Ladies and gentlemen, welcome to the Gerog Fisher Mid Year Results 2021 Conference Call and Live Webcast. I am Paolo, the Chorus 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 and A session. The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Andreas Muller, CEO and Mats Jorgensen, CFO. Please go ahead, gentlemen.
Welcome and thank you for joining our half year results conference call. Present on our side are CFO, Mads Jurgensen Head of Investor Relations and Sustainability, Daniel Berziger Private Communications, Bernd Rimmel and myself, Andreas Sundberg. Slide 2. In the 1st semester of 2021, GF recorded a strong performance and was able to accelerate growth. Most of GF's key markets recovered amidst the ongoing COVID-nineteen pandemic and the challenging macroeconomic environment.
Sales strongly increased by 20% organically compared with the first half of twenty twenty and came in at CHF1.835 billion. All three divisions contributed to this result. The operating result increased by 120 percent to CHF 141,000,000 Compared with last year's EBIT before one off items of CHF64 1,000,000, the EBIT margin stood at 7.7%. The GF shareholders' net profit more than tripled to CHF 108,000,000. GF achieved Remarkable solid free cash flow of minus CHF2 1,000,000 compared with a negative free cash flow of CHF73 1,000,000 in the prior year period.
Demand in key segments such as microelectronics, car industry, medical device production, infrastructure, etcetera, showed a positive momentum again. However, the market environment remains challenging considering the recent and ongoing supply chain constraints on raw materials gas. The legend, for example, is predominantly responsible for the subdued recovery of the global car industry. Slide 3. Let's have a look at the sales development in the first half of the year.
As such, sales increased by a robust CHF307 1,000,000 to €1,335,000,000 organically up by 20%. Geared Piping Systems contributed to this with a strong organic growth of 16% based on healthy demand in more or less all regions and end market segments. Despite the chip shortage and consequently a subdued rebound of the global car industry, And the first question is from the line of the previous year. However, it is noteworthy to mention that the division benefited from a favorable base effect JF Machine Solutions saw a soft recovery in the first half of the year and has organically grown by 11% on the back On Slide 4, We highlight CF's monthly divisional and regional organic sales development. The chart on the left shows the overall sales development of the divisions on a monthly basis compared year over year.
The relaxation of the lockdowns and the rebound of the car industry compared with an extremely low base in the previous year are the main reasons for the impressive peak of GF Casting Solutions, light blue, in the months of April May. GF Piping Systems, the dark blue line, and GF Machining Solutions, the gray line, also recorded high monthly growth rates in this period. Compared to China, various growth in the U. S. In freight was more moderate, but also more steady without this pattern of any specific peak, showing growth rate in the range of 20% in the second quarter.
It is worth to mention that sales in the Aerospace industry continue to remain Let's move to Slide 5. Asia further increased its share of sales from 30% to 31% with the highest organic growth of 23%, a result of the booming Chinese market. Europe remained on 45% of total sales and has grown by 18%. Growth was well balanced across Europe This is somewhat stronger development in Southland Europe. The Americas represent 19% of all worldwide turnover And has grown organically by 16%.
Let us now turn to Slide 6. The EBIT margin rose from 4.2% to 7.7%. In the first half of twenty twenty one, GF increased its EBIT to CHF141 1,000,000 versus the comparable EBIT before one off well loaded plants and allowed GS Piping Systems to achieve an EBIT margin of 13%, well above The 11.1% recorded in the comparable period the year earlier. Cheer Castings Solutions swung back to a positive EBIT with a margin of 2.8%. The division's profitability was negatively affected by metal price effect and subdued demand due to the semiconductor shortage, especially in the U.
S. GS Machining Solutions improved its EBIT margin to 2.3%, Slide 7. Our recently announced Strategy 2025 with a strong focus on sustainability and innovation is internally And externally, we'll accept. Its implementation is in full swing. Innovation remains the key drivers for growth.
As an example, Let me mention how as part of its accelerated digitalization process, our Machining Solutions division is offering our customers Our Placement Systems division increased its central activation product range to offer comprehensive process control and automation. The strong focus on robust end markets such as e mobility was underscored by the development of additional innovative at Rehousings and GF Casting Solutions. Lastly, we have inaugurated our competence and exhibition center for medical device production in South of Germany. The center showcases innovative processes and machining technology for this demanding medical device industry. GS is evolving its culture towards more performance and learning.
Many workshops, either hybrid or in person, have been conducted to increase the learning capability of our organization. GS kept a strong focus on sustainability and in The first half of this year increased its turnover with products and solutions that create positive environmental or social benefits. In addition, we have published Let me move now to Slide 9. We show selected ESG key figures for the first half of twenty twenty. The global trend towards a more sustainable world creates for GF new business With its innovative solution, Jio focuses on the sustainability needs of its customers, helping them to achieve their own targets.
Innovative Solutions also reinforced GS' long term growth initiatives and the generation of a sustainable performance. Many applications of GF have a substantial impact on the CO2 footprint. For example, the picture on the top right illustrates an application LGS supply PVF Piping Solutions to ensure a safe installation of the electricity transmission at the new offshore wind park The picture on the bottom right illustrates 2 GS solutions to bring CO2 emissions done, a lightweight battery housing Total greenhouse gases of the corporation emissions decreased 9% compared with 2019. We reiterate to announce a comprehensive climate target that is in line with the Paris Agreement and the Science Based Target Initiative in early Let's now continue with the Trade Division, slide 10. Cheer Piping Systems achieved an impressive organic growth of 16% and record sales of CHF 983,000,000.
The operating results increased to CHF 128 million with a corresponding EBIT margin of 30%, which is already approaching our strategic target range of The division focuses on innovations with a strong impact on sustainability, such as the new full wall magnetometer product range, The resilience seen in the previous year as well as the growth in the first half of this year are driven by the well balanced global presence and the focus on growth markets and segments. Products for microelectronics and data center, Water and Gas Infrastructure and Building Technology enjoyed strong demand. The integration of FGS Presid, whose acquisition was announced last year is well on track despite the ongoing pandemic turbulence is impressive. The construction of a new factory in Yangzhou, China is also progressing well. Let's now look at Slide 11, illustrating 3 end market segments of the division.
Sales of products for the microelectronic, degi san and photomaltarics It went up 18% in the first half of the year to CHF 90,000,000. This segment is especially strong in Asia. Sales of products and services for our water treatment segment increased 13% to slightly above CHF100 1,000,000. Finally, yet importantly, we have seen a strong recovery of the Southern European and Asian Building Technology market supported by the healthy markets in the dark regions. Hence, the strong momentum business in Geos Piping Systems is not only geographically well diversified but also based on double digit This further underlines the solidity and progress
of the division.
Slide 12 Illustrates 2 major solutions for sustainable markets. The picture on the left shows a newly developed nondestructive testing methodology to assess the quality of the well connection. The testing is using ultrasonic technology embedded in additive manufactured functional lines. 1 out of 300 bottles is estimated to be defective and therefore, for the answer. Depending on the conveyed media to the environment, Mr.
Shahi, the chair, supported the Seaboard cooling application for hospitals with its services and installation equipment, helping our partner In the first half of the year, demand in Asia But also Central and Eastern Europe increased in this segment. GF developed an innovative, multi destructive testing equipment called VBI to ensure the highest quality level of the installed piping solution. Let us now turn to Geof Casting Solutions, Slide 13. The global car industry has been recovering since mid last year As a result and thanks to the focus on new energy vehicles, organic growth amounted to 38.3 percent with sales of CHF459 1,000,000. The global automotive industry grew approximately 30% in the same time.
JF Casting Solutions was able to turn the previous year operating loss operating profit of CHF13 1,000,000. Nonetheless, the division's performance was negatively affected by the Deeply rising cost of raw material, which are contractually passed on to customers and only recoup with the timing. The subdued demand in the U. S. Due to the shortages of semiconductors was also impacting performance negatively.
This specifically affected our light metal facility in Northern River, North Carolina, U. S. China and Europe registered a record amount for e vehicles Let's turn now to Slide 14. The slide highlights GS Gas and Solutions' focus on 3 strategic segments. Components and Solutions for the eMobility segment have grown by nearly 70%, addressing the CO2 emission reduction targets of all GF customers.
As seen on the chart on Slide 15, e mobility was quickly picking up in recent months in Europe and Asia. The light green bars And bubbles represent the pure battery electric vehicles. The blue bar represents The soft mode plug in hybrid car sales quantity. Pure battery vehicles represent in Europe approximately 7% All newly registered cars and in China, 12%. All indicators point to a continuation of this trend, especially in the light of the targets for 2,035 that were published last week.
This imply more or less the end of internal combustion engines in Europe. Let us turn back to Slide 16. The Body and Structure Class Components segment, which clearly is Independent continued its growth trajectory and represents now the largest product segment of Geos Casting Solutions. Components made out of magnesium and aluminum helped to reduce vehicle weight, increasing battery range and reducing emissions. Special turbine blades and structural components for gas engines have grown by 38%.
New generation gas turbines are capable As a summary, Growth at GS Casting Solutions is hands on the one hand based on the industrial rebound and on the other hand on the strategical and Let us now turn to GS Machining Solutions, Slide 17. Sales increased organically by 11.4% to CHF393 1,000,000. The operating results came in at CHF9 1,000,000, which translates into an EBIT margin of 2.3%. Strong impacts have been reported in China and also Asia, followed by good levels in Europe. The U.
S. Still remains on predominantly because of the high dependence on the aerospace market. Increased order intake came along with an increased utilization of virtually all Despite the omni trans semiconductor shortage and the strong increase in the demand On Slide 18, we show the sales development in 4 selected end market segments of GS Machining The division's expertise in high precision automated solutions is a main reason for successful development in the ICT market segment. The recently launched new innovative EDM machines combined with automation represent the lion's share of the achieved growth of 29%. The Select segment, the only segment that did not decrease last year, has grown by 40% as a result of the integrated multi Aerospace remains a key market segment.
These projects are currently under discussion and are expected to materialize in what is in the second half of the year. The energy efficiency of Blinks, not only driven by upcoming regulations in many countries, but also by sustainability aspects, will therefore play a key role in the jet engine production. On a year on year comparison, the segment was down 21%. To be noted that in the first half of twenty twenty, Let's move to Slide 19. The slide extensitarily illustrates 2 out of many innovations at GS Machining Solutions.
On the left, we see the most advanced laser texturing machines that can replace chemical etching and eliminate hazardous process materials. This technology is used in a mobile dive but also in the ICT, information communication technology and medtech industries. On HMI, human machine interface, which allows operators to immediately connect live with the serialization of Jia. This solution will increase uptime of the machine and at the same time optimize the machine to service in substantially compressed period of time. At the upcoming IMO, the world leading machine tool exhibition to be held in Milan next to the tour, the division will release various additional new digital solutions focusing on service and efficiency.
With that, I will hand over to CFO, Marc Jurgensen for a detailed review of the figures.
Thank you, Andy. Ladies and gentlemen, also from my side, a warm welcome, I will now present The consolidated financials of the first half of twenty twenty one. On Slide 21, We present the order intake for the 1st semester. Geopiping Systems achieved an organic growth in order intake of 29.8%. This was driven by a number of industrial projects worldwide and by the Chinese market, in particular.
Geocasting Solutions rebounded from the very low callouts, which happened during the lockdown period in 2020, The order intake was growing strongly on all three continents. And for 1 gs and Machine Solutions, the highlight of the semester was Clearly, the significant growth in order intake with €471,000,000 order intake was up 45 Moving to Slide 22. Here you can see in the Last slide on the table, the overall sales of George Fisher increased by 20.1 percent to 1,835,000,000. Organically, the growth was almost the same with 20.0%. The 3 divisions different levels of recovery on the backside of the COVID-nineteen lockdowns, which occurred globally in the first half of twenty twenty.
During the course of the 1st semester, George Fisher Piping Systems experienced a strong surge in demand for industrial and building technology products worldwide. The division came close to 1,000,000,000 mark in sales with 983,000,000, representing an organic increase of 16.4%. For your recollection, the organic decline in sales in the 1st of 2020 was only minus 3.1%. In the 1st semester of 2021, Also sales of George Fisher Casting Solutions recovered clearly from the lockdowns of the OEMs that we experienced in the second quarter. Sales grew organically very strong by 38.3 percent to €459,000,000 This compares to sales decline of 27.6% in the 1st semester of 2020.
The European and Chinese Automotive market For GEDMACHINING Solutions, the first half of twenty twenty one also developed positively. Sales grew organically by 11.4% to €393,000,000 The low order backlog when starting into 2021 as well as bottlenecks organically by 21.3 percent and could therefore not fully be recovered in the 1st semester of 2021. Nevertheless, the division saw a strong recovery of the ICT, medical and the traditional mold and bio businesses. From a technology point of view, the growth mainly took place in the EDM segment and in services with growth of 36% and 18%, respectively. On Slide 23, We show the various components of the sales development, starting on the
left hand side with the consolidated sales in the first half of
The acquisition of Krysal based FGS, A leading manufacturer of PE Piping Systems for the water and gas utility markets was closed at the end of February 2021 and added $11,000,000 to sales. The accumulated effects across all foreign currencies amounted to minus CHF9 1,000,000. Whereas the U. S. Dollar's decline against And overall sales for GF grew organically by CHF 305 1,000,000.
An estimated CHF34 1,000,000 of this organic growth relates Price increases to compensate for the global surge in prices for a number of key raw materials. We now move on to the EBIT. On Slide 24
shows on the
left hand side, The EBIT in the Swiss franc and on the right hand side, the EBIT margin in percent. Please note that in order to make the numbers more comparable, the color For the first half twenty twenty, shows the EBIT before the one offs and hence excludes the $7,000,000 negative effects from the George Fisher Casting Solutions Verdon Relocation Project. Driven by high growth rates and Higher margin industrial and buildings in larger products and the leverage from an increase in plant utilization, GE and Pipix Systems grew EBIT from €94,000,000 to €128,000,000 This corresponds to a growth of 36%. The EBIT margin increased from 11.1% to 13%, which is an all time high for the 1st semester for the past 10 years. The Chinese markets were also accountable for sizable part of the increase in profitability.
GF Costing Solutions achieved a turnaround in EBIT from a loss of minus €25,000,000 faced in the first half of twenty twenty to record a positive €13,000,000 agreed in the semester review. Most European and Chinese plants were able to capture the effect of the strong callback First, key OEM customers was forced to shut down production in February due to severe weather conditions in the southern part of the U. S. And late in the semester, the impact of the automotive civic conductor shortage led to a stubborn go pattern in the call offs from key accounts as their assembly plants were only working 2 out of 4 weeks in the months of May June. This obviously impacted utilization of our plant at Orestle.
And in addition, the company faced a delay in certain ramp up of the projects. On the other side, the investment costing business in Switzerland was able to improve profitability through a combination of cost reduction measures and efficiency improvements, this despite the ongoing subdued aerospace market. The EBITDA of GF Machining Solutions increased from $1,000,000 to $9,000,000 Most of the profitability increase comes from the growth of the EDM and service business. In particular, the Chinese operations contributed significantly. Nevertheless, with an order backlog, which is up more than 50%, we expect At consolidated levels, the EBIT decreased from €64,000,000 in 2020, excluding the one offs, to €141,000,000 equal to an increase of 120%.
As a result, the EBIT margin improved on a comparable basis from 4.2% to 7.7%. As mentioned earlier, during the course of the first half of twenty twenty one, the prices for key raw materials increased substantially. However, due to compensating Slide 25 shows details of the currency impact. Compared to past years, the effects of currencies were Less pronounced in the first half of twenty twenty one, overall, the currency effects on sales amounted to approximately minus €9,000,000 compared to almost 10x more adverse effects in the same period of the previous year. The main part of the currency effects was attributable to Chief Piping Systems, which is caused by the division's exposure The relative high level FX of EBIT relates to the high volatility of the U.
S. Dollar in the past 6 months. Overall, the biggest positive effect Also from the euro and the Chinese yuan with €18,000,000 €14,000,000 respectively. Unfortunately, as in other years, the decline of the Turkish euro continued throughout the semester and accounted for a negative effect of minus €30,000,000 on sales and €1,000,000 Slide 26 brings to the income statement of the corporation. As I mentioned earlier, sales increased by 20 percent to €13835,000,000 Gross value added increased by €51,000,000 compared to previous year, growing by 27%.
The over proportion of growth in growth value added is due to the following factors: favorable changes in inventory lower foreign currency related losses and lower growth in operating expenses due to the general low level activity. Gross value added in the percentage of sales has increased from 36 Back to 38%, which is at the level of 2019. The personnel cost increased Only by €60,000,000 or 14%, which is well below the increase in sales and highlights the operational leverage of the organization. The increase in costs was caused by a related increase in headcount of 7.40, thereof, 2.43 relating to the acquisition of FGS in the GEF Piping Systems division. Secondly, the reduction of short time work compensation added €24,000,000 of costs Overall, the cost ratio decreased from 29% to 27%.
The EBITDA increased by €91,000,000 to €209,000,000 and the EBITDA margin increased from 7.7% Depreciation and amortization increased by 7,000,000 Of this increase, dollars 3,000,000 relates to a value adjustment to outdated obsolete production equipment in 1 George Fisher, Systems Cloud in the U. S. Moving on to the financial results, which increased marginally from minus The small increase mainly relates to the additional interest expense from the new €200,000,000 COVID bond placed in 2020. And Another factor was to reduce interest income from volume, the former higher cost of business in Germany. Income taxes, As you can see, increased from €9,000,000 to €27,000,000 This corresponds to a decrease in tax rate from 22.5 percent in 2020 20.8 percent in the period under review and is largely back in line with the tax rate that we have seen in previous years.
The reduction was mainly caused by a substantial decrease in loss making entities due to the global recovery. Finally, net profit attributable to Thomas Fisher's shareholders increased from €34,000,000 to €100,000,000 Turning to Slide 27, which shows the balance sheet as 30 June 2021 compared to 31 December 2020. The liquidity situation of George Fisher remained strong. Cash and cash equivalents only decreased by 60 $3,000,000 to $778,000,000 This seasonal use of cash is
well below previous year's level.
Due to the strong growth in sales and trade accounts, CECO increased from €550,000,000 at year end to €705,000,000 The days sales outstanding remain stable around 65 days compared to year end. Inventories on stock increased from €638,000,000 to €718,000,000 This was related to the increase in production as well as our discretionary decision to build up safety stocks for specific parts and materials in light of the persistent supply chain constraints. Base inventory outstanding, nevertheless, decreased from year end 110 days to 108 days by midyear. Current liabilities increased from 9 €86,000,000 to €1,128,000,000 Around €72,000,000 relates to an increase in accounts payable, The equity ratio remains strong at around 100% close to the ratio at year end. Slide 28 shows the development in free cash flow.
The higher EBITDA has a significant positive impact on the operating cash flow. The increase in net working capital is largely due to the significant growth in sales mentioned earlier, but is clearly under proportioned.
In In the first
half of twenty twenty one, GF was able to achieve a positive operational cash flow of 59,000,000 Investments in property, plant and equipment amounted to €61,000,000 €9,000,000 lower than the previous year. The decrease is not intentional as related to delays on strategic investments, for instance, the new Gea Piling Systems production plant in Egypt. We have seen these projects to gain momentum again and to be implemented in the second half. This This overall leads to a negative free cash flow before acquisitions of only minus €2,000,000 and marks the 4th best free cash flow before On Slide 29, We have summarized the key figures. Net debt decreased substantially by $214,000,000 to $206,000,000 The net debt to EBITDA multiple decreased accordingly from 1.52 to 0.53x, among the lowest ratios over decades.
Return on invested capital increased year over year by 5 percentage points to 15.8 percent GE and Private Systems with 31.6 percent clearly earned both and above its cost capital, whereas the ROIC We can see that adjusted for the one off effect, the ROIC is 6.3% in the first half of twenty twenty. The number of employees increased by 7.40. The acquisition of FGS accounted for $243,000,000 followed by an increase in accounting, Geodecasting Solutions and optimization of capacities of George Fisher Let me finally summarize the 1st semester of 2021 in a few words. GLS acted agile and adapted swiftly to capture the global surge in demand. We managed the cost base and the net working capital strictly and demonstrated our ability to substantially improve free cash flows.
The ROIC above 15% highlights that we are back to create value for our shareholders. And as we stand now, Thank you very much
Thank you very much. Let's move on to Slide 30. Thanks to the leading positioning of its 3 divisions in their end market, Gilat is well positioned to address the upcoming needs of their customers, which are more and more driven to impact positively all aspects of sustainability. We expect that markets will continue to further recover and grow in the second Governance and infrastructure projects will further support the development of national economies. During unforeseen circumstances, including the COVID-nineteen resurgence, we expect sales growth in the double digits for the year 2021 as well as a significant increase in profits.
However, It is worth to note that supply chain constraints and raw materials scarcity remains the biggest element. With that, we conclude our presentation and are ready to take your questions.
We will now begin the question and answer session. The first question comes from the line of Walther Bamet from Zurcher Kantonalbank. Please go ahead.
Good morning. Last year, at the same time, you guided for an operating result in the second half at comparable level to the first half. Could you explain which parameters you expect this time to differentiate significantly between H1 and H2?
Thank you very much for your question. I think as said during unforeseen circumstances, We expect an organic growth in the second half of the year in the upper single digits that would result It's been mid teens double digit organic growth for the entire year 2021. And that would also give us the chance or the chances would be intact to achieve a similar performance,
You mentioned the raw material effect for the individual divisions. And I especially Remember that you say there is a lag of about 3 months. So that would mean you already experienced The need to increase prices in the casting, but that will continue as prices are
Thank you very much for this question. I just should summarize You're talking about the time lag in passing on the raw material prices in our Casting Solutions divisions where we probably talk about the aluminum And the magnesium raw materials here we are contractually allowed if they go up and down To adjust these, normally, we have a time like in the range of 3 months. That means what we have seen is steep rises in the first half of the year, Comparable with the last month of last year that prices are partially being now passed over to the customers and that will continue to be passed over to the customers.
And how is that material effect for Piping Systems? I
think Mads, you want to answer that?
Yes, I can. For Piping Systems, It's a bit of a different situation.
There are
no contractual restraints in managing the pricing. Piping Systems is a premium provider thus has a good pricing power in the market. Traditionally, we have been able to on increases of the raw material cost to the market and it has actually no adverse effect on the EBIT. And if we remain where we are with the prices today, you should not expect that we would increase prices further in the second half. We are more or less compensated to the current level at the moment.
Thank you. Does this answer your question?
Thank you very much.
Thank you.
The next question comes from the line of Charlie Ferembach from AWP. Please go ahead.
Mr. Ferreira, we did not understand your question.
Yes, sorry, I got Mr. Folletti's remark in between. Okay, the EBIT margin of Casting Solutions and Machining is still between 2% and 3%. On a low level, how far do you think these margins can recover in the current year?
Thank you very much for your question. I think Machine Solutions does not recover its margins on the back of
The next question comes from the line of Bernd Poren from Tobel. Please go ahead.
Good morning, gentlemen. It seems that the efficiency of the light metal casting plants in Europe and the U. S. Was quite negatively impacted by By highly volatile customer orders, is there anything for example regarding production planning, flexibilization of production plants or contract Thank you
Thank you very much for your question. And yes, you're absolutely right. And currently, our light battery in the U. S. Has been marked by the subdued and multi Customer call offs, as mentioned by our CFO, Max Svensson, we have on short notice reduction of call offs by more 50% that means our 4 weeks of production, sometimes only 2 weeks of production have been called.
Although, what has to be said here, this It's a new company, which we are ramping up over the last couple of years and also still ramping in new projects. And the latest gas in the U. S. Is one of the key drivers and therefore flexibility in terms of cost base is limited. So we keep our people, which we are ongoing training, to cope with the challenges Our European plants are much better off in regards to that one since they are well established facilities And they can react.
But also to be said here, the erratic call of situation in Europe is not as that bad as it is
The next question comes from the line of Christian Hoops from Baader Bank. Please go ahead.
Yes, good morning. I have three questions. One is the utilization rates in machining are still below a sufficient level. Can you give us An indication of these rates may be in Europe and in China. And what do you Back in the next 6 to 12 months there.
Then coming to free cash flow in the second half, which will be the main driver for the free cash flow, Which is normally very strong in the second half compared to the first half, but what will be the main driver For you now in the second half and the last question is on M and A. Can you give us some kind of an update of the current market description or your M and A pipeline. Thank you.
Thank you very much for your questions. I will give you an answer on the question 12 And our CFO on the number 2. First of all, our capacity utilization of course to work. If I'm not mistaken, you You asked about our Machining Solutions division? Yes.
Our Machining Solutions division is currently loaded On average of 70% across the world, which is with strong development in China more or less at There are standard capacities. There's still some room for additions. And the European ones, in particular, the Swiss ones and the American ones, have been subdued. Also, here we have seen the low order intake in the aerospace business given its marks on these
The M and A
pipeline, your first question, this is something which is obviously So for example, the FGS acquisition, which we did earlier this year, is being prepared For
a couple of years, and the first context actually happened over 10 years ago. So it will take
some time. And we are not the only one looking for targets at this point, I think, but we continue to deploy our activities in the M and A section. I think I'll need the microphone to open the question. Pretty cash flow. Our expectations for the full year is at the upper End of
our range, so we'll probably say €175,000,000 to around the €200,000,000 mark. Please recall free cash flow last year ended up Free cash flow before acquisitions ended up at €230,000,000 However, as you can see from the cash flow statement at year end, That also contains a one off positive effect of €23,000,000 which stems from the sale of a number of properties in Switzerland. And that, of course, will not also be happening in this year. The decline of the free cash flow will be the increase in profitability. As you can probably understand, the element net working capital is a difficult number To manage out of 1,400,000,000 invested capital, about 8.50,000,000 of net working capital.
So Depending on acceleration or deceleration in the business towards year end, we can have a different number there. That's why we are remaining In that range of guidance for the full year.
Okay. Perfect. And then maybe I have an additional question on that Or on the cost side, so you were improving your underlying profitability by implementing measures to reduce The structural cost base, will there be some sufficient seeable impact in the next 6 to 12 months from the measures you are currently taking.
We have announced a cost reduction efficiency improvement program called Fast Track, Which means end state was supposed to generate about between €100,000,000 to €120,000,000 of improvements. And we should Expect for the full year, you see already part of the results in the numbers as they are here at half year. And at full year, We should be coming up to the target
that we have
been setting a couple of years ago.
Okay, perfect. Thank you very much.
The next question comes from the line of Alessandro Foletti from Octavian. Please go ahead.
Yes, good morning. Thank you for taking my questions. I have a couple. Can I go back on the price effect In the Casting division, the aluminum prices were up about 25%, 30% in the first half of the year? Now considering the 3 times the 3 months lag, can you quantify a little bit of the 38% organic growth in sales that you had there, how much of that comes from the prices really?
Okay. Shall we take the questions 1 by 1?
Yes, because they are all connected. I'm staying around this topic.
Okay. They're all connected. 1st of all, yes, on average year over year, it depends a little bit on which kind of aluminum The Carbon Solutions division is mainly relying on secondary aluminum, that means recycled ones. This guidance has seen a steep rise in the 1st 6 months compared to the last 3 months of 2020. We We talked about price increase of 70%, not only 30%.
So we have to be very specific in regards So which kind of trends, I don't know, meaning we're going to take. The 3 months is on average now it will be in the range 2 to 4 or sometimes even a bit more. And what we're going to have seen now towards the end of the first We have seen the first price increases. So overall, out of this organic growth, there's only 2 percentage points Growth through the metal price increases, which we could pass on to our customers in first half of the year.
All right. Thank you. That's very important. Now, same question for the orders, because they were up About 80% organically, I believe.
Could you repeat, Mr. Parelli, just a bit?
I wonder, On the order intake, you published €462,000,000 order intake forecasting. That's up 80%. I imagine the organic growth is probably similar because FX was not a problem. I wonder if in the orders That effect of prices is much more than this 2%.
I think the order increase effect It's, let me say, marked by 2 effects. First of all, a pretty abnormal 2020 first half, where we have seen cancellations of call ops, Which obviously reduced in the month of April, if I'm not mistaken, last year orders to a 0, which is also not completely correct because we still had a base of 40% sales in that month. So order intake has been distorted by the rather turbulent situation, Which we have been faced last year, so the 18% growth. But you're right, the order intake is slightly marked with higher Material price inflation, I would guess this is at least in the range 5% plus.
Okay. Let's take this 5% plus, maybe it's a touch more than that. This is something that should now come into your sales in the second half of the year.
Because now
so I'm trying to understand how the development is Sales and then also then how much you lost basically on EBIT, which then should recover then in the next
I think, Fonetti, the answer is Quite straightforward. There's a negative effect on our results in the range of a highmidhigh So we'll talk about approximately €7,000,000 negative effect of the metoprice time lag Invoicing, the most of that, we will normalize the price levels which we can invoice to our customers during the course of the second half of
That was the last question.
All right. And we would like to thank you for your attention and the interest in our company. We look Forward to meet all of you in person with the year 2021 trigger presentation in March 20
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