Good afternoon, ladies and gentlemen, and welcome to Oerlikon's 2022 results presentation. My name is Stephan Gick, Head Investor Relations, and I have here with me Michael Süss, Executive Chairman, and Philipp Müller, CFO of Oerlikon. Michael will start the presentation with a market and strategy overview, then Philipp will highlight the financials and the outlook. We will take questions in the end. For that, I would like to open our presentation and hand over to Michael. The floor is yours.
Thanks, Stephan. Good afternoon, ladies and gentlemen. I'd like to welcome you to our Oerlikon's press conference for Oerlikon 2020. If you go with me on our position on page number four, I wanted to highlight where we come from and then where we want to go. Our global developments are based on our strategic market position, and this is built by our leadership in two sweet spots, our technology entry barriers, the small cost position typically for customer calculations, and the creating of significant value for our customers. That's in line with our leverage of our core competences into new areas, helps us to position ourself in both of our divisions as a market leader in coating solutions as well as a polymer process market leader. We're taking, by saying that, a different approach as some of the industries.
With high specialized technologies that can be used in a wide range of industries, we are diversifying our risk, above all, we are expanding our business. In one example, we are in the process of expanding our coating solutions business into the luxury market. More on that in a moment. Our technologies have other advantages that guarantee high future potential. They have significant barriers to entry resulting from years of innovation in close partnership with our customers. It's remarkable that you cannot build such a position within a couple of quarters. You have to build it over years, you have deepened the relationship with customers that they understand this what I tried to explain, the small cost position. If you take a very expensive milling system, the coating for this milling system is almost nothing. The contribution for the performance of the system is immense.
This is exactly the way how we built our business. For example, the PVD coating, which I mentioned, is extending a miller sometimes from 160x lifetime. This is a small cost position for the customer versus the results he gets by using that 160x . The customer value is exponentially higher than the costs we are creating for him. If, as in our case, you're a market leader in these technology fields, you're also the leader in the relevant discussions and are always in the best position in terms of pricing and customer perception. Surface Solutions has technology leadership in materials, equipment, and many coating service markets. We have the leading technology portfolio with competences across PVD, thermal spray, and additive manufacturing.
Polymer Processing Solutions has technology leadership from polycondensation plants and flow control equipment through the filament and non-filament applications. We leverage our technology leadership and Surface Solutions into attractive adjacent markets. I think this is important to understand. We use new market fields to take that of technology which are really core leader and multiply the effect with different customers in different hemispheres. As I mentioned, in the luxury segment, customers wants to replace electroplating with a more advanced and more sustainable technology. It was driven by the customers, not by us, to open the sector. PVD is that technology they're looking for, and we entered this market via two acquisitions over the past 24 months. In the space of e-mobility, we are leveraging our advanced material technology to sell thermal insulating in solutions for vehicle batteries.
Our PVD and thermal spray solutions also extend into wafer fabrication applications for semiconductors. Our capability in polymer flow controls was an ideal combination with hot runners from INglass. We extend these capabilities into non-automotive applications like packaging, personal care, and medical. By leveraging our strategy, positioning, and technology leadership into these new areas, we open up significant growth opportunities. This will drive the group towards our midterm growth and margin targets. With this promising midterm outlook, I would now like to take a look back on fiscal year 2022. Please note your questions if you have some. We'll come later back onto this. Overall, our team achieved another year of strong execution in 22. Besides growth in both divisions, we demonstrated technology leadership, protected our profitability in an inflationary, how to pronounce it, inflationary, I think is right, environment and drove further sustainability progress.
Sales of CHF 2.9 billion were up 10% and without considering FX. If I consider the ex-FX effect, it would be 14%. Order intake to CHF 3 billion increased by 11% year-over-year in constant currencies. Without FX consideration or with FX consideration would be 7%. This represents the highest sales and orders since we refocused our company on two divisions in 2018. Growth was driven by strong performance in both of our divisions. This was achieved against a significant FX headwind, as I just mentioned, supply chain shortages, and weakening industrial production in the second half of the year. In Surface Solutions, we successfully introduced our new regional organizational structure. This is designed to accelerate market share in America and Asia. As we will show later on, it's already driving growth.
I have to mention that it will drive growth even more in a more positive market environment. We are also delighted to have signed the deal to acquire Riri. As I mentioned several times, this is the ideal next strategy step in Surface Solutions in a luxury market after the acquisition of Coeurdor. It will give us a complete offering with significant cross-selling potential in the growth high-end luxury market. Here again, if we reflect what I said initially, it's a market where we contribute a huge value to the product because if the metal plating of a handbag, which costs $several thousand, has a better surface, takes less material, and keeps longer, it supports a very expensive product while the cost for this metal plating in PVD versus metal are significantly lower compared to price of the luxury end good.
The market is heavily growing. Luxury good market, that segment we are serving is $145 billion a year, mainly driven by 20 million customers which spent an average $7,000. In Polymer Processing, we achieved another record year of another intake in sales. This is important as well when you sometimes talk about future outlook, something is flattening. We have a record of $1.5 billion after a record of $1.4 billion last year. There's a record of a record, and if you then stabilize it somehow, it's still coming from a record level. We continue delivering our strategic goal to diversify into non-filament, and you will see in Philipp's presentation as well how much is non-filament percentual wise comparing the businesses which is originally filament.
Our group operational EBITA of almost half a billion represents the highest operational EBITA since 2014, driven by two divisions. In 2014, it was . When we still owned the Vacuum and the Drive Systems, cost containment and a structured approach to price increases enable us to largely counteract rising input costs, particularly energy. Our new organizational setup with more decision power and agility at the divisional level was definitely an advantage in this environment where you have to be flexible and fast. We have taken additional steps in 2022 to prepare the business for a challenging 2020 through macro environment. These include headcount reduction measures ahead of anticipated lower volume in the filament business of Polymer Processing Solutions.
This trend will mainly part-take place second half 2023 and will have some effect in 2024. Again, on a level where we can manage profitability and cost in a much better way as we could in 2016 or even in 2009. Maybe Philipp, you will come in your numbers to that again. We also took some cost-efficient measures optimizing our portfolio in Surface Solutions. Summing up this year 22, Oerlikon has delivered continued strategic execution and achieved robust growth. We are proposed to a dividend again of 35 Rappen per share. As you have seen this morning in the press release, we will also propose for the AGM to strengthen on one hand the independency and the gender diversity of Oerlikon's board of directors.
It's more about this, well, if you talk about independency, we have an independent board. Some proxies always asking us, how independent is that? We looked for someone who really can contribute as all the other board members with his expertise. That's the main reason to get additional expertise to the board and to have additionally to that an answer to some requests which we have gotten last year after the AGM. As we look to 2023, we see a more challenging macro environment for both divisions. We guide for around CHF 2.8 billion. This is excludes the acquisition of Riri. That will be seen as top, but that depends on when we do the closing. Philipp, you will mention to that. We'll go to that as well in your presentation.
Riri will somehow between 100 million-150 million CHF revenue adding to our numbers, and we expect the operational EBITA margin between 16% and 16.5%. Here to be clear, this year was 17.1%. That's 16.5%. You have to judge on yourself how significant is that in that given market environment or how good our achievements in the given market environment as we have shown and as we will show. After the financial statements, it's before the financial statements. How do we see the future, and what strategic measures are we taking to prepare for future developments in the markets? Let me make a few comments on this. We made a capital market day in May 2022.
We had a certain understanding on markets which was changing, and you see that high inflation, two years of lockdown in China, the energy security, the supply chain bottlenecks, and geopolitical tensions in total gave a pretty intensive mix of challenges for our business. We saw the inflation in labor, raw materials and energy, which we have not seen in decades. In some areas, this drove weaker consumer demand and drove up industrial companies' fulfillment costs. China experienced prolonged challenges due to more than two years of COVID lockdowns. An inflection point happened in the summer with purchasing managers' indices moving into a contractionary environment across all three of our geographies. Clearly, this had an impact on our operations. Our early cyclical service business and Surface Solutions started to soften in the second half of the year.
At the same time, our Chinese filament customers in Polymer Processing Solutions started to postpone orders. What developments can we expect for our business in the end markets? You have that on our next slide. Mainly, there are challenging end markets in Polymer Processing Solutions after records in 2022, but still a strong demand and a strong market environment. In the first six months, the order environment weakened toward the end of 2022, so we will see some effect in the year 2024. In particular, our filament customers in China experienced a very difficult market environment. Domestic demand was significantly impacted by continuous lockdowns. In parallel, our customers were exposed to lower consumer discretionary spending globally as a result of inflation. For instance, in China, large clothing towards have seen several consecutive quarters of negative sales growth.
You're not investing in clothes if you're investing in energy and food. Overall, you will again invest in clothes. The underlying trends will be unbroken. There are some dips and some headwinds in the near future. Last but not least, our customers experience higher domestic financial costs and inventory losses. The combination of these factors is resulting in our customers preserving cash by deferring investments. While this represents short-term headwinds, the medium-term demand in filament remains intact. Demand will continue to be driven by population growth and a lack of alternatives. Our latest technologies save significant energy and are a strategic priority for customers around the world and also our customers in China. In the non-filament business, we continue to see growth opportunities. The flow control market continues to enjoy positive market development driven by new e-mobility models.
INglass continues to expand into adjacent non-automotive applications with market-leading technologies and hot runner systems. Overall, we expect the Polymer Processing Solutions division to experience lower volume in the near term before returning into structural growth. While we can't give a guidance for 2024 today, we will still see the business being in 2024 well above CHF 1 billion in sales and well into double-digit EBITDA margins. That's a total difference to what we have seen in 2016 or in 2009. As I mentioned this morning, I have to repeat that again, this market the last 20 years had an average growth of 4%, including all the 2009 and 2016 effects. It's an unbroken trend, but sometimes you have a flattening situation before you get up again and speeding growth.
In Surface Solutions, we are operating across tooling, automotive, aviation, general industries and end markets. The development deferred by end-to-end markets in 2022. The tooling and general industry end markets saw a recovery in the first half of the year, which was counteracted by supply chain shortages. While shortages eased in the second half of the year, we also saw industrial production starting softening. Previously mentioned PMI's in all three regions moved towards contraction in the second half of 2022. Demand for our products was broad-based, including strong demand in semiconductors. For luxury, we see robust market demand. Coeurdor launched new products like PVD or Arise. This is simply fulfilling the entering of this market now with new products out of the PVD, replacing the typical electroplating which was used in this market.
This PVD Arise is a deep black coating based on our diamond-like coating technologies. These launches were all received by customers underpinning the market demand. Luxury brands have been resilient during past GDP downturns as their customers are typically less price-sensitive. As we look into 2023, the post-COVID China reopening is expected to support demand for both Coeurdor and Riri. In energy, we saw positive market development resulting from oil and gas. High energy prices benefit our customers. We see this continuing into 2023. In automotive, the first half of the year was still impacted by supply chain interruptions due to semicon and other commodity shortages. Automotive partially recovered in the second half of 2022 as shortages started to ease. Light vehicle production rose by 6% in 22. Research agencies predict around 5% in 23.
Finally, in aviation, sales recovery significantly driven by increased flying hours. 2022 saw 64% growth in passengers numbers. This represents 69% of 2019 levels. The recovery is mainly driven by demand for maintenance, repair, and operations for narrow-body. Passenger demand is expected to reach 86% of 2019 levels over the course of 2023. We're in line with that. What we thought before COVID, how long it will take, as you remember, we talked about 2024, 2025 to see the air industry back on pre-COVID levels. The perception for 2023 with 86% is in line of that. This should drive recovery for Oerlikon, partially for new engines and partly from maintenance, repair, and operations for wide-body.
Aviation will be a growth driver for Oerlikon for some time to come, in addition to structural growth. Overall, we foresee a flat sales development in Surface Solutions in 2023. The impacts of weakening industrial production should be partially offset by automotive, luxury, and aviation growth. Clearly, our midterm growth potential remains intact. Summing up, we see a challenging market environment in those divisions for 2023. Despite that, we will continue to focus on our strategy execution in order to gain market share and emerge stronger in the midterm. How are we proceeding strategically in the face of this market development? We continues to focus on our execution despite macro headwinds. Our strategy to drive profitable growth remains unchanged. We focus our priorities on growth, diversification, profitability, and sustainability.
In terms of growth, for example, we have seen a 23% sales growth in Surface Solutions in the Americas. This was supported by our new geographical organization, which we introduced at the beginning of the year, which helps us actually to understand markets much better as we have done that in the past. The aviation recovery was taking part of that. We also continue our diversification to non-filament, where we grew sales by a strong 16%. As we mentioned this morning as well, the non-filament story is meanwhile almost 40% of the whole OPP revenue, while the non-filament part in 2016 was almost not existing. The Riri acquisition, which I have mentioned already, will enlarge our sales in luxury goods above the CHF 200 million.
Aside from that, we continue to drive technology leadership in other in-innovation fields. We are on track to industrials coating solutions for e-mobility, such as e-gearing and differential shafts. We made significantly progress in commercializing our thermal insulation solutions for batteries and already won contracts with large auto OEMs. These thermal solutions are nothing else than to protect passengers to leave their car in case of a battery burn. You have to guarantee somehow five minutes, and that's based on a carbon coating solution which we have and which we're rolling out into this market. It's another example how we use our technology toolbox to enter more and more other applications. The management of applications coming from PVD, CVD, or thermal spray is exactly that what drives the development of Oerlikon.
It's not a rocket science, it's simply the strong execution of something where we have started years ago to build on this strategic fundament and now to roll it out. Either it's luxury, it's e-mobility, it's green hydrogen, it's semicon industry. This is old technology which we have developed around tooling, precision components or molds. To utilize that with the right applications, with the right market understanding, is that what drives the performance of the company. Additionally to that, we find more and more ground in our additive business, exactly around applications, not only in the aerospace sector, but as well in the semiconductors area and other fields. It takes somehow a while to position yourself there, but when you're once positioned and you have the trust of your customers, it's developing.
Last but not least, in sustainability, we achieved a number of rating upgrades through the year. In particular, agencies noted our ability to help customers reduce environmental footprint. We are largely considered a leader in the industrial sector. We did that by talking about what we are doing. We hadn't to change too much. We have simply started to talk about what Oerlikon is doing and how sustainable the business is, what we are contributing, either by saving fuels, which is saving carbon emissions, by improving the tribological characters of products, by extending lifetime. This is all sustainability driving. To tell that story makes people understanding how sustainable the core of Oerlikon business really is. Parallel to that, operational, we have made further progress towards our 2030 sustainability targets. We'll publish more details in our sustainability report at the end of March.
Last but not least, we're about to strengthen diversity skills and dependency in our board, as we announced today. In terms of profitability, reached a double-digit operational ROCE. This ROCE is 30% higher than the pre-COVID ROCE in 2019. Philipp will as well deepen on that. This is a clear indication that our strengthened capital allocation framework is playing out. Cost focus remains key for us. We achieved 22% savings in overheads comparing to pre-COVID 2019. In Q4, we optimized our portfolio as we have indicated at the capital market phase. We discontinued the in-line EPD business, which no longer fits into our capital allocation framework. One word here, too, this EPD business was designed 2010, starting to replace hard chrome.
With the decision of some administrations that hard chrome will not be replaced, this technology had no future because it was more cost-intensive. It had better character. In the end, if you're more cost-intensive and you have an installed industry, no chance to move there. We tried to find other fields for this application. There was not too much promising there. Consequently, we cut the tie, and we stop this business by end of this year. Wherever there's something we have to correct, we correct. Wherever there's something we have to talk about, we talk about. We don't keep you in doubt. I think we are clear, and you can compare that year-over-year that the last six to eight years, whatever we said we meant and whatever we meant we did. There was no surprises there.
I think this is due to the strengths of the management and their execution capabilities as well, to the character of the company, which is an open-minded one. In Q4, we also took proactive steps to prepare our cost structure, which is in line with that what I said, we are preparing ahead. We identify something, we assume the worst, and we hope for the best, but we prepare for the worst. That's why we're building measures and activities. That's why we negotiate with our business partners and with our unions and with our workers councils about what are the necessary steps to pre-prepare the company for that to come, to maintain the profitability and the performance level of the company. We focused on innovation capacity and flexibility to quickly build up capacities once business's momentum turns positive.
Last but not least, we propose a stable dividend for the AGM. We paid CHF 1 billion Swiss francs dividends in the last five years. Not to forget, we invested more than CHF 1 billion into new businesses. Summing up from Oerlikon is consistently executing on its strategy priorities. We do what we mean, as I said. We don't been driven by something. When we are absolutely convinced it's the right step to do, we do it. If we have to cut something, we cut it. If we have to buy something, we buy it. We do it typically on our conditions. This is important to understand because this is the character of the management and of the board. This will drive top and bottom-line growth in the mid-term because we are with the right technologies in the right application fields.
On the next slide, I will give you more details on our growth strategy and the sustainability before Philipp will highlight the improvements in profitability. Focus on growth and diversification in Surface Solutions growth is driven by customers' increasing demand for sustainability and efficiency. We executed our growth strategy of diversifying the business. We accelerated our regional expansion and capitalized on new technologies. A milestone has been the successful introduction of a new geographical organization. It's already delivering growth with 5% sales increase in Asia and 23% growth, as I mentioned, in Americas. We will continue this growth strategy and further diversify our strategy and end markets into luxury and e-mobility. On the bottom left, we highlight a development in Polymer Processing Solutions and filament. Oerlikon is a market leader with a broad integrated soft offering and cutting-edge technologies.
We saw these filament sales grow around at 9% in 2022, leading to a 20-year CAGR of 4%, as I mentioned. While we see near-term headwinds due to the macro environment, all our mid-term growth drivers remain fully intact. That's why fully underlying what we said on the capital market in May is unchanged. We cannot change strategy every half year only because of some external factors. Mid-term demand for filament will be driven by man-made fiber outgrowing natural fibers. There is simply not enough soil and not enough water for natural fibers to dress the world, which is an 8 billion population today and further on growing. For more efficient and sustainable machines, we have the technologies.
In the last six years, we initiated various growth initiatives to leverage our core competencies into non-filament. Non-filament markets are growing with an annual mid-single-digit percentage number in the midterms. Our non-filament sales grew, as was several times talked today, 16% in 2022, including some contribution from the acquisition of INglass. Looking in the right side of the slide, you see that we reached CHF 2.9 billion in sales in 2022. This represents a 5% organic CAGR since 2015, underscoring our midterm ambition of 4%-6% sales growth. Let's move to the next slide, where I give you some more details in the strategic rationale to acquire Riri. This is. It's the power of repeating. You're coming with a technology where you have a market-leading position in cutting tools and molds.
You can do all kind of materials, all kind of surface qualities, all kind of colors. You take that and move it into a new sector. We exactly formulated that demand. They told us and their suppliers, electroplating is not good enough anymore. The scratches are not good, the material consumption is not good, the surface quality, and even the colors. We want to achieve more. We want to get more. That's our field. That's the simple rationale why we started with Coeurdor and enlarged that on Riri. You may say buttons or other parts Riri is doing, not so important. It's very important if the perception of the final product is damaged or supported.
If a bad metal were on a bag of a CHF 5,000 or CHF 2,000 or CHF 7,000 even more, that's an issue. That's simply the field why we have taken that step. This is a similar way as we take existing well-known technologies which we drive and roll it out into other fields. Now, with more than CHF 200 million in sales and an attractive cross-selling potential, that mission is on a good way. As you'd see on the top left of the slide, Oerlikon is the technology leader in PVD, as I mentioned, and running out into new applications. This brings the cost savings, this brings additional customer contribution, and this is in line what I said initially, a low-cost position to the overall product cost with a high-value chain, creating with a specialized USP.
There are high technical entrance barriers for others to do so in a market which is intact and growing. Next slide. Let's touch sustainability rating upgrades. I think the slide speaks for itself. But to summarize it and not to go too deep in is with the sustainability story, we are in the top 10% of our industry after two years talking about. Not designing something which sounds sustainable or which has to be whatever means sustainable. It is sustainable. There is no need to formulate something which we're not doing. There is no need to create something which is not core element of our business. This is exactly what we have done on lifetime extension, fuel consumption reduction, and integrity of products. The result is that we are in all four, either it's EcoVadis or it's ESG or Sustainalytics.
We have massively ramped up, we're typically seen as low-risk company with a very good sustainability story. We are at the top 10% rated companies with industrial space. This was partly supported by our improved disclosure in our sustainability report in 2022. We progressed well on our way to our 2030 ESG targets. 32% of operational sites now have energy management systems. This represents 70% of our total energy consumption. Our project to define the calculation of Scope three emissions continues successfully. Mentioning that Scope three is for all companies a certain challenge, how you measure that and how you, let's say, put your borderlines, what's your Scope three and what's the Scope three of your customers. We are also evaluating meaningful actions to reduce our Scope three emissions that are in our control.
Around three-quarter of our R&D is invested into products that cover ESG criteria. For sure, we plan to increase that to 100% going forward. Helping customers becoming more sustainable and efficient will be a key driver for business growth going forward. ESG is also about empowering our people to take personal responsibility. Sorry for my afternoon pronunciation of English, but as I have to mention, it's not my native one, and sometimes some of these words are a little difficult to talk about if you have them in your mind, but you don't get it via your tongue. For the internal change of mindset towards diversity, for instance, I took a personal involvement in our second internal diversity conference. The whole management team, by the way, did the same. We enhanced our diversity, equity, inclusion program.
We also provide enhanced government reporting and are about to strengthen our board diversity and independency. Here I have to reiterate that the board of Oerlikon always was an independent, fully independent board according to Swiss law and Swiss conduct. Even there, we can improve on gender diversity, regional diversity, national diversity we have, competence diversity we have as well. I'm absolutely convinced that Oerlikon has a fantastic board and it's set up, and with a new member, we strengthen our level there and not weakening it.
The progress made in this increasing important pillar of our business strategy rounds off the very positive view of the past fiscal year. Together with the measured initiatives for profitability, with our growth strategy, and with our innovation strength, I'm very confident about the future and emphasize once again, Oerlikon is a value-creating company with great future potential because it makes important contributions to creating a sustainable world. By saying that, I don't want to take more of your time. We have time for the Q&As to deepen what I was mentioning, but now I want to hand over to Philipp, who gives you more insight about the numbers, and then we all three will sit together here for the Q&A discussion. Philipp, the floor is yours. Thank you so much.
Thank you. Thank you, Michael. As usual, I will start with the group results and then provide more details on the divisions. I will finish today with the outlook for 2023. At the group level, orders were CHF 3 billion, up 7%, driven by Polymer Processing Solutions and a continued market recovery in Surface Solutions. 2022 sales were CHF 2.9 billion, up 10%. Both divisions contributed to the sales increase, at a constant exchange rate, sales were up 14%. Our group book-to-bill ratio was above 1 for the full year. Operational EBITDA was CHF 498 million, a 10% increase versus the prior year.
Our margin was stable at 17.1%, supported by the continued focus on pricing and tight cost management in the face of rising input costs and certain negative mix effects. On the next slide, I'll give you more details on our continued execution on to drive profitability inside the company. Our focus on boosting our company's profitability is unchanged. We have improved our profitability compared to pre-pandemic levels by approximately 200 basis points, and we will continue to drive productivity going forward. As you see at the top of the slide, we have reduced overheads by 22% since 2019. While growing revenue significantly, this has reduced overhead intensity by 320 basis points to 7.4%. As we have previously said, part of our strategy is to continuously review new technologies and assess their viability in the market.
In Q4, we determined that our in-line EPD business will not achieve the commercial success we had anticipated and therefore decided to discontinue it. It does now no longer fit our capital allocation framework. At this relatively small scale, we will continue to review and optimize our portfolio. This will, together with our other initiatives, help us to sustainably improve profitability going forward. Our operational EBITDA margins of 17%+ are roughly two points above 2019 levels. In 2022, we actually achieved the highest operational EBITDA since 2014. That's a strong performance. Also, keeping in mind that we had several more divisions at that point in time, as Michael pointed out. It is a clear proof that our strategic priorities are paying off. As a result of these measures and our strong capital allocation framework, we achieved 10% operational ROCE.
We have previously explained driving value for all shareholders is our primary objective here. We remain committed to delivering double-digit ROCE on a sustainable basis. With those comments at the group level, let me go through some more of the details on the Surface Solutions division. 2022 orders were CHF 1.42 billion, up 9% in local currencies. Sales increased 11% in local currencies to CHF 1.38 billion. In the Q4 , sales increased year-over-year by 10% FX adjusted, as we saw a strong demand in aviation and tooling. 2022 operational EBITDA was CHF 247 million, up 4% versus the prior year. This represents around 60 basis points of margin contraction, mainly due to rising energy costs and mix effects.
These were not fully compensated by operational leverage and the price increases we continue to drive with our customers. In the Q4 , margins improved year-over-year, supported by continuous pass on of input costs and positive operating leverage. We are still facing, relatively speaking, an unfavorable mix equation in our Surface Solutions business as our early cycle service businesses remain lower due to the weaker industrial production. Over time, we expect that to normalize and reverse and translate it to a positive mix effect. We will continue our approach to pass on input cost inflation in partnership with our customers. Pricing adjustments might take more time to execute in a softer demand environment, but we continue to expect that we can manage the overall equation with a positive outcome.
Overall, cost containment, portfolio optimization, and passthrough of inflation will support us in reaching our midterm margin ambitions of 20%-22% EBITDA for the division. I'll focus on Polymer Processing Solutions. Orders were CHF 1.57 billion in 2022, up 12% in local currency. Orders in Q4 were roughly stable year-over-year. The soft order book was impacted by customers postponing investments. The magnitude was pretty much in line with our expectation when we first communicated about this trend at the Q3 results. We have not seen any acceleration or deceleration to date. Sales in 2022 of CHF 1.5 billion were up 16% in local currencies. This represents record sales for our business.
On the one hand, this is supported by strong organic end or end market demand. On the other hand, INglass contributed with an additional five months of revenue to support our diversification into non-filament. This is a very critical point that we continue to highlight, and that has been a strategic priority for the past couple of years. When you look at the left-hand side of the chart here, you can see that about 40% of the business are not related to the filament sector. This is an area that we continue to focus on. It has great growth expectations. As we will see a certain reduction in demand at Filament, we're expecting that part of the business to continue to grow.
Operational EBITDA for the division improved 15% to CHF 244 million. Margins were up around 40 basis points to 16%, supported by operating leverage, as well as the INglass acquisition and cost efficiencies. In the Q4 , operational EBITDA margin was 14.7%. We saw some transitory higher costs related to overtime coverage and special actions required due to the COVID peaks at our Chinese facilities. We booked a cost of living provision for employees in Germany. This is part of our, you know, the general works with workers council's agreement to help counter the impacts from inflation or some of the impacts from inflation on our employees. Overall, the division achieved a record year in 2022.
Since 2014, so prior to a dip that we saw in 2016, the division grew organic sales with a 4% CAGR. That includes the dip we saw in 2016. This is the kind of growth that we also continue to expect in the midterm, driven by the fundamental growth drivers we benefit from. Michael has described them: population growth, more demand for clothing, and lacking alternatives. As we have explained, in the shorter term, certain delays in customer investments will lead to a slower demand. This is why we have taken proactive measures to protect our margins. We have actioned a headcount, a reduction, in the production and overhead functions, and to phase in off those actual reductions will match our anticipated lower sales volume in the second half of 2023.
You have seen that we've booked a restructuring provision of approximately CHF 50 million in Q4 preparing these actions. The full-time equivalent reduction is expected to be over 800 employees. We are well prepared for a potentially lower demand in the near term. We're reacting early and aggressively, as Michael stated, in order to protect our margins. We have a much more diversified business model than we did in 2016, and overall, we're very well positioned to weather the a potential filament downturn while delivering solid earnings performance. We're also maintaining full flexibility at that capacity when demand returns. I wanna go back to one of the things that Michael has said.
We obviously cannot give guidance for 2024 today, but when you kind of put all the things that we've talked about together, we still see the business being above 1 billion in sales and well into double-digit EBITDA margins. I think that really gives you a visibility into how we've positioned the business differently than six or seven years ago. With that, I'll move on to cash flow. 2022 cash flow from operating activities was CHF 230 million. Net working capital was primarily impacted by a reduction in customer advance payments in Polymer Processing Solutions. At the same time, we did still build some inventory given the high sales achieved in both divisions. Partially offsetting these impacts was a strong performance in both receivables and account payables.
Altogether, this led to operating free cash flow slightly above CHF 100 million. Next on, return on capital employed, ROIC came in at 10%. When we look at the really operational performance of the company and 5%, 5.3% reported really on the basis of, you know, some of the significant one-off expenses that we had in the Q4 . This operational ROIC performance is well above 2019 pre-pandemic levels and gives you a strong indication that our improved cost management and highly focused approach to capital allocation are bearing fruit. I'll move to the balance sheet quickly. Our net debt to EBITDA ratio was 0.9 at year-end, and the equity ratio was 33%.
As many of you know, in November 2022, we repaid a senior unsecured bond of CHF 125 million, and we decided not to replace that at the market environment that we faced in the fall of last year. Instead, we executed certain transactions that allow us to repatriate up to CHF 250 million of otherwise trapped cash from China. These actions resulted in a CHF 24 million tax provision, which we booked during the second half of 2022. We remain committed to maintaining a strong balance sheet with a prudent financial policy. I'll conclude our presentation today with the guidance for 2023.
Group sales, group organic sales are expected to be around CHF 2.8 billion. This assumes a mid-single-digit decrease at constant FX rates. Depending on the timing of the completion of the Riri acquisition, we expect an additional CHF 100 million-CHF 150 million sales from that transaction. Foreign exchange rates, especially the weak euro, have obviously continued to put pressure on top-line growth. It's difficult to predict how this will impact the future. We're expecting group operational EBITDA margin to be between 16% and 16.5%. When I look at Surface Solutions, we are expecting around CHF 1.4 billion of organic sales at constant currencies. Price increases and the recovery of automotive and aerospace will be offset by weakening general industrial activity.
The contribution from the Riri acquisition will be on top of this guidance. On margins, the slight increase to 18% will be supported by pricing and structural cost actions. We continue to expect further inflation pressure, specifically on energy costs and labor. In Polymer Processing Solutions, we see sales of CHF 1.4 billion at constant FX. We anticipate a lower second half as there is more order book coverage in the first half. As it pertains to our order backlog with customers in Turkey, it is too early to tell whether there will be any impact on the timing of these revenues given the recent earthquakes there. We expect approximately 14.5% EBITDA margins.
There will be a slight drag, on margins from higher costs and negative operating leverage, but our cost measures are designed to largely counteract, these pressures. With those comments, I would hand it back to Stephan for Q&A.
Great. Thank you, Michael. Thank you, Philip, for the presentation. Now it is time for Q&A. For investors participating via webcast, please dial the phone number shown in the webcast and press star and one. We now start with questions in the room. Please first introduce yourself and the institute you're representing.
Good afternoon. My name is Torsten Sauter. I'm from Kepler Cheuvreux. Thanks for taking my questions. Actually, I have questions on the financial leverage. Specifically, you've taken provisions in Q4. Can you guide us a little bit about the cash out on these? I see that the order book in the filament business is going down. Of course, that could lead to a further cash drain in the customer advances, which will potentially slow. Summing things up, I mean, is it fair to assume that you are considering that you meet the guidance, that you will end up with a net financial leverage of around 2x net debt EBITDA at the end of 2023?
Yeah. I'll start maybe with some of the financial details, and then Michael, you'll take over with the strategic aspect of it. I think the Q4 charges were largely non-cash, with the difference that as it pertains to the discontinued activities, this remains a largely non-cash charge because it relates to investments in the past. The restructuring charge is predominantly cash, severance payments that we will make at some point in the future, largely in 2023, some of it in 2024. I think that's the first part I would say. The second part I would say is, you've seen a significant cash outflow from customer advances in 2022. Net-net, that's about CHF 160 million.
While at the same time still seeing an outflow while we're building inventory. We're expecting that to largely reverse in the next year. We expect a continued outflow of customer advances, but inventory being a source of cash in the next year. I think that's gonna be much more normalized. When you put it all together, Torsten, you're, we're doing the same calculations. We're expecting to be around 2x net leverage at the end of the year when you include all the things we have, including the acquisition, the completed acquisition of Riri.
EBIT question. Some time stamps.
That was 2x . Yep.
Strategic, I haven't heard any question from your side. If you need something, let me know.
Hello. Sebastian Vogel from UBS. The first question would be on the guidance, with regard to the EBITDA side. You have explicitly shown the potential sales contribution from Riri. I was just wondering on the margin side, has that been also included over there? If not, what would be the contribution there? The second one would be on the, on the cost-cutting side. How much sort of cost cuts do you think you can achieve with the measures you're currently planning to undertake and have already undertaken? The third question would be on the discontinued business. If you can remind us there what would be a sort of or what had been in the past the revenue that has been seen by you on the back of that business, that would be great.
Okay. I'll start with the first two, and then, maybe on the Riri side, it's important to also get the strategic aspect of it. On the discontinued activities, revenue low, single-digit million CHF, that you. Almost negligible. On the cost cuts, while obviously relatively invasive in the jurisdictions and geographies that we're doing this, the payback is still below one year. That means, you know, the cost savings are above what you see as a one-time expense here, the annualized cost savings. That's important. Riri margins are accretive to the group and slightly accretive to the Surface Solutions division. Very strong asset. It doesn't make that big of a difference individually that we had to change the margin guidance for the overall group. Net-net, it's slightly accretive, margins, cash, and earnings per share. I don't know if you wanted to add anything on the Riri acquisition.
No, I think the rationale was already mentioned. There's just a market coming from, let's say, 10, 15 years back. Oerlikon was mainly tooling. From tooling, we developed consistently in different applications. Luxury goods was since years on our radar screen. There was a project 10 years ago with Swarovski, which in the end wasn't executed because of missing of gold tones, we couldn't cover in PVD. Now with Riri and with Coeurdor, we have the number one position metal plating and metal applications in this luxury goods segment within the two years rollout. Now it's important to make the integration and to turn that business in further growth with our customers as described. PVD consumes less material. If you especially when you work with expensive materials, it's an effect.
It's more sustainable from the process side. It offers you more freedom in different colors, and the surface is much harder and more resistant. The overall product gains are there. That's the rationale behind. The same is what we have done in Semicon. Semicon five years ago wasn't playing any role. Meanwhile, for 3D printing and for coating, it's a market especially because of this CHF 150 billion or even higher investments in new chip productions. The smart part of that is that this production is not one-time built. There's a lot of life-limited parts in this production, which needs that coatings which we are providing and which needs as well 3D printed parts as we are providing.
Christian Olesen Stifel. Both of you, Mr. Süss, Philipp, you mentioned 2024 polymer processing, you still expect more than CHF 1 billion sales and double-digit % EBITA margin. More of CHF 1 billion sales, that means, I mean, is that your main scenario for 2024? Meaning that sales will decline further from the CHF 1.4 billion you expect for 2023. Is that the way we should think? That would be my first question.
Yeah, I think, you're right, Christian. Obviously, I wanna say that again, there's still a lot of time until 2024, but that's basically what we wanted to communicate. Much more diversified business. We are seeing a scenario where the business could decline compared to 2023, just back, based on the backlog that we're seeing and that the filament backlog that's reducing in the second half of the year. At the same time, there are some international customers that are looking at placing new orders. The key point here is really that we're seeing that business still being very robustly positioned. It's much more diverse. We're reacting much earlier, so I think, sales will be stronger and margins will be stronger than in prior situations.
Okay.
What's the reason why we mentioned it? We both don't have the glass ball. You don't have it. What's 24 really is the case. The issue is, or the positive side is, it's deft a total different setup as we have seen in 2009 with purely filament, or in 2016 for the ones who you've been covering Oerlikon already, when it was dropped from 2014, 2015, CHF 900 million- CHF 480 million. Total different story. Don't assume such scenarios. If it's in the end one one one one, two one three , you can only partially predict because it depends as well how the non-filament businesses first will perform. There is on the nonwoven side is huge opportunities. Some of them may materialize, some of them may not.
In the end, it's negotiations, I cannot predict if we fulfill all the negotiations in the next six-nine months. The other one is the underlying demand, that's what our customers telling us, for textiles, for the filament is there. The reason why they had stopped and why they have seen headwind was simply of two years completely shut down of the Chinese consumption, because if people cannot go out of their house, they cannot consume. That additionally supported then in a negative side with the high inflation which we have seen in 2022 second half, after Ukraine War started in the U.S. and in the Western World. If that's easing, if their demand is turning again with this underlying trends, this could accelerate faster or not. This is the insecurity.
Why we mentioned that is to give you, and I think we have done that now since couple of years, in a very open way. Whenever we see something, we try to let you share, to share that with you and say, "This is the scenario win." We're working on these scenarios, but it's a scenario, remains a scenario. With all given, it looks still with the headwind and filaments very promising, but will it be CHF 1.4 billion as this year? If I have to predict, maybe not. Will it be CHF 1.3? Could be.
Will I take my hand in the fire now for that? No. That's why we tell you it will be above CHF 1 billion, which is already gives you a certain insurance belt, because if it's above CHF 1 billion, if it's double digit on EBITDA, it's, it stays positive. The costs for restructuring are in. The rest is how to get quick out of that, again, following the markets when the markets are relaunching.
Well understood. Thank you very much for that. That leads me to my next question. You were talking about double-digit EBITA margin in that kind of scenario of above CHF 1 billion. If we are coming from CHF 1.5 billion down to CHF 1.4 billion in 2023, and the EBITDA margin is going down to 14.5, that's what you, yeah, you mentioned as a guidance for 2023 on the CHF 1.4 billion. Going down further, let's say to this CHF 1.3 billion, we still remain double digit. We probably be below this 14.5%, right? That now I compare that with your sales level of 20 of 2019.
I think there you were at CHF 1.1 billion with an EBITDA margin of 13%-14%. That means that actually your margin, you are telling us, is probably lower or your cost structure is different. I want to know why is that? Why can you reach, let's say, 14% or 14.5% with CHF 1.4 billion, whereas in 2020, 2019, you reached this 14% with CHF 1.1 billion?
I think that starts to be a little difficult to compare, you know. It's just there are so many differences then in terms of the different years. I think, you know, backlog mix and so on, business mix. I wouldn't necessarily go to that. It's not linear. I think you see a little bit where the cost actions are coming in. For us, the focus is on putting the business on the right in the right cost position to work through the lower demand. I think we have a very strong business, you know, and then where exactly the margin is gonna be, there's still a lot of things that need to happen there. I think, the real difference is that we're preparing very early, very aggressively for a potentially lower demand scenario, and we will generate strong earnings through a market environment that we cannot control.
Thank you.
Yannick Ryf from ZKB. During the Capital Markets Day last year, you mentioned in your five-year plan that you're aiming for a revenue of around CHF 3.5 billion and an operating EBITDA margin between 17% and 19% until 2026. My question now is whether this medium-term guidance is still realistic and is still your goal?
Yes.
Yeah.
Yes.
Yes.
Thanks.
Welcome.
Do you have another question?
I-
Maybe it was too short, but it's yes.
Yeah. Maybe another question regarding luxury segment. I mean, it's getting bigger and bigger, my question is: will you in the future report it as a different segment within the Surface Solutions?
No, we're not reporting below divisions.
Yeah. We're not gonna, you know, subdivide that out, but we will for sure focus on an individual sort of go-to-market approach for that division. I think that's the key difference. You know, we're obviously the parallels from a technology and from a fulfillment standpoint are there. That's the reason why we entered the business. The commercial side of it is very different just because of how the customers behave. I think we'll run it differently in that sense, but we're not gonna split it out.
The strengths, if I may add to that, the strengths in Oerlikon with this regional setup is that you have the verticals. Luxury will be a, will be a vertical as tooling, cutting tools, and others. They cover from a vertical perspective the global market. But then you execute throughout the region, the countries. In the luxury good market, it's pretty simple because it's mainly Italy and France, so it's not that much the regional setup necessary. It's more the vertical view towards clear customer groups, and it's finally that's the Louis Vuitton and LVMH group or it's Gucci or it's Hermès and not to forget anybody. This is the segment, and this is, I would say, pretty good covered. That was one of the reasons to get the sales channels to have the credibility to that sector.
We had a project with one of these, and they didn't want to go further on because we've been an industrial company. As soon we entered Coeurdor, they came back and said, "Now you understand our language. Now we want to go deeper." This is the rationale behind. There is a market for PVD applications which is very good and no one else as us has now this access to in combination with the deep PVD knowledge we have.
Thank you.
Great. If there is no further questions in the room, we now move to questions via phone. Operator, please go ahead.
The first question comes from Sebastian Kuenne from RBC. Please go ahead.
Yeah. Hi, gentlemen. I have a question on the cuts that you have in OPP. You talk about stabilization of demand, softer 2023 demand, and so on. If you do a CHF 50 million restructuring charge affecting 800 people, that's about 19% of divisional staff. If you then say the nonwoven business is strong, we only cut in filament, would that mean a 30% cut in the staff in that business? If so, doesn't that mean that you expect a fairly long period of softer demand? That would be my first question. Thank you.
The last one I can answer or try to answer very fast and clear. We're not predicting a longer period for that because of the underlying demand. Is it a year? Is it 18 months or 20 months? This I cannot predict. Here we are very close with our customers. The second is, with the CHF 50 million we go to the cover the max.
As I said, there could be as well a combination of short work and others, but here I don't want to go too deep in because negotiations are actually ongoing, and I don't want to interfere there. How much is structural change? How much is temporary change? From the 800, to be a little bit more precise, it's somehow more around 600 Remscheid, 650, and somehow 100, 150 Neumünster. It's, it's not a nonwoven story, but it's as well with a staple fiber and some other smaller stuff.
You agree that it's, it feels like a very deep cut, for non-filament. Sorry, for the filament business.
Yeah.
It seems a bit unusual from the sound of the comments for 2023 that you make, comparing this to the restructuring, there's kind of a discrepancy there.
No, I.
No
it's really right in line with what we talked about. I think you're not far from that. There is obviously, you know, we have extended the workbench there significantly with suppliers. Here, it's very important to react very early and very aggressively. I think we have started with sort of the lowest scenario that we could think, and then if things turn out a little bit better because demand in China returns faster, then we're gonna adjust to that.
Okay. Could you tell us a bit more about the savings potential? I mean, you have the restructuring charge. You mentioned, main savings come in 2024, but what's the scale if it all comes through?
Sebastian, I tried to, you know, indicate that in one of the questions earlier. It was maybe difficult to hear over the phone, but the payback is below one year. In other words, the annualized savings from these predominantly severance charges are north of what you see as a charge there. In other words, higher than CHF 50 million.
Understood. Last question is on the business opportunities, especially, you mentioned thermal insulation for batteries and e-mobility coating. Could you give us a little bit of an indication what the scale of the business is per car, per million cars, per million EV cars or per million batteries? Any financials on that opportunity?
Let's start with this thermal insulating shields. That's not a norm which is given by Chinese or European or American government yet. It's simply given by some car manufacturers saying, "We want to guarantee a 5 minutes period to get our passengers out the car in case something happens." and to cover these batteries, that is, for us, it's a business which could reach out in a couple of years between CHF 1,500 million annually. only covering couple of customers yet. If that becomes a norm, it's much bigger. here again, to predict what happens in two- three years is a little difficult, but I give you an scenario-wise an indication. For us, a typical approach we are taking is, what is the potential market size? What's the growth potential behind?
What's the earnings? What's our USP? What's the competitive environment? Taking all that in consideration, this is a business where we see it's worth enough to invest in because the first projects which we have gotten are very promising. The outlook is very good. How much that could raise the bar, it's not predictable yet, but it's a good business. The same is now-
Okay
... in Arabic it gets a little bit more difficult if you take green hydrogen. For the green hydrogen, you have three technologies. It's SOFC, it's PEM. It's the classical one. All of them needs stacks, and it needs electrolyzers. Each stack is a massive material. You can calculate now, do you want to have 50 million tons a year or do you expand to 10 million? What is the expectation? There is a matter of fact that they will need a lot of coatings for these stacks. That's why we have investigated this market environment, why we go deeper in and see what's in for us. It's the same calculation. How much in the end a 1 million tons of green hydrogen will drive material consumption? Which kind of materials are behind that?
What's our earning position in these kind of materials? There are not too much players who can fulfill that. Same now if you talk on batteries. There's a solid-state batteries or the lithium-ion batteries, all of them needs a cathode and anode materials. It's a starting business point. We have developed a small Knopfzelle, how you say that? A little, very little battery in solid-state simply to check what are the requirements and can we fulfill that. To scale that, we will scale it if there is enough market behind. The important part for you is that we have identified that fields, that we have the right investigation in place to see if that could become a market as we have done in luxury segment.
It was not falling out of the blue sky because our ladies want to have some handbags, and now we want to make the plating by ourself. It was a strategy embarked four, five years ago and say, "Where are promising application fields for our PVD coatings?" This e-mobility in a nutshell is from batteries to green hydrogen and tilt protection systems to keep three-quarters of a ton of materials or maybe 1 ton of a battery in a car content in case it's burning.
My final question here. Do you have already contracts with car OEMs or battery OEMs to develop it? Or is it?
Yes
... a project that.
Yes.
Yeah.
We do.
Okay.
We cannot disclose, but we do.
Thank you very much. That's all. Thank you.
Great. Okay. Thank you, everybody. This concludes today's presentation. You're now all very much welcome to join us for tea and coffee. Thank you for your attention today, and