Hello, ladies and gentlemen. I'm happy to welcome you for today's presentation of the half year 2023 figures. Today's presentation will be divided in four sections. First, I will give you a quick overview about the big highlights of the first half year. Then, Burim will give you more details about the final result, the financial result. Then I will try to do an outlook into the future and give you some insights of why we think the growth might continue, and then we will be ready to answer your questions. To start with the overview, basically, what we can report, we have a record high order backlog and a book-to-bill ratio of 1.3. That still gives us a very good visibility.
The order intake, as you can see, is, is lower than it referred to the half year of the previous year. In general, it has stabilized, or it has now labeled, levelized on a good level for us. A book-to-bill ratio of 1.3 is, is, in my opinion, very solid and gives us a very good visibility for the future. On the other hand, it allows us to come back to reasonable lead times that make us attractive also for the future. Basically, important to say is that also the pipeline of orders, so those orders which are not yet firm, basically the, the orders that we expect to, to, to get, is still very solid and very healthy. We are very confident that our growth can continue.
On the net sales side, we have already in the first six months reached a double-digit growth. This is more than it was a year ago. This year, we have, let's say, less variation between the first six months and the second six months of the year, although there is still some variability between the two semesters. EBITDA has also significantly increased compared to previous year. The EBITDA margin is absolutely within our guidance. The EBIT also doubled from CHF 5.9 million- CHF 12.4 million, which also confirms the healthy situation. We have also invested CHF 2.2 million, mainly related to pre-approved services project that will then support our services growth in the future. When we look at the segments, both segments have developed well, Equipment and Solutions.
Basically, the main focus there was the strategic initiatives. We are developing integrated process systems, and we also increased the level of equipment standardization. For the standardization initiatives, we have formed a group of, let's say, from people that were in the operative business, took them out of the operative business to really drive standardization forward, and we are very confident the progress is going very well, and we are confident that we will profit from that in the near future. We again spent around 7% of our sales into development initiatives. This includes standardization, but it also includes general research and development projects. Services and Consumables. Here, I think we can highlight that we have increased our stake in AT by another 5%- 85%.
As already mentioned previously, we have an option to buy another 5%, latest by 2026, from, from the co-owner, WE. So far, obviously, there is no reason why we shouldn't do that, and today, we plan to do so. Good progress, we can also report from our pre-approved services project. Basically, construction is full ongoing. Long lead items are on order, and we are expecting to be on plan there as well. More insights about Aseptic Technologies. On this slide, on the left side, you can see the five products that have been approved so far.
You might remember, we have about 400 active ingredients in stabilities in the different clinical studies, or clinical phases at our customer sites. Statistically, we are expecting that more and more of those products will become ready for the market. In the meantime, we have already five approved products, which already have a positive impact on our result, and we are looking forward to that this can increase even more. What is also important is that, besides of vials, we are also selling robotic filling machines to fill those vials. This business is going well, and the capacity expansion that we have started last year is also doing a very good progress.
[audio distortion]
That was a quick overview. Now I'd like to hand over to Burim for the details of the financial results.
Thank you, Thomas. Ladies and gentlemen, I would also like to welcome you to today's presentation of the half year figures 2023. In the next 10minutes-15 minutes, I will give you some more color on the figures. When we look at the order intake, as mentioned, the demand has stabilized at a high level, as per half year 2023. We have booked orders with a volume of CHF 175.3 million. Compared to the same period of the previous year, this represents a decline of 33.4%. What is really important to understand is that when we compare to the previous year, we reached CHF 263 million based on the catch-up effect in the Equipment and Solutions business, which was driven from the Corona pandemic.
That means that our customers focused previously on producing COVID vaccine and temporarily postponed other medicines because they were busy to produce the COVID vaccines. Once the pandemic situation returned to normal, all the pharmaceuticals companies resumed their focus on other medicines and had to build up production capacity accordingly, which results in the previous year's growth on order intake at 67.9%. It is also important to understand that despite this decline, our current order intake is at normalized level, and it is in line with our internal forecasts and expectations. Positive is also the fact that our order pipeline remains very well filled, which indicates continued demand and strong customer confidence.
In the, the, the market situation, although the increased interest rates and the strong Swiss francs compared to euro and US dollar, did not really impacted our order intake or order situation in the reporting period. What we can say is that, that, that the, the decisions from our customer is made slightly more slowly compared to the previous years, but we see a continuous strong demand in the specific area of aseptic fill finish, where we are the market leader. The drivers for this demand is the general growth of biopharmaceutical markets, as well as the shift within the industry towards more injectable drugs.
On top of that, there is also a trend towards reshoring, where we see, how to say, relocation of drug production from Asian market in the Western market, means in Europe, in Europe and also North America. From a regional point of view, Europe with CHF 88.1 million and a share of 50.3% of the total incoming orders, and America with CHF 78.8 million and almost 45%, remains the most important markets of SKAN. The Asian market is still at a low level, with only 3.2%, and the fluctuation between years or half years is due to single, single larger orders from customers.
On the next slide, when we look at the net sales, we have a stable growth with a volume of CHF 139.7 million. The growth amounts to 15.6% compared to the same period of the previous year, and is within our guidance, which we guided at the last year. When we adjusted for currency effects, growth even amounts to 18.7%, which is at the upper end of our guidance. It is also important to understand that the imbalance between projects in the design phase, which still generate relatively low value and projects in the value-intensive manufacturing phase, was significantly less pronounced than in the previous year.
The order backlog on the right side increased from CHF 360 million, as end of last year, to CHF 384.6 million, which represents a new record order backlog and gives us a very good visibility for the upcoming two years, of the development of the next two years. When we look at the cost development and margin improvement, we see that we have reached CHF 18.6 million EBITDA, which is around 74% higher than the previous year. Accordingly, also, the EBITDA margin increased to 13.3% and is around 4.5% points better than previous year. Now, I will explain the main impacts of the margins.
First of all, the main reason is, as briefly explained, the imbalance between projects in the design phase and the projects which in, in value-intensive manufacturing phase, this is on a lower level, and this accordingly has a or has a better impact on the EBITDA margin, or drives the EBITDA margin stronger in the half year. Secondly, the material and logistics costs relative to net sales fell from 29.8% from the previous year to 25.7%, respectively, the gross margin, we were able to improve it from 74% to around 80%. The reason for this improvement is that the expansions in Görlitz and Stein enabled us to increase our own production, and this had a positive impact on the gross margin.
The Personnel ratio increased also slightly from 51.2% to 51.8% in the reporting period, and the main driver for this increase is that we have expanded our workforce as planned, adding 97 permanent employees and a further 30 temporary staff during the reporting period. The increase was in line with our decentralization strategy, where we have built up just about 80% at the subsidiaries, and as mentioned, is in line with our decentralization strategy. In addition, the personal cost also increased slightly due to the inflation-related wage adjustment, which we implemented in April 2023. Also what Thomas mentioned, we have built a dedicated team which is not working anymore for customer orders. They are focusing on the standardization initiative.
It will cost us a little bit margin, but we will profit in the near future, or we will see a positive impact in the near future. Finally, also, the operating costs increased from 14.4% to 15.0%. This is in line with our growth of the whole company. The main driver for this cost increase is primarily the travel expenses and also the administrative or maintenance cost, which is driven by the ramp-up of our resources. One more positive impact here, or a positive to be noted, is that we invested another significant amount, about 7% of our total growth group sales in strategic initiatives for integrated process systems and also in standardization.
That means that our margin could have been at about 20% if we would have capitalized all these costs. Let's have a look on the segment Equipment and Solutions. This segment achieved an order intake of CHF 128.2 million, which is 43% lower than the remarkable high prior year period, where we grew at 85.9% due to the catch-up effect, which I explained at the beginning. As additionally mentioned, this order intake is in line with the internal forecasts and expectations. It is also positive to note that the ratio between customer-specific large systems and more standardized small volume systems is more balanced, which has also a positive effect of our production capacity utilization.
In the middle, sales increased by 14.3% from CHF 90.2 million to CHF 103.1 million. The EBITDA almost doubled from CHF 4.8 million to CHF 9.5 million, resulting in a EBITDA margin of 9.2%. The improvement of the margin is primarily due to the already mentioned better balance of the different project phases and the realization of the revenue and the EBITDA margin. It is important also here to understand that we are still a project-driven business with a share of around 74% of the total net sales. This drives also the the result of the second half year, where we expect to have a stronger half stronger second half year compared to the first half year.
The order backlog increased further from CHF 340 million to CHF 349 million, which gives us very good visibility for the upcoming two years in the equipment business. The next segment, Services and Consumables. Also here, we report an order intake of CHF 47.1 million for the first half year, representing a growth of 27.3% compared to the same period of the previous year. Here, in addition to the continuous expansion of our installed base of SKAN systems, which require regular maintenance, also requalification and consume spare parts, the growth is attributable to higher sales of aseptic technology, closed vials, and other consumables from Aseptic Technologies. As mentioned at the beginning from Thomas, now we have 5 medications on the market, which are filled in closed vials.
The development of the pipeline amounts, as already mentioned, at 400 active ingredients, which we, which should come up in the near future, also in the different phases. Another positive contribution to the growth in this, in the segment Services and Consumables, is the whole Retrofit business, and within this segment. Sales increased here from by 19.5%, from CHF 30.7 million to CHF 36.7 million, and are at the same high level as previous years. At 26%, the share of the total sales increased slightly to the pre- prior year, and which is also in line with our strategy. On the right side, the EBITDA substantially increased by 53.8%, from CHF 5.9 million to CHF 9.7 million, and representing EBITDA margin of 24.7%.
The main reason for this margin increase is the product mix. That means that we were able to sell more closed vials and other high-marginal consumables in the first half year. In parallel, we also focused or continued to build up resources as planned, to be ready to expand services for the continuous increasing Installed base of SKAN equipment. On the next slide, the whole cash situation. As you can see, it remains on a stable level at CHF 97.9 million. In the reporting period, the cash balance decreased about CHF 13.1 million, primarily due to the repayment of bank loans, which we had in connection with the production expansion in Germany.
We also built inventories to secure the supplying capability of SKAN and also made the payment of the dividend end of May. That's the main impact of the cash decline, about CHF 13.1 million. The operating cash flow before changes in net working capital, is around CHF 15.8 million, and the net working capital still structurally remains negatively at CHF 17 million, mainly due to the order intake and the advanced or the prepayments from customers. When we look at the investing cash flow, it amounts to CHF 7.5 million.
The reason for the positive cash flow in the investment area is due to the booking of the fixed-term deposit of CHF 25 million, which is the rule is, fixed-term deposit over three months are to be shown in the investment area, and this CHF 25 million expired, and accordingly, this position has been shown as inflow in the investing cash flow, that's the reason for this positive effect. However, we have been investing, as mentioned at the beginning from Thomas, approximately CHF 16.2 million, of which CHF 10.2 million are in connection with infrastructure and the pre-approved services initiative. The remaining investment is the increase of this 5% in AT shares.
The negative financing cash flow of CHF 15.2 million includes not only the dividend, but also the repayments of the loans to the banks. When we now look at the balance sheet, we still have a very strong balance sheet structure that allows us to finance the planned growth independently. As mentioned, we have high liquidity, liquidity, because we do not have or only less loans. We have a net cash position of CHF 19.6 million as end of June 2023. The decrease in non-current financial liabilities is due to the repayment, as mentioned, from of the loans. When we look at the capital or the equity, we have CHF 162 million, which corresponds to the equity ratio of a solid 40.8%.
Now, I would like to hand over to Thomas again for the outlook.
Thank you, Burim. Now I'm happy to give you a quick outlook, what is expecting us in the coming months and maybe also in the coming years. First, the big question is: Why do we believe that this growth is sustainable? When we look at this slide, we can see that the development of injectable dosage forms or specifically large molecule injectables is increasing. 2005, the top 10 selling products in the pharma industry were all oral dosage forms, so tablets. 2020, five out of 10 were already large molecule injectables that need aseptic manufacturing. Other words, they need isolator, or they need a technology like ours.
When we look at the statistics of 2022, we can see that already in the top 20, 60% of those products are large molecules. On the next slide, we can see the four main drivers that we believe are driving our business. First of all, the underlying growth of the global biopharmaceutical market. Our customers are still growing, maybe not double digit, but they are growing significantly. Basically, in general, that base is growing continuously. What we see, this reinforcing trend towards injectable drugs. When we look into the development pipelines, we see that 75% of the products that are being developed at the moment, and that are expected to come to the market in the next 5-10 years, are injectable dosage forms, most of them on a biological base.
The need for isolators will even increase in the future within the total pharma industry. We also see the shift from traditional clean rooms into isolated technology that's still ongoing. That, let's say, classic lines or old lines are being replaced by, with latest technology. We're profiting from that as well. The last, and not to ignore factor, is the reshoring effect. Many of our customers are building up capacity in the West after, let's say, a negative experience of, of, of supply chain issues. Obviously, we profit from that as well, since we are very well-positioned in the Western world. The demand of SKAN equipment is increasing, and we are very confident that also in the near future, the demand for aseptic filling equipment will further grow.
To accommodate the strong growth, we will, besides North America, also further expand in production capacity in existing sites like Switzerland and Germany. To summarize that, we expect a strong second half of 2023. Basically, when we look at how the projects are in our planning, it looks very positive that we can again have a slightly stronger second half than the first, and so we are happy to confirm our guidance. Looking at the guidance in detail, again, we expect to end the year in the mid to upper teens area.
We also expect that the mid-term outlook will also be in mid to upper teens, although the Services and Consumables segment has a potential to become even higher, basically based on consumables from mainly from the closed vial technology, but also on our pre-approved services that we expect to come operational in a few years. EBITDA margin will also stay within our guidance between 13% and 15%. To end the presentation, I would like to thank you for your attention, and we are happy to answer your questions now.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star, followed by two. You may also submit your questions in writing directly on the webcast via the question mark icon. We start with the telephone questions and switch to the written questions afterwards. As a reminder, anyone who has a question may press star and one at this time. We have the first question from Odysseas Manesiotis with Berenberg. Your question, please.
Hi there, Thomas. Hi, Burim. Thanks for taking my questions. I, I'm gonna pick off one of your last comments there. You mentioned that you expect a better second half from the year. From my understanding, your top line this half was around 90% growth, excluding currency effects, so top end of your guided range, and your EBITDA margins were also in range. When you're, when you're saying that you expect a better H2, is that on an absolute basis? If not, are there any pressures you expect in H2 that are making you more conservative in maintaining your targets as they are for the full year? Then I'll have a few follow-ups.
I think I can answer the question as follows. Compared to the previous half year in the previous year, that was obviously far below guidance, right? We have already a much better half year this year. We are expecting, again, a strong second half. Basically, just looking at all the projects that are currently in the manufacturing process, what could go against that? Yes, if a customer would cancel or delay a big project, then that might have a small impact. Basically, we expect that, that, yeah, the second half year will be, again, a good year.
In total, that would mean if everything goes well, yes, then, maybe we should also be able to be more in the, the middle or at the upper end of our guidance. Again, there is also still there are some risks, as always, in the project business. Therefore, we, we, we confirm the, the guidance as we, as we, have done it at the, at the beginning of the year. Does that answer your question?
Yes. Yes, that's very clear. Thank you, Thomas. Understood. I have another one. Could you share some color on whether you're involved in the production of GLP-1 obesity drugs? If yes, is it sensible to assume that your contract win rate here holds similar to the rest of the opportunities you talked about? What's the sort of timeline we should expect from this opportunity to be reflected on your sales more and more actively?
Yeah. The answer is yes. We have already won some of some orders that are specifically that will be specifically for these type of products. I think that in general, everybody is talking about the huge demand, right? That will trigger a global demand for filling capacity, and we will definitely profit from that as well. Will it be GLP-1s only? This is, in my opinion, still to be confirmed. We also don't have to forget that some of those products are kind of replacing diabetes, and so there are existing filling machines for this. It's not that all these products need a 100% new machines.
On the other hand, yes, we will definitely profit from the fact that the, the whole world has a higher demand, and, and we will-- I'm sure we will get our, our share from that cake.
Understood. All clear. One last one for Burim on, on margin progress.
Mm-hmm.
So you mentioned several one of margin impacts taking place in H1, including inflation-related wage increase, your production expansion. Could you quantify how much this, these two took off your margin that would otherwise add to your profitability? What would you expect would we see, let's say, a much bigger jump next year when it comes to your midterm guidance of this 13%-15% range getting closer to the upper teens?
The impact on the personal cost due to the inflation cost increase is 0.8% if we calculate it from the EBITDA margin. This has not really a strong impact as we when we calculate it. We do not plan, at the end of the year, to increase, to have a increased salary costs. The second question was? How do we think going forward for midterm guidance, the development of the margin, right?
Yes, exactly. As in, would we expect you to be on the upper teens level of your range by next year already, assuming that is?
Exactly. The drivers for the, the guidance, what we have, slightly increased to upper teens. The main drivers is the whole consumables business from Aseptic Technologies. As we have more products, commercial in our AT-Closed Vial, we'll, we'll, we'll increase the consumables sales, which is on a really a good margin. The other initiative, what we have is the whole standardization. At the moment, it costs a little bit margin, as I mentioned, during the presentation, and this will have a positive impact also in midterm, midterm guidance. The third, the third driver for the margin improvement is the whole pre-approved services. This, this initiative will kick in beyond guidance. That's why, or let's say that these are the, the, the main drivers for the margin improvements, midterm.
All clear. The very last one, now that you touched on that, on, on a follow-up on the pre-approved isolator business. I remember around IPO, that you were mentioning the potential for these, is to generate around annual sales of, CHF 50 million at an EBITDA margin of around 60%. Now that you're getting closer to, let's say, a revenue contribution, would you be able to share a bit more detail on, on the timelines of when this target could be reached, potentially?
Yes, I'm happy to answer that. I mean, the timeline looks that, we plan to be ready, with everything, by the end of 2025, and that we would start to sell those, services starting 2026. We're not expecting to be fully loaded on day one, obviously. Then the ramp-up will, will, then happen over the next few years.
All clear. Thank you very much for taking my questions.
You're welcome.
Ladies and gentlemen, as a reminder, if you would like to ask a question via telephone, please press star and one at this time. One moment for the next question, please. So far, there are no further telephone questions. I hand back to Thomas Huber.
Thank you very much. I also see there are no questions from the webcast. Thank you very much for your attendance, for your interest, and looking forward to talk to you in the next opportunity. Thank you very much, and goodbye.
Thank you very much.