reais, and Czech koruna. During the Corona time, they depreciated quite strongly against the Swiss franc. The valuation of open derivatives and thus unrealized hedge results are included as well. Third, the EBIT decline led to less tax expense. However, there are various tax jurisdictions that still levy base taxes so that decline is actually under proportion. When we move on to the condensed consolidated balance sheet, just two remarks to make here. The equity ratio increased to 61.1%, and the increase of the net cash surplus is due to the repayment of interest-bearing debt in the amount of CHF 26.7 million. That leads me to the condensed consolidated cash flow statement. Net change in cash and cash equivalents is -CHF 19.2 million, mainly influenced by financing activities.
Net cash flow from operating activities is positive by CHF 79.1 million. Net cash used in investing activities reduced to CHF 18.5 million, mainly helped by less CapEx, as you can see, and obviously the cash inflow of sold subsidiaries. Net cash used in financing activities increased to CHF -79.8 million, mainly due to repayment of debt, whereas 2019 actually saw loan increases. What you can see in the cash flow statement is that operationally, purely operationally, Dätwyler already earned or generated, let's say, the normal dividends in the first half of 2020. What is also remarkable is that a large portion of the investing cash flow is investments into the future. With that, I hand over to Dirk for his outlook into that future.
Yeah. Walter, thanks very much for these financial insights. Now I would like to continue with the outlook. The COVID-19 crisis will continue to accompany us in the coming months, and therefore, the uncertainties for the second half of the year remain high. We will continue to focus on ensuring the health of our employees as good as we can and meeting our customers' needs. Due to the reduced demand at our mobility, oil and gas, and general industry units, we will continue to adjust capacity and cost structures. This is likely to result in one-off restructuring costs in the mid-single-digit million range. Irrespective of the mentioned uncertainties, we also see first signs of improvement in these business units. This indicates a first sign of a global economic and market recovery.
In China, for an example, we are experiencing a rebound of this market in the last month on previous year's level. This also shows how well we are positioned in the markets we serve. We see a very positive picture for our pharma and food and beverage business units and our brand, Reichelt. The first two in particular have high order backlogs. This will lead to accelerated revenue growth in the second half of the year 2020 and the coming years. Overall, we expect a continuous improvement of the business in the second half of the year. This should be at least on the level of the first half. More than 70% of our sales come from low cyclical and solid growing markets. As mentioned, sales growth in the business area Healthcare Solutions is accelerating since the end of April.
This is already a direct effect of the global efforts to develop therapies and vaccines against the COVID-19 virus. Due to payments from foundations and government authorities as well as market potential, some pharmaceutical companies plan to produce therapies and vaccines to combat the COVID-19 virus at their own risk before they receive regulatory approval. With this unique case of the COVID-19 virus, all people around the world need therapies and vaccines. Once the drug will be developed and approved, there could be bottlenecks in the glass vials or rubber stoppers, as international media has been reporting. We will support the healthcare industry in its fight against COVID-19. With our new additional production capacities in the main regions, we are an attractive partner for the pharma industry.
To be able to handle the additional volume quickly enough in 2020 and for the coming years, we will invest in additional capacity expansion of our existing healthcare facilities. Our strong balance sheet, with an equity ratio over 60% and high liquidity, allow us to seize profitable growth opportunities at any time and thus emerge stronger from the COVID-19 crisis. At Dätwyler, we are all proud to be able to contribute to COVID-19 therapies and vaccines that will save hundreds of thousands of lives. We will continue to work with pharmaceutical companies, packaging suppliers, and other healthcare industry experts to develop multiple proven system solutions. To conclude my presentation, I would like to draw your attention to Dätwyler's strategic priorities. With our focus on increasing agility and accelerating digitization, we have been preparing ourselves for unforeseen events in the VUCA world since 2017.
With this Corona pandemic, we are benefiting from this groundwork. The progress achieved has shown us that we can react even faster and better to exogenous impacts. I'm very convinced that Dätwyler is well-positioned for the challenges and opportunities in the future. With our strong market positions, our focused capital allocation, and our strategic priorities, we will profit from the long-term structural growth trends in our core markets, and we create value for our customers. How we will do this? We would like to show and present this during our next Capital Market Day. If the Corona situation allows, we will invite you to visit our Swiss plant in Schattdorf on Wednesday the fourth of November. Please save the date. More detailed invitation will follow. Now, thank you very much for your attention, and now Walter and myself are now available to answer your questions.
The first question comes from Michael Foeth from Vontobel. Please go ahead.
Yes, good morning, gentlemen. My question would be regarding the investments in your Healthcare Solutions business going forward, and how you manage the potential volatility in demand going forward. I would expect that currently we have high levels of order intake in preparation for ramp-ups, but it's very unclear how the demand will really be in the next 12 to 24 months. Is there a risk on your behalf to overinvest in capacity, and then to be stuck there with that capacity if the demand is delayed? Can you make a comment on that, please? Thank you.
Yeah. Let me add some comments to that. As you know, many companies around the world are working on a vaccine for the coronavirus. At the present, it's hard to say which vaccine is going to work. What we know is that we face, on a global scale, close to 20 million confirmed cases and more than 730,000 deaths. The researchers around the world are developing more than 165 vaccines, and 30 vaccines are in human trials. Vaccines typically require years of research and testing before reaching the clinic, but the scientists are racing to produce a safe and effective vaccine by the next year. Dätwyler is working with a couple of pharma companies to support them in their development. All of them, which we are working with, reserve capacities at Dätwyler for the coming years.
That's the reason why we will invest further in the next, at minimum, the next one and a half years. Independent of the COVID-19 crisis, the demand, what we are facing, especially for our high-value products, is constantly increasing. That is linked to our concept with the FirstLine, and therefore we see, of course, an additional boost which is related to COVID, but beyond that, whatever we are installing as an additional capacity for this COVID-19 crisis, we can use it later on for the higher demand for other applications in the future. I'm still confident that we are not over-investing in additional capacity.
Okay, thank you. Maybe just a second on a follow-up on that. In terms of the startup costs that you mentioned, are you expecting similar startup costs now in future periods, related to those additional capacities?
No. I think that what we are now doing is in our existing facilities, investing further equipment. That is not leading to additional cost, because accordingly, when we have equipment installed, we can start to produce.
Okay, thank you very much.
You're welcome, Michael.
The next question comes from Charlie Fehrenbach from AWP. Please go ahead, sir.
Good morning, gentlemen. You initiated cost-cutting measures already last year, and you now say you want to increase these measures, because of the situation of Industrial Solutions. Could you maybe give us some more light about that, some more details? What does this mean in increasing this measure? Can you tell us how many employees you had to let go from the company already, or for how much you will reduce the workforce in the near future? Thank you.
Thank you very much for this question, Christian. I think, as you know, the adjustment of our cost structure at the various locations is an ongoing process. That is in line with the constantly changing customer demands, especially in the mobility sector. It's quite difficult to say today what that means finally, because as you know, we said that we believe that we are facing a U-turn in this mobility sector. What we will do after all the cost measures and cost reductions, what we did already in the last couple of years, we will have a close look to that, what the market is doing in the next couple of months. Of course, we still have opportunities to further reduce the cost. What we would like to see, first of all, how the markets are developing.
Therefore, it's not a fixed value what we are talking about. It's more about what is coming up in the next couple of weeks and months. We are talking about the reduction of people, if I remember right. Walter, maybe you can help me. I think it's around 700 people when we compare that to the year 2019. Meanwhile, this year is around 300, let me say. From that perspective, we already reacted very fast. Currently, we have not foreseen further huge changes here. Depends on the market development, as I said, in the next couple of weeks.
May I repeat, you reduced workforce 2019 around about 700 people, and in the first half of 2020, around 300 people. Is this correct?
Reduction of 350 jobs in business area Industrial Solutions worldwide since the beginning of 2020.
350 you say.
Voluntary leavers and of redundancies. As Dirk mentioned, since June 2019, so year-to-year result is CHF 700. The adjustment of the cost structure at the various locations is actually an ongoing process. It's ongoing, also these minutes, these weeks, whatever, with the constantly changing customer demand. Also depending on the regions.
Okay. Do you have the figures also for Switzerland, maybe?
Let me say, in Switzerland, it's more balanced out because we have employed very fast improving business with our food and beverage sector. Therefore, let me say, for our employees, not really a huge influence to that. We moved some of the people from the mobility to the food and beverage sector.
Okay, thank you.
The next question comes from Richard Frei from ZKB. Please go ahead, sir.
Yes, good morning. I've got two questions. First of all, may you give us some insights how the mobility business in China is doing? Secondly, regarding food and beverage, the growth outlook, is that closely tied to the announcements we heard from one of your main customers, or are there new projects already, let's say, driving growth?
Thank you, Richard, for the questions. In China, what I can tell you is, if I'm looking to the last three months, that means including July, we are back to the previous year level. That you can see already there or even slightly above that. It's unclear whether this will be sustainable for the next couple of months. What we are facing there, that is, it's back to this level what we had before, and we have to look further down the road what will happen in the next couple of weeks and months. It's quite good, I have to say, and that is helping us that we have new product lines which is starting there. If we have a look to food and beverage. Here, we have invested and will invest in further capacity based on the alignment with our customers.
I expect that we will see a significant growth in the next couple of years, which should be above our average of the last years. Of course, that is not only related to one customer, as we won another customer, but I can't disclose the name today.
Just a quick follow-up. Your comment on China, is it generally China industrial business or focused on mobility?
As a mobility.
Mobility.
As a mobility business, yeah.
Okay.
Of course, in China, we have as well a business for the healthcare sector. That is more what we are delivering from our regions in Europe and India to China, but that is increasing as well. China overall is currently a market which is supporting us in our strategy.
Okay. Thank you.
Yeah, you're welcome.
The next question comes from Serge Rotzer from Credit Suisse. Please go ahead.
Yes. Good morning, gentlemen. I have three questions, if I may. First one is, you mentioned that you have a high demand or backlog in healthcare. I'm wondering, given the new capacity in the U.S., where you said in the past that it takes two to four years for full capacity utilization, whether this is going faster and with that, more top line and mainly more margin. What we can expect here?
Yeah. I think, with this demand, you have to understand what we are doing with this COVID-19. Of course, we are talking about product lines which we already have in place today. What we are doing is here, that we are using existing processes, and we are just adapting this with further equipment in our locations, for example, in the U.S. and as well in India and in Belgium. That is much more easier to do that in such a way than compare if you would have with a new ramp-up of a complete new site. It's a complete different approach here. As I said in my outlook, it's more investment in equipment. That is not so difficult to bring it direct to the market.
Okay. Got it. Thank you. You mentioned this increasing capacity in food and beverage. Annually, when I take the first six months, you make about CHF 120 million sales. How big is the capacity increase? Is it another CHF 20 million-CHF 30 million additional sales, or what can we expect here on top line?
Sorry, you mean for the Healthcare business? Sorry.
No, food and beverage.
Okay, sorry. Food and beverage.
Yeah. This gives about CHF 120 million annual sales. When I take the first six months, when I double this and now the increasing capacities, how much of incremental sales can we expect from these investments?
I do not would like to disclose that in detail. What I can tell you that it will be above the first half year level. We are starting with this new customer, with the formalization of the new lines in October. Together with the contracts, what we have in play, that will lead to a growth in the second half year, but it will be more visible and on a higher level in 2021.
Okay. Got it. Then probably the last one. You made a guidance that you said that second half will be on same level like first half. Do you mean on sales or on EBIT? What level, on what numbers? Continuing numbers, I guess.
I think that what we are talking about is on the sales and the absolute EBIT. As I said, it's quite difficult to predict how, especially, these volatile markets, like in the mobility and general industry, are now performing. I think what I can tell you, as I said, with the backlog in Healthcare Solutions and with Nespresso, the backlog what we have there means we have to fully utilize all our capacities and especially in Healthcare Solutions. What is very important to understand is that we see additional positive change in the product mix to a high-value product in the second half of the year, which is really significantly increasing. That will help us to increase the margin by end of the year.
Okay.
We will see what happens with the mobility sector. Yeah.
Okay. This is including or excluding the restructuring costs, your guidance?
That is, let me say, it's a mix. It's a running movement. Currently, I have that more or less included in the outlook.
Okay, got it. Thank you so much.
Depends a little bit on the size of this. Yeah, okay?
Yes. It's volatile numbers still, yes.
Yep.
The next question comes from Daniel Koenig, from Mirabaud Securities. Please go ahead.
Yes, hello. I have actually two questions. First, I was wondering on the Reichelt. I remember you were looking for value-enhanced options. What is the latest in terms of value-enhanced options, this investment? I was wondering, what is your statement in terms of gross margin? What can we expect for the second half? Thanks.
Yeah. That means as well related to Reichelt, the gross margin?
Yes. Mm-hmm.
I think with Reichelt, as I said, Reichelt is performing very well. We have no pressure to divest this business. We have installed enough capacity in the last couple of years, and even we are using, let me say, different opportunities to further improve that. From that perspective, there is no pressure as long as Reichelt, as we see, is moving in the right direction. We will evaluate the options year by year how to proceed. Currently, we have no process in place, and there is not a fixed timing for divestment. For the gross profit margin, I think Reichelt, as I said before, they have a very lean production there. They are able to have the cost under control, and even with this higher turnover, they were able to reduce the cost compared to the first half year of 2020.
Overall, they did a very good job. Typically, from the seasonal effects, they will see a better second half of the year if it comes to the gross profit.
Can I ask you on the gross profit for the full company? What do you foresee in terms of margins for the whole Dätwyler company?
For the continued business, of course, as I said, due to the fact that we are expecting, in the healthcare business, that we are bringing more valued products to the market, that we should be able to improve as well our gross profit in this direction. Additionally, what we will see, and there we have some lagging effects, is with the material prices. Currently, we are mostly working the first six months, based on the oil price, what significant reduce in the second quarter, that those effects we will see in the second half of the year, which will help us to slightly increase the gross profit here.
And so-
depends on how fast now the mobility sector is growing, that to the effect that they have a lower gross profit, that could be a wash out, but it's difficult to say today.
Okay. Thanks, Ulf.
The next question comes from Rolf Renders from Helvea. Please go ahead.
Yes. Good morning, gentlemen. Thanks for a few questions. One, just to understand on your presentation, page nine, on Industrial Solutions, there is a total revenue figure of CHF 212, but I think you also mentioned CHF 208.7. I'm not sure if I got that correctly, but if that's correct, what's the difference between the two numbers?
Well, the CHF 212.0, as you can see in the half year report or the interim report, the CHF 212.0 million is actually the externally reported sales. What Dirk mentioned is actually when you go to page number, I'm just flipping through it, page number 10, you have the CHF 208.7, which is net sales with third. Obviously we have Schattdorf, a tooling and molding shop that is actually selling out from Schattdorf to the whole world, which is also a turnover between the segments because Industrial Solutions is also selling tools to Healthcare Solutions. That's another CHF 3.3 million, which results to a total net result of CHF 212.0.
Okay. Thank you for that. Yeah.
You're welcome.
On page 17, was it, I think, yes, on your CapEx figure, you mentioned, of course you see after the big ramp up, it coming down. You indicated it to go up again, but I'm not sure if I got the right numbers for that. For the full year, is that then more like CHF 70 or more like CHF 100 million, what you mentioned?
Well, it will be higher than the mid-range figure of between CHF 60 million and CHF 70 million. We want to support in the healthcare market, as Dirk just mentioned, in its fight against COVID-19. The additional investment is to cover additional demand for COVID-19 therapies and vaccines that Dirk mentioned before. The exact amount we do not want to disclose due to competition.
A part of that additionally is for the ramp up of further production lines for the food and beverage sector. Overall, that what we are doing here will lead to some further investments, which was not expected before. However, that is direct linked with orders, that means that will help us in the mid and long term.
Okay. Thank you. That is not that you now already foresee a shortage in capacity for healthcare. That's not what I should understand. It's more into the food and beverage.
I think what we are facing, as I said before, that in the future there will be 1 billion of products may be needed for the healthcare sector, and the market is striving to get the capacities. We are doing our best to bring the products to the market. However, overall, we believe there could be a shortage for such products, and that's the reason why we're investing further. It's quite difficult to say how much the amount will be exactly in the near future. As I said, we are quite confident that we are able to fulfill the customer's demand.
Okay, that's great. If you make those extra CapEx then, what kind of return do you expect to make on the CapEx?
Overall, the return of investments will be below three years.
I'm not sure I understand. I was more thinking of a percentage number.
Yeah. The CapEx. That is around 30% of what we are expecting here.
Oh, okay.
It's a mix of what we have for food and beverage and for the healthcare.
Okay. If you look at external capital allocation, what is your hurdle there?
Sorry. Rolf, can you actually elaborate on your question?
Yeah. For this internal organic growth, you expect to make 30% return?
Yeah.
That's how I understand it.
Yeah.
If you now look at external growth, so you find a fitting company which could add to your group, what kind of return do you expect to make on those acquisitions?
Okay. I see. Okay.
Sorry.
I think, Dirk, you will. I think that is, as we said in the past, Rolf, I think when we are looking for further acquisitions and that is what we are doing, of course, that should be above that minimum, let me say, on the average level, what we have with Dätwyler. However, as you know, that always depends on what is an opportunity in the market. If we see a company which has a full strategic fit, maybe it's a little bit lower than what we are facing today. That is too early to say what is exact rules for that. I think, first of all, we have a look, is the cultural fit given? Is the strategy given? We are discussing internally would it make sense to go forward based on the DCF calculation, of course.
All right. Thank you. Maybe final question on Parco, that used to be always very profitable also when you acquired it.
Yeah.
With this rapid change in the market, to which degree were you able to hold up the profitability?
Parco is still generates very positive EBIT margin despite a significant decrease in revenue. That shows how robust their business model is. With that, what we are facing there, that is sometimes with a decline more than 50% in this business in the second quarter, but we are still generating a good margin and they are acted very accordingly. They know how this business is running, and they had several influence in the last couple of years. Even, as you know, we have considered a downturn like what we are facing now. We have considered that, of course, for the future, not for this year. They are doing a very good job there. We have experienced people. We are quite happy with what they are doing. If that is recovering, then of course, it will help us dramatically. Yeah.
All right. Thank you, and good luck for the second half.
Yeah. Thank you very much, Rolf. Yeah.
At the same time, I see some chat messages coming in from Stefan Gächter from MainFirst. He asks, "When you see better margins in Healthcare Solutions in the second half of product mix, were you referring to adjusted margins?" Actually, Dirk was referring to the reported margins of 17.7%. That obviously will increase due to the product mix. The 21.7% margin that was mentioned as well is actually including the ramp-up cost in Middletown. I also see from Michael Inauen from MainFirst, first question, Nespresso will increase capacity for VertuoLine due to strong growth. Any comment here? What we can say on Nespresso is basically that we manufacture the traditional Nespresso capsules, Starbucks, and also the VertuoLine capsules. We actually grow in line with Nespresso's growth in these markets. What we don't produce is actually the pads. All the other ones we are in.
Yeah. All the other ones we are in.
The second one, also from Michael Inauen. Does the COVID situation help Dätwyler to win market share in healthcare as multi-sourcing away from West Pharma?
I think that is not only due to the COVID. Of course, that is our target to increase our market share over the time. We expect, especially in the year 2021 and 2022, that we should have a higher share of products compared to our share today for the future, for these COVID-19 products. I think I'm looking quite confident into the future that we can benefit from that, which will help us to accelerate our growth and that we are able to increase our market share over the time.
Last but not least, also from MainFirst, how do you currently see interest for your Reichelt asset as it is for sale?
Well, as I just mentioned, Reichelt is performing well. There is no pressure to divest the business. The options for Reichelt are actually evaluated by the company every year, so to speak. Nevertheless, the interest is there, and in case of an attractive offer, we obviously analyze the offer, and then decide how to proceed. As we said, there's no pressure for us.
So-
The next question from the phone comes from Sebastian Schroeck from UBS. Please go ahead.
Hello, good morning. I have two questions. Both are related to healthcare. The first one is, with these additional capacity you're planning, how much.
Sebastian?
Yeah.
Sorry. Could you start again? That was not loud enough here.
Oh, okay. Can you hear me now better?
Yeah. Now it is great. Yeah. Thank you.
Perfect. I've got two questions, both related to healthcare. The first one is, how much of additional revenues you think you can cater with the additional capacity you're installing over the second half of this year? The second question is with regard to the CHF 8 million ramp-up costs in the U.S. facility. Is it now the end of these ramp-up costs, or should we expect this sort of position to see again in the second half of this year or next year as well?
I think starting with this turnover for healthcare for the COVID-19 in the second half, please understand that we don't like to disclose these figures, yeah, due to competition.
Right.
If we're having a look to the ramp-up cost, I think what we are facing currently that we believe that we can accelerate, let me say, the ramp-up due to the COVID-19 situation. That should help us in 2021. Of course, as I said before, our clear target is to achieve the break even with this facility in the second half of 2021. Yeah. I expect that if it comes to the one-time cost for healthcare in the second half of this year, should be lower than the first half year.
Understood. Many thanks.
Yeah. Thank you.
The next question comes from Markus Büscher from BBAG. Please go ahead.
Yes. Good morning, gentlemen. I would have a couple of questions around mobility. You have the claim that every second car has parts of you. I would wonder if you could distinguish between the content that you have within conventional cars, hybrid cars, and totally electrified cars with a price tag on, so that we can kind of get a feel for what the content looks like. Maybe you could also talk a bit about the projects. You said that you would carefully watch the next couple of, once you said weeks, and another time you said months, in order to assess the recuperation of the mobility sector. The projects are longer lasting. Can you maybe describe the nature of the projects where you designed in or participating already, in order for us to assess the turnaround of the mobility sector a bit more?
Maybe as a third question, I would wonder about M&A. Historically, you've grown successfully with sensible acquisitions. Can you maybe give us a feel for the next couple of quarters? I mean, there is opportunities, I assume, especially in the mobility sector. How do you assess the situation there?
Mark, thank you very much for your couple of questions. First of all, you said I said sometimes weeks and sometimes months. When I'm talking about that, I'm not talking about projects. When I'm talking about weeks and months, what we have to facing here is, of course, I'm talking always about what was the market development within existing product lines, what we have in place, and which we have already placed at our customer site. As you know, I'm sure in the mobility sector, if we are talking about projects that typically needs somewhere between, let me say, two and four years before a project comes to the market. Therefore, of course, we will see in 2020 what we did in 2016 or 2017, 2018. From that perspective, I think we are working in different directions.
We have, let me say, a long list of projects and different applications related to the type of engine in the car, if we are talking about the combustion engines or the full electric vehicles, or the battery electric vehicles and hybrids, where we are working on all levels quite successfully. What we are facing here is that the content in a car with an electrical vehicle is approximately the same value what we are facing today with a traditional car. The quantity is not on the same level, but the value of such products are higher. Overall, it's good. Of course, if we are looking to the hybrid versions, that is helpful because then, of course, the content by car is higher for us. That is how we see that.
That means we are working very close with different institutions, even on the fuel cell development, because there's a couple of companies who still believe in the long term that fuel cell could be the engine for the future. If we are having a look to the M&A sector, of course, that is always an important topic for us. We are not looking so deep into M&A for the mobility or for, let me say, more precise for the automotive sector. I think we are good positioned, especially with the last moves in Brazil and especially with our former company, Ott, in Germany, which is now a Dätwyler brand, where we have the two components products of LSR and plastics, for example. There's a high demand of such types of products in the future. From that perspective, I think we are well-positioned in the mobility sector.
We are focusing our M&A targets more on the direction of general industry, into new technologies and markets, and as well in the direction of healthcare. We have some discussions, but during these COVID-19 times, you can imagine it's quite difficult. Even if you would be willing to go into due diligence, it's not possible in the physical one. Therefore, we are working on projects, but it's too early to say something more in this direction. Have I missed something, Mark?
Yeah. If you maybe you could, the content per car, and you don't have to mention the hybrid content, but in the conventional and e-cars, you said the content is approximately at the same level. What is it about? Is it in the range of CHF 15-CHF 20, or is it rather more towards CHF 50?
Slightly below the figures which you mentioned first.
Okay. Thank you.
You're welcome.
Good luck. Thank you.
Thank you very much, Mark.
We have a follow-up question from Serge Rotzer from Credit Suisse. Please go ahead.
Yes, good morning. A quick follow-up on the high backlog you mentioned on healthcare and on food and beverage with the new customer. I'm wondering, how firm is this backlog or these orders lasting into next year, point one and point two, and to what quality, to which margin level we have to expect that, or how does this work? Can you elaborate on that, please?
I do not like to disclose everything because that's the only thing what I can tell you, that this capacity, what we're investing, is partly going in this year, in the last quarter. Of course, it will be more visible in the year 2021. However, what we are doing here, we tried out to, let me say, to play more driving the volume. Of course, that will lead to a lower margin. However, overall absolute, we see in the next couple of year an increasing value here.
Okay, got it. Thank you.
You're welcome. Ciao.
Gentlemen, this was the last question.
Okay, thank you very much for all your great questions, and I wish you a good second half year, and stay healthy. I am looking forward to see you, as I mentioned, to our Capital Market Day and latest, let me say, to our yearly result. Thank you very much for your attention. As well from my colleague, Walter.
Thank you very much. Have a good afternoon.