Ladies and gentlemen, welcome to the half year results 2020/2021 of dormakaba Holding conference call and live webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Riet Cadonau , Chairman and CEO of dormakaba. Please go ahead, sir.
Thank you very much. Good afternoon, ladies and gentlemen. Welcome to today's presentation on our half year results 2021. I will start the presentation with some overall comments on our results and business activities, followed by our CFO, Bernd Brinker, who will talk about the financials in more detail. Afterwards, we will answer your questions. Our results have significantly improved compared to the second half of financial year 2019/2020. Our strong focus on cash, as well as benefits resulting from our cost savings and restructuring program, were key drivers for our ability to face the continued negative impact of the COVID-19 pandemic on sales, to protect our EBITDA margin, and to improve our cash flow. We generated sales of CHF 1.227 billion. Due to the strong Swiss franc, we had a significant negative currency translation impact of 5.5%.
Organic sales were still impacted by the pandemic at minus 6% compared to the previous year. They improved by 8.3 percentage points against the second half year of 19/20. EBITDA was at CHF 181.9 million, which equals an EBITDA margin of 14.8%. Exceptional one-time items in the reporting period amounted to CHF 6.6 million, and therefore had a positive impact of 0.5 percentage points on the EBITDA margin. Net profit was at CHF 99.9 million, and finally, we achieved a strong operating cash flow margin of 15.8%. Overall, our markets saw a good sequential improvement. This is despite a continued negative impact due to the pandemic, which strongly correlated from country to country, depending on the severity of the pandemic and the related measures. Now, I would like to give you more insight into the performance of our five segments.
All segments showed sequential improvement in performance compared to the second half of 2019/2020. I would like to start with the segment Access Solutions Americas. Just like in all other segments, organic sales were below previous year as they were still impacted by the COVID-19 pandemic. However, compared to the second half of financial year 2019/2020, organic sales improved by 6.6 percentage points. There was a continued strong performance by Alvarado in the entrance system product cluster, which we acquired in July 2019. The performance of the Mesker Hollow Metal Door business improved sequentially during the period under review. Nevertheless, for the full year, we still expect an overall negative impact as the business is steadily but slowly regaining customer trust due to improved delivery and quality performance. We generated organic growth only in the Electronic Access & Data global product cluster.
The global product cluster lodging systems have experienced the most notable decline due to its high proportion of customers in the highly impacted hospitality industry. However, the product portfolio also includes solutions aimed at the multifamily and vacation rental housing sectors, which experience continued growth boosted by the multifamily housing market strength in the U.S. Under the lead of our new COO, Alex Housten, investment in growth initiatives were made and are expected to improve the results over time. Implementation of these initiatives have started in the period under review and includes, for example, a dedicated sales excellence initiative, which is designed to drive performance through adaptation of selling efforts to geographic and market opportunities.
We are confident that with our ongoing focus on innovative products and the implementation of growth initiatives, we are well-positioned in the midterm, especially for promising verticals such as education, multi-housing, and healthcare. I'm going to continue with slide 6 and with the segment Access Solutions APAC, Asia, and Pacific. Sales in the period under review improved compared to the second half of 2020, but were still impacted by the pandemic. However, despite a double-digit decline in volume, the segment was able to keep its EBITDA margin close to previous year's level with 14.6%. In China, the segment experienced sequentially increasing business activities during the period under review. Performance is still impacted by project delays in the commercial sector, particularly for projects with international customers in China.
We gained a strong foothold with touchless entrance solutions in the market and have a good order backlog here for the second half year 2021. Wah Yuet delivered strong growth due to improved sales to the OEM business for the United States market. In addition, we have successfully started to shift capacity to Chinese domestic customers. In Pacific, the decline in sales was partially compensated by growth in the Kilargo business, a door seals business in Australia, which we acquired in July 2017. The segment expects that major markets like China and India will return to organic growth in the second half of 2021, as well as for full year 2021. We continue with the segment Access Solutions DACH, Germany, Austria, and Switzerland. We had a strong performance in all three markets of the segment, so again, Germany, Austria, and Switzerland.
Organic third-party sales in those three countries in the first half of 2021 were in total 6% above the same period of the previous year. However, due to the pandemic, the segment's plants, including the sites in Asia, still suffered from the global shortfall of intercompany demand for the three global product clusters attributed to the segment. This effect negatively impacted both overall segment sales and profitability. As a result, organic sales were 2.9% below previous year's level compared to the second half of financial year 2019/2020. They nevertheless improved by 4.7 percentage points. The segment continues to explore growth opportunities in multi-housing. One of the latest examples in this vertical is a cooperation with the Artisa Group for 1,000 micro apartments in Switzerland called City Pop. The cooperation includes a platform for mobile access, integrating a cloud-based solution, door hardware, as well as services.
We come to the segment Access Solutions EMEA, Europe, Middle East, and Africa. While organic sales were 3% below previous year's level, they improved by 9.6 percentage points compared to the second half of financial year 2019/2020. Business performance continued to be impacted by the pandemic, with most countries faced by a second wave. However, the impact was less severe than in the first COVID-19 wave. Demand continued to be negatively impacted by postponed project commencements, restricted access to building sites, as well as lower stock replenishment among distributors. Despite that, countries such as Denmark and the Netherlands delivered solid growth together with Norway. Following the divestment of the project installation business in Norway, the local market organization achieved organic growth as well as improved profitability in the period under review. Sales benefited from a recovery in the service business in major markets such as the U.K.
In some markets, the project business gained traction again with the pick-up and the completion of delayed projects, for example, several airport projects. Going forward, the project pipeline is solid. On the final segment on slide nine, Key & Wall Solutions, which was the hardest hit by the pandemic in the previous financial year, 2019/2020. Organic sales were still impacted by the pandemic in the period under review and declined 9.2% compared to previous year. However, compared to the second half of financial year 2019/2020, organic sales improved by 11 percentage points. Despite the double-digit decline volume, the segment successfully protected its EBITDA margin and even improved it by 0.7 percentage points to 15.7%. Sales at the business unit Key Systems improved sequentially. There was a particularly good recovery in demand by the global automotive industry, which is an important customer group for the business unit.
Sales in the Movable Walls business unit were impacted by delays in the finalization of existing projects, by postponed construction projects, as well as by regional lockdowns. Despite this, sales improved month by month in the period under review. As you can see on the slide, both business units will benefit from several major contracts going forward. Compared to our other segments, raw material prices have a higher impact on Key & Wall Solutions due to the materials used in the segment's product offering. Both business units have started implementing strategic pricing initiatives at the beginning of the second half of 2021 to compensate for higher raw material prices. This concludes my overview on our results. Now I would like to add a few words on our investments.
Our sound financial and business profile has enabled us to consistently execute our strategic initiatives, even during the current challenging times. This includes continued investment activity in innovation, digital transformation, and in sustainability. We see that as a key to ensure our competitiveness and long-term profitable growth going forward. Let me give you a few examples. Let me start on slide 11 with a so-called Software-as-a-Service solution called Entrivo. This digital solution aims at supporting our customers to manage their automatic door operations and maintenance. Take, for example, the current regulatory challenges due to the pandemic. Companies must ensure that access to their enclosed public spaces is limited to a maximum number of people at one time. Our solution enables our customers to monitor door traffic as well as current occupancy, and consequently, compliance in real time from everywhere.
A door display at entrances lets people know it's okay to enter. Alerts are sent to the operator if there is a need to act. The solution is easily installed, works for any door, and is offered as a subscription model. This offering ideally illustrates part of our digitalization strategy. New business models, such as Software-as-a-Service, become increasingly important to us. With new technologies, we continue to build so-called complement offerings around our core business, our actual global product clusters. In other words, complementary digital services, such as Entrivo, support and secure our entrance systems business, which is one of our global product clusters. These complements are intended to protect our existing business by providing added value. After all, complements can offer a competitive advantage and sustainable business opportunities in our digital world.
A similar complement offering is resivo, which is designed to enable smart access to multi-housing properties, mainly in Europe, addressing trends such as smart homes and the sharing economy. This offering is closely tailored to the needs of the property management sector and is currently installed in three pilot projects in Munich, Vienna, and Zurich. This solution offers several advantages in comparison to mechanical keys. resivo enables the building manager to issue and revoke access authorizations digitally to an app at any point in time. As this is already possible during the building phase, problems and delays caused by forgotten or lost keys are a thing of the past. Residents are provided with their own apps specially tailored to their needs.
If, for example, a tenant goes on holiday and has forgotten to water their flowers, they can use resivo to send a person of their choice a time-limited digital key on their cell phone. Both solutions, Entrivo and resivo, were developed by our internal incubator unit, dormakaba Digital, which we established three years ago. The benefit of our products continue to be acknowledged by our customers and industry experts. For example, our new sliding door operator, ES PROLINE, won the German Innovation Award in December 2020. This product, combined with our new sliding door generation, ST PRO Green, allows for significant savings in ongoing energy and heating costs for a building, as it has been certified to have a long life cycle and a low energy requirement. The product therefore contributes positively to the energy balance of a door.
Reducing the carbon emissions of our products in their use phase is one important and often underestimated factor to achieve long-term carbon reduction targets. As part of our commitment to the Science Based Targets initiative, we have defined long-term carbon reduction targets, which are currently being validated by SBTi. Targets imply a reduction pathway of around 25% against a 19/20 baseline. I would like to hand over to our CFO, Bernd Brinker, for more details on our financial results. Bernd, the floor is yours.
Thank you very much, Riet. Ladies and gentlemen, a warm welcome from me, too. If you've just heard from Riet Cadonau now, our results for the first half of the 2020/21 financial year have to be viewed in a rather more nuanced way than normal. Why? Because the corresponding year back period, i.e., July to December 2019, was completely free of any coronavirus effect. While the entire first half of the current financial year, i.e., July to December 2020, was strongly impacted by the pandemic and its economic effects. As well as the normal reporting, we want to provide you with additional information to help you make a better assessment of our performance and isolate the impact of the pandemic. We will provide you with additional information so that you can compare our results with those from the final six months of the previous financial year.
Most of these verbal remarks are also included in the additional short commentaries you will see on the presentation slides. We are also presenting this information because in September 2020, despite all the uncertainties caused by the pandemic, we explicitly stated that results for the first half of the current financial year would be better than for the last half of the previous financial year, for all our segments and for the group as a whole. Here we achieved this goal. I'd now like to move on to an overview of our results. Sales for the first half of the financial year of 2021 showed an organic decline of 6% compared with the previous financial year. Maybe you can go back one slide, please. The presentation. Yeah. Thank you.
Again, sales for the first half of the 2020/21 financial year showed an organic decline of 6% compared with the previous year. In the final six months of the last financial year, organic sales were down at -14.3%. Overall sales were down by 11.4%. Currency translation effects caused by the appreciation of the Swiss franc during the period on the revenue pushed the headline figure down by 5.5%, while the positive net effect of acquisitions and divestments was 0.1%. Owing to the much lower sales figure, EBITDA went down by 15% to reach CHF 181.9 million, but in the final six months of the previous financial year, it had been only CHF 110.9 million. We have actually seen a substantial improvement of more than 60%.
Because of the lower operating profit, net profit before minority was 16.3% lower than in the equivalent period of the previous year at CHF 99.9 million. A comparison with the last six months of the previous financial year gives a different perspective. By this measure, we improved by CHF 55.2 million or more than 20%. Let's move on to the next slide, sales development. The upper right part of the slide shows the drivers behind the change in sales compared with the previous year. Our sales declined organically by CHF 83 million or 6% compared with the previous year. This fall was due to the economic consequences of the pandemic and the associated restrictions. Once again, for a better understanding, in the last six months of the last financial year, organic sales was -14.3%.
The acquisition and divestment of businesses produced a net increase in sales of CHF 1 million, as well as smaller acquisition effects, including from companies bought in England and Australia. This includes the divestment in September 2020 of our project installation business in Norway. The strengthening of the Swiss franc against all key currencies during the period under review had a significant negative currency translation effect of CHF 76.2 million. The AS DACH and AS EMEA segments did particularly well during the period under review in terms of sales, with organic sales growth of around -3% each, while the other segments saw sales shrink by around 10%. One of the pleasing aspects was that our third-party sales in Switzerland, Germany, Austria, the Netherlands, Denmark, and Norway were actually higher than the year previously, i.e., we achieved organic growth in these places. Let's move on to the next slide.
The factors mentioned in relation to sales also apply to our profitability during the period under review. The pandemic's economic consequences and restrictions were also the main cause of the 15% decline in EBITDA from CHF 214.1 million- CHF 181.9 million. This gives an EBITDA margin of 14.8%. Here, too, it is important to see the trajectory of our profitability through the prism of the pandemic. In the last six months of the previous financial year, EBITDA was only CHF 110.9 million, and the EBITDA margin was only 9.6%. Outside of operating business, there was an extraordinary and non-recurring income of CHF 6.6 million during the period under review, which added 50 basis points to the EBITDA margin. After adjusting for this, the EBITDA margin for the period under review is 14.3% instead of 14.8%.
Organically, our EBITDA decreased by CHF 20.6 million compared with the previous year. The acquisition and divestment of businesses, as described when I was talking about sales, produced a net CHF 1.6 million increase in our EBITDA. The divestment of our project installation business in Norway in September 2020 had a particularly positive effect. Currency translation also had a negative effect on our EBITDA, pulling it down by CHF 13.2 million. Our three segments, AS DACH, AS EMEA, and Key & Wall Solutions, performed particularly positive in terms of EBITDA development during the period under review. All of them improving the EBITDA margins, even compared with the pandemic-free year-back period. Let us turn next to the income statement. Lower volumes led to a fall in gross margin from 42.5%- 41.7%.
Though, in the last six months of the last financial year, it had been down at only 39.3%. Once again, the typical cost profile of the pandemic can be seen in our results. The positive effects of savings and restructuring to compensate for lower sales are reflected in lower expenses for sales and marketing, as well as general administration. Despite lower sales, we slightly increased our spending on R&D compared with the previous year in accordance with our strategic focus on the importance of innovation. When capitalized projects are added, our R&D ratio rises to 4.6% because of the lower sales figure compared with the year-back figure of 4.0%. We significantly improved our net financial results, thanks mainly to two factors. First, over the reporting period, our gross financial debt was significantly lower than in the prior year period.
Second, in addition, the interest rate environment for our debt portfolio developed favorably. There was also a slight improvement in our income tax rate from 24%- 23%, owing to the country mix of our profits and some smaller positive one-time tax effects. Overall, our net profit before minorities fell by CHF 19.5 million or 16.3% to CHF 99.9 million. Again, to illustrate the trajectory of our financial results through the pandemic, in the final six months of the last financial year, our net profit was down to CHF 44.7 million. Therefore, we outperformed this number by more than 220%. Let's move on to cash flow. There was a very pleasing increase in operating cash flow during the period under review.
This is attributable to our Cash is King initiative, which we implemented rigorously throughout the whole company in order to manage the consequences of the pandemic. Currently, all aspects of our net working capital, i.e., change in trade payables and receivables, as well as in inventories, showed a significant year-on-year improvement. This gave us a cash flow from operating activities of CHF 194.3 million, which is almost 40% higher than in the prior year period. The resulting operating cash flow margin came to 15.8% compared to 10% a year earlier. How did we use this cash? First of all, as announced, we invested far more cautiously in our existing business because of the pandemic. Capital expenditures, therefore, amounted to CHF 30.8 million. During the period under review. This is equivalent to 2.5% of sales compared with 3.6% in the previous year.
We only spent CHF 7.5 million for M&A activities during the period under review. In the pandemic environment, therefore, we scaled down our M&A activity significantly. We are currently working less on realization of M&A transactions, but more on the background to further develop our M&A pipeline. This left a very high free cash flow of CHF 153.3 million, which we used mainly to repay financial debt. Let's move on to the net debt development. Due to our very healthy cash flow, we were able to reduce net debt significantly to CHF 556.3 million. A net debt reduction of almost CHF 300 million compared with the end of the corresponding reporting period last year. This improved our leverage, i.e., ratio of net debt to EBITDA from 2.1x at the end of the prior year period to 1.5x now.
The core of our funding rests on the two bonds totaling CHF 680 million that we placed in October 2017, and on a syndicated credit facility, which puts our financing on a very solid footing. I'd quickly like to take a closer look at this syndicated credit facility. Our previous facility of CHF 500 million was due in March 2021, so in the current months. In order to avoid refinancing risk, especially during the pandemic, we decided in the second half of last year to refinance the facility early. In November 2020, we completed this refinancing successfully on several fronts. First front, despite the pandemic, we managed to achieve another improvement in contractual terms and conditions compared with the credit facility we agreed to in 2016. Second front, we also ensured that the financing clearly reflects our corporate strategy's emphasis on sustainability.
If we achieve certain ambitious sustainability criteria included in the credit agreement, this will have an impact on the interest margin of the credit facility going forward. With that, I would like to give you an update on the status of our Group-wide Cost-Saving and Restructuring Program, which in the current pandemic environment, is extremely important for our Group's development and profitability. Already back in April 2020, we initiated this Group-wide Cost-Saving and Restructuring Program in response to the pandemic and the attendant decline in demand. The general aim was, and remains, to adjust our cost structure and capacities to existing demand. One of the particular characteristics of this unprecedented pandemic is the negative effect it has had on both supply and demand. Another is the series of restrictions and lockdowns imposed by governments and local authorities, which have led to much reduced economic activity around the globe.
By contrast with earlier crisis, this one has had a serious effect on businesses that were previously seen as very crisis resistant, such as services. The aim of our measures we have taken is to maintain our entrepreneurial flexibility and financial stability at all times. These measures inevitably entails job cuts. Up to 1,300 headcount will be affected, the vast majority of them production employees in Asia and Americas. By the end of the 2019/20 financial year, so 30th of June 2020, we had already made around 900 of these job cuts, rising to 1,100 by the end of calendar year 2020. The measures have had a positive impact on our results of the first half of the current financial year, and thus we have achieved the associated objectives. With that, let me conclude on the guidance and business outlook for the full financial year 2020/21.
Owing to the COVID-19 pandemic, current business environment is still characterized by uncertainties and lack of visibility. Short-term postponements or delays may occur on the sales side, while on the procurement side, raw material costs have risen. We anticipate positive organic sales growth for the second half of the financial year 2021, resulting in a stable year-on-year organic sales growth for the financial year overall. We believe the EBITDA margin for 2020/21 as a whole will likely be somewhat lower than the one for the first half of the current financial year. The main reasons for this expected decline in EBIT margin are the following. First, the positive non-recurring effects which occurred in the first half will not be repeated.
Second, while net expenditures for our cost savings and restructuring program in the first half of the current financial year were close to zero, we expect significantly higher expenditures in the second half of the current financial year. Third, we are facing a significant increase in raw material costs, which can only be offset by price increases with a certain time lag. That's from my side. Thank you very much for your attention, and with that, I hand back to Riet Cadonau.
I'm going to hand over to the operator for the Q&A session.
We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you've 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 answers while asking a question. We kindly ask you to limit yourself to one question and one follow-up. If you have any additional questions, please re-enter the queue. Anyone who has a question or a comment may press Star and one at this time. The first question comes from the line of Rizk Maidi with Jefferies. Please go ahead.
Yes. Hi, gentlemen. Thank you for taking my questions. First of all, congratulations, Riet, on your tenure as CEO of dormakaba throughout the years. My question now, I'll just focus on one and one follow-up, is on the North American outlook. Maybe perhaps if you could just walk us through the exposure there, commercial, institutional, how your specification business there has been behaving in light of the contracted leading indicators that we've seen, such as the ABI or Dodge Momentum Index. How do you tie in your sort of rebound in the second half of this year with Allegion's more bearish guidance of - 3% to - 4% decline for the entirety of 2021?
Okay, thank you very much. Let me answer that topic with regard to North America. I think it makes sense to spend some time there. Before I answer your question, let me also say to you that the new COO, who started July 1 last year, has initialized growth initiatives with three major directions, so to say. One has to do with sales excellence, as I said beforehand. He reorganized the go-to market, bundled also some of the product clusters, and has also adapted the geographic segmentation, with the goal to increase, of course, market orientation and accountability in the sales force. That is a first direction with regard to sales excellence. The second direction or focus is channel management, clearly higher focus on attractive products such as touchless and EAD, Electronic Access & Data.
That was the area with the growth also in the first six months of the current fiscal year. The third focus is increasing resources on specific vertical, such as multi-housing, just as an initial introduction to AS Americas. You mentioned, of course, a comparison with our peers, which is, of course, very, very important. Let me clarify that from my perspective. Both ASSA ABLOY and Allegion have mentioned weakness in the commercial business with a double-digit decline in organic sales. Okay? We have experienced a similar decline. However, residential businesses in North America is not part of our portfolio, except for multi-housing, but you can, of course, always discuss whether multi-housing is commercial or residential. The residential business is quite resilient during the pandemic, as people stuck in their homes used that time to upgrade their homes during lockdown.
We have, first of all, at this time, not the tailwind of residential, except for multi-housing, if you allocate multi-housing to residential, and in addition, we still have a negative impact of Mesker. That is important from my perspective when it comes to comparison to our peers. Let me also mention about our verticals, because often I get the question with regards about the verticals. Of course, we also focus on verticals that have good potentials, such as education, healthcare, and as I said, multi-housing. Of course, we are aware that we have also other verticals in our portfolio. One is lodging system. As you all know, the majority of lodging system at dormakaba is with hospitality, and that has, of course, a very different dynamic than other verticals.
Nevertheless, I always would like to add that a part of that one, we have also multi-housing, and we have also vacation rental in that piece. That is what I can say with regard to the North American market, so to say. I think going forward, there is a limited visibility on the progression of the pandemic, as well as on the yet unknown impact by the new U.S. administration and potential economic stimulus program. As I said, currently, we are experiencing a rather weak non-residential business environment. As such, the segment will continue to control costs while prioritizing investments in growth initiatives. I hope this answers some at least of your questions.
Yes, Riet, and thank you for the color. The follow-up is really on the cost inflation in the business. We've seen steel, brass, et cetera, prices going up. Add to this also freight costs as well. Can you just help us assess what will be the headwind from this cost inflation in the second half? How is your ability to raise prices in an environment of weak macro? How does that have been historically?
I leave that to Bernd with regard to raw material cost as well as freight cost. He will certainly answer to your question. Bernd, please.
Sure. Hi, Rizk. With regards to raw material pricing, you are absolutely right that we've seen a relatively strong increase in terms of some major raw material prices, which also have an impact on our portfolio, such as steel, brass. You are right that we also see higher freight costs, and we see also some impact on logistics, so ability to ship on time. With regards to our ability to raise prices, given our business models which we have, our ability to adjust prices is rather solid and good. There is only the time lag which we need to consider.
Therefore, in general, I personally expect that in the current environment, we are considering adjustments of price increases in certain areas up to 10%, that we will be able to achieve an overall price increase for the group for the calendar year 2021 in the magnitude of a little bit more than 2%. And I am personally quite positive on giving the business profile which we have, which we will be able to do so. However, again, this will only be possible with a certain time lag of one to two quarters.
Okay. Thank you.
Back to the operator.
The next question comes from the line of Martin Flötiger with Credit Suisse. Please go ahead.
Yeah. Afternoon, gentlemen. Thanks for taking my question. I've actually only got one left. I was wondering, in which countries do you see structural issues beyond the current pandemic and beyond also the current restructuring measures that you're undertaking? In this respect, how likely are further divestments of underperforming businesses or further restructuring programs from today's perspective?
Okay, I can take care of those questions. With regards to structural issues, at least from my perspective, the challenge remains with our Access Solutions North America business, as you are well aware of, and we elaborated on that. Besides that, I do not see further structural issues. Martin, you have been with us for many years. You have seen us solving Wah Yuet. You have seen us solving Norway. You have seen us solving growth in Germany. I think the remaining challenge is with Access Solutions North America. At the same time, I repeat what I said, I am convinced that this new team has set up a very solid program, and we will see the comeback over time from my perspective. That's with regard to your first question, Martin. The second question is with regard to divestments.
We should always keep in mind that at dormakaba, we have a clear history of portfolio management. We have always assessed our portfolio, at least on a yearly basis, and we have always adapted our portfolio. We have not only acquired, at the same time, we have also always divested units. The last one was in Norway, as you know, with this infrastructure services business. That is from our perspective, from a leadership perspective, a continuous task to do to assess the portfolio.
Okay, there's nothing cooking right now?
Nothing to talk about it now.
Okay, thanks.
Back to the operator.
The next question comes from the line of Andreas Müller with Zürcher Kantonalbank . Please go ahead.
Yes. Hello, gentlemen. Thanks for taking my questions. I've got several. One is really on the OpEx part. Do you know how much of the OpEx reduction was because of the cost reduction program, so basically fixed, and how much is related also to COVID-19, lower travel expenses and these things? I mean, what should we expect going forward in terms of mix between fixed and variable?
I leave that question with regard to OpEx to Bernd.
Yeah. Thank you, Andreas. With regards to the OpEx reductions, currently, the savings from our cost management restructuring program is in the magnitude of roughly CHF 17 million at the end of the first half of this current financial year. There are obviously some elements which are a little bit more variable, such as lower travel. However, with regards to travel, I think there is also the learning that we will be able and need to be able to move certain savings and by change of behavior into the future. We, within dormakaba, expect to be able also to reduce travel expenses going forward, not in the same magnitude as we did it in the current environments. I think personally, I expect that we'll be able to reduce travel in the magnitude of 30%-40% compared to what we have expensed in the years before.
Therefore, the CHF 17 million result from our cost-saving restructuring program and some of the lower spending, which is deemed to be a little bit more stable going forward, will also have some flexibility to go down.
Okay, thanks. Bernd, I was wondering, China and India, the prospects there are better for growth actually for the year. Can you remind us how much is China and India within APAC? If APAC can grow as such, probably not, if I understand that right.
I will leave that to Bernd as well. I can just start with China and India, when it comes to third-party sales, are both a top 10 country of dormakaba. That shows, of course, that this is important for our business. Bernd, you might add a few information to that.
I think there's not much more left for me to explain. They are, as we have indicated, part of our top 10 countries. We've seen in both countries that significant organic growth since the merger. Those two countries are part of the success story which we have established, especially in the Asia-Pacific region. We now see a little bit of a comeback in China for commercial business. This is the reason for our outlook for this country. For India, it's a little bit different because in India, we suffered a lot in the first half based on COVID-19. Here it's much more a base effect.
However, we believe that based on our strong position which we enjoy in India, and the potential of the country to go back to previous years' growth levels, this will also be a significant growth driver for our company going forward.
Okay. Thank you very much.
Further questions, Andreas?
We have a question coming from the line of Patrick Rafaisz with UBS. Please go ahead.
Thank you, good afternoon, everyone. My question would be around the cash flow. You did very well on working capital management in the first half, especially inventories, but also trade payables and others. Can you talk about the scale of the reversal here you would be expecting in your second half? Also related to that, how should we think about your CapEx?
Okay. Cash flow and CapEx with Bernd, please.
Thank you, Patrick. Let's start with the potential negative impact on cash flow going forward. Let's say, I would be happy if we will see a further utilization of cash going forward, because this will only happen in a more stable environment, because we will continue our Cash is King principle as long as COVID-19 has a major negative impact on the business environment. Therefore, there is a little bit of potential in all areas, especially in the area of inventories and accounts receivables. If business picks up again, I would not see the same potential in accounts payables. With regard to CapEx, we are now at 2.5% of sales. Here, as we indicated, we have revisited a lot of CapEx projects.
We have postponed some of those, and we have even reconsidered certain CapEx projects, and now we might even combine the CapEx questions with some strategic revenue questions which come up soon. Therefore, I clearly believe that we will be willing to spend a little bit more on CapEx in a new normal. In the current environment, I would expect that we continue the path which we have successfully started in the last half of the last financial year and the first half of this financial year.
Okay, thank you. My follow-up would be on your organics. I am just wondering if you could add a bit of color how you exited calendar 2020 in the final few months, and how you started. Was there a significant change in dynamics you are seeing on the group level?
Bernd, because you answered that question to the journalist this morning very well, up to you.
Okay. Thank you. What is the profile of our organic growth? Could start with the first half of the current financial year, so July to December. As we have indicated in our reports, we have seen a sequential improvement of organic growth compared to the prior year period throughout the first half. The month of January is not a good indicator for a comparison because in the calendar year 2020, it was Chinese New Year, and we had the first start of COVID-19 already in that month. This calendar year, we have Chinese New Year in the month of February. Therefore, there is a switch between those two. Second, we have seen in January a later start of many of our customers into the new year. They prolonged their year-end break by almost one week. Therefore, we had less business activity in the month of January.
To give you also that indication, this did not come as a surprise. Part of our guidance, which we have shared with you, is also a weaker start into the current calendar year. Therefore, those two months developed in a way we expected, but on a lower level.
I think that's important. It's not a surprise, January and February. February, we only have indications, of course, not yet the consolidated numbers. In our plan as of March, we expect stronger months. That is the mix that we see for the second half of the current fiscal year. Are there further questions?
The next question comes from the line of Delphine Brault with Oddo. Please go ahead.
Yes. Hello to everyone. Thanks for taking my question. I just would like to be sure that I understand correctly your guidance. When you say that the full year EBITDA margin will likely be somewhat lower than the one for the first half, do you refer to the 14.8% that has been published, or to your underlying margin, which is 14.3%?
Bernd, be very clear, please.
Delphine, thanks for the question. As I indicated during my presentation already, the 50 basis points were a result of one-offs, which will not happen again. Therefore, our guidance is based upon the underlying EBITDA margin. We not only expect a lower margin against the 14.8% for the full financial year, we also expect a lower margin than the 14.3%. Therefore, our guidance is based upon the expectation that the EBITDA margin for the full financial year 2021 will be lower than 14.3%.
Okay, thank you.
Next question.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Star followed by one. We have a follow-up question from the line of Mr. Rizk Maidi with Jefferies. Please go ahead.
Yes. Hi again. Thank you for taking the follow-ups. Just maybe perhaps a high-level question. I'm just wondering if you could just remind us of the exposure to your, what you call the aftermarket business or the renovation business as a percentage of the group? How tied you think this business is with reduced mobility of people? More importantly, do you see any reason why this business should not go back to its pre-COVID level, even in a scenario where the working from home trend is here to stay?
Okay. I start with the last question. We might see, of course, changes in office buildings. That was referring to, with regard to mobility, et cetera. Even if office buildings are going to be used differently, with shared space, et cetera. You need access. We see it as an opportunity. Of course, yes, I also believe that post-COVID, we will have a hybrid model, the way we work, part of it remotely, part of it in the office. That will mean that these spaces will be adapted from my perspective, as I said, to use the space differently. Again, I repeat, you will need to have access solutions for such spaces. That is, from my perspective, opportunities to dormakaba. That is with regard to that one. With regard to our dependency on new construction and installed base is about half-half, plus, minus.
About half is new construction and the other half is installed base, depending on how you define that. We are certainly not only dependent on new construction. That is important, and that gives us a certain level of stability, including the corresponding services.
Okay. That's very clear. The second one that I have is perhaps for Bernd, on the headcount reduction program. I think initially you targeted 1,300 people, and it looks like given the environment has been better than what you expected, you only reduced that to 1,100. Is now the new savings target CHF 40 million instead of CHF 50 million? What is the phasing of this?
Rizk, you're absolutely right that the current business environment seems to be a little bit better than we originally expected. Our 1,300 target was based upon something which we call internal base case, and we currently are developing slightly better than base case. We even started to rehire certain people in some of the regions, as indicated by Riet during his presentation. I think this goes back to a discussion which we already had at the end of last financial year. I am personally more than happy not to reduce by 1,300 if business activities allow. If we are not able to achieve the 1,300, this will be driven by business activities which will deliver more profit than we expected from the savings program.
Today, I still believe that we will be able to achieve our savings, which are the run rate is close to CHF 50 million, which we expect at the end of the current financial year, early next financial year. If we will not be able to reduce by 1,300, this gap in savings will be filled by operational profits driven by the business activities. In addition, there is one element which needs to be understood. In some of our markets, in some of our countries, we are today not in the position to reduce headcount to the extent we would like to do. This is driven by some government-related restrictions in labor law, where we need to comply with. Therefore, there are also here some limitations where some of our headcount reductions might move even into the next financial year, if still required by business activities.
Okay. Understood. Lastly, on the price increases, I think Bernd, just to clarify, you said you were expecting a little bit more than 2% for the current full year. Is that right? How much have you raised prices in the first half?
Okay. My comment was that I expect a little bit more than 2% in the current calendar year, so in 2021. In the first half, we were able to achieve in the magnitude of 1% price increases.
That's very clear. Thank you very much.
Back to the operator.
We have a follow-up question from Mr. Andreas M ü ller from Zürcher Kantonalbank. Please go ahead, sir.
Yes, thanks again. I was wondering the one-time positive effect of CHF 6.6 million, is that buried in the other operating income line? What was it exactly? The second question is on the business mix going forward. It seems that more kind of delayed projects are coming in. Larger projects, typically the project business is probably at least initially not that profitable. Is that also part of the explanation why the margin comes short-term rather down than up with volume?
Okay. With regard to the one-time effect, Bernd, you can elaborate, but I would just to clarify on the second question, project business per se is not a bit lower profitability. Of course, there are very different project businesses, right? We have, as an example, project businesses in EAD, or project business in Movable Walls, and that is, of course, different businesses and different segments, but we cannot say that in general, project business has lower margins in general. That is not correct, and I leave it to Bernd to complete.
Okay, Andreas, with regards to your first question, the non-operating positive of CHF 6.6 million, you are right. They are part of our other operating income in the P&L. The background, we were able, in the first half, to finally resolve two major cases, which resulted in these positive one-offs. One of those cases is related to a long-lasting dispute with a licensor, where we finally agreed upon a resolution of a claim for overpayment of royalties, and the second case is related to excess provisioning, which was built up over several years for discount customer claims, product defect warranties, all of this in the project business. The items, the CHF 6.6 million, which are part of other operating income in the P&L, they were not allocated to a segment but are allocated on group level. We will not find that in the segment reporting.
Okay, thanks. Very clear.
Back to the operator.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Riet Cadonau, Chairman, CEO, for any closing remarks.
Before we close this call, let me add a couple of words. As you all know, I will be handing over my CEO role to Sabrina Soussan at the end of this month. For the past 10 years, I had the honor to lead dormakaba as a CEO, and during that time, the world and access to buildings and rooms have evolved significantly. During my tenure, our company has successfully made the technological leap from the electronic to the cloud-based world, which is a cornerstone of our digitalization strategy. The main milestone, however, was the merger of former Dorma and Kaba to dormakaba, which transformed both companies from niche players with international reach to one truly global full-range supplier. With this move, we significantly improved our risk profile, gained scale, and broadened our offer while remaining financially flexible and therefore more resilient, which is vital in today's environment.
We have also substantially expanded our market position in the United States, the most profitable market in our industry. While it is true that the segment AS Americas has not yet leveraged the benefits of this move, the measures we introduced makes me confident that dormakaba will also achieve its goals in this region over time. Finally, I am proud that we have formed a company with a strong culture that has proven to be a tangible asset to help us navigate the current times and beyond. In the past 10 years, we have built a strong foundation for the future of dormakaba. Going forward, I am convinced that my successor, Sabrina Soussan, with her substantial track record and her market focus, will successfully advance and grow our business. Finally, let me say thank you very much for the good exchange over the past 10 years.
With that, I would like to close this call. We appreciate your attention. We wish you a good day. Stay safe and healthy. Goodbye.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.