Ladies and gentlemen, welcome to the publication of the Half Year Results 2021 Conference Call and Live Webcast. I am Alice, 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 Q and A session. Over to Edwin Panderrest, Investor Relations.
Please go ahead, sir.
Yes. Thank you very much. So welcome, ladies and gentlemen, to our call. I'm very sorry that we picked such a wonderful day as today. It's the first day not raining since days.
And now you have So stay in your office and listen to us, but I hope some of you are already somewhere on holidays and listening from the beach or wherever. So we start our call as usual with Thomas, our CFO, who will go through the figures And then Jens, our CEO, will go in details into the divisions and give you an outlook of where we are after this Very, very interesting and demanding half year. That was the short half year that is influenced by the pandemic. So, Thomas, please, may I ask you to start?
Yes, sure. Welcome everybody to this conference call from my side. We look back to a very positive first half year twenty twenty one We have very positive and good market condition. This was also affected by customers investing in Because of their learnings and experience during the pandemic. Last year, we mentioned that we expect a rebound in low print taken also net revenues.
And this is what is happening and materializing right now. We see a rebound in order intakes and this is really boosting Our order intake in the first half year twenty twenty one. Unfortunately, this is not resulting in higher revenues for the time being. But for this, I will come on later. Profitability has been increased on all levels and in both divisions.
We continued with our strategic investments and pushed the programs further down the road. So let's see let's have a look at the key figures over the last cycle of the last 5 years. This becomes more important, Especially based on the pandemic, because we don't want to look back only 1 year, we want to see Looking at the net revenues, we see that net revenues amount on the same level as past year. So, there is only a slight decrease compared to If we compare net revenues to 2019, so the pre pandemic period, We see a decline of 10%. If you look at the CAGR, the CAGR from last year was 5.1% and this year it amounts to 3.8%, so slight decrease based on non increase of the net revenues.
If you have a look at the EBIT, there we see an increase of 12% compared to last year. But again, if you compare it to the pre pandemic period, there it is a decline of 5%. So, we are 5% below Half year twenty twenty nine. On the other side, if you look at the EBIT margin, the EBIT margin went up to 13%. So, Again, looking at the CAGR, the CAGR went up from last year's 7.5% to this year's 7.7%.
The net cash flow from operating activities amounts to around €25,000,000 This is the 2nd best Results looking at the cycle here of 5 years and it was only beaten by 20.20, euros 26,300,000. Also equity and equity ratio are very strong and remain strong and confirm a healthy and solid company. Now, let's look into the details of the income statement of this year. There on the bookings level, we see the increase of a bit more than 50% compared to the last year. This 302,500,000 bookings represent the book to bill ratio of 1.46.
The order backlog of 300 €13,400,000 also represent almost an increase of 50% And are also representing a visibility of around 9 months. Net revenues, as explained before, remained on the previous year's level. Looking at the gross profit, the gross profit went up by around 5%. The gross profit margin was further increased from past year's 34.6% to now 36.3%. Main reason behind this increase is the sales split.
So, we had a higher share of Alcias business compared to the share of new business. And as you know, LTS Business is slightly higher margin than new business. The operating expenses, they are under control. You see an up of only 1%. Then the EBIT, EBIT of €26,900,000 representing an up of 12.1%.
The EBIT and also the EBIT margin of 13% were never achieved before by Cortex. The 26.9 percent million sorry, dollars 26,900,000 EBIT. There is also close to €1,000,000 extra cost for the new kits, automotive and outdoor store. Looking further down the income statement, the financial result is SEK 400,000 better than last year. The main impact there are positive exchange rate impacts or less, less negative impact from last year, to be more precise.
The tax rate remains on 24.3%. This despite the guidance Of around 26%, but this year we had exactly the same geographical split of revenues and therefore also the profits. This is the reason why the tax rate travels below the guidance of 26%. Looking at the cash flow statements there, I want to explain Beforehand, one topic, this is that we have started to reallocate cash into financial assets, mainly to avoid negative interest and this has impacted the cash flow statement. If you look at the net cash flow from operating activities, There, the displayed amount is around €25,000,000 But there, we have a shift of Cash to financial assets of €21,000,000 So neutralized, we look at the net cash flow from operating activities of around €46,000,000 compared to the €26,000,000 of last year.
Net cash flow from investing activities It travels around €45,000,000 This is a high increase compared to the last year, but also Year impact of around €14,000,000 of reallocated cash to financial assets. If we neutralize this amount, then we see that the CapEx are lower than previous year. The reason behind this is that last year we invested around €10,000,000 into our newest manufacturing building. Resulting free cash flow, euros 26,000,000 compared to €10,000,000 last year, so up by €16,000,000 This was driven by the CapEx and also by network accounting. Net cash flow from financing activities is below last year.
It's around SEK 28,000,000. Looking at the balance sheet, there I want to highlight only 3 lines. 1 is the current assets, which Weight down by roughly 13% or €27,000,000 The reason there is again The reallocation of cash into non current financial assets, which is exactly the reason why the non current assets went up Accordingly. Then on the passive side of the balance sheet, liabilities also here, this went up Quite heavily compared to last year. The year is that the business picked up.
Last year we had The negative impact on the business, therefore, slight positive impact on the net working capital, which went down last year because of reduced operation. This year, we have exactly the contrary effects in the net working capital, and this is the reason why the liabilities went up. With this, thanks a lot for your interest. I would like to hand over to Jens for the next slides.
Good afternoon everybody also from myself. Very shortly on The first division we want to talk about today. The first division we want to talk about today. The first division we want to talk about today. The Pretty healthy booking in the first half of twenty twenty one with EUR 228,000,000 Compared to 156% last year or up by 46%, which mostly comes from new business, But we also have been able to drive our service business further.
So in the targeted mix between new business And service, we've been able to increase our bookings accordingly. Order backlog as a result of Net revenues and bookings went up to €204,000,000 which you can see is Substantially up on previous year's levels, 42%, which means we are really looking with Healthy and good order backlog into the, let's say, at least 6 months, if not 9 months ahead of ourselves. Net revenues have been trailing. We call that trailing mostly because of ongoing site restrictions on customer sites. We've been reporting this about these restrictions already with the full year closing and that partially continued.
It was eased up Towards the middle of the year. And therefore, it had not the full effect like last year, but still We've not been able to fully access customer sites for either new installations or for service works. And you also like many other companies have seen shortages in our global supply chains from Delayed deliveries to us up to non deliveries, which actually put a bit of a Our manufacturing from time to time and that resulted in lower than expected net revenues of €167,000,000 which is down by 4%, which is something we carefully monitor. I will get back to this in our outlook. The EBIT itself 26.7%, 16% on EBIT margin improved over last year.
Revenues mix is one of the elements that contributed to it. Economies of scale, we've been talking about certain Volume cost in our factories, but also good cost management. Some of them being a continued saving on travel and Marketing costs or exhibition costs, but also in other parts of the company, we've been able to manage the cost reasonably well. We continue with our investments in our strategic programs to prepare ourselves for the future. And they are Pretty proud what Remstar has achieved despite these investments to actually create Over the years, 16% at half year is also something new for Remstar in terms of EBIT margin.
We see the revenue mix on the lower left, where we see that service business for REMSAR has Increased to 34% compared to the 30% we have seen in 20 20 half year, Something which I consider a little temporary, because we expect that net revenues in new business will pick up again And we will get back to ratios more like the 30%, 70% compared to what we are seeing now 34% and 64 that we are showing here. Over to AMLOG. AMLOG, Little bit of a surprise also to all of us in terms of order intake. I think we already with the full year started Seeing some upturn in bookings for mLog in the last quarter, last year and that continued. We had a Very strong bookings semester, I would say, with 73,000,000 That is above I believe 2019 total numbers and also substantially higher than in the First half of twenty twenty, 66% increase, something this organization has delivered and I'm very happy about that.
Net revenues, not quite the same pace. It's mostly driven again also by projects in new business, Where projects are in house, they are safe. However, they have their ramp up periods and they have their percentage of completion and therefore net revenues not yet in line with the bookings levels. Order backlog As a result, also increased by 60% to €108,000,000 I think that's a number that AMLOG has not seen in the years at least that I've been part into this company. And something that this Organization now has to manage in the months and years to come.
EBIT margin, EBIT and EBIT margin due to the Cost control and risk management in MLOG, I would say back on track, if we keep in mind that we had Minor hiccup last year in 2020. So we are back to, I would say, minimum expected numbers with the 5.2% in EBIT margin for Emblem. Over to the next page, you see the development over The annual comparison between net revenues development on the right hand side, the EBIT development, EBIT and EBIT margin. So you see we are slightly behind in comparison not to 2020, but to 2019 On the same level of revenues, something to look at, specifically As we have a new revenue mix of service 50% compared to 48% in the last for the year's half first half of the year. Outlook, as cautious and As always, we believe that we are looking ahead into a good future With some disclaimers I would say, but one cannot ignore that during this pandemic, the automation Demand of our customers has substantially increased.
Customers who previously did not want to invest In automation have now decided to look into automation, reason being mostly availability or rather to say Non availability of people, during specifically these pandemic situations, people, social distancing played a factor in there. So We see a healthy increase in demand for automated solutions. And you also see that efficiency in intra logistics Becoming more and more important and key success factors for our customers. So all in all, we consider that Healthy market trends, which should support Cardex's development in the future quite well. Looking forward into the second half of the year, we expect that KARDEX Ramsar will turn the very strong order backlog Into an increased net revenues level in the second half of the year compared to the previous year previous half, The new manufacturing plant in the U.
S. That we've been talking about quite a bit already should start Operation in Q4 2021, we will do the final touch up installation ramp up work Starting in August, then we can send people over again. And that should help us to secure the opening The factory in Q4 as we wrote down here. And with that opening of the factory and the first machines to be delivered to the market, Cardex Remstar will then ultimately move closer to its customers in the very important North American market That should help us defend and hopefully increase our market position in the U. S.
For Cardixentra. Similarly, Cardex MLOC should profit from the continued positive market conditions. We do not necessarily expect the same bookings levels for the second half that would be extraordinary, but we should expect A continued strong bookings levels for Cardexamlog and also the revenues should increase Substantially based on what they're having in the books already, knowing that certain projects will have to close by the end of the year Based on customer requirements, so we are pretty confident that we are that we will be able to increase net sales And also profitability in Hardex. We continue with our strategic investments Into our supply chain, the U. S.
Operation is one thing. We're also investing into the Remstar facilities in Neuburg And in Belheim to get them more competitive, but also prepare them for capacity demands of the future. We continue to develop into technology, added elements, added features to our solution portfolio and product. And last not least, also into the digitalization of Cardex, partly, let's say, across all our processes and tools. We believe that this is start up of our new kits, we call them the new kits, automotive and Rocket Solutions and AltaStore that you should have a good support to our image in the market as a total solution provider.
It was for the first time this year that we could actually present a digital exhibition booth. It's available from our website as well. And there people can see our customers, but also you guys can see The total offering of the Cardex Group as a total and I believe if we compare that to 5 years ago, that picture has substantially changed. And that in itself does not Provide a good story, but what it does is, it gives our customers more choice in terms of fulfilling their needs in terms of Intralogistics or coming from their Intralogistics solutions. I cannot close without the Disclaimer at the end, our short term concerns.
I think you hear that in almost every call that The uncertainties in the market and this is twofold. 1 being what is coming towards In terms of maybe a 4th wave of the pandemic, that's one of the elements and the related restrictions that Would be imposed on us. And second, also the continued shortages in the global supply chain. We try to Actually alleviate that, but we have no visibility at this stage. How long it will last, How severe it will continue to be.
We hope it will ease over the autumn and then ultimately in Q4, But that's something that may impact our short term outlook. Having said that, I would say once we master these challenges, I would say Cardex itself is pretty well prepared for a good future And we should actually continue delivering to our promises. And with that, I would like to close and hand back for, I believe, what's going to follow the question and answers. Thank you very much.
Yes, Jens and Thomas, thank you very much. May I ask now the operator to start the Q and A session?
We will now begin the question and answer Our first question comes from the line of Walter Bammett with ZKB. Please go ahead.
Good afternoon. This is Walter Palmer from Tech IB. You mentioned the booking level that you Don't expect at the same level in the second half of the year. Do you have any evidence in the order book that you think, for example, that July wasn't that strong towards of the 1st 6 months you experienced a declining order intake or do you have the impression that the delivery times that the clients are asking for Are getting longer or could we even speculate that H2 could be as strong as the first half? I take the question.
This is Jens. Thanks for the questions. That's many in one. A little fact, but I'll try to answer them as good as I can. First one, you can speculate as much as you want.
And we hopefully deliver to your speculation in the end because that would be the good news for all of us. 2nd, more serious. Currently, our sales funnels, you know that We monitor all our sales activities from a very early stage that we call the leads, Early intent of our customers to do something where they don't exactly know what they want to do up to the very large stage in the funnel Just before we receive a signed order, we monitor this on a weekly basis, not just on a monthly basis. And these do not indicate a decline in the market. I have to say that.
And I need to probably be a little more Specific with my qualification or my statement when it comes to my expectation that half 2 may not be As strong as half 1, that's mostly related to AMLOG, because AMLOG had quite a few projects booked That go beyond also partially our expected average order volumes, booking volume. So beyond the €10,000,000 mark and of these, we do not necessarily see Endless numbers of orders coming in. That is so for Rambda, however, I would expect if nothing else changes in the market, a continuation of their booking pattern for now. I have no evidence otherwise. What the potential Delivery times will do lead times in our factories.
That remains to be seen. We are off the record sometimes also talking to the other people in the market, you call them peers. I call them contenders. They seem to have similar type of challenges. So at least this is One of the good better news, I would say, that we are almost fighting the same weapons.
So in the end of the day, it's not As with maybe 12 or 13 weeks delivery times against somebody who can deliver in 4 weeks, Not to our knowledge at least. Did I manage to answer your question? That was a very good answer to these questions. I will Later come back with follow-up questions. Okay.
Thank you.
The next question comes from the line of Konstantin Hesse with Jefferies. Please go ahead.
Hi there. Good afternoon. Thank you very much. Just a few questions on the margin momentum from me, please. So If we could elaborate a little bit on what the impact was from higher raw material prices in H1 and what do you expect to see in H2?
How much pricing have you taken and has competition followed? That's my first one.
Yes. This is a question for me.
Here is Thomas. If
we look at CardXRimstar, their COGS went up and were prices in the market, but this will not this is not affected or this does not positively affect our margins for the first half 2021, this impact will follow.
Did I answer your question?
So do you expect Potentially then the higher prices to have a more positive impact in H2 than in H1?
To some extent, To some extent, because you asked the other question whether competition follows suit. They partially do. They partially don't. So I know this is a vague answer, but that's the reality out there. You find projects where they fight like hell and some projects we win with Our expected or above margin.
So for now, we managed to defend We call that the commerce margin. So the margin we measure in different ways. We measure on one hand what we generate in The sales and service entities out there, that is fairly stable despite increased cost for the sales organizations as well. On the other hand, we have a second contribution to margin from our factories from the manufacturing. And that has been suffering due to these increases in COGS, raw material cost and so on.
We can partially hand that on and transfer. So I would say of every price increase, we believe that some 20% Or something like this end up in the margins that we can book.
Okay. And in the second half, is it fair to say that COGS could be even more negatively impacted Because you're basically taking a whole half of higher raw material prices, whereas the first half, I think only the back end was mainly impacted by higher raw materials.
That could happen. We are currently in talks. I'm less concerned about the pricing. It's a margin issue, I'm with you. Yes.
But I'm much more concerned about capability to deliver when it comes to shortages or non delivery. That is our bigger problem right now because we've been we've managed to actually to even to satisfy our customer needs, we even managed to Buy stuff or we had to buy stuff on the spot market in the, let's say, Q2. That was going that far. I've never seen it before. We seem to have some easing with some of the suppliers and some seem to continue to be a challenge.
So did we see the peak of prices that was more of your question? I don't know yet. We are having intense discussions with our steel trade companies, The guys who provide us with the one of the most important raw materials and we try to fix something for the next 6 to 9 months Based on best projections. But if you look at MEPPS, for instance, which is a fairly strong indicator, that varies almost by week as far as I can remember. Going up, going down, going up, going down.
And I don't know what's going on there, but this is absolutely unpredictable. I'm sorry, I cannot be more specific because I don't know better. Not that I don't want. No, that's
That's absolutely perfect. Can I say that? So fundamentally, so the margins, obviously, this time around, they were supported by the higher share of services, which is of course a positive thing. I'm just wondering if you can provide some color on the actual hardware, meaning the new business segments in terms of Number 1, the mix and scale within Remstar, as well as MLog. Have you seen an improvement there?
Did you understand the question? Sorry.
So just in terms of remittance, so for example I
did not understand the question.
So at Remstar, if you exclude Service business only looking at hardware specifically, has there been an improvement in mix, a fundamental improvement in mix there as well?
Okay. I believe I understood your question. You were asking whether it's only the mix between Alcias Business and New Business or if the margin itself In new business and Alcias has improved? Is this your question?
Exactly. Yes, within new only at new business, exactly.
Yes. We can confirm that also this margin at Garfex Remstar has improved.
Okay. That is perfect. Thank you. And then just lastly, and I'll come back later, I'll go back to the queue. Any margin headwinds From and the opening of the plant in the U.
S. In Q4?
Margin wins to that?
The ramp up? Headwinds, yes. Any negative impact on margins because of the
ramp up? Yes. You asked for headwinds. That is to be expected, yes, because of the less than or less than needed loading of the factory. We will do whatever we have we can do with a slow ramp up of the people To follow in line with the machines to be manufactured and distributed to the market.
But there is some, as you know, capacity costs like fixed costs, like the factory itself, which will go into depreciation, these type of things. So we expect that to actually provide you call that some headwinds. I Some dampening on the productivity of the overall supply chain. On the other hand, I also expect That the 2 factories in Europe should actually work on a better utilization subject to material being available, so that should possibly compensate. If I look into the entire supply chain, The effect of a ramping up factory in the U.
S.
Understood. That's actually great. Perfect. I'll go back to the queue. Thank you.
As I said, this is my expectation. We will see what it really does.
Absolutely.
Okay. Thanks,
The next question comes from the line of Alexander Koller with Stifel. Please go ahead.
Good afternoon, gentlemen. In your cash flow statement, we see that you reallocate cash to avoid negative interest. What type of financial instruments you bought and why you still don't return this capital to shareholders? This is my first question. And then the second one about outdoor store, this product category applies to both to Remstar and Amlog or is it just for Ramstar, that's my question.
And how big do you estimate the cannibalization effect to the current product portfolio? Thank you.
Okay. Thomas takes number 1. Alex, I take number 2.
Hello, Alex. Thanks for your questions. I expected this question to be honest. It is only fixed term deposits. For the biggest of the Portion, we reallocated from cash into financial assets.
And this is really to avoid negative interests. So fixed term deposits lasting more than 12 months or lasting 6 months and this has in the end no speculative corrector. This is just parking money. We have a smaller portion, which we invested mid- to long term, And this is dedicated to cover pension liabilities, which sits already on our balance sheet. Does this answer your question?
Yes. Thank you.
Yes, there is one additional, Alex. So why not return To the shareholders, this is a question that you should put to the Board. That's not I mean the operational management, It's not the right to ask them. But anyway, this is still I think the Board still feels very fine With a solid balance sheet and maybe shareholders should just stand as we keep that Stable balance sheet for a moment.
Okay. I don't think he is Alastair, Alex, I think the question was, do we do it via Ramstar and MLOG Or else and how much is the cannibalization effect? Is that correctly reflected?
Yes, correct.
Okay. Autostore is set up as a separate unit. So not in the organization of Remstar and not in the organization of MLOG. It's a separate unit. You will see that also in the holding reporting.
You still see Some other costs now that are related to these type of investments. We have set up a small team That actually drives the outer store business into the market. This team has 2 parts. One is an independent auto tour business direct with customers, S-eighteen. 2nd, it has the time to actually leverage on Cardex Remstar and also Cardex mLogs Existing customer base and present solutions like Out of Store to these customers who we never We are able to offer out of store solutions before.
Cannibalization, Very limited, not in MLOG at all, because MLOG has no competing product. There is no overlap. There is no nothing. So for MLOG, really for their existing customers, it's an added benefit. It's actually an extension of MLOG's Solution portfolio, which puts mLog into a better position compared to say a year ago.
For Randstar, the overlap is fairly limited. It is there. We should not ignore that we do have some overlap in the solution Mostly with our vertical buffer module, the LR35 that you've heard of. And there When we move up in the solution complexity with Remstar and outer storm moves down, We start seeing some form of overlap, but to a very minor extent. Typical outer store projects To give you an indication, €1,500,000 and above investments, total investments.
Remstar, Typically in their systems business with vertical buffer modules 400,000, 500,000, 700,000. So normally the requirements from the customers that are to be fulfilled in terms of capacity and throughput do not see much overlap. Without a store wanting to grow, they're coming a little towards That range, so into the €1,000,000 or even less than that range And Bramstar also has plans to move up. However, I don't think there is a lot of cannibalization. It's more of a distinct decision In our own company, which solution we actually position at which customer in order to have the best chances of winning the project.
And there I see the benefit rather than the challenge because if it wasn't in house, Remstar would compete with Other out of store indicators and if that's the better solution, Cardex Remstar would lose the deal. Now we are in the position to evaluate, delete, Evaluate the opportunity and position ourselves with the correct solution, something that we should always aim for. Question answered. Alex, with many words. Thank you.
Yes, welcome.
May I add here something, Alex, and for the others? But we also hear that with Altastore in the market, The Cardex as a group is really and we mentioned that in the presentation, is more recognized As a solution provider for a lot of inter logistics questions and that's really helping to Builds the image of the whole group. So there is a certain extra effect. It is 1 plus 1 plus 1 is more than 3 Rather than 1 plus 1 plus 1 is less than 3.
Okay. Operator?
The next question comes from the line of Marc Diethelm with Vontobel. Please go ahead.
Thank you. Good afternoon, everyone. I just have two questions. One is on MLOC. I noticed they made $1,000,000 or a bit more than $1,000,000 sales Europe and Asia Pacific.
Was that kind of a one off or can we expect more of analog becoming more kind of international? And was this €1,000,000 actually profitable? And the second one is, can you quantify the extra costs you mentioned for the new kits In the first half and what are you expecting in the second
half? Thank you.
Yes. Thank you. These two questions belong to me. First one, yes, this is sort of a one off. This is one project.
We delivered most Of the solution as a next works solution and some consulting in addition. And yes, profitable. You asked a question in regards to the new kits there. I mentioned in my speech that in the first half year, there is cost included of close to €1,000,000 And for the full year, we expect To increase this cost to around €3,000,000 in fact. Did this answer your question?
Very much. Thank you.
The next question comes from the line Sebastian Vogel with UBS. Please go ahead.
Hello and good afternoon. I have a couple of questions. The first one would be on the FX impact On Remstar's top line, if you can remind me what the number is there? The second one in the press release, you mentioned the e commerce exposure of Remstar that seems To be getting more in focus, can you remind me how much of Randstad's top line is exposed to e commerce? And the last one would be on When you mentioned earlier on about the mix services versus new equipment and you said like the normal average mix should be rather seventythirty compared to the one that you have at the moment.
If you would assume you would have 70, 30 in the first half of this year, but what sort of operating margin we would be looking at?
Yes, I'll take the first two questions. FX impact is very minor as always. There is on the top line, there is around €5,000,000 FX impact, but this is reversed In the cost more or less. So the impact of FX on the EBIT level is very minor, not really relevant. I forgot the second question, sorry.
What was it?
The second one was The second one was on e commerce exposure at Remstar.
E commerce represents around 20% of total net revenues at Kordex Remstar. This is an up compared to last year, which was around 17%. So, we grew quite heavily in the e commerce and retail business.
Maybe I have to add here that it's not just that in this segment e commerce that is retail wholesale e commerce. It's not really what you would mean pure e commerce, but what we see and that's I think it's important to add That's where I see the last couple of years, analysts and investors were always asking us why isn't your e commerce share higher? And that was in a Time when all the big companies like the Amazons and Zalando's were doing their big investments in fulfillment centers Where we are not active with what we saw in this whole year or what we saw now during pandemic is that the small and midsized companies With simple web shops or web organizations that they really started to pick up and that they learned that they have To start to automate the e commerce businesses and this is exactly where Cardex Remstar is in place. And this is what we saw and that is what we mentioned in the press release that from all over the regions, very strong order income Was coming from the small and midsized companies investing in e commerce solutions to I mean, this is the next step, but And that's really very nice to see this and this will continue.
And if I would take out of this 20, if I would try to strip out the retail and wholesale, is that possible? And if yes, what number would I get?
It's not possible yet, because we only recently installed the CRM system, in order to track these, our e commerce definition stretches beyond the Wholesale and retail, because other companies also do e commerce solutions, their online sales channels. We've established that now in our CRM systems, but it's very hard to track it backwards. So We should be able in a year from now to see to give you some better indication for that, once we see the bookings and how they categorize.
Understood.
And then maybe your last question is in past, even if it's a question to Thomas, but we don't disclose the exact margins of the LGS and Machine Business. I mean, you all know that the margins on LTS are higher than on the new machines. New businesses It's profitable as the LCS, but we don't disclose the exact difference. So if I would give you the exact figure with this A portion, we will disclose the precise margins and that's something we can't.
Understood. Fair point. Sorry, one follow-up question. I'm not sure if I was getting that early on. When you were talking about price increases, you were trying to get through What sort of number you got there?
We mentioned that COGS in Arensdor went up by 5% to 7%.
That's the prices what you were
paying for, right?
I mean, what the price you charge to your customers?
I wish it would be as simple as that, Zebatin. It's more complicated. We do stage Price increases, we do some every year anyways. We do some different by product or solution category And only some where we had not done price increases, we tried to get something into the market. So it's not a X% across Everything that Cardex Remstar sells, it varies by category.
Understood. Got it. Many thanks.
Because we always try when you put new features up to also somehow reflect that in the pricing scheme. And somehow you cannot overstretch it some extent, even though I wish I could.
That makes sense. Total things. That's all my questions for me. Thanks.
Your next question comes from the line of Retho Brevilleer with Entrepreneur Partners. Please go ahead.
Yes, hi. Thank you very much. On life cycle services, the order intake in REMSDA was up 30%. I just wonder a bit if you can you maybe explain the dynamics behind this because your revenues were large We're glad over or not moving that much over the last semesters in that division. Now I wonder whether this order intake is Driven already by the new business in the new machines or the rather this is Higher result of a higher conversion ratio or some old clients, which where you could convert The lifecycle management into your books, can you explain that a bit?
Can you help me To understand where you have this 30% from?
No, it's 13%, 13%, 13%, 13%.
Yes, but that's our Targeted ranges. It's actually a little more than we wanted to have, but you also saw some I mean, that is now half year half year comparison. We need to be careful. Because these first half years, they always include contract renewals as well, Very often at the beginning of the year for Randstar. So that could be simple effect that effectively affect The comparison half year, half year.
We expect that to go back to our normal targeted ranges, how to The lifecycle service. So in other words, there is no any job. If you all of a sudden found new products, That would substantially over increase the bookings in Life Cycle Services. It's not like this.
Okay. And would you expect that with new clients like, for example, e commerce clients in your order book that The conversion ratio, I don't know how many percentage of your clients or your installed base where you do the life cycle Services, but can you maybe elaborate a bit how you see that evolving, whether this ratio is going up or stable or how do you what to In terms of the dynamics versus the new business?
I think Without disclosing numbers, we are okay with the, I call that contract coverage Of new clients or new installations rather to say, because it's not always new clients or new customers. It's a new installation that we account for. So something new is installed and we measure how many of them are getting a contract coverage Straight away, where we effectively get a life cycle service contract. That's one of the incentives, a joint incentive for Our new business people together with the lifecycle people in the field. So they are incentivized once they also together with the new machines, the new We're pretty happy with this number that has increased over the years, and we're running Internal programs to actually continue with these numbers.
And of course, it would be ideal if we could also increase them. But you also have a dead end to the overall installed base, where machines are, I I call the dying or the aging machines and there we lose contract coverage. So it's really a challenge in itself with every new machine to add To the population, right, you lose some at the end. And I think With that number that we're currently having, we don't see a decline. We see a gradual incline per year, but very marginal In terms of how many we can cover because it's so different by region as well.
There is more people in Europe who tend to actually go for these coverages. Other people in other regions like Asia, they hardly ever go for it. And there are the acceptance of life cycle So this contract is not yet fully there. And that's a development of the market for the years to come. Okay.
Thanks. Can I ask
a third question on the e commerce side of things? I'm not an industry expert, but it seems like the large players, the large e commerce players, they Also more and more try to build decentralized distribution center in order to have Same day delivery. Can you play a role there?
Possibly we could, if we wanted to. But from a strategy point of view, that's typically the field The biggest price war is happening. And we need to differentiate again between very centralized Distribution centers, then the decentralized and then comes the pickup points, where effectively the customer goes and picks the stuff up themselves. Even these decentralized things, like take a metro area like Atlanta, they I think have 6 or 7 of these decentralized Pickups are distribution centers centered around Atlanta area, which then deliver into the urban areas. Each of them is easily in the range of €50,000,000 €80,000,000 invest, each of them.
That's not Cardex is playing field from a strategic point of view, simply for the reasons that this would not meet our risk profile that we would accept as a company. We decided not to enter this market and not fight with the Swiss locks, the Dematix and others of this world. Profitability is not so appealing in that area. Thank you. Difference for the component people Like our friends in Interrole, that's a different discussion, because they are not having the risks as such.
But if you go into the integrated systems element, Then you carry a lot of risk and that typically is not the playing field that we as Cardex decided to target. Thank you.
Okay. Thank you very much. Ladies and gentlemen, is there some last Your second last question as we are running out of time, may I ask the operator to ask us for a last round?
Yes, we have a question coming from the line of Mr. Remo Rossenau with the Helvetica Bank. Please go ahead.
Yes. Hi. Thank you. I've got a totally different question. Mr.
Franke and I Yes. No, no. That's for a change, not that one. No, I looked at I had a look at the annual report of 2020 and I saw that you have 933 shares of capex, Which is not a
lot actually. And I mean, personally to me.
Yes, personally to you. And did you own more in the past? Have you sold some? Or did you never own more than these? And why?
I mean, yes?
Well, I can answer that. Is this a question for the round? Yes, I still own them. Yes, I did own more in the past. Yes, I did need money for private purposes, and I had to sell sometimes.
As a CEO, we are always bound if you're Holding on to these shares. On the good news side, Remo, you must have read in the same report That we installed a LCI program, which is share based, which brings us back Into a closer connection of the management with the company performance, if that was your question.
No, just no, that's great. That's great. And I mean, by the way, I would like to congratulate you on your job there for 10 years. I mean, CEO since 2016, but before you were CEO of Remstar, which basically also was Cortex more or less. And since then, the company has made a tremendous way of which you have a big contribution.
And I mean, are you still foreseeing another 5 to 10 years? Or are you getting a bit tired by now? Or How is your personal situation?
Can I opt to just thank you for the nice words I very much appreciate, but I take it for the team, Because I have to say, without Thomas, Edwin and all of my team, we would not be where we are? It's not Jens. I may have had a contribution to it, but it's been a great team that I've been able to work with. Now I'm not talking in the past. I'm here and committed.
Am I tired? Maybe I was a little, but we have so many new things that we are currently targeting in terms of also the new kits that you've heard about, Which is my personal element that I really much drive now in my new role. That From my point of view, I don't see me walk out. Not sure what my Board of Directors thinks about that. Betacardex needs a new fresh blood, which every company needs to be fair also because Every CEO has a certain lifespan.
And I mean, it's not for me to decide only.
Well, from a shareholder's point of view, I wouldn't see any urge to change a lot in the near term.
Okay. Ladies and gentlemen, I think we are coming to an end now. I would like to thank you very much for participating. I also would like to address your attention to we will send out an invitation soon to next Capital Markets Day That will give you the opportunity to learn more about our new kits we are mentioning and to learn more about what is going on in the market. Now for today, I would like to thank you And we are happy to answer your questions individually over the next couple of days.
Thank you very much.
Thank you. Thank you. Bye bye.
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.