Good morning, and thank you for joining us today. Today's call is hosted by Samuel Sigrist, CEO, and Frank Herzog, CFO. We had planned to have a video presentation this morning. Unfortunately, we have had to change the format slightly as Samuel is in quarantine. While you will be able to see the slides, the rest of the presentation will be in audio format. We will be taking your questions verbally after our presentation. For the few of you having to join by Vimeo, please submit your questions in writing. The slides for the call are available for download on our investor website. This presentation may contain forward-looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full cautionary statement and disclaimer can be found on slide two of the presentation, which participants are encouraged to read carefully.
With that, let me hand you over to Samuel to begin the presentation.
Thank you, Ingrid. Good morning, everybody. 2021 was a year in which SIG once again proved the resilience of its business. We achieved growth in all regions, despite the continuation of negative COVID-19 effects. We also successfully overcome supply chain challenges which affected most industries. We continued to invest in our manufacturing presence with the ramping up of the new APAC plant and the start of construction of our new plant in Mexico. We also saw the fruits of our significant investments in R&D with groundbreaking innovation in both filling machines and carton packs, with an expansion of our alu-free portfolio. We continued to demonstrate our leadership in sustainability, with notably a significant reduction in carbon emissions. To take account of the current inflationary environment, we have initiated price increases to offset higher cost.
Last, and certainly not least, we identified two acquisition opportunities, which culminated in the announcements made earlier this year. With these acquisitions, we will further strengthen our company, cementing our position as a solutions provider for sustainable aseptic food and beverage packaging, and position ourselves for sustained growth and best-in-class profitability across an expanded platform. I will comment on some of these topics in more detail in a moment, but let's first take a look at the financial performance in 2021, which illustrates the ongoing momentum and strength of our aseptic carton business. We already pre-released the key numbers on February 1st this year. We are pleased to have exceeded our core revenue guidance with like-for-like growth at constant currency of 6.6%. This reflects a stronger than expected fourth quarter, with robust at-home consumption in Europe and the Americas and improving conditions in Southeast Asia.
The strong top line growth contributed to an increase in the adjusted EBITDA margin to 27.7%, a record level. This was achieved despite a further negative impact from currencies, although less than in previous years, and higher freight and raw material costs. ROCE also reached a record level of 31% and free cash flow of EUR 258 million was comfortably ahead of last year. Adjusted net income increased to EUR 252 million, enabling us to propose a 7% increase in the dividend to 45 rappen per share. Let us now look at the performance by region. Our business in Europe is predominantly in little packs and therefore continue to benefit from home office working.
In this context, growth of 2.1% for the full year may look modest, but remember that the comparison is with an exceptional 2020, which featured consumer stockpiling as well as increased at-home consumption. In fact, 2021 continues our track record of growth in Europe, which is a mature market where we have been gaining share thanks to our innovative product portfolio, which has allowed us to expand into new categories, win new customers, and grow our share of wallet. Our most significant win in recent years has been a contract to place 15 fillers with the German dairy Hochwald. Most of these fillers were installed in the course of 2021, and they will start to contribute to growth in early 2022, with the contribution steadily growing as the fillers ramp up throughout 2022.
As anticipated, when we spoke in October, the Middle East and Africa business saw a strong rebound in the Q4 . This resulted in positive growth for the full year, despite significant COVID-19 effects and the impact on the liquid dairy business of a drought in South Africa in the first half of the year. The underlying growth drivers remain positive, and we achieved a number of new business wins during the year, including the placement of our first food filler in the region. When we took full control of the Middle East and Africa business, we talked about bringing more innovation tailored specifically to the needs of consumers in these countries. We have been quick to put this into practice with the opening in November of a new tech center in Dubai to support co-development of products with our customers.
In Asia-Pacific, China saw a return to more normal market conditions. Demand for white milk, which grew substantially during the pandemic, remains strong and is one of the key factors behind our expansion into the fresh segment with the acquisition of Evergreen Asia. Southeast Asia delivered robust growth even though demand continued to be affected by COVID-19 in many countries. This led to a focus on affordable products which we were able to serve thanks to the flexibility of our system. The ramping up of new fillers in a number of countries also contributed to growth, a function of our ability to continue installing fillers even during the pandemic. In the Americas, we saw a continuing benefit from the 9 new fillers we placed with [cheaper leading] in the course of 2020.
As these fillers were largely in place by Q4 2020, the benefit tapered off towards the end of the year, but we still saw solid Q4 growth. At-home consumption of liquid dairy and culinary products remained strong in Brazil and Mexico. We are also seizing new opportunities with the development of categories such as high-protein drinks and plant-based dairy. In the U.S., food service sales recovered with the reopening of fast food restaurants. Growth in premium plant-based dairy alternatives and creamers continued, particularly with emerging brands. Returning now to the topic of innovation. We are constantly upgrading and refining the filling machines we have in field. In 2021, we made a step change with our new generation filling machine. That is why we are so excited about the launch of SIG Neo, which took place last November.
With a speed of up to 18,000 packs per hour, SIG Neo is quite simply the world's fastest filling machine for family-sized carton packs. It compares with the top speed for these larger packs on our current fillers of 12,000 packs per hour. SIG Neo has a carbon footprint per filled pack, which is 25% lower than existing machines, reflecting low waste rates and a 30% reduction in the consumption of utilities. SIG prides itself on its system offering. Alongside SIG Neo, we are also launching a new fully automated sleeve magazine powered by a robotic arm and a new user interface which operates the entire filling line end to end. This also enables digital connectivity with remote monitoring and serviceability. Of course, we have not forgotten the packaging. With SIG Neo comes combivita, a new family-sized aseptic carton pack.
Combivita has been developed following extensive consumer-centric research and provides new levels of convenience and differentiation. It has a new tethered and resealable closure, which ensures smooth and easy pouring and is easy to transport, thereby reducing secondary packaging and logistics costs. Sustainability underlies our entire carton offer. With our SIGNATURE packaging range in the vanguard of innovation, we have just made another major breakthrough with the launch of SIGNATURE EVO. Until now, our aluminum-free solutions have only been available for milk. Oxygen-sensitive products, such as juices with high vitamin C content, have still needed an ultra-thin aluminum layer to protect them. With SIGNATURE EVO, we have engineered an aluminum-free solution which can be used for juices, nectars, and plant-based milks, as well as for dairy milk. It will be available in portion packs and will facilitate the development of SIGNATURE packaging in the markets outside of Europe.
These product innovations are just one part of our sustainability journey. Today, we have published for the first time a combined annual and corporate responsibility report, where you can see the wide range of metrics against which we monitor our progress. Prior to acquisition of the Middle East business, our Scope 2 emissions were already at zero. In 2021, we succeeded in eliminating Scope 2 emissions in the business, and the entire group is now at zero. For all our operations globally, we have also exceeded the target of a 60% emissions reduction of Scope 1 and 2, which was set for 2030. We have also made further progress on our goal of reducing the emissions of our entire value chain per liter packed. In total, these emissions, including Scope 3, have been reduced by 20% compared with our 2016 baseline.
We have achieved this mainly by working with our suppliers, developing more efficient filling machines, and innovating our packaging solutions among other factors. We have many endorsements from external rating agencies for what we have achieved, but we are absolutely not resting on our laurels. On the contrary, we will drive further progress with a commitment to best-in-class ESG performance, and this across the enlarged business following the recently announced acquisitions. As evidence of our determination to go further, the weighting of the sustainability metric in variable remuneration for management will increase this year. I shall return to elaborate on the acquisition shortly, but first, let me hand you over to Frank for a more detailed review of the financials. Frank?
Thank you, Samuel, and good morning, everybody, also from my side. I look forward to taking you in more detail through the strong financial performance for 2021. These very good results are testimony to the strength of our aseptic carton business and our solid foundation for the recently announced acquisitions. As Samuel has detailed, we saw sales growth across all regions in 2021 and a like-for-like core revenue growth at constant currency of 6.6%. This exceeded the upper end of our midterm guidance range of 4%-6%. In the second half of 2021, we benefited from some initial price increases in selected markets.
The contribution from the Middle East reflects the first time consolidation of our former joint venture, which we acquired at the end of February 2021. As a reminder, when we are showing the contribution from the Middle East on the following slides, this reflects the additional revenue and adjusted EBITDA generated by the former joint venture in the period, offset by the loss of third-party revenue and dividends that SIG received from the joint venture in the comparative period. Going forward, the sale of the non-core paper mill in New Zealand, we will only report total revenue with no more reference to core or non-core revenue. In 2022, the loss of the paper mill revenue will be broadly offset by the additional two months of net revenue effect from Middle East business.
We will therefore consider growth in the Middle East business as organic on a full year basis. In 2021, we continued to increase our EBITDA margin by 30 basis points to now 27.7%. We achieved a record level of adjusted EBITDA of EUR 571 million, a 14.5% increase compared to 2020. The strong revenue growth was the key driver of this EBITDA growth, contributing EUR 47 million. We had only minor headwinds from raw material costs and production as our hedging strategy dampened the effect of commodity price inflation and production efficiencies largely balanced rising energy and freight costs. While SG&A costs grew in absolute terms, they declined as a percentage of revenue due to cost discipline and operating leverage.
The net contribution of EUR 34 million from the consolidation of the Middle East joint venture was another major contributor to the EBITDA growth. This is a one-off effect, but we will continue to benefit from the attractive margins in this region. FX effects played only a minor role this year. Q4 shows strong revenue growth of 5.1% as the basis for our robust finish of the year. All regions contributed to this excellent performance. Looking at the Q4 adjusted EBITDA bridge, top-line growth drove EBITDA improvement and that more than compensated raw material headwinds. Improvements in production more than offset a slight headwind in SG&A. Again, the first-time consolidation of the MEA region resulted in a step-up of EBITDA from this region with attractive margins. There's been a lot of discussion, obviously, about raw material price inflation in 2021.
We're able to contain much of this inflation due to the type and mix of our raw materials and our policy to hedge aluminum and polymers. As you can see from the graph, liquid paperboard, or LPB, is the largest component of our raw materials at 20% of 2021 revenues, close to the level for 2020. We've multi-year supply agreements for our LPB that give us high level of price visibility. Polymers represent 10% of our cost base as a percentage of 2021 revenues, and aluminum represents 6%, of which the metal component is only 3%. Again, no material changes to the 2020 levels. It is our policy to hedge the majority of our polymer and aluminum needs for a given year during the preceding year.
We retain both risks and opportunities on the unhedged portion of our requirements as the year progresses, depending on the evolution of price movements. As we discussed during the Q3 results call, we have initiated price increases to offset the impact of higher costs on our absolute EBITDA in 2022. These annual price negotiations are continuing through the first quarter of this year. 2021 was a year of continuing investment in our business. PP&E CapEx increased and included investments in the growth of our European factories in the areas of digital printing and tooling for sustainable packaging. We also made further investments in the new APAC plant and started work on the new plant in Mexico. Gross filler CapEx was also higher, reflecting strong order flow from our customers. Net filler CapEx, however, declined due to a substantial increase in upfront cash received from our customers.
The level of upfront cash largely depends on a geographic split of filler placements, with some regions more likely to enter into contracts with higher upfront payments. Because of the high level of upfront cash, total net CapEx as a percentage of revenue of 6.9% came in clearly below the guided range of 8%-10%. The numbers of fillers in the field increased in 2021 by 29 net additions to now 1,295. More meaningful, however, is the high number of gross addition at 76. These new fillers generally have much higher output than the ones we retire, which tend to be less productive with lower volumes of packaging material. We therefore saw in 2021 a significant expansion of our filler base, which will contribute to sustainable volume growth going forward.
Strong working capital management was an important contributor to cash flow generation. On a comparable basis, taking account of the acquisition of the Middle East joint venture, net working capital as a percentage of revenues was more than 100 basis points lower than at the end of 2020. Operating net working capital includes volume rebates, which are a function of our strong revenue growth, and it also showed meaningful improvements. The good operating performance drove our strong cash flow generation. Net cash from operating activities was positively impacted by the growth in adjusted EBITDA, operating net working capital inflows, and the non-recurrence of refinancing related payments in 2020. Upfront cash is included in net cash from operating activities and contributed to free cash flow generation. The contribution of the Middle East business more than offset the loss of dividends from the joint venture.
As a result, free cash flow was up by EUR 25 million, and cash conversion increased from 71%-75%. This strong cash flow generation will support our planned acquisitions and underpins our confidence in the continued leverage reduction. We have a strong track record of deleveraging since the IPO, with an average reduction of approximately a quarter turn per annum. In 2021, net leverage declined to 2.5 times despite the acquisition of the joint venture in the Middle East, which had a net debt impact of about EUR 200 million, and despite an increase in lease liabilities largely related to the new Suzhou packaging plant and the consolidation of the former Middle East joint venture. Our post-tax return on capital employed reached a record level of 31% in 2021.
This is at our customary reference tax rate of 30% to enable better comparison. At the actual adjusted effective tax rate of 23.3%, ROCE reached 34%. This strong performance reflected growth in EBITA and the contribution of the MEA business. The high level of ROCE is due to the strong underlying returns of our business, especially driven by the attractive profitability of our long-term customer contracts. In conclusion, we delivered a very strong performance in 2021, with top-line growth of 6.6%, a further EBITDA margin increase of 30 basis points to now 27.7%, as well as strong cash generation. This is a solid foundation for our recently announced transaction, and Samuel will now provide you a summary of the compelling rationale for the Evergreen Asia and Scholle IPN acquisitions.
Thank you, Frank. Let me start with Evergreen Asia, which is an opportunity in line with our strategy for category expansion and enables us to tap into a new pocket of growth in Asia Pacific. As already alluded to, demand for white milk in China is growing fast, driven by awareness of its health benefits. Aseptic remains the preferred form in many parts of the country, but there are pockets of growth for fresh milk in urban areas. We see significant cross-selling opportunities, and we will be able to strengthen our relationship with existing customers while gaining new access to regional and city dairies. In addition to the top-line growth, we expect to realize cost synergies in the amount of around EUR 6 million. SIG opened its first factory in China in 2004, and we have a long-standing focus on the liquid dairy market.
We are well able to leverage our marketing and technical expertise into fresh and extended shelf life products, as well as bringing important innovation to this segment. Evergreen Asia reported revenue of EUR 135 million in 2021, which is 5% of the combined group. The acquisition of Scholle IPN will broaden our leadership in sustainable packaging systems and solutions. This business, comprising bag-in-box and spouted pouch solutions, has many similarities with our own that make us very confident in a successful integration. Like SIG today, Scholle IPN serves resilient food and beverage end markets. It enjoys high barriers to entry arising from its use of aseptic technology and its know-how and IP in barrier films and fitments. Its solutions are deeply embedded with the customer's value chain, contributing to the development of long-standing customer relationships that generate recurring revenues.
Scholle IPN's focus on sustainability set the scene for the enlarged group to offer the most sustainable packaging solutions across a wide range of categories and product sizes. Our businesses are also highly complementary. SIG today is present largely in the retail sector, whereas Scholle IPN also has a strong institutional and industrial presence. While our largest carton size is 2 liters, bag-in-box caters for volumes ranging from above two liters to well over 1,000 liters. Pouches, on the other hand, are ideally suited for very small sizes of 100 milliliters or less, particularly when filling viscous products. Geographically, Scholle IPN will significantly increase our U.S. revenues, while we will use our established platform to expand their business into emerging markets. We will also be able to expand their use of aseptic technology, particularly in pouches.
Think back to the first part of the presentation when I talked about SIGNATURE EVO. Scholle IPN's barrier film expertise can accelerate our alu-free journey through the development of new alternative structures. The strong strategic fit of Scholle IPN with SIG is not only the source of additional growth and revenue synergies, it is also the basis for significant cost synergies in the amount of EUR 17 million. Scholle IPN reported revenue of EUR 474 million in 2021, which is 18% of the combined group. Together, Evergreen Asia and Scholle IPN represent just over 20% of the group's revenue. SIG Aseptic Cartons will continue to drive the group's performance from a financial perspective and in terms of using our established platforms to drive growth at both acquisitions. Now Frank will walk you through the financing of these acquisitions and the timeline for refinancing.
Thank you, Samuel. As previously discussed, we've arranged committed bridge facilities to fund the transactions when they're expected to close in the Q2 or Q3 . We'll then have the flexibility of up to 18 months to arrange long-term financing whenever market conditions are suitable to execute the planned capital increase of EUR 200 million-EUR 250 million and to place long-term debt. We currently have authorized capital with our subscription rights equivalent to 10% of our share capital. This corresponds to the 34 million shares that will be transferred to the owner of Scholle IPN as part of the consideration for this acquisition.
At the AGM on April 7th, we'll propose a replenishment of the authorized capital without subscription rights in order to accommodate the planned capital increase, which will take place in the form of an accelerated book building as a standard practice in the Swiss market. This capital increase will ensure that our pro forma net leverage at year-end 2021 following the transaction does not exceed 3.25 times. Finally, we are pleased to see that both S&P and Moody's have confirmed their respective ratings at BBB- and Ba1, both maintaining their stable outlook. This is a further endorsement of the acquisitions and the strength of the combined business. Now moving on to the last part of the presentation. I'll turn now to the guidance for 2022.
For this purpose, we're assuming the consolidation of Scholle IPN and Evergreen Asia businesses with effect of July 1st, 2022. This timing could vary depending on fulfillment of the closing conditions. For the full year, we expect revenue growth of 22%-24% at constant currency, with growth of approximately 15% due to the acquisitions. This implies organic revenue growth for the standalone aseptic carton business of 7%-9% at constant currency, taking account of continuing volume growth supplemented by price increases to offset the impact of higher raw material costs. For the enlarged group, the adjusted EBITDA margin is expected to be around 26%. The aseptic carton business is expected to deliver an adjusted EBITDA margin at the lower end of our past performance range of 27%-28%.
Considering that passing absolute cost increases has a dilutive effect on margin. In light of the current volatile inflationary environment and the recent geopolitical developments, our revenue and margin guidance assumes no major changes in input costs or FX rates from current levels. Net capital expenditure is forecast to be within a range of 7%-9% of revenue, reflecting the lower CapEx intensity of the acquired businesses. We expect the dividend payout ratio to be within or slightly above a range of 50%-60% of adjusted net income as we plan to continue our established dividend policy of progressive dividend per share growth also after the recent acquisitions. Samuel will now take you through the midterm guidance and to conclude our presentation.
We are maintaining our midterm revenue guidance of 4%-6% at constant currency, with the two acquisitions expected to enable resilient growth in the upper half of this range across an expanded platform. Both Evergreen Asia and Scholle IPN offer substantial cost synergies, which together with the top-line growth and continued margin expansion in the aseptic carton business. We expect to deliver a best-in-class EBITDA margin of above 27%. Starting from this year and continuing midterm, our CapEx guidance is down a percentage point at 7%-9% of revenue, reflecting lower CapEx needs of the acquired businesses. We are maintaining our dividend payout ratio of 50%-60% to continue the progressive dividend per share growth.
Our midterm leverage target of toward 2x is also maintained with a milestone of 2.5x by the end of 2024, supported by the strongly cash generative nature of the combined business. The Scholle IPN and Evergreen Asia acquisitions increase our presence in resilient end markets and add further long-term customer relationships supported by a large installed base. We will extend the reach of our aseptic carton technology across substrates and formats. Expansion into new categories has been a hallmark of SIG's development to date. Now we have much broader scope for expansion, including entry into the institutional and industrial segment and new retail opportunities in wine and water. Equally, SIG owes its record of above market growth to the decision taken more than 10 years ago to expand the business outside Europe.
Now we have the opportunity to do that again by bringing the Scholle IPN portfolio to the emerging markets of Asia-Pacific, Latin America and the Middle East and Africa. We will do this with the benefit of many years experience and a strongly established local presence. We are committed to achieving the highest ESG standards across the group, and we'll use our larger presence to drive growth in areas such as recycling. Sustainability will govern the development of new technologies, which we will be able to deploy globally. This across substrates and across categories, building on our barrier film capabilities and leadership in aluminum-free solutions. We will continue to deliver best-in-class financial performance with resilient growth, expanding margins, and strong cash flows.
These acquisitions strengthen SIG as a company, cementing our position in aseptic packaging solutions for liquid, food, and beverage, bringing benefits to consumers, customers, and shareholders, as well as the environment. That concludes our presentation. We are now happy to take your questions.
We will now take a question from UBS.
Yeah. Hello, Samuel, Frank, and Ingrid. Thanks for taking my questions. Just two technical questions, please. The first one is, I mean, can you clarify of Evergreen and Scholle if you expect that their total EBITDA is growing in 2022 versus 2021, considering the inflation environment? If they also have a seasonality on EBITDA like SIG has, first half versus second half. The second question, please, on your organic business, can you give us an update where you stand on the price negotiations, it's all done now and you can or have passed on the inflationary costs already? Or is there still some negotiations ongoing which will result in a quite severe back-end load this year on EBITDA margins for SIG standalone? Thanks a lot.
Thanks for your question, Joern. Maybe I start with the second one, and then Frank, you can cover the first one. Price increases and price drops, as you're familiar with, are normally taking place in the first quarter. They are well underway and we are right now executing those price increases. It might be that one or the other drags into Q2, but so far I think we see progress in line with our expectations. I think from a margin seasonality perspective, I think what you can expect this year, in general, from a seasonality perspective, it's gonna be a year more in line with seasonality you're familiar with pre-COVID, where we are more back-end loaded, simply just also a function of how revenues are generated. Maybe on the first question, Frank.
Thank you. On the first question, for the EBITDA of both Scholle and Evergreen Asia, we do expect growth of these businesses that will also then translate into a growing EBITDA. We also talked about some of the synergies where there may be earlier wins in the second half of the year, starting already a little bit. There's benefit. Plus, they don't have a particularly pronounced seasonality, so I think, for that half year when you're, you know, trying to incorporate that into your forecast, it's probably good to just assume, yes, straight 12 months, you know, without big seasonality.
Okay. Thanks very much. Just one follow-up. The total EBITDA contribution from Scholle and Evergreen, we are speaking around EUR 60 million then you are putting in your guidance?
Now you're obviously going to a very specific number. I think it's probably an order of magnitude that wouldn't be mathematically correct, but I don't wanna specifically communicate on a particular number, yeah?
Sure. Thanks a lot.
Thanks, Joern.
Our next question comes from Alessandro at Octavian.
We can't hear you, Alessandro.
Can you hear me now?
Now we can hear you.
Ah.
Good morning.
Sorry. Good morning. Thank you for taking my questions. I have four, if I'm not exaggerating, please, like, but they are quite quick, and I would like to go one by one. Makes it maybe easier. Two related to the past year. The margin in Americas was down in H2. Can you give a bit of an indication what happened there? Why?
Okay. Yeah. I think, I mean, you saw obviously the very strong growth in the first half of the year, so I think that has an impact on this. Overall, we're very pleased with the margin development in the Americas business. You've seen the, you know, year-on-year important step up, and I think that's really what we're looking at, you know, this business is growing fast but also increasing its margin quite well.
Yes, but it was really down, sorry to contradict, at least over H1 2021.
Yeah. Again, I think we're very pleased with the development there. You saw the strong growth in the regions. That's where, you know, this is a region where we have had, you know, the benefits from the filler placements that, you know, ramped up in the course of last year. This is, you know, benefits that we see really in this region and, we're very pleased with it.
I cannot say I'm satisfied, but I'll leave it there.
I think, Alessandro, I would also read too much into the half-year margin. I think important for us was, and we talked about that when we presented 2020 numbers, that we believe that we can get margins in the Americas region further up after the hit that we took there as a function of the currencies. I think that's what we clearly demonstrated last year. I think we're confident to continue that path. You know, back then we already talked about what are the levers that we see. I mean, the margin improvement is definitely a function of operating leverage in divisions, but also, I think, Frank, a year ago, you explained that we have levers to further localize supply, which we now see also the benefits coming through, and that explains the margin improvements also in the Americas region.
Okay. Okay, let's leave it there. On the Middle East, maybe two questions here. One, the quarterly development, Q3 was down almost 20%, if I have calculated properly, and now Q4 was up 20%. Again, can you give a bit of an indication what happened in that region?
Sure. I mean, we talked about that, I believe, on the Q3 call also. What we do see in the Middle East, and I think you recall that from earlier reporting periods, there are some customers that have a bit of a, for the lack of a better word, lumpy order behavior. You know, they place whenever they have cash and whenever central banks allow them to tap into hard currencies to pay with hard currencies to place significant orders. That can lead to distortion from one quarter to the other. I think the underlying market environment in the Middle East last year was difficult. I mean, COVID did leave its mark on our top line as a function of, for example, schools in the Arabian Peninsula, in North Africa, far beyond the summer break remaining closed.
Obviously, the schools generate for us this juice box business, and that simply didn't take place. Then on the other hand, there was this drought in South Africa, especially in the first and into the third quarter, where we just saw that raw milk production came down and there was less milk to pack for us. We were already in the Q3 call positive on the outlook for the Middle East, and obviously we remain positive in the outlook also into medium term, as it is a very attractive region. We said we expect in the Q4 to be back on a growth trajectory.
I mean, we probably have to admit that the Middle Eastern growth, if you look quarter by quarter, and we tend to look rather at it on an annual basis, but if you look quarter by quarter, might come with a bit more fluctuation. Frankly, it also comes with a very decent margin.
Okay. Thank you. That's helpful. Can you maybe indicate how the start was in the year or if we are going more towards a normal business with probably more volatility but more normalized?
Yeah. I definitely expect now a continuation of the normalization in the Middle Eastern business, as obviously, COVID restrictions have lifted and we expect a continuing improvement.
All right. Okay, thank you. I would like to move towards the outlook. Can you give an indication about the magnitude of the price increases?
Yeah, if you look to the 7%-9%, I mean, very ballpark, you can think of maybe 3%-4% being related to pricing, you know. You know us well since the IPO, we never have been very outspoken about splitting revenue growth into price, mix, volume, as normally volume is clearly the driver for our top line growth. We do understand that we operate obviously in an unprecedented environment when it comes to input cost changes. We wanted to give a bit more color there. Ballpark of, I would say 3%-4%.
All right, great. Did I understand correctly, Frank, when you mentioned that the price increases have a dilutive effect on the margin, that basically the combibloc margin is probably trailing a little bit down than in 2022?
Yeah. I think there's just a mathematical effect, if we're, you know, raising prices in order to offset the increase in raw material costs and cost inflation on the input side. Mathematically, you will have a margin dilution from that.
Right. That would be all if, let's say, for my modeling purposes.
I mean, we've given our margin guidance and that's where we see we get to the margin that, you know, we said at the lower end of the range of 27%-28%. I don't know how your model works, but I think that's an important effect if you think about margin for next year.
Great. My very last question on the 15% outlook from M&A. To understand you properly, this excludes the two months from the Middle East joint venture?
That's right. Yeah. We take that as, again, and we just looked at this, and if you think about it, for the full year, we have, you know, the core and non-core distinction with the Whakatane paper mill, where, you know, we don't have that distinction anymore. There's some revenues in the first half of the year, last year that we don't have this year. Then there are obviously the net, you know, effect of on revenue from the Middle East joint venture in the first two months of this year. For the full year, that roughly balances out.
Understood. I agree with that. Thank you.
Thank you, Alessandro.
Our next question comes from George [Barrass] at BNP.
Good morning, everyone. Thank you for taking my question. My first is on the filling line. You called out several new filling line installations, including the Hochwald Foods contract for 2022. Can you just remind us what your typical guidance is for, say, revenue contribution per filling line once fully ramped up, and how the ramp up curves had to look in terms of months, please?
No, you're absolutely right. We talked about deployments of new fillers across all geographies, and we also continue to look at filler pipelines, i.e., opportunities to win fillers for future placements that are very solid. Now, we don't tend to guide in a relation from one filler placed this year leads to revenue of X next year. We do not do this because it's also not how we budget ourselves. You know, we look at our installed base and budget bottom up. If you think about a filler placed this year, that can go through different ramp up curves. It can go up to 18-24 months until the filler is fully ramped up. It's really a function of, is it the growth expansion of the customer? How fast is the customer growing? Is it new products?
It's depending on market success. That's why we don't look at that and don't guide specifically for a number of fillers this year leads to growth of X next year. To give you a bit more color around the Hochwald fillers, these 15 fillers, they are now, right now under installation. The majority by far is now already in this new greenfield site. They're gonna go through a ramp up, and we expect the major contribution to the European top line to happen in the Q2 and the Q3 .
Okay, thanks very much. That's useful color. In terms of the 76 new filling lines that were installed in 2021, can you give any detail in terms of any of those that were potentially related to plastic replacement contracts? I know you've given some examples previously of the contract with Danone in France, for example. Are there any particular filling line installations there that are related to plastic replacement?
Oh, yes they are. We haven't quantified them. I think, you know, from today's perspective, it's still a very small number out of this total. But it's a trend that continues to take place. I think we were on the last core call, so we're very outspoken about the new win in Japan, where for the first time, a co-packer that used to be in plastic only opted for a carton line. It definitely is taking place, but it's a fraction of the total numbers of filler that is replaced in a given year at this stage. It's a trend that continues.
Great. Thanks very much. That's all my questions.
Thanks, George.
Our next question is from Christian Arnold at Stifel.
Yes. Good morning. Can you hear me?
Very well. Good morning.
Good morning. Two questions left. First, maybe on to Frank, did I understand you correctly that when you gave the financial guidance outlook for 2022 in terms of dividend payout ratio, you were saying, yeah, 50%-60% or slightly above?
Yes. Let me take that first, Christian. Yes, that's what I said, because it's also important for us that we continue the growth of our dividend per share, the absolute dividend per share, that we're paying. Depending on really the outturn, it could be slightly above the 60%. What I indicate with that is if it were to take an increase above the 60% level to maintain an increase in the dividend per share, that wouldn't be precluded.
Okay. Thank you. On the Ukraine-Russia crisis. I think your exposure here, sales exposure is some 1-2%. What do you expect from the crisis? I mean, how much does it impact you, as your customers maybe don't have now hard currencies available anymore? I mean, is your business coming to a stop in these regions? Or are you thinking it will be? Have you considered this somehow in your 2022 guidance? Thank you.
Yeah. Thanks for the question. Obviously, we are saddened as, I guess, everybody about this development. I think with regards to the implications on our business, I think we can say they are very moderate. As you rightfully say, the business, the combined business in Russia and Ukraine is below 2%, and Ukraine is the minuscule part of that. We have a handful of fillers into Ukraine, about 5 fillers. Most of them were used fillers that we deployed there. In Russia, we mainly work with the big global brands like PepsiCo, Danone. We are right now assessing with our customers the continuation of the business going forward. Obviously, we operate, as you're well aware, in the packaging for food and beverage products, very basic products.
We try to support the customers and the markets as long as we can. From this perspective, it's difficult to assess. I think from an overall materiality, we don't expect a material impact on our 2022 numbers. We have kind of considered that also in our guidance range as a function of the smaller business that we have there. You might recall we discussed that a lot during IPO. We have partially withdrawn from our Russia business back in 2014 when first import duties were put in place. That's why since years, Russia doesn't play a very relevant role in our business.
Okay. The remaining Russian business is mainly with, yeah, linked to these global customers, as you said.
That's correct. Yes, that's correct.
Thank you very much.
Thank you.
We now have a question from Bank of America via Vimeo, which I will read out. There are two parts of the question. The first part: It looks like the underlying margin of the core business was more around 26.2% when you take out the JV effect on slide 16. If this is the case, where do you see higher input costs, and how are you trying to mitigate them for 2022? The second part of this question: Do you see an increased risk on the energy side from the current situation?
Frank, do you wanna take the first one?
Yeah, let me take the first one. I think the way we look at the margin is really what the business has delivered, and that was the actual performance of the Middle East joint venture and or former Middle East joint venture, now the MEA region. There's obviously the puts and takes when you have the adjustments here, but you could also obviously see the very attractive margin of the region there with 31%. For us, the 27.7% is really the underlying and profitability of the business as it currently stands.
On the second one, the energy cost, I mean, if you look to overall energy cost in our business, it's around 1%, so we don't expect here a significant impact on our business.
Thank you. The second part of the question. Would it be possible for you to provide more details on the historic margins of the acquired businesses? It looks like guidance is not necessarily including any operating leverage at this stage. Do you see scope for improvement?
Well, we discussed this question already earlier, right? We were very clear that we buy a business from a private owner who hasn't disclosed the financials, mainly for commercial reasons, because he didn't wanna have customers having all this transparency. Going forward, we're gonna report the acquired business as part of our regional segment. Also there, one is not gonna see Scholle IPN or even Evergreen Asia dedicated numbers. Against this backdrop, there will not be further disclosure of historic data. We talked about also, for example, historic growth rate, especially in the Scholle IPN case. And we gave some additional color by describing the business's footprint today.
They're predominantly in Europe and in the Americas or North America, where you can think of their market growth rate of rather 2%-3%, whereas the emerging markets grow with 5%-6%. In other words, given their footprint, it's a business that rather tracks these mature market growth rates. We obviously have the ambition to bring them to our emerging markets platform and really accelerate the growth in this acquired business and for the combined group. We definitely see margin expansion potential, and we have qualified cost synergies of EUR 6 million in the case of Evergreen and EUR 17 million in the case of Scholle IPN. We believe this, together with a continued margin expansion in our core business, will be able to deliver a margin above 27%.
Thank you. There are no further questions at this stage.
In this case, I would like to thank you for participating in today's call. Have a very good day, and we hope to catch up soon, maybe also on the roadshow that follows the results call. Thank you very much for your time today. Have a good day, everybody.