Ladies and gentlemen, welcome to the DEVS Year 2019 Half Year Results conference call. I'm Andy, your conference call operator. I would like to remind you that all participants have been placed on remote 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. For operator assistance, please press star and zero. The conference must now be recorded for publication of the broadcast. At this time, it's my pleasure to hand over to Mr. Dirk Lambrecht, CEO, and Mr. Reto Welte, CFO. Please go ahead, gentlemen.
Yeah, thank you very much. Good morning to all of you, and welcome to the first half year update call, and thank you, of course, for your interest in Dätwyler. Speaking is Dirk Lambrecht, and I'm here together, as usual, with our CFO, Reto Welte. During this call, we will refer to our presentation, which we have uploaded this morning, and I trust that you have it in front of you. I would like to start with an overview of the key financial figures covering the first half year of 2019, and therefore, please, I would like to refer to slide three of our presentation. Thanks to our strong positions in Sealing Solutions division and our intensified market activities, we were able to increase our revenue by 1.8% to CHF 706.3 million. In the course of the first half year, we were confronted with increasingly difficult market conditions.
The trade conflict between the U.S. and China led to a decrease in demand, particularly in the automotive industry. Adjusted for the negative currency effects caused by a stronger Swiss franc and the positive acquisition effects, our organic revenue decreased slightly by 1.6%. Thanks to our efficiency improvement programs that we already started a couple of years ago and our focus on system-critical components, we were able to increase our operating results to a record level of CHF 91.2 million. The reported EBIT margin reached 12.9%. Adjusted for start-up costs for growth projects of around CHF 4.5 million and negative currency effects of CHF 2.3 million, the EBIT reached CHF 98 million, and the EBIT margin reached 13.9%. The net result increased to CHF 66.2 million. This represents an increase of 5.7% to CHF 3.89 per share.
Before I dive into the results of the two divisions, you can see on the overview on slide number four. The revenue split is around two-thirds Sealing Solutions and one-third Technical Components. I assume that you know our divisional portfolio well, and therefore, I would like to move quickly to the next page. Our Sealing Solutions division serves the three global markets, healthcare, automotive, and general industry. The connecting element is the fact that our sealing components are always customer specific and system critical parts. If our components do not work properly, the system in which they are installed won't work properly either. At the same time, our sealing components account for only a small part of the total cost of systems. Example of systems are different syringes, brake boosters in cars or all types of engines. I would like to move to the next slide, please.
To be in the position to offer our customers industry-leading sealing solutions, we are relying on the three strong, unique competencies. We are able to develop and simulate appropriate materials for various applications and combining that with engineered tailor-made parts from prototyping to large-scale production. Finally, we strive always for best-in-class manufacturing processes. It's important to understand only if those three competencies are aligned, we will be in a position to offer the best sealing solutions. These three core competencies are independent of the end markets and form the genetic foundation for serving the three current and potential future markets. Also, we are able to deploy our core competencies and serve our customers with a global footprint of approximately 20 plants on four continents, and they all meet global manufacturing standards.
This is how we differentiate in the market and how we create value for our customers. We hurry to the next slide, please. In the first half year of 2019, the Sealing Solutions division continued its profitable growth course despite the difficult market environment. Revenue increased by 5.8% to CHF 479.3 million compared to the already strong prior year period. Adjusted for the negative currency effects and the positive acquisition effects, there was a slight organic decline of 1.2%. This figure was impacted by the negative development in the automotive industry. Particularly in China and in the U.S., we faced significant sales decline. Thanks to a double-digit sales growth and the high-quality components for selective catalytic reduction systems and diesel vehicles, and the first-time inclusion of Bins, we were nearly able to compensate the sales decline.
Demand for high-quality healthcare components from Dätwyler's FirstLine production continued to grow at a double-digit rate. The espresso business also performed well. Despite start-up costs of CHF 3.9 million for growth projects, we were able to maintain operating results at CHF 83.7 million. Adjusted for the start-up cost and the negative currency effects of CHF 1.5 million, the EBIT reached CHF 89.1 million, and the EBIT margin came in at 18.6%. Raw material prices were stable, even a little bit below previous year. The integration of Parco and Bins is well on track, and both newly acquired companies create added value as we have expected. We are moving to the next slide, please. I would like to take this opportunity to give you a brief update of one of our most important growth projects, our new plan for high-quality healthcare components in the U.S.
In recent months, we have worked intensively with our customers' representatives to validate and approve the production capacity. In the healthcare and pharmaceutical industries, the validation of a new plant is a complex and a time-consuming process. The interest of our global healthcare and pharmaceutical companies in the new Dätwyler plant in the U.S. is very high. We will record our first commercial sales in Middletown before the end of August. After the intensive cooperation with our customers, we are even more confident that our FirstLine production standard represents the highest innovation level, quality, and safety in the elastomer industry worldwide. It exceeds the highest quality standards of the European American authorities and that's our customers' expectations. The FirstLine standard is based on quality by design and includes state-of-the-art clean room technology, automated manufacturing cells, fully automated camera inspection, and a unique washing process.
Our new U.S. plant also is a showcase for digitalization at Industry 4.0. The production process is fully supported by state-of-the-art IT and digital systems and solutions. In the next step, we will roll out the new digital systems and solutions in other existing plants as well. Our customers will benefit from a higher product quality, safer production processes, and an improvement traceability throughout the entire supply chain. Finally, we will create value for our customers, what we're always striving for. Now, I would like to go to the next slide and start with the Technical Components divisions. The Dätwyler distribution business with electronic components and products is grouped here. In online distribution, we provide time-critical electronic components for the short-term needs of most business-to-business customers. In the wholesale distribution, we sell home and consumer electronic products to online and offline retailers. Next slide, please.
Here you can see some interesting key figures about our distribution business. We bring together over 1,400 suppliers and over 700,000 customers. The business model is based on a high service level and high availability of a broad range of components that we can usually ship to our customers on the next day basis. Our customers still use a variety of channels to order, with increasing emphasis on digital and increasing % of online sales. Every day, we have over 230,000 visitors to our workshops in 18 languages. Every day, our distribution centers pack and dispatch more than 12,000 parcels with an average order value of around CHF 200. Profitability is driven by average order value rather than the size of the customers. We are moving to the next slide. In the first half of 2019, the Technical Components division made further operational progress in a difficult market environment.
The economic conditions in the European market in which we operate weakened gradually. Sales declined slightly to CHF 227 million. Adjusted for negative currency effects, the organic decline was 2.4%. While our distribution companies are still giving up business-to-consumer sales with low margins on purpose, sales are growing with the more attractive business-to-business customers. Thanks to a strict cost discipline, the operating results increased to CHF 7.5 million. The reported EBIT margin improved to 3.3%. The start-up cost for the international expansion of Reichelt to reach CHF 0.6 million. The negative currency effects on EBIT level amounted to CHF 0.8 million. Adjusted for those two effects, the EBIT margin reached 3.9%. Reichelt continued its successful international expansion. The Italian market is now also staffed with a local webshop and customer support in Italian.
After the positive experience on Reichelt, Distrelec is working on an international expansion with webshops and local languages as well. Nedis is working intensively on implementing the new single brand strategy. Acquisition of new customers, the increase in the active customer base, and the growth of RND private label will continue to have a positive impact on the business of our distribution companies. The next slide, please. The measures implemented in recent years have improved the operational efficiency and competitiveness of our Technical Components division. Although there is further potential for development, Dätwyler has decided to review the strategic options for the division, including a possible sale. Dätwyler's goal is to increase long-term success and to create value for our customer and shareholders. The evaluation is in the early stage, and the Group will communicate more about this when appropriate.
I will hand over to Reto, who is looking forward to provide you with some further information.
Good morning from my side. I'm on slide 13. Where you find the segmental reporting by division at a glance. Shortly, net revenue in the division Sealing Solutions, CHF 480 million compared to CHF 453 million. You see that the EBIT was almost unchanged compared to previous year. EBIT margin at 17.5% compared to 18.5% in the previous year's period. In Technical Components, CHF 227 million in sales compared to CHF 241 million in the previous year. You see the EBIT at CHF 7.5 million compared to CHF 6.9 million, which corresponds to a 3.3% EBIT margin. For the whole Group, we can report CHF 706 million in sales, which is 1.8% higher than previous year. At a record EBIT level of CHF 91.2 million compared to CHF 90.7 million the previous year, and a very slight decrease in the EBIT margin from 13.2% to 12.9%.
I continue on page 14, where you'll find the return on capital employed information. Please note that the ROCE is calculated by dividing the operating results before interest and tax, EBIT, of the last 12 months by the average capital employed of the same period. Capital employed is CHF 50 million higher than previous year as a consequence of projects like Middletown, which are very well known to you, and further investments in automation, especially in Sealing Solutions. The reduction in ROCE on Group level of 2.7% results on the one hand from a higher capital employed for 1.3% and a relatively lower EBIT for another 1.3%. This is supported by the individual results for Sealing Solutions and Technical Components as presented in the chart, where you can see a ROCE for Sealing Solutions of 28.7% and 7.1% for the division Technical Components.
While Technical Components should remain stable, the expectation for Sealing Solutions short-term is a further decrease, while in the long-run, the ROCE should return to levels above 30% for Sealing Solutions. I continue on slide 15, where you can see the consolidated income statement. I do not refer further on to revenue, as I explained it already. One of the effects that resulted in the growth of 1.8%, which supported this growth, is acquisitions which contributed 5.8%. The gross margin is slightly lower at 25.7% compared to 26% in the previous year's period. R&D costs are stable at 2.1% compared to sales. Marketing and selling expenses are 6.9% compared to sales and are at a similar level as in the previous year. General and administrative expenses are 5.2% compared to sales and at the same level as in previous year.
As a result, we can see the EBIT margin of 12.9% again compared to previous year. The used finance results due to lower interest expense and smaller currency impacts compared to previous year result in a lower financial result. Therefore, EBIT before tax, the margin is at 12.5% compared to 12.3%, which is slightly higher. The tax rate is at 24% compared to 27% due to positive impacts out of acquisitions and improved conditions in several countries like Belgium and the U.S., where tax rate or tax burden has slowed or come down. At the end, you find the net result of CHF 66.2 million, which is a margin of 9.4% compared to 9% in the previous year. I continue on slide 16, where you see the balance sheet and where you still can see that the liquidity actually supports our planned growth.
Cash and cash equivalents are slightly higher than December. It's a plus of CHF 10 million. Accounts receivable are a bit lower compared to June in previous year, despite acquisitions, but of course, also as a consequence of the sales level and the difficult market conditions as Dirk explained. Stock is at year-end levels, year-end 2018, and you can also see a further increase in fixed assets, of course, as a consequence of the high investments in Sealing Solutions activities, especially the Middletown location where we established the FirstLine business, which should result in high margin. Accounts payable are at a comparable level to previous year and the year-end. Equity is at CHF 840 million, only slightly higher compared to year-end. You have realized the net result of CHF 66 million was also included in the equities, of course, the dividend paid in 2019, which was CHF 51 million.
The equity ratio at the year-end was 62.9%. We are at a similar level at the moment. I continue on slide 17, where it's all about CapEx. Most of you know the development of our CapEx related especially to sales. CapEx in the first half to 2019 reached CHF 63 million. CHF 45.3 million thereof was spent for property, plant, and equipment. The previous year, we could show the amounts for the full year. The relative figure of capital expenditure as % of net revenue, therefore is comparable. The red relative line graph shows that the peak of our investment program is behind us. This is also reflected in the decreasing difference between capital expenditure and depreciation. In the automotive sector, in particular, we are reviewing the planned investments and adapt them to the changed market conditions.
We carefully distinguish between strategically important investments in our future competitiveness and tactical investments to expand capacity. I continue on slide 18 with the condensed consolidated cash flow statement. You realize a slightly higher net cash from operating activities compared to previous year. Still high CapEx of CHF 45 million, but reduced by 45% compared to previous year. A free cash flow of plus CHF 39.4 million results compared to a small minus of minus CHF 4 million in the previous year. You also see a position net proceed from loans payable to PEMA of CHF 28 million, which reflects, on the one hand, the dividend that has been paid to PEMA, which then has been turned into a loan from PEMA to Dätwyler Holding. This is, of course, to be compensated at interest rate at third-party levels.
You also see the line purchase of treasury shares, which is to serve the share program of the board of directors. You also see what the most important position, actually, the biggest position of CHF 51 million, which is at the similar level of previous years corresponding to the dividends paid. As a result, the company has cash of CHF 180.3 million by June. I now hand over again to Dirk.
Yeah, Reto, thank you very much. I would like to proceed on page 19. The economic challenges in some of Dätwyler's markets have clearly increased. In the automotive market, for example, there are no signs of a recovery in the coming months. In online distribution for electronic components, too, the purchasing manager indices in the main European markets signals a significant decline in demand. In the market with declining demand, strict cost discipline is applied. Investments are reassessed and where possible, postponed without weakening our long-term position. It's important to understand that these weaknesses in demand are short-term or medium-term developments. The long-term structural growth trends based on the mega-trends in our core Sealing markets remain unchanged. I'm really confident that our growth projects position us for these long-term trends.
In the short term, we will benefit from the fact that we already generate more than one-third of our group sales with the healthcare and consumer goods businesses with an increasing trend. These markets are not very cyclical and growing steadily. Overall, I'm confident that we achieved sales growth for the year as a whole and reported EBIT margin in the lower half of the unchanged target range of 12%-15%. I move to slide 20. To conclude my presentation, I would like to draw your attention to the Dätwyler's Group strategic priorities. These are long-term priorities on which we base our decisions and activities, and on which we work continuously and systematically. Examples to drive profitable growth in the future include our investment in the new FirstLine production capacity, as well as acquisitions of Parco and Bins.
While Parco opens up new market segments, Bins strengthens our presence in South America. Besides expanding our core business, we also work on some exciting innovations to accelerate long-term organic growth. Keywords here are smart rubber and soft dry electrodes, which enable interesting new applications in digital health, diagnostic wearables, and driver vehicle interface and digitalization in vehicles. All these innovations have in common that we use our unique core competencies in the Sealing Solutions division to develop new applications for existing or new market segments. As I illustrated with the example of our new U.S. plant or with our hub in Manchester, we are also proactively using the potential of digitization, whether in contact with our customers, our employees, or in the automation of our production processes.
Especially with the acquisition of new customers, the increase in the active customer base and the growth of R&D private label will continue to have a positive impact on the business of our distribution companies. We are in the privileged position of having many longstanding and competent employees. These employees value the entrepreneurial culture we offer and have a very strong identification with Dätwyler. With the new role of the Chief Agility Officer and targeting trainings, we are further promoting employee initiatives and empowerment. By doing so, we are advancing our way to a self-learning organization. I'm very convinced that Dätwyler is well-positioned for the challenges and opportunities of the future.
With our strong market positions, our targeted use of resources, our ongoing efficiency programs, and our strategic priorities, we will profit from the long-term structural growth trends in our core markets, and we will create value for our customers. Thank you for your attention. Now, Reto and I are now available to answer your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Michael Ifkovits from ZKB. Please go ahead.
Good morning, gentlemen. Thank you very much for taking my questions. I would have two short ones related to healthcare. How did the traditional business develop? In the press release, you mentioned the good growth in FirstLine produced components, but if you could maybe talk about the more traditional business. The second question there, the break-even point for Middletown. Do you still expect to cover costs by 2021, or did anything change there? That would be the question related to healthcare. A more qualitative question for Dirk. How do you see the progress in TeCo developing? Are you happy with it, or did you expect it more at the beginning of this year? The first question just related to CapEx for full year, what would be the reasonable target? Thank you.
Michael, good morning. Thank you very much for your questions. Let me go through that. I think the first one, if I remember right, was linked to the healthcare business, about traditional business. As I said, the FirstLine business is running really quite well. Even there, we have more of a problem that we have capacity issues. That means that, as you know, we are a little behind with our new facilities in Delaware. There we have to, let me say, could sell more to the market. I suppose that will come in the next couple of months better. The traditional business in the pharma is as well slightly above previous year. We had already last year very strong half year. In the, what we call, medical sector is slightly around zero. That is as well linked with the strong half year last year.
Otherwise, I suppose, due to the good order book, what we have that especially in this sector, we will catch up in the second half. The Middletown break-even point is difficult to tell because it depends really on how fast we are proceeding here. I still believe that we should be able to start with a break even in 2021. Maybe that will be in the last quarter. Please understand, we can have a much better view at the beginning of next year. If it comes to TeCo, the expectation, of course, for the first half year was higher. There is a reason before we are below that, and that is linked to the market condition. If you look to the PMI, especially in the European companies, you can see there that the PMI dramatically went down. From that perspective, it's below that.
However, I think in this circumstances, under this market condition, I think we performed quite well. The last question, I think is for Reto.
Well, we ask for CapEx for the full year. At the moment, there is projects under discussion which would result in some CHF 120 million CapEx for the full year. Individual projects are still under review, which will probably lead to a reduction.
Okay. This reduction is just tied to or related to a more difficult economic situation that you are just facing currently.
Absolutely right. That's the major concern we have to take into account.
Mm-hmm. Just maybe follow up on this TeCo. When we look at some of your peers, okay, they report maybe in a bit different timelines. There we've seen still open growth or even double-digit growth in the markets that you are serving. Do you see that you are losing market share and that's also a part of it, or do you really contribute all the underperformance to the market?
What we have to say here, Michael, yeah, that's right. I think that if you look to the peers, of course, what we can see that it was the peers which are giving their figures to the market. Not everybody is doing that. What we are facing there, that they have even in the second quarter, a sharp decrease in their sales growth trajectory. However, I think we are still below that, and that means that we are currently losing a little bit market share. That, of course, depends on which segment we are talking about. Reichelt is still on a very good track, it's performing very well. We have a little bit more topics here with Distrelec. However, I am convinced that with all the activities what we have, that we can perform maybe slightly better in the second half.
That, as I said, it depends on the general market conditions.
Okay. Thank you very much.
You are welcome, Michael.
The next question comes from the line of Richard Frei from ZKB. Please go ahead.
Good morning, gentlemen. I've got several questions. May you give us some more insights regarding the organic development of the general industry segment? Secondly, regarding consumer goods, it seems that the business is still steadily running. Still, I'm interested in the competitive situation. Is it more or less unchanged, or do you face more competition today? Regarding TeCo, you've mentioned a potential sale. Is here also a possibility that you just sell parts of it to different buyers, or is it just available for sale as one package? In relation to this, how do you rate the regulatory landscape when considering a potential sale? Thank you.
Yeah. Richard, thank you very much for your questions. Let me start with TeCo. As we have communicated today, we are examining strategic options, including a possible sale of this Technical Components division. The evaluation is really on the early stage, we can't say more about it today. I thank you for your understanding and ensure that we communicate more about this in the due course and answer your questions then later on. I think that is what we can say today, yeah?
Yep.
If it comes to the general industries, consumer goods is performing quite good. We do not see a change in the competition here. I think what we are doing, and we do our job here, I think we're doing a good job in the team. From that perspective, I think there is nothing what I can add to that. As you know, we do not giving further details on the contract here. Yep. Yeah, that is organic growth development for the general industry. Overall, I think that is what we can say here. That is, for example, with oil and gas, as I said during my presentation, that is performing as we have expected. The margin development is really nice to see, and as well, the target is here to achieve our budget, and that is full in scope currently.
I think that is from that perspective, there's nothing changed. What we have with civil engineering, we have a slightly decline in sales here in the mid-single-digit range. That is what we are facing now. That is the current situation we have with general industries. Thank you.
Thank you.
You're welcome.
The next question comes from the line of Daniela Turnheim from Mirabaud. Please go ahead.
Yes. My question on TeCo was already answered. I have just one additional slight question. Depreciation and amortization charge has been growing as percentage of sales. I was wondering what one could expect for the full year in terms of depreciation and amortization. Thanks.
Well, there will be a slight increase in the second half of the year as further investments will be capitalized and seen as fixed assets. That's going to be a very slight increase. You can actually double the figures for the first half of the year.
Okay, thanks.
Yes.
Thanks a lot.
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 Carla Bänziger from Vontobel. Please go ahead.
Yes. Good morning, gentlemen. I would like to have your current view on the potential expansion into China in the healthcare segment. Do you have any update you can give us here? Thanks.
Yeah, good morning. Far, we are still in the discussion in China. What we have decided internally is, roughly, not to go for a greenfield. We have seen some change in the regulation to add us to China. We will, first of all, let me fill our capacities, what we have in India. Therefore, I think our target to export from India to China, and that is running quite good currently.
Thank you.
You're welcome.
The next question comes from the line of Michael Inauen from MainFirst. Please go ahead.
Yes, thank you very much. Good morning, everyone. I have a couple of questions, maybe also on the consumer business or the Nespresso business. I was wondering if you see a positive impact from the Starbucks deal that Nespresso has done, particularly on the VertuoLine in the States. Maybe a little bit more a general or complicated question on the capsule business. I'm getting more and more pushbacks from international investors on the ecological discussion on the capsule business in general. I was just wondering if you had a view on this, if you see this as a long-term risk for the capsule business in general. I know it's a question also, obviously, for Nespresso, but I'm just interested in your view. The third question on selective catalytic reduction. You said it was going double digits.
I remember once you showed in one of your presentations that you expected to grow further, but I was just wondering when do you expect it to actually stop. When do you see a zero growth impact here? On TeCo, also, when you mentioned that a sale is a potential option here, also here, I was wondering, when looking at the landscape, electronic components in the U.K., Premier Farnell has been taken up by Avnet. Do you see a buyer for such an asset in general? I mean, you don't have to be obviously precise here, but just do you really see this as a real option to sell this business? Thanks.
Yeah. Michael, thank you very much for your questions. First of all, as I said, regarding Nespresso, as you know, we have a contract there. We would like to set this business on risk, therefore we are a little bit hesitant to tell you so much about that. What I can tell you that we are, let me say, happy with this business currently. If you look for VertuoLine, we are on this LPR as well. We are working as well with other product lines, what they are bringing to the market. Finally, it's running as even a little better than we expected at the beginning of the year. If it comes to the aluminum, to the single-portion capsules here, I have to say, I think it's not our target to say if we see that as the right product or not.
Finally, the consumer will decide what they are using. From our perspective, that has a lot of positive, let me say, sense to use such an aluminum product, even what they are doing with all the recycling efforts and how they are getting the coffee from the continents. I think they are spending a lot of money there. I have seen that in their facilities and what they are doing. From that perspective, I think it's even from time to time, much better let's say on a thermal compared to plastics. Let me come to TeCo. As I said before, I think today, what I said before, we cannot tell you more. There's a lot of options what we evaluating. Please understand that we will not give further, let me say, comments for that. I'm not sure if I understood the third question, but was regarding.
Selected customers.
SCR, the expectation, yeah. Then what is going forward. I think currently, it's running quite good. Even that we are seeing a decline of sales of cars, but the penetration of such products, what we are producing in the market is really quite good, and that is on the double-digit range. Nobody can tell how that will be in the second half-year, but if I look to the orders, what we have in-house, that is quite good. Even despite that, what Bosch, for example, communicated a couple of weeks ago. That is one of the reasons why we not came back with an exact figures. What we see as a target range in sales for the second half-year is a lot of uncertainties. That's a typical example, yeah.
Thank you very much. I just had two follow-up questions on SCR, that's probably, I just don't understand it. Is most of the revenues for new diesel engine cars, or is it actually upgraded diesel engines? Maybe you can just tell me this as an answer. On Parco, I understand you cannot give very much details, maybe let me rephrase the question. Do you see, for example, American companies in the same area to trying to move into Europe?
As I said, Michael, please understand, I do not would like to give further views to that topic. We are together with our board of directors, are thinking about what can we do in the future and to find the best solution. Regarding the diesel engine cars, I think that is really difficult to say, because we do not have any aftermarket. We are delivering the products for the 1st tier, and they are bringing these products to the market. It could be that already some products of what we are delivering is going as well for refurbishment, let me say, for cars. Mostly, I suppose that 90% or 95% is going to new cars. That is my guess, yeah.
Okay. Thank you very much.
You're welcome, Michael.
The next question comes from the line of Rolf Enderlin from Helvea. Please go ahead.
Yes, good morning, gentlemen. Just a follow-up on the auto exposure and the outlook for that. You touched upon it already a bit, but maybe you can elaborate a bit further given all the negative news we get across the board from suppliers into that.
I think, yes, Rolf, I can do that. I'm happy about that. The point is here that for example, in Europe, if I look into our orders book, they are quite well thought. For example, our Middletown production plant has a lot of orders. It's a little bit different in China, which we are seeing still as slightly decreasing trend, and the same as in the U.S. The reason why I'm a little bit hesitate to be too optimistic here is really I do not believe that what we have here in the orders today will come through in the second half year. I was already at the beginning of the year, let me say, more conservative when somebody asked me regarding the automotive. No, that is still the same, and that is what I globally, we should be more conservative.
We are trying to be very disciplined in the cost. We will initiate some further activities to reduce the cost base, then we'll see in the next couple of months what happens. Maybe you remember in 2007/2008, it was in this crisis at that time that comes to one to another month, we trying and doing everything to be prepared for such a case. Yep. I'm sure that we will able to do that as we did it in the past.
All right. That's very helpful. Thank you.
You're welcome.
Once again, to ask a question, please press star and one on your telephone. The next question comes from the line of Sebastian Vogel from UBS. Please go ahead. Mr. Vogel, your line is open. Please go ahead. Maybe your line is on mute, Mr. Vogel.
Hello, can you hear me now?
Yes.
Perfect.
Sebastian, yeah.
Many thanks for taking my questions. I've got three in that regard. The first one would be on Sealing Solutions. With your full year results, you were providing a revenue split between auto, healthcare, and general industries. Maybe I missed it, but I haven't seen it with the half year results. Is that something what you only provide with full year results, or would it be possible to share that also for the half year numbers? Coming back to Technical Components, of course, I was wondering if you can update us there, what is the current asset base. One last follow-up, and I want to thank you for that in advance. Sticking more to your press release, when you were talking about strategic options, can you share what you're thinking about what would be strategic options?
You mentioned that sale is certainly one. I assume that strategic, there could be also others. Maybe you can update us there, please.
Sebastian, thank you for the questions. Let me start with the last one. I can just repeat what I had said before, that we know what type of options there are in the market to do, and we said that is including the sale of this division and the other one, of course, that is excluding acquisition in this area. There is a lot of other options here. As I said, we will not give further comments to that. Please understand that. If it comes for the split of the segments at Sealing Solutions, we will provide that only at the end of the year for the full year, due to this, let me say, long-term behavior of our business, it makes, from my perspective, no sense to do that under the year.
On the other hand, we do not like to tell too much during the year for our market competitive view. Yeah. I think, the second question.
For the asset base, you are aware that we are not sharing divisional balance sheets because there is also certain complexity linked to it. We give you at least some indication and explanation. The assets that we have in Technical Components is mainly stock and of course the logistics centers. As you are aware, we have logistics centers in Den Bosch in the Netherlands. We have one at Reichelt, and we have a smaller one here in Switzerland. They all carry stock. If you take the total stock number that we present in the balance sheet, you just reduce it by 50%, and then you have an indication, at least on the stock level, that is used in Technical Components.
Makes sense.
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Okay. There's no further questions, then we from the Dätwyler team thank you very much for participating this call. I really enjoy that and that is for all your questions. This was very helpful. I'm looking forward to see you again the next year. Thanks for your attention. Thank you very much and goodbye.
Have a good day.
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