My name is Volker Cwielong. I'm CEO of Dätwyler. Joining me today are Judith van Walsum, our CFO, who will take you through our financial performance in more detail, and Katharina Immoor, our Head of Communications and Investor Relations, who will then moderate the Q&A session following our presentation. Before we begin, I would like to sincerely thank all our colleagues around the world for their outstanding commitment throughout the first half of this year. I also want to recognize the tremendous effort they have made over the past 18 months in driving our Forward Now transformation program. Ongoing geopolitical tensions, especially the conflict in the Middle East, continued to disrupt global supply chains, constrain raw material availability, and drive higher logistic cost. Despite these challenges, our teams ensured reliable customer supply, avoiding any significant production disruptions and supply shortages.
This achievement shows the strength of our global manufacturing network, the hard work of our teams, and our commitment to our customers. Dätwyler continued to make solid progress in executing its strategy. Most importantly, the structural trends supporting our Healthcare and Food & Beverage businesses remain fully intact. Against the backdrop of strong currency headwinds and continued softness in some parts of our industrial markets, we improved the quality of our earnings, we further strengthened our portfolio, and achieved important milestones in our Forward Now transformation program, which is progressing according to plan. Let me briefly walk you through today's agenda. I will start with a business review, and I will highlight the key developments of the first half of 2026. Judith will then provide a more detailed review of our half-year financial results.
After that, I will return to discuss our market outlook and our expectations before we open the floor for your questions. Let's now turn to our first half performance. Our reported net revenue for the first half of 2026 reached CHF 582.7 million, representing a growth of 3.5%, despite an adverse foreign exchange impact of approximately CHF 27 million on our top line. Excluding currency effects and the contribution from the Capsul'in acquisition, which has been consolidated since mid of February this year following its closing, our organic growth was at 4.6%. At the same time, we further improved the quality of our earnings. Our gross margin increased to 24.7% and the EBIT margin to 13%, driven by a richer Healthcare product mix, a higher capacity utilization, pricing initiatives, and procurement improvements.
Importantly, we achieved these gains while continuing to invest in innovation, commercial capabilities, and future growth platforms. Division Healthcare continued to benefit from attractive structural growth drivers. Reported revenue rose by 2.5%, while organic sales grew by 9.5%, driven by the successful ramp-up of customer programs, increasing demand for GLP-1 therapies and NeoFlex products, and finally, the ongoing expansion of our high-value offering portfolio. Division Industrial operated in a very challenging market environment, with underlying demand remaining soft across the automotive and diversified industries markets. Reported revenue nevertheless rose by 4%, reflecting the consolidation of Capsul'in. At the same time, we continued to actively shift our portfolio by expanding our presence in higher-value applications and attractive structural growth niches. Turning to Forward Now, the program has now reached its halfway point.
During the first half of 2026, we further optimized our North American healthcare footprint to ensure it's well-positioned for future market requirements and decided to consolidate three smaller U.S. manufacturing sites serving the oil and gas markets into a new state-of-the-art facility in Houston, which is expected to be completed by spring 2027. These milestones strengthen our competitiveness and pave the way for the second phase of the program, which will place greater emphasis on portfolio transformation and process standardization across all entities in the group. Since the launch of Forward Now in December 2024, we have made significant progress in improving our profitability. Our EBIT margin has increased by 230 base points from an adjusted 10.7% in 2027, excluding provisions related to the transformation program. In healthcare, we successfully scaled the commercial supply of components for a leading GLP-1 therapy from our first-line manufacturing site in Middletown, Delaware.
At the same time, the demand for our NeoFlex spray-coated plungers continued to grow, particularly for biologics, prefilled syringes, and home care applications. We also strengthened our high-value offering portfolio with the launch of the industry's first Universal 20 mL spray-coated plungers, completing our platform for large volume injectable therapies. To support this growth, we continue to invest in our production network, making our operations more efficient, flexible, and productive to meet growing customer demand and support our future growth. Within industrial end markets, we continue to sharpen our portfolio and focus clearly on higher value applications. In automotive, we further expanded our portfolio of electrification-related applications while strengthening our position for platforms of Chinese automotive manufacturers and beyond light vehicles. Today, more than one-third of our global automotive revenue is generated from applications for electrified vehicles.
Beyond automotive, around 10% of our revenues in our Transportation & Electronics business unit is generated in adjacent end markets, reflecting our continued diversification. In the business unit Food & Beverage, execution remained on track. Demand for compatible aluminum coffee capsules continued to develop well, while the integration of Capsul'in and the planned expansion of production capacity to support future demand further strengthen our long-term position in this attractive market. The General Industry business unit secured new customer projects in aerospace and medical technology, with the first revenues already contributing to our results. We also made further progress in data center cooling applications, where customer programs continue to advance and are expected to become an attractive growth driver over the medium term. Across both divisions, our strategic direction remains clear. We continue to strengthen our portfolio by focusing on high-value, system critical applications while improving our operational performance.
This disciplined approach fully supports our strategic priorities and our commitment to profitable growth. With that, I would like now to hand over to Judith, who will take you through our half year financial results in more detail. Judith, over to you.
Thank you so much, Volker. All right, let's have a look at the first slide. The net revenues, as Volker already indicated, increased by 3.5% in reported terms to CHF 583 million, driven in particular by strong momentum in healthcare and by the acquisition of Capsul'in. Demand in other industrial markets remains subdued. The high fall-through from healthcare sales, in particular, led to gross profit margin increase from 23.1%- 24.7%. We continue to invest in R&D and in building up our commercial capabilities, as you can see from the growth in the OpEx lines. The Capsul'in acquisition accounted for slightly over 20% of that increase. The other operating income line includes a one-time benefit from the sale of fixed assets resulting from our footprint optimization healthcare, partially offset by a reclassification of sample and certificate sales, also from healthcare, away from other operating income to net revenues.
Overall, our EBIT grew by nearly 10% to CHF 75.7 million. Our EBIT margin of 13.0% shows an improvement of 80 basis points versus prior year. When we look below the EBIT line, our net finance result improved. The interest expenses stayed flattish versus prior year. The improvement rather came from a more stable foreign exchange environment, resulting in less FX exposure and lower hedging costs on our intercompany loans. Income tax expenses, in contrast, increased. In part, this is due to the usual withholding taxes on dividend payments in half year one, an impact that will wash out over the course of the year. It's also due to the conservative decision on our side not to recognize selected deferred tax assets. Despite the higher effective tax rate, our net result increased in absolute terms. At 6.7% of sales, it stayed flat versus prior year.
Let's have a look at the top line in more detail. As mentioned before, net revenues grew in reported terms by 3.5%. What that means in organic terms is that there was a growth of 4.6%. With organic growth, we mean the growth adjusted for the FX impacts and for acquisitions. As you can see on the left side of the bridge, net revenues were materially impacted by an FX headwind of CHF 27 million or -4.8%. On the right side of the graph, you can see that Capsul'in contributed nearly CHF 21 million or 3.7% to our top line. This represents the incremental sales over and beyond the business we had already with Capsul'in prior to the majority share acquisition. Zooming in on the organic growth of 4.6%, the two columns in the middle.
You can see that CHF 18.5 million came from higher volumes and product mix improvements. CHF 7.5 million from price increases. Anticipating a question I typically get, whilst the price increases included some impact from both U.S. tariffs and Middle East surcharges, the vast majority were actually regular price increases that represent the value contribution of our product portfolio. Breaking down this organic growth between the two divisions, healthcare contributed with 9.5% organic growth and industrial, excluding Capsul'in, at merely 1%.
What does this top line mean for EBIT? You can see that on the bridge here, the product mix, so the larger share of high value offering in Healthcare and the better capacity utilization resulting from the processing of higher volumes in this division, are the main contributors to the group's overall EBIT improvement, together with effective procurement measures and further cost mitigation and cost reduction initiatives. As already mentioned, the half year results include the positive gain on the sale of a building on one of our sites, as foreseen in our transformation program Forward Now, partially offset by a series of one-time costs, ramp-up costs, the build-up of provisions, and the Capsul'in purchasing price accounting adjustments. Capsul'in's contribution to EBIT amounted to CHF 2.4 million.
We expect improved performance in the second half of this year, following the completion of the post-acquisition integration and also the stabilization of new production lines we have installed in support of the growth of Capsul'in. Let's have a look at both segments now. With a nearly 10% organic growth in revenues, Healthcare is obviously increasing in importance as a growth driver. Volume, and particular mix, account for around CHF 16 million of the growth, with price increases amounting to CHF 6 million. Over CHF 4 million of these price increases in Healthcare are regular. Less than CHF 2 million reflect the surcharges for higher raw material prices caused by the Middle East crisis. Particular polymers, chemicals, and aluminum are impacted, and a bit also by the U.S. tariffs.
Overall, we see increasing interest of pharmaceutical and biotech companies in our capabilities, and as Volker mentioned, particularly in the areas of GLP-1, NeoFlex, and also ready-to-use products. Consequently, as you can see in one of the prior charts, the share of HVO has been increasing. To date, over 38% of our revenues come from high value offering, with the remainder coming mainly from our advanced product lines. Based on our pipeline, we're confident that the share of HVO will increase further by year-end. As you can see on the right, top right, I should say, the higher volumes and the improved product mix and price effects come with a high fall-through to the EBIT line, with a reported EBIT margin of Healthcare improving by 400 basis points to 20.9%.
For completeness sake, this includes a CHF 7.7 million gain on sale of assets, you can see that in the financial report, offset by one-time ramp-up cost and additional provisions. The net positive impact in Healthcare amounts to around CHF 4 million. When we look at the revenue split by regions, I would like to call out the growth that is visible in the East Asian markets, followed by the U.S. Looking at Industrial. Within Industrial, Capsul'in drove the reported revenue growth of 4%. The remaining segments grew organically around 1%, with the growth dependent on the niches targeted and the different market situations. It's very hard to make a uniform statement around Industrial. When we look at the geographical split of sales, the growth in the European share versus year-end 2025 reflects a strong European customer base of Capsul'in.
Within the automotive industry, Europe was modestly positive, yet fragile. The U.S. market showed softness, Latin America in contrast, strength, and Asia was under pressure from China despite strong electrification and having become a net exporter. Oil and gas demand showed a variable picture. Yet in line with our strategy, we saw business wins come through in growth areas such as aerospace, data centers, and adjacent mobility, resulting in a higher share of industries in revenues. The lower EBIT recorded for half year one will increase over the second half of the year based on the improved performance of Capsul'in, as well as profit protection and other structural measures coming to fruition in the second half of the year. In addition, unfavorable one-time impacts, such as the Capsul'in purchase price accounting adjustments and the building of additional provisions, will normalize in the second half of the year.
Clearly, the big change from our full year reporting was the acquisition of Capsul'in. On this slide, you see some key indicators. We acquired a majority share of Capsul'in in mid-February. Since that date, Capsul'in has been incorporated in our numbers. This means that the numbers reflect not a full half year, but only the results as of the 18th of February. Capsul'in's revenues amounted to nearly CHF 40 million. As mentioned before, the incremental benefit to Dätwyler's top line has been around CHF 21 million, given that Dätwyler has been Capsul'in's industrialization partner in the past. As you can see in the financial statements, Dätwyler acquired its majority stake of 51.5% at a purchasing price, including transaction cost, of CHF 57.1 million.
The fair value of Capsul'in's net assets at the time of acquisition amounted to CHF 55.4 million, with Dätwyler's portion of these net assets totaling CHF 28.2 million. Consequently, a goodwill of CHF 28.9 million, the difference between the purchasing price and Dätwyler's portion of the net assets, was recognized in our books in half year and also booked against equity. The net assets include sizable intangible assets in the form of technology and customer relations, exactly the reasons why we actually acquired the majority stake in Capsul'in. The net cash outflow was lower than the actual purchasing price, and the reason is that with the majority stake, Dätwyler also acquired cash of around CHF 8 million. In addition, the transaction was structured with an earn-out clause that will only be paid out when Capsul'in delivers to its business plan.
Overall, the Capsul'in acquisition is fully aligned to our resource allocation strategy of investing in attractive non-cyclical growth segments. How did we finance the Capsul'in transaction at a time when we actually also have to pay out our dividends? The Capsul'in acquisition was financed by a bridge loan of CHF 65 million from our anchor investor. By the end of June, however, this bridge loan was fully repaid, and the outstanding balance on the loan to the Pema Holding was back at the level of year-end 2025, CHF 145 million. Therefore, the increase that you see in net debt on this slide from CHF 379 million by year-end 2025 to CHF 424 million for half year, a difference of CHF 45 million, doesn't reflect an increase in debt, but rather a reduction in our cash balances from CHF 125 million- CHF 83 million.
As the loan repayment shows, our ability to generate cash has remained strong, and therefore, the expectation is that we will be able to further reduce net debt over half year 2. With EBITDA expected to improve as well, leverage should further decline from the 1.9x you see here to last year's levels. Now, a slide with a bit of a mixed message. Working capital increased despite improvements in accounts payables versus year-end 2025. On the one hand, this is a natural reflection of the structural sales growth that we see in both Healthcare and in Capsul'in. On the other hand, we also see increases in accounts receivables and inventories that we actually expect to be temporary in nature.
Half year shows a spike in accounts receivables, notably in Healthcare, that is linked to the price negotiations that we've had with key customers around the Middle East crisis-triggered price inflation in raw materials. Most of these negotiations have by now been concluded, yet unfortunately, not in time for the half year close. Also, inventories show an increase. Safety stocks were deliberately increased to safeguard continuity in supplies. I would like to call out procurement. Thanks to their targeted actions, we have faced no disruption in our production despite several supply chain challenges. Overall, Capsul'in accounts in this picture for 7% of accounts receivables, 2% of inventories, and 13.5% of the accounts payables. This brings us then to the last slide within the financial update. Operating cash flow remains healthy at nearly CHF 77 million, reflecting the underlying cash-generating strength of the business.
Despite, obviously, this increase of funds locked into net working capital. As mentioned, we see part of this increase as a temporary spike that should normalize over the second part of the year. Investing cash flow, not a surprise, reflects the net cash outflow for the Capsul'in acquisition, as well as continued capital investment. One word here on CapEx. CapEx, as a percentage of sales, increased to 4.6% from 4.3% last year. However, we still see that depreciation and amortization exceed CapEx by CHF 13.4 million. In sum, the free cash flow reflects strategic investments as well as temporarily higher net working capital. We expect this to improve over half year 2. On that note, I hand back to Volker.
Thank you very much, Judith. Let me now turn to our expectations for the second half of the year and beyond. While the external environment is expected to remain uncertain as the security situation in the Middle East has deteriorated further. The structural growth drivers underpinning our business remain firmly intact. Our diversified end-market exposure and local-for-local manufacturing footprint continue to enhance the resilience of our businesses, while Forward Now enables us to focus on the areas we can directly influence and execute with discipline. Dätwyler's strategy remains unchanged. We will continue to execute with focus, invest in tomorrow's growth platforms, and further strengthen our competitiveness to deliver sustainable, profitable growth. In Healthcare, we continue to benefit from strong demand for injectables, biologics, and self-administration therapies.
We are well-positioned through our expanding high-value offering portfolio, the successful commercial ramp-up of our GLP-1 production from our first-line facility in the U.S., and increasing demand for advanced solutions such as our NeoFlex products. In automotive markets, we continue to expect broadly flat global vehicle production. Rather than relying on market growth, our focus remains on further reshaping our portfolio by increasing our exposure to higher-value applications, electrifications, and connectors, while expanding our presence on Chinese OEM platforms and broadening our reach beyond passenger vehicles into commercial vehicles and adjacent mobility applications. In food and beverage, our long-term outlook remains attractive. Compatible aluminum capsules continue to grow faster than the overall coffee capsule market, supported by sustainability trends and regulation.
The integration of Capsul'in is progressing according to plan, while additional dedicated production lines scheduled to become operational during the second half of the year will support further growth and strengthen our market position. Finally, in our diversified industry markets, our focus remains on improving the quality of the portfolio rather than maximizing exposure to any single end market. While oil and gas remains an important business and may benefit from a midterm replenishment cycle following the current geopolitical tensions, we continue to diversify our portfolio into aerospace, medical technology, and data center infrastructure. We expect these markets to become increasingly attractive growth drivers as customer programs ramp up. At the same time, we expect profitability to improve as enhanced profit protection measures, particularly in the division Industrial, will take effect and recently secured customer projects continue to ramp up.
Across all of our markets, our objective remains unchanged: to allocate capital and resources where we see the highest long-term value creation while continuing to improve the quality of our current portfolio. Let's have a look at our midterm ambitions. Today, we can confirm all previously communicated financial targets. We continue to target higher single-digit organic revenue growth and an EBIT margin above 17% at group level. Healthcare is expected to remain our structural growth and earnings engine, driven by the continued expansion of our high-value offering, which now accounts for more than 38% of divisional revenue. As additional customer programs scale into commercial production and capacity utilization improves, we expect further earnings growth supported by higher operational efficiency and the continued strengthening of the underlying business. Within Industrial, we are increasingly moving from planning to execution.
As our portfolio transformation progresses, profit protection measures take effect, our manufacturing footprint becomes more efficient, and recently won customer projects will ramp up. We expect Industrial profitability to improve progressively. Most importantly, our confidence is not based on expecting a broad cyclical recovery. It is based on the structural improvements we are making across the Dätwyler Group. At the halfway point of our transformation program, Forward Now, we're improving our operation model, we are strengthening our portfolio, increasing our competitiveness, and creating a stronger foundation for sustainable, profitable growth. The progress we have made during the first half reinforces strongly our confidence that we are on the right path towards our midterm ambitions. With that, Judith and I end the presentation session and will hand over to Katharina. Katharina, I think we are now ready to open the floor for the questions. Thank you very much.
Thank you so much, Judith and Volker. Yes, a warm welcome from my side as well. As mentioned, we are ready to take your questions, which you can ask via the respective chat function in the system, and I'm happy to read them out, and we address them here. First three questions come from Sebastian Vogel, UBS, and the first two of them are towards healthcare. Maybe we start with those two. In the past, you guided for GLP-1 revenues of low double digit for full year 2026. Do you still share this expectation? The high-value part in healthcare is progressing well. What sort of progress trajectory do you have in mind for the next years?
First part of the question, Sebastian, for the GLP-1 revenue of low double digit for financial year 2026, we are progressing well. We are above the last expectation, fortunately. We expect a strong growth in the second half of the year. However, we'll stay still in a low double digit million for financial year 2026. However, with a very good trajectory to improve further.
The last question from Sebastian, UBS, would be regarding industrial. From the sub-segment perspective, do you expect the addition of Capsul'in to have been accretive to your F&B margins or rather dilutive?
We see Capsul'in as an accretive part to the industrial business division and absolutely with all the growth around on the additional programs, it would help us to stabilize margins as well in the Food & Beverage business unit, clearly.
Thank you so much. Are there any further questions? We don't see anything in the chat yet, but let's give it a few more seconds. Next question. Miro Zuzak, JMS Invest AG. Food & Beverage revenues excluding the incremental CHF 20.9 million from Capsul'in declined by 6%. Please comment on the underlying decline.
First of all, it is a phasing topic. We had some ramp-up of additional lines. These lines have also caused some downtimes for installation and some reset in the production over the first half. We do expect this to phase out definitely over the full year. From that perspective, we would not see any negative effect here.
Next question comes from Bernd Laux, DZ Bank. Could you please explain the reason for the high H1 tax rate?
Hi, Bernd. The high tax rate is driven by a number of factors. The factor that we always have in half year one, and that you can also see in previous reports, is that we pay withholding taxes over our dividends, right? That accounts for around CHF 4 million over and beyond the weighted average tax rate that we have. That will phase out over the second part of the year. Generally speaking, we see an improvement. In addition, as I also mentioned, we did decide not to recognize a number of deferred tax assets, and this is more in line with our overall transformation and the wish to ensure that we create a healthy financial base moving forward.
Thank you so much. Next question comes from Estelle Kessler from Berenberg regarding healthcare. Can you provide further details on the ramp-up of first line in Middletown? How far are you in the ramp-up? What is the timeline we can expect this facility to get filled?
Thank you very much, Estelle. Referring to the first line facility in Middletown, we have a significant growth over this year. We will grow in volume sales approximately between 60%-80%, depending now on the second half. This is a massive growth already for this year for this site. That will help us now to set up the site on a high volume production setup and framework. Which is very important for the next step. We do expect additional programs come in in 2027 and 2028. We will further improve the layout and as well the production flow in this site over this period in order to have a, I would say, a 70%-80% utilization depending on the trajectory of these new programs in 2029, 2030. We have also opportunities to expand the facility on that site we have.
Depending on the speed and the trajectory of the new programs that will come in, and for sure the success in the market from our customers with these new programs, we will then decide upon an expansion of the site, earliest in 2030.
Thank you so much. Next question also regarding healthcare. Robert Popilok from DWK Life Sciences. Regarding healthcare, what is the outlook for vial stoppers compared to plungers and which regions are expected to lead performance?
Maybe I start with a regional view and Volker, you can then comment or add on. What is very interesting is naturally that the largest healthcare market is and remains the U.S. Yeah. This is also a market where we see continued growth, we see continued interest of U.S. manufacturers, and is actually one of the reasons why the Middletown factory is of strategic importance to us, as well as the footprint optimizations that we're doing in our other site in Pennsauken. We're basically preparing our sites in the U.S. to drive further growth and to be fit for the future. At the same time, we see in the regional distribution of our sales also that the demand in the East Asian markets is increasing materially, and that is naturally particularly in those markets with a stronger financial power. South Korea, China.
Very interesting developments there as well.
Hello. Question, are there any plans to modernize Pennsauken or increase production at this site?
We have referred to a optimization of the North American healthcare footprint, which was actually going back to our Pennsauken site. Our site basically was a fragmented setup since we have increased production and took on many different customer programs over the course of many years. We've decided to streamline the site as such, to modernize the building, and with that, we have further opportunities, also to move our portfolio in Pennsauken to a higher level of sophistication and also a higher level of value.
Next question, Louise Bjørn, Baader Europe . You highlighted focus growth through Chinese OEMs and adjacent mobility applications. Could you elaborate on the strategies, the expected growth drivers, and how you safeguard your technologies and intellectual property in China?
The global light vehicle production currently is at around 92.5 million vehicles. That's rather flattish. If you look at the Chinese OEM production share, currently we're at a roughly 27.5% share. We see in China the domestic market a little bit softer, the exports and overseas production is expanding rapidly. Looking at our position here, not in all cases as a Tier 1, very few cases a Tier 1, some cases a Tier 2. We are not targeting applications that are about to be commoditized in few years. We could potentially grow much faster with our mobility applications in China, especially focusing at the high-value applications primarily, we safeguard a very long period where we can have a premium price point for our applications.
Most of the time, we achieve that over a material, over a special application, over a application that also safeguards a certain function, while only holding for a low share of the bill of material overall.
Thank you so much. I don't see any further questions right now in the chat. If you have questions, please feel free to reach out to me directly at any time and I'm happy to support you. Before we finish this call, maybe a last look into our financial calendar. We are looking forward after the summer break to continue in the dialogue with you in the conferences in Switzerland as of September. Having said that, thank you so much for your interest. Have a great summer and see you soon.
Thank you very much.