Good afternoon, ladies and gentlemen, and welcome to Oerlikon's 2023 Results Presentation. My name is Stephan Gick, Head Investor Relations, and I have here with me Michael Suess, our Executive Chairman, and Philipp Müller, CFO of Oerlikon. Michael will start the presentation with a strategy update and a review in 2023, then Philipp will highlight the financials and outlook. We will take questions in the end. With that, I would like to open our presentation and hand over to Michael. The floor is yours.
Stephan, thank you so much. As well, a warm welcome from my side to each and everybody who made it today to our annual press conference. Probably I'll start with the major headline: why we separate OPP from OSS, and why we formulate Oerlikon as a pure play on our future strategy within the next 12-36 months. Then we will touch why, and how, and whom. It's nothing which was falling out of the blue sky, and it's coming as a result of a. I'm serving Oerlikon now the 10th year as Chairman and in the second year as an Executive Chair. It's a result of a longer, longer organized strategy which we have executed the last couple of years or more couple of years, because in 2014 Oerlikon was built by five divisions, was still a conglomerate.
You remember probably that Metco was on the way focusing in on the thermal spray base, and Advanced Technologies was somehow in 2014 on the way out. It took over January 2015. We made a deeper, deeper dive on the businesses which we had, the management team we had, and there were two conclusions. The one conclusion was, "Let's focus on businesses where we have a clear market position, number one, or a really strong number two with a chance to be a number one." And then let's, let's discuss the businesses where we do not have the opportunity for market leadership, and do we consider ourselves still as the best owner or not.
As you know, between 2014 and 2019/2020, we executed pretty successful, sometimes with a little luck, if I remember the divestment of Drives where we started first with a planned IPO and then we could sell it directly to Dana. But before that, we carved out our pump business, and the result was simply that my predecessors missed the opportunity to buy Edwards when Edwards was in the market. And then with our pump business, we had only the chance to be somehow number four, five, or six in the business. And all of you know, if you're in such a position, you typically make money in good times, but you don't make money in bad times. By saying that, with the divestments, we made CHF 1.2 billion proceeds.
We reinvested CHF 1.1 billion in a so-called smaller group of somehow 20 assets which we called String of Pearls, where we had to improve or we could improve our technical position and sometimes even close a little market niche. And then two major, major investments, or maybe three if you count Coeurdor and that, Coeurdor and Riri together on the luxury sector and, INglass on the polymer side. On top of that, we paid additional special dividends of CHF 400 million and the regular dividends, which was a 35 rappen on the Swiss francs throughout that period. So the last five years, the dividend, I think, was summing up to CHF 1.2 billion as well. So now we had two divisions, and in 2017, we thought about to execute the last step.
In 2016, we had a drop in the polymer story, and we had no, no positive results. For some markets we looked for, three years positive results in a row being of necessity. The earliest we could reach out was 2020, which was in COVID. Throughout COVID, we had other things to do and to manage the company through that time. The idea was always there. As you remember, on the capital market day in May 2022, we had two, two, two things done. First, by January 2022, the OSS division was reporting on P&L regional-wise. The two divisions made the capital market day. There was the introduction by myself and Philipp Müller about the corporate picture, but then there was a clear strategy and a clear market development for the OSS and OPP side.
As well, maybe you will understand now why in July 2022 we didn't replace the group CEO and why we have chosen the model of an executive chairman, because running very independent divisions as a test run and a preparation for the next step to come and an additional group CEO wouldn't have had a chance to contribute additional value. By saying that, when we will have executed the whole exercise the next 12-36 months with a grace period of a couple of months to see that everything works well, we will close that exercise of executive chairman again and we'll come back to a regular setup.
Not saying that this setup is not regular, but it's something where at least some of your colleagues always have a problem with the way how to organize power and how to organize governance. We have done that in Oerlikon, I think, in a very proper way with a lead director, a governance committee, and all the other stuff. But for the time being, for our situation, it's the best model. People always have asked, "Is there a termination?" The years before I couldn't mention the termination. Now I can give you at least a horizon for terminating this. So we have two attractive assets. And, the Polymer processing solutions is an asset which has over the last 20 years a CAGR on average of 4%.
So the message we always delivered, "There is an underlying trend for a growing world population with an ongoing demand on dresses on gloves," is still valid. And there's an underlying demand and a continuing trend on construction, because you should always consider that the machines we are building is the machines for the yarn where you can build then later on a textile or non-textile applications on. So you use that yarns as well in the construction field on roads, railways, buildings, and you use the yarns in a different specification for polymer-based gloves. The markets for this industry is typically in East Asia. 75% of the division today making revenue in China. India is another big market for them. Turkey is a market. Turkey is not Asia, but at least it's an Eastern market. So there are some markets.
The business model is to have a two-handful customers, maybe three-handful customers, big projects, and serving them. The market environment is driven by a duopoly with another big player in Japan and some small, very small, not very important competitors on a regional base. The creation of a distinct investment opportunity for investors, especially out of that region, to invest in OPP and not to invest in OSS or to invest in OSS, which we'll touch just in a second, and not to invest in OPP was one of the reasons where we said we have to separate that now. It was always in our mind, but there was the opportunity, not always the best. You will raise the question, and maybe I can try to answer it upfront: Is it the right timing? There is never a right timing, or there is always a right timing.
There is always some crisis out there in the world. There is always something to come. We consider the period now as a preparation to be in the downturn of OPP business, prepared in a proper way when we see the markets in a good shape or in a way to come back that we can use then the opportunity, a further developed business, to separate. Separation itself will be chosen later on which way. There can be from the whole portfolio, from partially selling, fully sell, partially spinning, or splitting to full spin and split. These opportunities, we are exercising on them. We are investigating what is the optimal solution for that move. Optimal solution means optimal solution for all stakeholders. That means as well, what's about the future of the asset?
What about the future for investors to be invested today? And in future, what about the shareholder value we can create so there will be an optimum, not a maximum in one direction, but an optimum for all directions. So saying that, let's touch the other division, which is the core of Oerlikon and which will stay at the core of Oerlikon. That's the capability on material science, material know-how, different ways to coat materials in ceramics with diamond coatings, with PVD, CVD, thermal spray, up to the level of 3D printing. It's a much more agile market environment because it's not only the textile industry. It's much more industries, which you will see in a second as well. We will focus further on. We will not lose time in the management to cover two businesses, which have really nothing to do with each other.
It was for a period of time to do so. The reason why we did it was that we did the best out of the situation. We create as well here a distinct investment opportunity for investors mainly sitting in Europe, U.S., but as well some in some areas in Asia. It's high-tech applications. It's in sensitive industries like in space, like in aero, like in healthcare, like in semiconductor business, like in defense. So a completely different business situation. Where we're coming from and where we are, you see here in 2013, and a lot of you may remember that or not, Oerlikon Surface Solutions was mainly 75% tooling plus automotive and then very small two other businesses, which was a little bit in energy and a little bit in aviation. We diversified that.
It took some effort, but we diversified that toolbox. First, we enlarged the toolbox from PVD via CVD, diamond coatings, and thermal spray, including additive manufacturing, a much wider toolbox in more industries. This is exactly the other part of the strategy we have, which is pretty simple: being number one in that. "What are you doing?" and find enough applications around that technologies you're capable for to use these technologies in other applications. So we rolled the technology, which was developed for cutting tools or molds, into other industries. We adopted that technologies. You will see later on a slide how that works and how much different applications year-over-year we are finding and doing.
You see as well that even sales-wise over the last 10 years, Europe, Asia Pacific, and North America, which, by the way, are the regions which are carrying the P&L as well since January 2022. So we have the toolbox still central, but the P&L responsibility already regional following our markets. And there is meanwhile 161 production and coating centers in 36 countries with more than 30,000 customers. That sounds complex, and it is complex. And to manage that complexity is not the easiest one, but we are one of the rare companies who are capable for doing that. We have more than 500 coaters globally, operating. We have a huge amount of data, customers, applications. We are preparing for a better utilization of that data. That's why we have a DigiHub.
That's why we are working in Brea on a virtual coding center, which will be the, let's say, pacemaker for, or the roadmaker for, a wider application in a way that you have virtual factories where you know in the different sites exactly what the other sites already have done. So it's a much better exchange of data. This is a huge strength where we haven't played in the past. So we've been in a lot of countries. We're working with a lot of different industries, but we haven't yet played this power. And it will still take a little while to play it fully, but we are embarking on that road, and we are embarking successfully on that road. So another example, only as a sidestep, and I will stay with my time.
Maybe you have never really realized, or people haven't realized, that since 2016, we do material development based on AI and Big Data. This Scoperta, which we bought in California, which we have utilized the last seven, eight years, much more for material developments, is nothing else than having different algorithms and working on these algorithms with the data available, which we have, to develop new materials. And instead of working years on a new alloy, we can make new alloys within three, four, five months and even talk about if this alloy would really fulfill the requirements, if it's a good solution, what will be the cost of that, or are other ways, maybe even the better ways, to adapt an existing alloy instead of using a fully new designed one. Why is that the case?
Because very very often you have industries, especially in air and space, which are very conservative, and these industries don't want to change too too often the materials. So you have to prove them that there's a really radical step in that, and then they're open to enter this. So with a Balzers technology, we still have, I name it, a dynamic gap because Europe is still far ahead of APAC and Americas. Americas, we had and Philipp will reiterate to that last year, only 13% growth. I think the years before even more. So Americas for us is the growth area. Asia-Pacific as well. Europe is growing, not as fast as the other two. So the target for the company, and it shows you as well the opportunities of the business, is to close up to Europe. So Europe still will move.
So it will take a while to get fully in. But the clear focus is to grow the Asia-Pacific region and Americas on the same level in Europe. By saying that, we see Oerlikon with the activities in the core of Surface Solutions as a clear number one market leader. There is no one globally even getting close to us with an integrated high-tech offering, with a very global and diverse end markets. And by the way, to these end markets, if I take this picture, a couple of years in future, you will have some more pies within this doughnut because we are actually entering the semiconductor business with new coating technologies, with 3D parts for the semiconductor manufacturing because you have a lot of life-limited parts in the manufacturing chain. We are opening up materials for the hydrogen production.
If there is a big hydrogen industry, we will be one of the material suppliers for the stacks, for coating the stacks for these hydrogens. We are developing solutions for thermally isolated shields for electromobility, which I will touch a little later in a little bit more detail. So there is a lot ongoing in our innovation pipeline. By the way, on the polymer side as well, there is a full innovation pipeline, which we will utilize when the market is coming back. That doesn't make any sense to show that now and to wake up competition. So taking that, with a sales upside, with our sales with our M&A operational upside, we show the profitable growth. And by the way, you may say 2023 was a difficult year. Yes, it was.
But to achieve, especially in OSS, the results that you grow by 7%, if I would eliminate FX, we would have grown in Surface Solutions by 16% globally. We have only the last three years, we lost CHF 400 million top line only because of currency. And CHF 400 million with a 16%-17% EBITDA level, you know what that an absolute EBITDA and an EBIT means. That is simply not there because we changed it back to Swiss francs. And we know that, and we live with that. We don't draw the conclusion, "Okay, then let's move out." No, we face the challenge because we see a lot of other positive arguments why we are Swiss.
And with our financials now for 2023 in a summary, you will see that with the order intakes and the sales, we will have even on the sales side in 2024 probably a lower number than we had in 2023. So 2024 will not be an easy year again, but it will be a year where we again will show that we can turn profitability of our businesses and growth of our businesses further on in a positive direction. To have the 16.5% and the 8.7% EBITDA and operational EBIT margin was, in my eyes, a very good very good result. And on top of that, to lead in innovation, to drive sustainability, and to strengthen resilience. And to strengthen resilience, I think, was clear when you look on this doughnut again.
Instead of depending on one industry, which is tooling, we have now six industries, probably in the future seven, eight industries where we work with our applications, where we work with our technologies in. We face all the challenges, you know, the geopolitical tensions, the very slow recovery in China, inflation, which leads by other reasons to cautious consumer spending, the FX headwind I have already mentioned, and the rising interest rates. Nevertheless, we were waiting on industrial production, our Surface Solutions, and we were waiting on customers' profitability in polymer processing. The market outlook is more flatish. There is aviation, looks positive, especially when you hear about Airbus and some developments there.
When we see some of our developments, which we are actually testing in the U.S., which is High Entropy Oxides, which could lift engine turbine intake by 50-60 degrees, which will have a much better erosion, not corrosion, but really erosion behavior, which will help in a lot of applications, especially on the military side when you are operating in a sandy environment, but as well for commercials and a lot of other stuff. When we say we lead in innovation, then we have next-generation coatings.
We have the battery shielding, which I mentioned, which is out of a carbon coating, which we use for friction systems, and we turn that technology into heat shields for batteries, which gives you and that's a requirement of the auto industry, of the electromobility, that you get the five-minute period to evacuate a car if it's in case it's burning, to get your people out, to get your kid out, to get your old parents out if you have them in. And our technologies are very, very promising. We have signed a big contract with one of the premium manufacturers already last year. We look forward. There is more to come, not only in Europe, but as well in Asia-Pacific and in the U.S.
We have the next generation of winder technology, as I mentioned already, and these are only some examples. What else? Drive sustainability. We are on track with our ESG targets. Our ESG rating, according to MSCI's AAA, we belong to the top 15% globally in the industry to the most sustainable companies. Close to 80% of our R&D spending already goes in sustainable products. And we have strengthened our resilience significantly with the examples I have mentioned to you. So here is only a snapshot, and don't be shocked or say, "No, because of his engineering background, he really wants to bore us now." It's not the case. I only show you some examples in all different areas. And they're not moving in tooling. They're moving in tooling in aviation and semiconductor and luxury accessories. Different innovations, which we have in the PVD and CVD.
PVD stands for physical vaporizing. CVD stands for chemical vaporizing, depositing. We have applications in the thermal spray hemisphere where we work as well: aviation, automotive, energy. So it's not linked with one industry. And whenever it has proven its capabilities in one industry, we still can roll it out into other applications of other industries. So the appetite, for example, in jet engines and I was running five years MTU when we brought it public as a COO. There was no PVD coating in the jet engines at that time. There was thermal spray. Now there's more and more appetite to get PVD-coated parts in the engine because that's improving the lifetime and the durability of the engine and the performance. So if you take electroplating for galvanic, electroplating for luxury goods, the first which disturbs you are all the scratches you have in.
PVD coating doesn't have that. If you buy a bag for several thousand years, you don't want to have after one year the scratches in, either because you buy the bag as one you want to keep for 10 years or you're one of these luxury customers who is selling that bag after one year on a second market and buying the next one. Scratches are always disturbing. But to cover the demand of that industry was necessary to be part of the industry because there have been several attempts in the past when we worked with Swarovski and with Rado and others. For them, we have always been an industrial player. Now we are a luxury player. Now we develop with Hermès, with Gucci, with Louis Vuitton their demands because they take us serious. But we had to buy the sales channel.
We had to buy the companies working in that. Otherwise, you cannot roll out your technologies in these industries. They don't take you seriously because they don't take you as part of the group. All that happened and the last one I mentioned already is the same as we have really great new solutions on Additive Manufacturing for the semiconductor industry, for RF antennas, which are not only for satellites. You have RF antennas in almost any kind of computers, and they all need cooling plates. And the cooling plates are a difficult piece of aluminum today manufactured and then welded together. And in 3D printing, you can optimize them dramatically. Only to give you some examples about what we have done in the past and what we will do in the future. It's a real tech company where the technology drives our success and drives our growth.
This is only the BALINIT Alcrona when we launched in 2004. The Alcrona Pro in 2010 was a 20% better performance. Now the BALINIT Alcrona EVO, which we launched in 2024, will again improve by 30% the performance of the tools getting coated by that. And this is huge because this gives you much more lifetime or higher durability when you operate them tougher, but it's improving significantly your cost base. Touching sustainability within the last 19 seconds of my time means that with two applications, the lifetime extension we do on metals and the efficiency increase which our coating is providing on turbines, we are saving in the first application 20%-28% of the carbon emissions of whole Switzerland for one year within our customer base. And we are saving 88% within the aerospace base of Switzerland with our aero customers.
So only these two applications are saving more carbon emissions in the applications which we are delivering than Switzerland is emitting. I only to give you a good reference about how sustainable that applications are what we are doing. Besides that, internally, Scope 1, 2, and 3 is under good coverage, and we stick to our goals and we will fulfill them. So conclusion by 2023 before I hand over: two attractive position divisions. The midterm growth drivers are intact. The synergies are limited. And by simple that reason, we will separate within the next 12-36 months. And don't ask, "Is it tomorrow?" No, it's not. We have still to prepare some stuff. We have, within the last couple of years, observed our environment very well to choose the right solution and then to execute the right solution. Will it be 36 months?
I don't know, but within that frame, it will happen. By that, thanks from my side. Later on, hopefully, a lot of questions. Now I hand over to Philipp Müller. Philipp, it's yours.
Jetzt muss ich Ihnen jetzt mal sagen: Ohne Unfall. Thank you, Michael. As usual, I will start with group results and then provide more details on our strategic priorities and the divisions. As usual, at this time of the year, I will finish with the outlook for 2024. At the group level, orders were CHF 2.5 billion, down 13% in constant currencies, driven by polymer processing solutions. In Surface Solutions, orders were up 4% organically. We highlight the quite dramatic movements in foreign exchange here on the slide, driven by the strengthening of the Swiss franc. Just since the beginning of 2020, this has negatively impacted orders and revenue to the tune of about 15%.
We don't have a huge cost base in Swiss franc, but as a Swiss headquartered company, we do incur some of our ongoing expenses in Swiss francs. And so, naturally, this development has also put significant pressure on margins since 2020. 2023 sales were CHF 2.7 billion, a decrease of 1.5% at constant exchange rates. This includes a 4.5% contribution from our acquisition of Riri. While polymer processing solutions were impacted by the very slow filament market, Surface Solutions achieved 7% organic sales growth. Operational EBITDA was CHF 444 million, an EBITDA margin of 16.5%. Profitability was impacted by operating leverage, higher input costs, the mix that we incurred in the year, and certainly the strengthened Swiss franc. During the year, we continued to focus on pricing and the cost out measures we previously described.
So this led to a solid margin increase in Surface Solutions in the second half of the year and certainly counteracted the negative operating leverage in polymer processing solutions towards the end of 2023. As previously discussed, we took certain actions in the fourth quarter of last year to improve and further improve the resilience of our business. Specifically, we decided to discontinue some activities where we don't see enough future potential. These actions were mostly related to early-stage technologies with very limited revenues. We incurred certain one-off charges related to these items, which are mostly non-cash. In addition, we took a significant step in further improving Surface Solutions' margins by consolidating five factories in Germany. With that, let me provide you with an update on our continued actions to drive profitability. You've seen the slide before and this chart. Our focus on strengthening our company's profitability is unchanged.
In addition to growing specifically Surface Solutions now organically, we've put a focus on working with the right structural cost base and optimizing the portfolio of products and technologies. As you see at the top of the slide, we've reduced overhead expenses by 24% since 2019. This chart includes the effect of the three acquisitions that we've made during that time. Additionally, we took the proactive cost actions ahead of the filament downturn, which we announced at the end of last year, and we're currently optimizing the footprint of more coating centers in Germany. As we've previously stated, part of our strategy is to continuously renew and review new technologies and assess their viability in the market. In the fourth quarter, we determined that our Teknoweb and automation businesses in Polymer Processing Solutions will not achieve the commercial success we had anticipated.
So we decided to discontinue them. They no longer fit into the overall capital allocation framework that we have for the overall company, but also for the strengthened individual divisions in the future. In parallel, as you know, we realigned our Additive Manufacturing business. We are improving the scalability of the business by transferring the European production components into the United States. North America is certainly the largest Additive Manufacturing market in the world and much more mature in terms of transition to serious production and overall innovation. So I would say these actions were quite significant in the fourth quarter, as you've noticed. They're certainly meant to continue to optimize and strengthen the resilience of the company. We will continue to review and optimize our portfolio going forward, but certainly at a much smaller scale than what we did in 4Q.
The 4Q actions are certainly also in light of the future structure of the company, a leaner setup, more nimble, and more resilient. Further on the page, what you see is initiatives that are aimed to improve our product portfolio and include the elimination of Surface Solutions materials and equipment numbers, which were subscale and dilutive. You can see here we have reduced the number of material codes by 43% since 2020. This is really without losing any revenue. Significant simplification that will contribute to better margins and more focus in the future. As you know, our R&D, one of the key strategies for us, is to introduce ongoing new R&D developments. We have an even stronger focus on the commercialization of those technologies. We will continue to price upcoming innovation at a significantly higher gross margin and at a premium towards the existing portfolio.
Overall, we have future-proofed the company, and we will continue to do that in each of the divisions individually, not only with the measures taken in 2023, but also with the measures taken before that. These measures, while significant in Q4, will help us to sustainably improve profitability and capital returns going forward. With that, I will go through some more details on the Surface Solutions division. 2023 orders improved 4% organically to CHF 1.51 billion. In terms of sales, we achieved 7% organic growth in 2023 and 7.6% in Q4. In light of a challenging industrial production environment, this is a very strong result. It includes robust 13% growth in the Americas, which benefited from our new geographical organization, as well as the recovery in the aviation markets.
I would like to remind you here that we generated 6% organic growth in 2021, 10% in 2022, and now 7% in 2023. So when we talk about the Surface Solutions business and really the future of the company being set up for substantial organic growth in the future, I think there are some good proof points there. Operational EBITDA in 2023 improved 4% to CHF 262 million. The EBITDA margin was impacted by the strengthened Swiss franc, higher input costs, and mix. And when we talk about mix here, it primarily relates to a lower share and short-cycle service revenue, as well as a difficult economic environment in China. The latter specifically has an impact on margins since, as you know, we sell a very high-margin product portfolio in China.
As we've explained also during the last year, the pricing and cost actions we took phased in throughout the year, and this was our expectation all along. So the cost actions and the continued pricing actions supported margins in the second half of the year. And this has shown positive effects. So as a result, margins were up around 150 basis points in the second half versus the first half of the year. As I said earlier, we took a decisive action in Q4 by realigning our additive manufacturing business. This led to a one-off charge in Q4, but will structurally improve profitability in our ability to commercialize this technology.
Going forward, the cost and pricing actions we are taking, operating leverage and portfolio optimization, and some normalization in key end markets such as Germany and China will allow us to bring the Surface Solutions margin back to our midterm ambition of over 20%. Next, I'll go through Polymer Processing Solutions. Orders were CHF 943 million, and sales were CHF 1.17 billion in 2023. Both were mainly impacted by order postponements in filament and negative foreign exchange. To a lesser degree, we saw non-filament activities being affected by softer PMIs, and in the second half of the year, fewer car launches. We believe that's very transitory in nature. Operational EBITDA decreased to CHF 170 million.
The margin of 14.5% was certainly impacted by lower volumes, foreign exchange, and really, at this point in the market, a limited ability to pass through higher input costs in terms of pricing to customers. As announced last year, we have taken proactive measures to protect our margins in 2024. We've actioned these headcount reductions in production and overhead functions. Really, the phasing in of those benefits started to support our 11.2% operational EBITDA margin in the last quarter. And we expect those cost actions to become even more visible in 2024 as they will counteract lower sales volumes. I think important to note here is that we're, for all intents and purposes, complete with all those cost actions that we have announced to you at the end of last year.
We've executed them, and so we feel very good about the cost basis for the next 12-24 months. As flagged also during our Q3 results here too, we executed on this capital allocation framework in Q4 and discontinued the Teknoweb business. We sold our automation franchise. These two actions led to one-off charges in Q4, are really also seen in light of the portfolio actions which we described. They will both structurally improve the profitability going forward, and both of those businesses had a very minor revenue contribution in 2023. The reason why we discontinued them is because we really didn't see the commercial viability in the market. With that, let me move on to cash flows. 2023 cash flows from operating activities were CHF 199 million.
As we had communicated, net working capital was a use of CHF 76 million in 2023, primarily driven by the reduction in customer advance payments and accounts payable in our polymer processing business. Important to note is that compared to 18 months ago, customer advances have reduced by over 60% to CHF 205 million. You see here in the chart on the bottom left, we're now pretty close to the trough levels of the last filament downturn, which we had in 2016. So as such, we expect limited further cash outflows from this dynamic going forward. I think that's very important when you think about future cash flows for the company. Altogether, when you add it all up, this led to an operating free cash flow of CHF 60 million. Next, I'll touch on return on capital employed.
ROCE was 7.7% when we look at the organic operational performance of the company and at 2.7% reported. That's a decrease compared to last year, which is really related to the filament downturn, which transitorily impacts, negatively impacts EBITDA and the lower customer advance payments. We continue to target, certainly in the current form, but also in the future form of the company, double-digit ROCE, sustainably double-digit ROCE. The recovery of the market recovery in filament will help us with that. We will continue to contain costs in a leaner setup for the overall company, and we will continue to execute in a disciplined manner on our capital allocation strategy. With that, I'll quickly touch on the balance sheet on the next slide. Our net debt to EBITDA ratio was at 2.6 times compared to 0.9 times a year ago.
This mainly includes the impact of the re-acquisition and the filament downturn, which has a negative impact on EBITDA and net working capital. As a company, we really remain fully committed to maintain a strong balance sheet. We'll continue to focus on cost management, net working capital, and cash. I would say, ceteris paribus, we expect a leverage ratio between 2.5 and three times by year-end 2024. Obviously, that doesn't include yet potential actions that are going to happen. Important to note is that at the end of 2023, we had access to CHF 1.1 billion of cash. This was also supported by our placement of two series of senior unsecured bonds in the second quarter of last year. We have one debt maturity of CHF 150 million coming due in 2024.
We will decide at a later point in time whether to refinance or not. This will certainly depend on interest rate environment and market conditions and so on. In terms of the dividend, we will propose CHF 0.20 per share, which reflects 42% of our underlying EPS in 2023. It's in line with our dividend policy of paying up to 50% of the group's underlying net result and reflects both our commitment to pay an attractive dividend to shareholders, but also our focus to maintain a strong balance sheet. With that, I'll briefly touch on the ESG rating improvements, which Michael had already mentioned. We are pleased to see that also external partners and agencies recognize our leadership in sustainability and innovation. This ultimately makes us an attractive employer and investment opportunity. Particularly in ESG, we had continued positive momentum with several rating upgrades in 2023.
In the last three years, we've become part of the top 15% of global companies within the industrial space. This was supported by our improved disclosures in our sustainability report and as a reflection of the fact that sustainability is in Oerlikon's DNA, as Michael mentioned. Our solutions improve efficiency and sustainability of our customers significantly. With that, I'd like to conclude the presentation with our 2024 guidance. We expect group organic sales to decline by a high single-digit % at constant effects. This is driven by the downturn in polymer processing solutions and partially offset by the growth we expect in Surface Solutions. Group operational EBITDA margin is expected to be between 15%-15.5%. In Surface Solutions, we're expecting low to mid-single-digit organic growth compared to 2023. The growth pace in aviation, we're expecting to slow down somewhat given that global passenger numbers are approaching 2019 levels.
Light vehicle production, which increased by about 10% in 2023, is expected to only increase very slightly, maybe about 1% in 2024. Certainly, as leading indicators are bottoming out, we expect to gain more traction in the second half of the year. On EBITDA margins, we're expecting 17.5%-18% for the division. Here again, pricing and cost actions will support us in reaching the high end of this range. In polymer processing solutions, the lower 2023 order intake will impact 2024 sales, which we expect to be down in the mid-20% percentage range. We communicated on the challenging demand environment already last year, obviously, and have proactively prepared our cost base. These actions, which I described, are fully on track and will support an approximately 11% EBITDA margin in 2024, despite the significantly lower sales volume.
In terms of outlook for the order recovery in the filament business, I would say it's too early to say anything definitively. What we do is we specifically look at leading indicators in the improved economics of our customers. The chart at the bottom of the slide highlights the cash margin that our filament customers earn on every ton of product they sell. We've included this chart a couple of times now. Without assuming that history perfectly predicts the future, we look at prior downturns in this industry and look for certain parallels. What you can see on the chart is that our customers saw a negative margin in 2015, which turned again positive in 2016. Given a certain time delay, this resulted in a very challenging 2016 for Oerlikon, which was followed by our order and sales recovery in 2017.
When we look at the current downturn, the margin of our filament customers was negative in 2022. It improved again into positive territory in 2023. This provides a positive indication for an order recovery in due course, in our view. Most importantly for us, the underlying filament growth drivers are very well intact. Michael described them. The filament market has been growing with a CAGR of 4% in the last 20 years. We are absolutely confident that this growth will return and continue. We have meaningful innovation in our pipeline to accelerate the market recovery. With that, I'll hand it over to Stephan for our Q&A.
Thank you, Michael and Philipp, for the presentation. Now it's time for Q&A for investors participating via webcast. Please dial the phone number shown in the webcast and press star and one. We will now start with questions in the room.
Please first introduce yourself and the institute you are representing.
Hi, Mike from Baader Helvea. So my first question is actually on the, let's say, the corridor between your operational profitability and the reported actual number and how you're expecting that to develop for 2024 in terms of restructuring charges. Are there any potential additional charges expected, or is it going to be relatively clean in 2024? And then my second question is on the potential portfolio realignment. You've mentioned quite a few different options that you're evaluating as it's very early in the process. Are there any options which are off the table? And also, are there any options which would potentially affect the shareholder structure? Could?
Great. Yeah, I'll start with the first one. I'm expecting 2024 to be a completely different setup and a much cleaner, if you will, setup of numbers. It's really that these actions that we've taken to focus the portfolio are really also to be seen in light of the future structure of the company, leaner, more focused, and so on and so forth. So I don't expect that. I think we will incur a certain limited amount of separation costs as we go through this process. But really, for all intents and purposes, all substantial portfolio cleanup actions should be done. I think that would be the first time. And then on the portfolio realignment, really all options are on the table, and we want to maintain that flexibility.
I think it's simply too early to speculate in case of options sell or spin or split or whatever, and how would that impact an even shareholder structure? There's all in. There's nothing excluded. That's why we said 12-36 months. People who know me probably will say he will not wait 36 months. On the other hand, we are not in a hurry to do something within the next six or eight months. We prepared it carefully, and we executed in the best way for the company. I think we have a track record on doing that. If you remember how much pressure we got on selling drives, and we withstand that pressure, and we did it in a very professional and good way.
And all the investments we have done and all acquisitions we have done according to our conditions and not to the conditions someone told us. Because there was as well in the years when we've been sitting on a big amount of cash, people being coming and saying, "You have to buy this. You have to buy that." If we would have done it, we would have burned a lot of money because there were highly overrated assets in between. So we do it in the best favor. And so here, what I mean is a certain trust necessary to the board of directors and to the management team to execute in a proper way. For us, important, I want to add that we are very early always. It was in 2016 we've been told you've been a little bit late with the communication about the downturn in the market.
We took that feedback very seriously. We came back in 2022 summer and told you there will be a downturn. Even the downturn was a year later, but we told you already, "Look for that." That's the same way we do this now. You can be assured we will execute it. You can be assured we will execute it in an optimized manner for all stakeholders. But there is no way back because it was always clear that the two assets are great assets, both market leaders, but they're serving different markets, they're serving different investors. They don't fit perfectly together. And this was how we prepared it now.
Thank you, Alessandro Foletti, Octavian. I have a few questions. Can I ask them one by one? I limit myself to three. But first, I have a pre-question because you said 3.1.
That's a smart way to do it.
No, but this is just a clarification. I'm sure it interests everybody. You said restore the Surface Solutions margin above 20%. In the presentation, I see 20% as a midterm target. So why this?
20% possible.
20%.
It's a good question, but we don't try to be that prescriptive on it. For sure, the ambition is to generate in that division with that portfolio margins of 20% in addition to that. At the same time, we obviously have to face the reality that over the past couple of years, there were a number of things that really impacted us adversely. So I would say before we start running, we walk, we work ourselves up. I think we've done a really nice job in the second half of last year to counteract the very, very substantial amount of labor inflation that we felt in the business. We executed in the cost-out actions. We executed on pricing. We're going to continue to do that. We were maybe a little bit later than what we expected.
I think we're going to march back in that direction and work ourselves back to that level. Then when we're at 20%, we can argue about is it more or less.
But then on my true question on the margin of Surface Solutions, what's the gap between this potential 20% level and what was in the past, which after Metco was already a few times just check my numbers again, significantly above 20%? Talking 22%-23%.
Yeah, I think we were obviously already higher in 2021 and in 2022. I would say what we've just talked about this a couple of times, what happened in the last two years, not higher than 20, but higher than in 2023. What happened in between was obviously a very substantial amount of labor inflation. It does take us a little bit of time to offset that and really translate into customer pricing and so on. But we've previously said, I think all the technologies are coming to fruition. I think we've continuously shown that. Again, maybe outside of this very significant inflation, we'd already be a couple of steps further, but we will continue to show that trajectory towards a much higher margin business.
The second.
And if I'm allowed to add here from maybe I'm a too much engineer, but there's always a mix of what you're doing. And there is a service, there is a material business, there's an equipment business. And as I have tried to show you on page five, we have a much more diverse business as we have done maybe in 2016 numbers. You remember when we had 22% of the company. This is a midterm where I would say we can come back to that. But then we handle a company in a much more complex way because instead of serving a tooling business, we're serving then six, probably eight or nine different industries, markets, talking their language and working in their environment. But this is exactly the part of the strategy which we're executing.
Hopefully, that helps you a little bit to understand that, as well, the last couple of years been transition phases. And I don't want to be seen that we hide something behind transition, but I give you one example. We had an ePD solution for replacement of hard chrome. We developed that. We've been ready to introduce. European Commission never banned hard chrome, no chance to introduce. So sometimes you have technologies developed which simply don't serve, but you have the costs. Then you have others which are overnight developing super, like Alcrona Pro was one of them that was a blockbuster in 2016, 2017. It was 40% of the revenue was Alcrona Pro with a super market-leading situation. What I want to say is the world is not one-dimensional, and that's what we are executing.
Right. So if I understood you correctly, really the gap lies more in the product mix and a different mix of activities.
It's in the mix and sometimes how fast a new product is developing, someone is phasing out. It's a wide range of five big families of coatings. Within the families, you have a lot of different applications. Applications are in different industries. In the end, it's the sum of a lot of small parts. It's not so easy always to calculate that, even from an analyst perspective, because sometimes aviation is running better than an application automotive or an application general industry, which is high profitable, runs better than something in space where you would have believed that it's super profitable. It is probably, but the other one is more. So I don't want to make the world even more complex, but it is. It's not that simple as it sometimes sounds.
I would say some of it is the mix that we talked about. For sure, there's also when we talked about consolidating 5 factories in Germany, there's still more of that work to be done. And then the third component of it is pricing, which I think we have really reestablished in our service business, specifically an ability to price more aggressively, to be more flexible in terms of the pricing and adapt to certain market realities, which I think for a number of years, we probably didn't have as much. And so I think between those three, a better mix, China and Germany going a little bit better than what they do at the moment, these cost actions that we're still taking on the portfolio and then pricing, I feel confident that we're going to get to a much higher margin level.
The second question on Surface Solutions, did I understand correctly that you plan to have once Polymers is out, a sort of a double-digit return on invested capital or ROCE, as you call it?
For sure, that needs to be the intention now. I want to be cautious, obviously, with everything we're saying when we talk about the outlook, when we talk about midterm growth ambitions, when we talk about guidance and so on. At the moment, we do this for the combined company. How we will evaluate then balance sheets in the future and so on is still a little bit out. We will do that in due course. But for sure, at the end of the day, every company has to deliver on those returns expectations just from a value creation standpoint.
But would you agree with me that separating is actually it will sort of expose the lower margin of Surface Solutions? I mean, without PP, you might have lower return on invested capital, a starting point.
I think it depends a little bit. For sure, what you have is a dynamic, and that's the whole background of what we're talking about here is you have a lower capital intensity business in Polymer Processing Solutions, which needs less capital to grow. I think you have Surface Solutions, which will require more capital to grow. But I think at the end of the day, especially when you look at it from a cash-on-cash standpoint and you exclude the significant amount of intangible assets that sit in Surface Solutions, so from a CFROI standpoint, also Surface Solutions will be a strong business, grow fast, and generate strong margins and strong capital returns.
Thank you very much. My last question, if I may, on the polymer processing. You made a comparison with 2016, 2017, which I agree that's what happened, and we saw it happening. Also, what we saw was then suddenly there was a big boom of orders, and you could sort of not follow with your capacities, really, and sort of you then were not really able to profit from this boom in a proper manner. Would you be able to avoid that next time?
Yeah, I don't know because sales were up 57% in 2017, so I don't know that I would say we didn't profit from it. I would just put it in perspective that there's obviously, behind the reduction of some of the production capacities that we've done last year, is also a strategic move where we both shift the supply base and certain manufacturing parts closer to our end customers. And so we're in the process of building that out. We're very aware of that. There's always this kind of how much do you do yourself? How much do you give to suppliers? We feel like we're going to be able to respond to an upturn just like we did last time. It's not easy, but we're going to be able to respond to it.
Thanks.
Hello, Sebastian from UBS. I also have three questions. I would ask them one by one, if I may. The first one is on Surface Solutions and with regard to the different end markets over there, and they're related to the exit rates. Were the exit rates somewhere materially different to the average that we have seen over the course of the quarter? And then, of course, since we are already in February, is anything what you have seen so far in the year is sort of having a bit of a stronger move in one or the other direction in any of the end markets that you outlined there? That would be my first question.
You're saying exit rates in terms of growth or margins or both?
Growth. You saw the fourth quarter grew 7.6%. So I think a healthy growth clip. And it's really driven by a lot of the things that we're doing as a company and growth initiatives. And then the overall environment is U.S. is good, China is muted, and Germany is soft. But I don't know, Michael, if you want to give a little bit more color on the end markets.
Aerospace is doing well. Automotive is still struggling a little bit. General industry depends where they're allocated to, if they're more linked with a supply base to the automotive industry. They're hesitant. There's a rational and an irrational factor in. The irrational factor is that a lot of customers, suppliers, take ZF and other players simply don't know how far Europe will go with this e-mobility story because in 11 years, there should be no ICEs anymore in Europe, which is difficult to imagine because it's 11 years down the road. So how far they are in their transition. Last year, I think it was 91 million cars globally. But making a long story short, out of them, 5% was electric. The rest was ICEs. So the transition here will take longer, especially on a global dimension.
Market actually for 2024, as I said, where it looks pretty okay, that's aero and space. Where it looks average is automotive. General industry is a little bit shaky. Healthcare industry looks not that bad. But overall, it's more flattish than there's some real boom upside.
Got it. The second question would directly there continue with the auto part. You mentioned that the overall industry is supposed to be growing by around 1%, or at least that's sort of the indication you had on the slide deck there. I assume your ambition on that is sort of to outgrow the market and that 1% would be rather sort of the low end. That's more of a clarification question. And the second one on EV or on automotive is the EV exposure there. If you have some sort of can give us a little bit of a ballpark indication what sort of EV exposure you have in your current auto exposure overall, that would be great as well as a second question.
Yeah, I think when you think about auto, we're probably not going to give individual expectations. But you saw our organic growth guide for Surface Solutions, sort of low- to mid-single-digit. And basically, the assumption is very, very limited volume growth and our ability to price better. Certainly, that's even harder in the automotive industry, but that's the base assumption. And then on the electric vehicles, I think we specifically don't give a split between ICE exposure and EVs because, frankly, for us, that is almost impossible to tell because so many components go in there. What we can tell you is not just the battery shielding, but also coating for certain gear components and so on is growing rampantly, just like the overall picture from a very low base.
We have a multitude of solutions there and continue to develop that and will continue to sort of time that together with how fast actually EV adoption proceeds.
Got it. Many thanks. And last question would be on PP with regard to the sort of trajectory that you have outlined already. Does it mean that actually the fourth quarter order intake should be sort of the low point or the bottom? And then going forward, we see some potentially initially some gradual improvement and then potentially later on some more of an acceleration? Or what is sort of the cadence you have in mind over the course of the following 12 months or coming 12 months?
Yeah, we're very hesitant to forecast the timing of that very specifically and also a cadence. As we always describe, typically what happens in the market is that once one customer starts to move and reinvest in polymer processing solutions, all the other customers follow in a very, very timely manner. So when exactly that switch kind of flips over is very, very difficult to predict. We don't want to predict it because it's probably not helpful to aim for that, and it's very difficult. But when that happens, I expect that there's going to be a similar movement again, which is partially driven by a need to invest and partially by our introducing new technology, more productive technology, which requires the customers to invest at the same time.
Many thanks.
This is Ingo, also from UBS, but the credit side. Regarding leverage, 2.6x is starting to inch up quite a bit. You're guiding for up to 3x. Can you maybe give some color on the pace of deleveraging after that? Or are you waiting for the big business split-off to be your main cash generator? Or what can we expect there in the near future?
Yeah, Ingo, I think you're right that this is higher than obviously the 0.9 times where we were at the end of 2022, but is fully expected by us. Obviously, we knew and had announced that to everybody that the filament market was going to go through this down cycle. We had the opportunity to buy Riri at the beginning of last year, which we know is a very strategic, very important acquisition for us. And then I would say, as you've seen now too with some of the decisions we've made from a capital allocation standpoint, the focus will be on deleveraging the balance sheet in a very swift manner. Market recovery in filament is going to help with that. Potentially, some of the transaction structures that we will choose will help with that. And otherwise, it's going to be the organic business that will follow in that.
I think that the entire framework is certainly focused on doing that. But don't forget, there's the cash component, and the much more significant component is really the earnings component and the filament earnings. And I think that normalizing will be the biggest contributing factor.
If I might follow up on that, if you see any more potential M&A opportunities, would you act on those as well, pushing leverage even higher? Or do you think you really will stay here?
I don't think at the moment. And also, just from a focus standpoint, I think we will be very focused on executing the transaction and potentially number of transactions that we've described to you. And I think that comes first.
All right. Thank you.
Christian Arnold, Stifel. Coming back to the capital intensity of the two businesses, looking at your segment reporting, I see that operating assets, there's a split two-thirds, roughly, Surface Solutions, one-third Polymer Solutions. Are there major differences in the different asset categories? So thinking about tangible assets, intangible assets, inventories, accounts receivable. Are there major differences about this overall two-thirds, one-third relationship between the two divisions?
Yeah, you have to distinguish a little bit and first take out the intangible assets because a large part of that is related to the Metco acquisition, which was many years ago. And so I think you have to separate that. And then you look at the fundamentals and you say, polymer processing solutions, at least the filament business is less CapEx intensive. It's an equipment business, and it tends to be, by definition, working capital negative. So that is a business that requires very, very little capital to act on. And then Surface Solutions is, historically, we've spent probably 6% of revenues on CapEx, and it has a slightly higher, although not incredibly high, working capital requirement.
So I would say the differences are there, but it's important first to kind of take out the intangible assets of it because I think that distorts the view, really, when you think about it from a CFROI standpoint.
Great. If there are no further questions in the room, we now move to questions on the phone. Yeah. Oh, we take this question before we move to the.
Yeah, we'll take one more.
Adrian Knoblauch, ZKB, also from the bond side. My first question would be a follow-up to my colleague here on the shareholder structure. Can you rule out a situation where your main shareholder is not increasing to above 50% in any case of whatever happens with your separation so that we would have a situation like with another Swiss company?
I think you give your answer by yourself. An investor who would increase to 50% and then risk to get in a situation as it was in the other company will not do that. But I'm not representing the shareholder. I'm representing the company. So if you want to ask himself, he should reach out to Liwet or to the truster. From my perspective, I don't see any risk in that direction. But it's my perspective. I'm not representing them. I'm German and Executive Chair of Oerlikon.
Okay. Then a second question I would have is, again, on the separation plans. Can you say anything on the protective clauses, covenants you have in your terms for the bondholders? I saw that you have a couple of covenants in there regarding reorganization, mergers, and these kind of things. Can you say anything on that?
Well, we're going to go through the details. As you know, not all of those are public or available to the public. We're going to go through the details of that. As we think about the structuring, we're going to work with all of our partners and, of course, our banking partners to think about what a new structure looks like. First, we need to decide what the transaction structures really are. Then we'll look at what that means for credit facilities and bond agreements and so on and so forth. I don't expect that there are no limitations in there that I would say that hinder us from executing on any of those transactions.
Okay. But following on that, it's fair to assume that part of the debt is moving away as well with the separation?
I think that will fully depend on the transaction structure. But it's all going to be prorated to whatever the future of the company looks like. Both future divisions or companies or however that structure is will be equipped with a healthy and strong and well-capitalized and well-financed balance sheet.
Okay.
Okay. We move now to questions on the phone. Operator, please go ahead.
Our first question from the telephone comes from the line of Sebastian Kuenne with RBC. Please go ahead.
Yeah, hi. Thank you for taking my questions. I have three areas of questions. One is OPP. You mentioned the last boom in the polymer CapEx cycle, 2017-18. And it does make sense that there should be a recovery at some point. But at the same time, your main competitor has a 25% FX advantage now compared to three-four years ago. So I was wondering how you prepare the division for the next up cycle in terms of being price competitive and also what you see currently on the pricing side in the tenders that you do have in Asia. That would be my first question.
So I will take your first question directly. What we have done is to restructure or to reduce with the downside workforce in Germany, in Neumag, and in Barmag. We will transfer that activities into the regions, which will eliminate, to a certain extent, any, let's say, exchange disadvantage. On the other hand, we have typically a significant premium because of technology, which we always had, which we will play, by the way. And then last but not least, as in 2017, the first couple of projects are always very price-sensitive. The good thing is when the first projects are coming, there are more to come because that's the behavior, the crowd behavior, as we have seen in two cycles, by the way. It was even after 2009, and it was after 2016.
Then when the first couple of investors are investing, the rest feels to be decoupled and to go for productivity, especially that we have a pipeline with significant productivity gains when we roll it out. We will not do that before the market comes back. So in that combination, reorganizing our cost structure, transferring significant workforce. And I have to say that in that clear way, most of the workforce which we have taken out last year will not be built up there anymore by two reasons. We will probably not even find the people. And second, the cost structure there is not capable anymore to do that for the markets where we are in. R&D is different. Prototyping is different. But all the rest of manufacturing will go more in the not more, will go and will be allocated in the regions where we are selling our products.
And then, in combination with the R&D capability and with the leading technology we have, we're still convinced. I'm not saying believe. We're convinced that we will make our margins as we have done in the past.
I mean, that leads me directly to the second question. What's your capacity now? If the market was to come back tomorrow, what is your capacity for OPP compared to where we were in 2021-22? Is it 20% lower, 30% lower?
We have, even in 2016, already flexibilized capacity. So I would not answer the question in a way that we have actually lower capacity. The question is how fast you can adapt. And by flexibilization of our supply chain on one hand and our workforce on the other hand because we have much more flexible contracts on hand as we had years ago, that was one of the reasons why we could manage the downturn this time in a way that we are not entering or not leaving the profitable level. So as you have seen, there was profit in 2023, and there will be a profit in 2024 as well. Not that high as it was in the boom time, but not like in 2016 or even in 2009 when the company crashed massively into the minus.
So it's about how to manage flexibility and how to create flexibility and how to manage your supply base and your internal resources. How we do that, I wouldn't like to disclose because I don't want to wake up others. But you can be sure that we can manage the capacity increase if that comes. And then we have a certain, let's say, interaction with our customers. It doesn't come overnight. It comes fast then, probably. And then you don't have to choose each and any project because, by the way, there are only two players who are capable. It's a real duopoly. It's not a monopoly, and it's not an oligopoly, but it's a duopoly. And if you want to get the productivity and don't forget, you're investing CHF 200 million in something which is a CHF 1 billion investment.
So the machine park or, let's say, the equipment manufacturer is probably a $2 billion-$2.5 billion market, driving only in China a $70 billion industry. But the productivity gains, you gain at the beginning. So you will always look for that you get the best technology available. That's why we could always cannibalize old technology with new technology from our own because we always could provide significant productivity gains. And this is exactly the name of the game with the next cycle.
Understood. On the OSS, you mentioned the margin target that you have for operating EBITDA. But then again, we have to reduce it by 10% depreciation or CapEx if you look at the cash side. So you end up with an underlying margin, EBIT margin of 7%-8%. For a number one player, is this an area where you are happy? I mean, compared to Sandvik's tooling business, they have a 20% EBIT margin. So is there a way for you to reduce the capital intensity, equipment intensity of the business to push more into services and to really make a difference and to bring that business maybe to a 15% EBIT margin? I mean, why is that not possible? Why should we not think that 15% EBIT margin is possible in that division? What holds you back? What is structurally different? Thank you.
Yeah, I would take two things. The first thing, Sebastian, I would point you to the EBIT margin trajectory of the business since 2021. You can see there that while EBITDA margins shrank by about 120 basis points since 2021, which was driven by the labor inflations, EBIT margins were actually up. That is a reflection of our capital allocation framework and a much stronger focus on CapEx and also other investments. So I would say it's very clear that the focus on operating more effectively with the capital that we deploy in Surface Solutions is there. That takes a little bit of time to work itself through the system. That's the first part. I think that's the positive part.
And then the second part would be that we just, based on the diversification that we have and that Michael described in his remarks, we don't only have products of that level of differentiation and margin in our portfolio. We certainly have some parts of our portfolio that are even significantly above the margin ranges that you describe. But certain other components that provide volume as well are not at that margin level. So I think at a mixed level, maybe 15% is high. But for sure, we expect that we're going to be able to deliver very strong 10%+ EBIT margins with a differentiated set of products. And from a depreciation standpoint, it takes a little bit of time for the depreciation to work itself through the system.
And even to be more aggressive, I would not exclude the 15% somewhere. The question is, will we really go for that? Or are we going more probably for a 10%, 11%, 12%, but with a much stronger growth? In the end, for me, margin times volume is which counts. And we will make here as well an optimization. We could have stuck in 2016 only to tooling and massage the tooling up and down and forward, left, and right. But we wouldn't have done this diversification which we have done, which gives us a more than healthy, a very promising future because we participate in all really good trends in the industry globally. If we wouldn't have done that, I would be pretty nervous because then I would have been harvesting the business, which could last another five or 10 years.
But then it would be over because if you rely only on tooling, that's too short. And that's why we have enlarged that. That's why we have found solutions for the semiconductor industry when the thermal spray solutions are not good enough for the next generation of semiconductors. And you need PVD coatings in the production world or where you need parts 3D printed where you cannot get anymore with a classical way done. And that's the areas where we are in. And these are some investments you do. And then in the end, for us, it's clear. A business like ours has to be double-digit in EBIT. Unquestionable. The question is then, do I limit our growth potential by optimizing margin, or do I optimizing the product of growth and margin? And for me, the second one and the absolute number is then the one which counts more.
But I would go with Philipp to compare us with a pure tooling company. And this is maybe a little bit our destiny. We don't have a real peer because a company which is operating 500 coaters globally is not existing. And what we haven't done, unfortunately, up to now, but we are working on it, is to utilize the power of Big Data which we have and the power of customer base and solutions to optimize even our capital base in a better way. This is, let's say, the next couple of years, one of our main focuses to work on that.
Understood. I have a final brief question. On page 10, you talk about the outlook and the end-market development. Just to get a bit of clarity, the flat development for filament demand, is this revenue or demand that you show with the arrow? Just for me to.
No. Or first of all, this is a comment on the market. And second of all, that would be more an indication for orders because we've obviously given you the sales guide on the last page of the presentation.
Flat underlying order for filament. Okay. Understood. Thank you very much.
Great. Thank you, everybody. This concludes today's presentation. You are now more than welcome to join us for coffee and tea upstairs. Thank you for your attention today, and goodbye.