Ladies and gentlemen, welcome to the Half Year Results 2021 conference call and live webcast. I am Sandra, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing via the relative field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Jens Breu, Chief Executive Officer. Please go ahead, sir.
Good morning and welcome to the presentation of our first half 2021 results. Today's speakers are Volker Dostmann, CFO, and myself, Jens Breu, CEO of the SFS Group. The agenda over the next 60 minutes will be key takeaways, development by segment, development of key financials, updated guidance 2021, group priorities, Q&A before closing. I will start with the key takeaways first half 2021, which can be best summarized as convincing sales and profitability improvements realized. Strong first half 2021 results were achieved, supported by dynamic market environment, retained capacity and capabilities to fulfill customer requirements, as well as continued attention to employee health. SFS has taken advantage of driving market demand. First half 2021, gross sales amounted to CHF 957.8 million, + 23.8% versus prior year, driven mainly by segments Engineered Components and Fastening Systems.
High capacity utilization, proactive price management, and cost consciousness led to operating profit margin peaking at 17.1%. Progress on infrastructure projects were achieved as planned, with most recently announced expansion of production platform in Nantong, China, planned to be commissioned in autumn 2023. Highlights noteworthy from the May published sustainability report for the period 2020 are. Number of work-related accidents reduced by another 13.3%. 5% of workforce enrolled in dual education program. Implementation of a CO2 roadmap containing measurable targets for reducing CO2 emissions. Let us for a moment further focus on sustainability. What are now the key elements to improve sustainable development? First and foremost, it's the management attention on regular reporting on progress. The management remuneration being tied to ESG KPIs, focusing of the organization on the core KPIs aligned with the materiality analysis of economic performance, occupational health and safety, training and education, emission reduction, socioeconomic compliance.
Another element, the regular public reporting, as well as the establishment of a CO2 roadmap to reduce CO2 emissions per Scope 1 and 2 by greater than 90% by 2030. Scope 3, greater than 90% by 2040. The last element, continued focus on the set goals and the update of the materiality assessment in 2021. The materiality analysis according GRI, as just mentioned, identifies the priorities, like the milestone to reduce our emissions by greater than 90% through the known SFS value engineering approach. By 2030, we expect to consume less than 10% non-renewable energy compared to today, before potentially buying any certificates. An important lever will be the switch to green electricity, as electricity consumption is the main trigger for the emissions in Scope 1 and 2.
With that, strongly underlying that sustainable thinking and acting is part of our DNA from our value proposition as of today, to a holistic view on sustainability where direct and indirect costs are considered for social, health, and safety-related risks, as well as the use of resources, production of emissions, waste, and disposals. Until today, society, in general, has not considered cost for environmental pollution in product pricing. As we see and experience currently, this is being changed by legislation and therefore will help us to quantify and argue such important cost elements with our customers in future in much more detail. Hence, further helping us in improving the meaning and relevance of our value proposition to our customers. Continuing with the development by segment.
Starting with the headlines of the engineered components segment, which participated at a strong market recovery. Due to that recovery, we can report positive development in most end markets, resulting in a first half 2021 reported sales of CHF 492.1 million, representing a +29.5% year-over-year growth and a +8.3% versus first half of 2019 year growth. Pronounced recovery in automotive and most industrial markets is progressing. As well, electronics is moving forward with continued strong demand patterns. The local-for-local strategy supported largely high delivery performance and allowed for selective market share gains. The global medical platform positioning has been positively received by customers. New projects, especially for our Malaysian site, are in discussion with potential new and existing customers. The high utilization of production capacities resulting in a strong EBIT margin of 18.7%.
The key message of the division Automotive, pent-up demand driving market environment, further underlines the just mentioned development of the segment. The recovery in demand across regions and applications is ongoing, however, dampened by shortages in semiconductor supply. Ongoing electrification of vehicles continue to be the major engine for innovation and growth of the division, evidenced by new substantial project wins in the area of electric brake applications, as expected and initially envisioned for the year 2021. The building expansion project for electric brake systems production in Heerbrugg, Switzerland, is developing as planned and will be essential to provide the needed space for the just mentioned recent project wins. Project conditions, market conditions are expected to largely remain unchanged, supporting the SFS Automotive division's position to outgrow the market. The key message of the division Electronics, stable growth across all applications of end users and supply chain in electronics alike.
Continued growth in the areas of mobile devices and lifestyle electronics is supported by the COVID-19 related ongoing push for home office work. The positive demand pattern for HDD applications is stimulated by cloud and enterprise computing. Shortages in semiconductor supply creating some degree of volatility. The needed expansion of the Nantong platform is approved and in planning stage. For fiscal year 2021, we expect new positive development versus previous year. The expansion of the production platform Nantong, China, as visualized on the slide, will therefore provide the needed capacity for future growth. The platform combines all SFS core technologies under one roof and was occupied in 2018. Ongoing growth of mobile devices, lifestyle electronics, and demand from other divisions requiring the expansion. Floor space will increase by approximately 70% to totally 130,000 sq m, and shall be ready for occupation in autumn 2023.
Total investment spending is budgeted for around CHF 32 million. The key message from the division Industrial, continued recovery in most niche markets underlines the return to the growth track. Development of demand is still varying across individual business units. Currently, we see strong demand for furniture, cutting tools, and general industrial applications. The aircraft business is still expected to continue to operate in stabilized, but challenging environment for the next 12-24 months at least. The expected ongoing good demand in the second half of the year will enable the division to return back to organic growth in fiscal year 2021. The key messages of the division Medical can be summarized with positive customer sentiment to the global platform development. Currently the division is still experiencing a challenging market environment for orthopedic products due to continued postponement of elective surgeries.
Besides, for the other roughly three-quarters of the business, the division is experiencing an ongoing positive development in these application areas. The buildup of the global manufacturing platform continues as planned. Positive customer feedback and good project inflow in Europe and Asia is observed, but still only slightly positive development for fiscal year 2021 is expected, hampered by the mentioned orthopedics business and phase out of some lower margin products. We're coming now to the headlines of the fastening system segment, where the two divisions clearly have taken advantage from the dynamic market environment. Continued high demand in construction and industrial manufacturing industries and pent-up demand in automotive market resulted in the H1 2021 reported sales of CHF 293.1 million, representing a +25.3% year-over-year growth and a +18% growth versus H1 2019. The currently high market demand put supply chains and material prices under considerable strain.
The strong performance orientation of the involved two divisions allowed them to navigate well through the challenging environment and helped them to benefit from market opportunities. High capacity utilization and thorough cost management resulted in a record EBIT of 17.7%. Looking into the details on the development with the Construction division, we can probably best summarize it by strong demand and capacity utilization. The fast relevant European and North American construction market continue its positive development, driven by rebound effects and moved up orders. Extraordinary demand in all application areas across Europe and North America resulted in historically high sales. Increasing signs of overheating is expected to result in a slowdown of construction projects and potentially normalization of demand in the second half of the year. Nevertheless, the division expects dynamic growth in the fiscal year 2021.
In addition, the Construction division broadened its market access in Denmark by the acquisition of Jevith. Jevith is a Denmark-based provider of fastening solutions for applications in high-quality building envelope. The acquisition allows the Construction division expansion of market access into the Danish construction industry. High technology and application competence, including specific services, are at the core of the acquired capabilities. The key figures for the fiscal year 2020 are sales of approximately EUR 5 million and a core staff of 10 employees. First-time consolidation will be as per July 1st, 2021. Coming to the key messages of the Riveting division, continued improvement of performance. Pent-up demand in automotive market and recovery of industrial manufacturing industry drove growth across all application areas. Some automotive customers have been, however, negatively impacted by shortage in semiconductor supply.
The concluded sale of the Chinese production site, Nansha, and the associated relocation to our Nantong manufacturing hub is expected to yield further efficiency gains. Looking forward, the market environment is expected to remain stable, resulting in organic growth for the fiscal year 2021. Last but not least, the headlines of the Distribution and Logistics segment where an ongoing positive development has been achieved. Overall, good market demand continued in first half 2021 and resulted in reported sales growth of CHF 30 million, representing a +8.1% year-over-year growth and a +4.4% growth versus first half 2019. Strong demand from construction customers has been observed, along with somewhat still challenging environment in the milling and machining end market.
High market demand put supply chains and price levels under considerable strain, which is expected to result increasingly in constraints of availability of selected product categories in the second half of the year. The segment expects organic growth for fiscal year 2021. With that, I conclude my explanations and will now hand over to Volker for covering the development of the key financials.
Thank you very much, Jens. Good morning and welcome everybody to this web call. The positive start into the year held strong into second quarter with slight acceleration on promising levels. Our team managed a high utilization and the demanding supply chain, making their best to honor our commitments towards our customers. This resulted in stark contrast to first half year in 2020 in a significant improved financial performance. In order to put the performance into perspective, as done already by Jens, I shall give occasionally a reference to first half year 2019 figures, which we consider as before the pandemic. Although first quarter 2021 showed still impacts of reduced capacity due to COVID-19 pandemic, we report an overall growth for the first six months of +23.8% versus prior year. In the decomposition, this is predominantly organic growth as foreign exchange impacts and changes in scope balance nearly out.
With a slight acceleration in the second quarter, the group reached an annual growth since 2019 of approximately 5% year-over-year, which is well in the bracket of our 3%-6%, which we aim for mid long term and which we achieved historically through this cycle. As a consequence, no short-time work regime or reduction on capacity is in place anymore throughout the group. The only exception being one site in Aircraft Components. Along with the development of the global economy, we have seen negative to flattish growth patterns from 2018 Q1 to 2020, when the COVID-19 pandemic adds its tribute. However, end of Q3 2020, a rebound kicks in.
Since SFS refrained predominantly from making redundancies during the pandemic, very swift adaptation of capacity to the new market needs allowed us to honor contracts, and thus confirming our position as being a reliable partner across our customer base. Particularly the automotive industry came back strong despite some volatility due to the supply chain issues, especially in semiconductors. As mentioned before, demand supports the volumes in electronics. In construction, we see historical high levels of sales that have been accomplished partially based on rebound effect, moved up orders, and restocking by our customers. We expect this to normalize during second half of this year and slow down slightly. Riveting managed to build up on the recovery in industrial and automotive markets, and we've seen also attractive growth in our segment D&L. Overall, the supply chain management of highest attention in order to act as reliable partners to our customers.
Sales breakdown by end market shows the recovery is visible in most end markets, with construction making just short of one third of the overall, automotive on 23.6%, and electronics at 17.8%. Medical remaining in the 7%- 9% corridor for the aforementioned reasons. All end markets, apart from orthopedics and aircraft components, see solid growth. From a regional perspective, Europe, being hit hardest in H1 2020, came back considerably to 39.2%, followed by America and Asia, which is gaining importance, being up 110 basis points. High utilization, cost discipline, and decisive pricing initiatives drove EBIT to a normalized level of CHF 161 million or 16.8% for H1 2021. EBITDA is at CHF 215 million or 22.4%. Workforce has, on a like-for-like basis, increased by 124 FTEs or 1.2%, which is slower than our overall growth. This leverage is made possible through successful optimization efforts in various plants.
To optimize production footprint, Division Riveting transferred its production in China from Nansha to our site in Nantong. Subsequently, the plant and the respective land right have been sold. An extraordinary additional book gain of CHF 3.1 million has been normalized for the reported EBIT of CHF 164 million or 17.1%. As shown on slide 24, we have experienced considerable dynamics in our end markets during the last three quarters. Given the significant pent-up demand paired with material cost increases, which will impact predominantly the second half of the year, we are carefully monitoring profitability as we go forward. Uncertainties stemming from volatile automotive demand and construction industry with signals of overheating influence our guidance, which will be presented to the latter of this presentation. The seasonality which we reported comparing first half to second half year over the last years might not hold as pronounced as in the past.
For some end markets, it may even not apply in 2021. For 2020 year-end, we presented the long-term compound average growth rate for the group, which was impacted by the 2020 slowdown to a level of 5.3%. Today, we can confirm our statement that the growth through the cycle holds firm and is around 6% and an EBITDA margin, which is well within the targeted bandwidth. Along with the livelier top line, the net working capital came down to 31.3% of net sales or 113 working days. Seasonality in the net working capital is usually higher at mid-year. Demand drove inventory levels with the mentioned need for high attention on on-time delivery to our customers. Further receivables management successfully avoided any increase in debtors risk.
Infrastructure projects at Stamm in Hallau, Switzerland, and for the automotive infrastructure, Hall 6 here in Heerbrugg, as well as improvements in machinery and equipment continue. The project of migrating our ERP environment to S/4HANA partially is recognized as capital expenditure under the bracket corporate. The majority of these projects will be visible and recognized as CapEx in second half year, and we expect our capital expenditure to be approximately at 7% of sales for the full year. The announced expansion in Nantong will only start in 2022. Free cash flow is, compared to prior half-year results, significantly higher. The reasons being twofold. In absolute terms, operational cash flow reached CHF 136 million, and is impacted seasonally from payables and receivables. Second influencing factor is the continuous strong demand that, as said, has meanwhile strained our inventory levels.
We have reached already at half year a conversion rate of 41.3% versus EBITDA, which in comparison to prior years is considerably higher. As a result, our equity base has further strengthened and the cash position raised by CHF 35 million versus year-end 2020 to CHF 180 million. Included are cash flows from our divestiture, mainly the Nansha building, and the payout of dividends, which were at prior year level. Returns on capital employed increased based on the back of the strengthened EBIT, reflecting utilization of our infrastructure. Calculating on a flat tax rate of 17.5%, we show return on invested capital of 12%, which brings us into the targeted range of returns. The differentiation between return on invested capital and return on capital employed can be decomposed into tax effects of 5% and the capital impact from goodwill of 11.3%.
Let me summarize the financial key figures as a demonstration of stability in the crisis on one hand, on the other hand, the ability to temporarily drive down capacity and costs, but swiftly ramp up again. The group is generating cash with speed and reliability, standing on a sound balance sheet. With that, I thank you for your attention and hand back to Jens, who will present you the guidance as well as the priorities for the near future.
Thank you, Volker, and welcome back. As mentioned to the guidance for the full year 2021, where expectations have been raised thanks to organic growth and dynamic business performance.
Assuming a continued positive development in the second half of the year, SFS expects organic sales growth to a level of around CHF 1.9 billion for the 2021 financial year at an EBIT margin of approximately 15%, as we have communicated in June. This corresponds to an annual sales growth of approximately 5% since 2019, which is in line with the original before COVID-19 crisis announced midterm guidance. Nevertheless, due to persisting COVID-19 pandemic, the outlook for the full financial year 2021 remains subject to risks and uncertainties. Arriving at the last slide of the active part of our presentation and covering the SFS Group priorities, continued focus on the organic growth path. As strongly rooted in our DNA, we aim to follow tightly the identified and relevant mega trends. Which means strengthening of the innovation, in particular in the mega trends, digitization and autonomous driving.
Under the key priority growth, we focus on further investments in future growth projects, in particular in the MedTech, automotive, and electronics sectors. On the employee side, we continue with the important preventive measures to protect our employees' health and safety. Under profitability, we focus on balancing production capacity with demand, ensuring full supply capabilities while keeping costs under control. Sustainability, as already mentioned, means continued focus on the set goals and an update of the materiality assessment. With that, we are at the end of the active presentation of the first half year results 2021, and now available for your questions. First, we take the questions from the call, and after that, switch to the ones from the chat.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to use only handsets when asking a question. Webcast viewers may submit their questions in writing via the relevant field. Anyone with a question may press star and one at this time. The first question comes from Alessandro Foletti from Octavian. Please go ahead, sir.
Yes. Good morning, everyone. Thank you for taking my questions. I have two, then a small understanding one. When I look at your guidance for the full year, maintaining the 15% margin after such a strong margin in H1 obviously implies a decline of the margin. I wonder if you expect to come out with this guidance, if you expect a reduction of the capacity utilization, in particular in engineered components. If yes, I would like to understand where this capacity utilization sort of reduction comes from.
Okay. Yes, good morning, Alessandro. We take this question, Jens, I will be answering. First off, we see challenges in the second half of the year, potential challenges ahead of us in engineered components. First off, in the automotive segment, I think we have seen a pronounced shortage in semiconductors. Until now, we assumed that the total annual car build will be reduced by 2 million cars due to semiconductor shortages. At this point in time, we believe it will be higher. It will be probably around 5 million cars which will not be built this year due to the shortages, which then later on also result in lower orders from our customers and lower capacity utilizations in our plants in division automotive. Secondly, as we already also know, the industrial division usually follows the trend of the automotive division by a delay of around one quarter, three months.
As we still have seen driving demand in Industrial, we would also expect in the second half of the year, there will be a certain normalization of the demand pattern, in engineered components. In fastening systems, as we have seen, we have particularly strong demand patterns in the construction division. Also there, we expect the normalization in the second half of the year. We have not seen that our customers expanded their crews or their capacity in the market. We believe the strong first half of the year was mainly a refilling, restocking of inventory, maybe some pre-buying ahead, due to increasing price levels or increasing price expectations in construction. We already have seen that also in some regions, construction markets have stopped expanding the buildings and waiting until price levels come further down.
The riveting division is also tied to industrial and automotive, as just mentioned before. These are the major challenges we see ahead. We certainly have seen a strong first half of the year. We expect a normalization in the second half of the year, and with that also a lower utilization of our manufacturing plants, which hence naturally is pushing or is taking down the EBIT of engineered components and fastening systems alike.
All right. If I may ask just a quick add-on here. What I don't understand so much is that if you will reach the CHF 1.9 billion in sales, then you are very likely to have two half years with the same sales level, plus, minus with CHF 10 million difference. Why should the capacity utilization be so much lower at the same sales level?
That's a good point. It's one is capacity, the other is the cost of raw materials, which are increasing. The first half-year we benefited from still having inventory rated at a lower cost level. The second half of the year, we would see that material flows in at a higher pricing point. That's a topic. Secondly, especially in engineered components, the price increases on the raw material side between 20%, 50%, and sometimes 100% of raw material, price increases have been only announced to start at the end of Q2. Meaning in Q3 and Q4, we will see a substantial increased pricing level, costing level of the raw materials, which we usually fairly quickly utilize and consume. This is the second element, lower utilization of the plants, secondly, also much higher cost on the raw material side in all three segments.
All right, thank you. Maybe this would be my very small understanding question. Your slide, I think it was to be precise, I think 27 I wrote down, where you indicate the seasonality of the EBIT. That slide with the two arrows, one pointing up and one pointing down for the EBIT in H2. Is that only to tell us that this time it will not happen as normal? Is there actually still a chance that it ends up at 180?
Yeah. Certainly, we expect that the arrow goes down. I think when we assumed 2021 development of the year and COVID-19, we were wrong. We expect that by now, the COVID-19 crisis is behind us, and we understand and see this is not the case. We remain open here. We may be misunderstanding the development and maybe see an upward trend even though we expect a downward trend. I think that's the message on this slide. We expect downward, but on the other hand, you never know. We could also see an upward trend that maybe it's further accelerating in construction, and maybe the slowdown in automotive is not as pronounced as we expected at this point in time.
As you know, SFS, I think we usually come out with a guidance, which is probably tilted a little bit more to the conservative side, and which represents usually a top line and a bottom line results, which we are comfortable to achieve.
All right. Thank you very much. If I may, one last one, maybe for the CFO, since there's a new one now here in charge. I was wondering about the cash-to-cash cycle. We've been speaking about that in the past already. Now you're at 109 days. What is your view here? Where can this go?
I think the cash-to-cash cycle at the moment benefited from very much strained inventory levels and is on a more lower end of the bandwidth. We're looking at the more important business portion going into Asia, with larger electronics customers where we face still negotiation on longer payment terms, which we, at the moment, can defend. I think we're seeing us towards the lower end of the bandwidth at the moment, just because of inventory effect. Low inventories potentially harming our on-time delivery. We must not go into a risk area there. That's why I would see it as a lower end.
Okay. Thank you. That's all from me.
The next question comes from Andreas Müller from ZKB. Please go ahead.
Yes, good morning, gentlemen. Thanks for taking my questions. I have also two or three. One was really on the restocking comment you did. I mean, the volumes were immensely growing this quarter. Can you gauge us a bit, how much was really underlying demand and how much restocking of these industries, particularly construction or maybe also automotive?
Yeah. Thank you, Andreas Müller for your question. Yes, that's certainly a challenge we have overall in business, that visibility is not very high in the construction market. Usually, our customers order 24, 48 hours ahead of time. From that point of view, there's not a lot of visibility we have. From that point of view, we have to assume that probably half of the sales growth we have experienced in the first half of the year in construction is due to restocking, but also it's probably due to new customers not being able to find the products with their existing sources. Meaning the growth roughly has to be divided in half on the construction side. One half is probably sustainable, plus, minus. The other half is probably restocking and new customers which have not been satisfied with their existing resources.
When we talk about automotive division, I think overall there we have seen the majority of the restocking already in the second half of 2020. The demand pattern as we have seen it now in the first half of 2021 is what we judge true and actual demand pattern, meaning cars being built and there's hardly any space or place between us and the car manufacturers to build up inventory. In automotive, we see this as real and true demand. We have also seen consistently over the last few months that the order level or the order placement level has come down slightly. As mentioned, that's why we believe that the recovery in the car market when we went into the year, we expected a 12% recovery in the cars to be built.
We expect this now below 10%, probably maybe around 8%, maybe even 7%, as low as 7%, the recovery in cars built year-over-year between 2020 and 2021.
Okay. Thank you. If you haven't had these trends in the supply chain, what could have been an indication of revenue if you would have fulfilled every order you had? Can you gauge us here a bit?
Up to now, we can say we had only minor delays in the supply chain to our customers, meaning we had still good delivery service to our customers, maybe two to three days delay to their expectations overall. We did not have customer orders which were completely unsatisfied to this level. In the second half of the year, we also expect further delays, we also expect that we can satisfy the customer demands overall. Usually, we had seen that at some competitors, they were not able to deliver on time or within a certain time period of the demand when it was raised. Due to that, we had some tactical wins over competitors. Second half of the year will be certainly interesting to see the development.
Will some of these so-called new customers remain with us, especially in the construction division, or will they fall back on their regular sources as they used in the years before? That's still an unknown to us, and that's still also an unknown we have put and built into the guidance for full year 2021.
All right, thank you. Maybe a last question on the HDD component part, which was growing, I guess, this first half. Is the medium-term outlook unchanged on that one?
That's probably a hard question you ask us here. We have been truly surprised that year-over-year, we see the TAM development, the total annual drive build is stable. This is the first time, probably in the last five years, where we have not seen a decline. I would assume we will see a stable year 2021, maybe even a stable 2022, sooner or later, the annual build drives demand will further being reduced because the HDD drives, they enhance year-by-year with more capacity, so hence less drives are being built and used. Overall, and this is what we see with the sales development in HDD, that it returned back to a slight organic growth again because the value content increased in those hard disk drives. That's something we have to particularly monitor in the year 2022, 2023.
We believe that maybe we could have a stable, maybe slightly increased sales trend in HDD due to the change of value in those hard disk drives. Once again, early development, early signs of this development, not yet ready to confirm that trend.
All right. Thank you very much.
As a reminder, if you wish to register for a question, please press star and one. Gentlemen, so far, there are no more questions from the phone.
We continue with questions from the chat. The first question comes from Torsten Sauter from Kepler Cheuvreux. Considering the strong first half year performance, do you think there is a risk that SFS will see top line decline in financial year 2020? Thank you, Torsten, for your question here. Yes, when we look out into the year 2022, we still expect that we perform according to our midterm guidance. That meaning the 3%-6% organic growth. I think when we take a look into the different end markets which we have, we certainly see a good pipeline of new projects, which should support this assumption for the year 2022. On the construction side, certainly some challenges since we don't know where the construction market will continue to go.
At this point in time, we expect as long as the national banks remain expansive, that there will be enough money available for consumers, enough credits available for consumers to further invest into the environment and where they spend time. Since this is not traveling, it's probably home improvements and new homes. We are also fairly confident that on the construction side, we will see a stable development. That's probably the biggest answer going into 2022. Besides that, once again, we would expect that we perform along the 3%-6% midterm growth expectation.
We continue with a question from Marta Bruska from Berenberg. Given the strong results, how sustainable do you view EBIT margin levels for Fastening? What areas have driven the strong increase?
We, for the Fastening Systems Segment, stay with our guided range of 12%-14% EBIT margin levels that we still are confident that they are feasible over the cycle. Really, automotive end market drove utilization of our infrastructure and asset construction, which makes one third of the overall contribute heavily in pushing our profitability here. Those were part of that strong increase. We, as mentioned now several times, we are looking with a clear focus on the sales levels in construction.
Of sales levels normalizing out here. Both contribute and construction is beginning to flatten out, and automotive shows significant volatility due to their supply chain issues. We continue with the next question from Torsten Sauter from Credit Suisse. What's the mechanic to pass on rising input costs to the market, namely steel costs? What sort of headwinds do you expect for 2H, and is this the reason for the conservative 2H margin guidance?
We have several mechanics to pass on price increases. In construction, that's more of a short-term price agenda that we are having with our key customers and with our mid and small-sized customers. The mechanic there goes through price increases that we can directly implement. In our long-term agreements with larger customers, we have price clauses that allow us to pass on raw material increases. On the other hand, also raw material decreases should they arise, to pass that on to our customers with a three to six-month delay once the bandwidth of plus, minus, whatever is defined is less. Therefore we see there a time lag in handing over price increases. You asked me about the headwinds we are expecting. Our bill of material is suggesting that we're having 12%-15%, 17% of raw material input depending on the arena we are in.
We're expecting headwinds, yes, it's been mentioned before, depending on the quality of raw material we are buying, we're looking at 20, 50 or even more % of price increases that have been announced, starting Q3 and further out into Q4. Yes, it is factored into our guidance. We expect that raw material is playing a more important factor in the second half of the year. Namely also because the attention on the supply chain allowing us to deliver on time will increase and will demand additional measures in order to securitize our delivery to the customer. I hope that helps.
We continue with the next question from Tobias Fahrenholz from Stifel. With regard to price management, could you please provide an estimate on the impact of price increases on top line in first half year and also expected in the second half year, and also highlight the most impacted division?
Yeah. Good morning, Tobias. Jens speaking. Certainly, a broad question you're asking us here. I will be able to answer it by segment. Roughly, we can say that in the first half of the year, we have increased pricing in Fastening Systems and in Distribution & Logistics segment to our customers. I would broadly state probably in the range between 3%- 6% prices have been increased in the first half of the year. Segment Engineered Components has not seen price increases in the first half of the year because there, the special, higher quality raw materials we use there, we have only seen price increases towards the end of second quarter.
That's why we see price increases in engineered components in the second half of the year and probably a more flattish price development in fastening systems and distribution logistics or only minor adjustments for specific products where they will still have price increases. That's overall and in general, the trend, as I said, 3%-6%. In engineered components due to the lower raw material content, the price increase will be probably below that range, will be probably in the range between 1%-4%, depending on the customer, the raw materials, and the raw material content overall. Besides that, we have not seen a special EBIT gain on the back of low valued inventories that we could recognize. I think it's division by division. We have seen it varying here and there between the product lines. Overall, we have not seen a specific major step up.
Overall, I think we can conclude that probably around 5% EBIT increase is max, due to raw material price increases we have seen.
We continue with a question from Marta Bruska from Berenberg. Can you provide a rough estimate on revenues in H1 2021 from the major customer of the electronics division?
Overall, we can state that in the electronics division, we profited from a better H1 development in general, because last year, second half of 2020, the ramp-up of the new programs have been delayed due to COVID-19, and some of that demand has been pushed over into the year 2021. That's the reason why we have seen throughout, in electronics overall, an improvement compared to previous year in the top-line sales. At this point in time, we believe, and we changed our opinion. First off, we expected for the second half of the year, a less driving electronics environment. We changed this opinion here when we analyzed first half-year results and looked out further into the second half of the year. COVID-19 is still around. Home office guidelines are still around.
We expect that the push for electronics gadgets is continuing in the second half of the year, with that yielding in a more positive development of electronics than what we expected initially for the year. In general, we can also say that the development is broad throughout all customers we have in the electronics division. It is not tied to a specific product, program line, or specific customer. Once again, it is a broad development we see in electronics.
The next question comes from Manuel Portinelli from AMG Fondsverwaltung. Can you please elaborate a bit more about ramping up the medical platform? What are the expectations going into the second half of the year and an outlook into 2022?
Yes. Good morning, Manuel Portinelli. As we see that medical division overall, as you are probably familiar, we acquired Tegra Medical in North America. We got access to the MedTech customer groups there strongly. Now we utilize this access in Europe and Southeast Asia, where we have good capabilities for all the larger volume products and components. First off, the second half of 2021, we expect that the orthopedics end market will start to rebound again. We would expect that the utilization in medical will also improve and increase on that side of the business. Secondly, we still have some low-margin product lines, where we are in discussions with customers and potentially phase them out in the second half of the year. That's the assumption at this point in time. In the year 2022, we see that we have good product wins.
That's why we also need the building extension in Hallau, for instance, in Switzerland. We also see that we have need for building extension in Malaysia, for instance, where we also have won considerable new medical programs for local customers. In general, we have a good pipeline of new products which we'll bring to the market. From that point of view, we would also expect in the medical end market next year, growth probably in 2022 of around 6%. That's a very early indication. Besides that, we are certainly working on a few more projects, which then may be coming in 2022 or maybe 2023, for medical customers into the medical division.
We continue with a question from Torsten Sauter from Kepler Cheuvreux. Can you please guide on CapEx in the second half year and full year 2022? Why have investments into intangible assets increased, and what's the sustainable level of intangible CapEx from here on?
Thanks for the question, Torsten Sauter. We see two trends now, where you said the CapEx in the first half year has been a bit deferred down. As we go into the larger infrastructure projects like the Hall 6 projects or the build-out of the platform in Hallau. We are seeing CapEx for the full year 2021 around 7% as these projects accelerate. What you see in intangibles is our capitalization of our ERP project, S/4HANA, where we do after 20 years of having SAP R/3 under commission. We are doing that bridge over, looking also at the broadening of the ERP to areas where we have been on other ERP systems and not on our core system. Now, this will continue certainly for the next year, expect it to be in the same range at the same speed, roughly.
We are going into rollout during 2022, starting 2022, and then this trend will be capped and will not go into 2023, certainly not as pronounced as now.
We have a final question in the chat from Torsten Sauter. Unlike last year, the financial result in the first half of the year was positive. Yet, there is a gross debt. How should we plan for the full year for these lines?
Not sure whether I fully understood the question. The net cash position when we compare to first half year last year increased by CHF 191 million. We repaid third-party debt. We have third-party debt out there, in connection with financing structure and balance sheet hedging, which is more on the technical side. We are not expecting to raise that significantly nor to fully cancel that out. As said, I'm not sure whether I understand your question correctly.
If not fully answered, please feel free to reach out to us after the call, and we'll discuss.
There are no more questions at this point in time.
Sorry to interrupt, sir. We have some questions on the phone.
Okay. We come back to the questions on the phone, yeah. Sorry.
Okay. Thank you very much, sir. The next question comes from Bernd Pomrehn from Vontobel. Please go ahead.
Good morning, gentlemen. You mentioned some market share gains. Is it fair to say that customers in automotive are more loyal than in construction? What can you do to more effectively bind customers to SFS? That would be my main question. The second question, just quickly, can you provide any tax rate guidance for the full year? Thank you.
Okay. I will answer the first question, and then Volker will answer the question on the tax. Yes. Absolutely, on the automotive side, customers have to be more loyal because the components and products are specified in and approved, usually with the tier 1s and tier OEMs. Customers are usually not that quick and flexible in switching sources, but quite often, there are maybe two or three sources for a specific product or program which is specified in, and then the customer can switch the allocation from one source to the other source, usually within a certain band. This is what we have seen, also in this rebound, that we had customers which gave us high allocation because the other source was not able to ramp up in time or not able to provide the right quality.
That's why we had also tactical gains in the automotive division to some degree. Certainly in the construction division, roughly half of the growth we have seen in the first half of the year came with customers which had no sales with us or no dealings with us over the last 12 to 24 months. Their customer loyalty is probably not as high because the customer can switch more easily, since a large number of those products are not specifically specified, from which source it needs to come from. That's why those construction customers are a little bit more flexible.
To the question on the tax rate guidance, we are stating slightly over 19% for half year, which is driven by considerable FX gains on equity loans, which inflates the taxation. We expect this figure to remain roughly stable, tendency to go slightly down towards year-end, so staying below 19%. Bear in mind that we have there a balance sheet effect in it, which inflates it when you compare it to the 16% you have in mind out of our last year's full result.
Excellent. Thank you so much.
For any further question, please press star and one. The next question is a follow-up question from Mr. Alessandro Foletti from Octavian. Please go ahead.
Yes. Good morning. Can you hear me?
Yes.
Okay, great. Had another question on the construction market, in reality. Your comments regarding the potential normalization of growth in second half year and so on are more related to the distribution and logistics part, or both, the construction business also within fastening systems?
The comment was more to construction industry, as we see that the capacities in the construction industry are not significantly expanded, and as we see that we had a distinct higher demand during first half-year, which now comes slightly back. We take it as a signal that the restocking effect and the moving up of orders is fading out and real underlying demand is shown. That was more targeted towards construction end markets. We see signals of overheating. We see larger construction sites being stopped because of prices or availability of other raw materials not being granted or stable. Budget constraints start to kick in. We are expecting that this fading out of the rebound will bring us to more normal levels for the second half-year.
All right. That would apply to both distribution and logistics as well as fastening systems?
Less to distribution and logistics.
All right.
Construction. As distribution and logistics is also nicely exposed to the industrial and other end markets and not predominantly construction.
Thank you.
Gentlemen, so far there are no more questions.
Yep. Okay. Since there seem to be no more questions in the chat or by the call, we thank you all for your interest. Wish you a good summer, talk to you soon again. Bye-bye.
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