Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the Semperit conference call on the report of full year 2022. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may do so by pressing star one. Press the star key followed by zero for operator assistance. It's my pleasure, and I would now like to turn the conference over to Mr. Haider. Please go ahead, sir.
Thank you very much, and good afternoon, ladies and gentlemen, and a very warm welcome from Vienna. I'm delighted to present to you the full year 2022 results of Semperit Group today, together with our CFO, Helmut Sorger, who will take us through the financials in some minutes. Generally speaking, 2022 was a year of high cost inflation, surging energy costs, ongoing disruption caused by political conflict, and the coronavirus pandemic still leading to shutdowns in China. As the CEO of the company, I am encouraged by all the positive engagement and strong support coming from our employees and colleagues. This at the time, not only of uncertain macroeconomic development, but also of changing times for the future structure of the Semperit Group, which I explain next with the strategic and operational highlights at slide 3.
Among the highlight of 2022, undoubtedly, the agreed sale of our medical business to HARPS, as announced on 16th of December, is a key milestone of the implementation of our strategy. This provides us now with the opportunity to fully focus on the industrial sector, while at the same time, still acting in responsible stewardship for Sempermed. It was always our goal to hand over our Semperit business in a very responsible way. With HARPS, we have found a new owner which will drive further the glove business in a very responsible way into the future. The sales price amounts to EUR 150 million, cash and debt-free. The completion of the first part of the contract, which refers to the production of examination gloves and worldwide distribution facilities, is expected by mid-year.
The second part of the contract for surgical gloves is related to our plant in Wimpassing, Austria, and the packaging facility in Sopron, Hungary. They will still be operated as contract manufacturing exclusively for HARPS for up to 5 years from us as Semperit. Please note that the sale of Sempermed implies change in corporate financial reporting, which Helmut will explain in greater detail right at the beginning of his financial section. We see these changes in the reporting structure, we as the management also will keep and maintain the established segment view, as this is the operational dimension how we are steering the company. I will keep the focus on this view in the segmental analysis of the industrial sector, the major part of our continued operations.
At the same time, I will also briefly outline the performance of Sempermed, which is a combination of continued and discontinued operations, as we currently steer the business in good stewardship. This should enable a like-for-like comparison with previous years. Nevertheless, let me mention that the annual report provides all the details for different reporting purposes, including the separate reporting of discontinued operations and results in an as-if format too. That means as if the separation wouldn't have taken place. We hope this helps a better understanding of the scope and details of corporate changes. As to the industrial sector, I am delighted to report a significant increase in sales and earnings, and this against the backdrop of lower order intake in quarter four, 2022 and continuing high inflation.
At the back of this strong result, the executive board proposed a base dividend of EUR 1.5 per share in the conditional, I repeat, a conditional additional dividend between EUR 2 and EUR 3.5 per share, which depends not only on the sale of Sempermed, but also on further organic and inorganic growth opportunities. We plan to refine the concrete additional dividend suggestion before the AGM. We continue implementing our industrial strategy to refine further our organic and inorganic growth momentum of Semperit. In line with our conventional approach of focusing primarily on the industrial sector, slide 5, shows top line growth and quarterly reported EBITDA since 2019 to provide a benchmark of a normal year before the outbreak of the corona.
In this comparison, the 2022 performance of the industrial sector was outstanding, supported by a high order book and timely pricing measures, which impacted both top line and earnings. Our active pricing policy and disciplined cost management helped to offset margin pressure caused by general economic slowdown and consistently high cost inflation. 2022 quarterly EBITDA margin improved significantly compared with the two prior years. This against the backdrop of softening demand and customer inventory cleanup starting the second half of 2022. It is worth noting that our industrial segments follow different economic cycles. Our growth engine, Semperflex, for example, was facing a turning point in customer demand in quarter three 2022 already. Over the same period, our business, Sempertrans, benefited from a late cycle upstream. I will elaborate on some of the specific developments in the industrial segments over the next few slides.
Turning the page and starting with Semperflex. Revenues were up by 36.7% and EBITDA by 60.1% year-on-year. Strong demand continued throughout the first half, and output increased in all Semperflex plants except China. Especially over the first three quarters, EBITDA was particularly strong, both in absolute and relative terms. During the first half of the year, the combination of especially the efficiency enhancement and proactive price adjustment helped to offset higher costs for raw materials, transport and energy, which started to ease in quarter three 2022. Although pressure on personal costs continued. Softer demand and customer inventory reductions resulted in a slowdown in quarter four 2022. On the next slide, Sempertrans benefited from late cycle tailwind, which resulted in a strong price development for mining products and led to higher demand for conveyor and transport belts.
As a result, sales were up by 45.5% and EBITDA by close to 3 x year-over-year, including the EUR 4.7 million asset sales of the site in France in Roullet closed in 2018. While facing higher input costs and a EUR 3.7 million positive deconsolidation effect due to foreign exchange differences after closing the Sempertrans affiliate in China in 2021, higher volumes and price increases managed to offset the impact. With quarter four 2022 margins reaching 22.7%, including the asset sale. Semperseal on slide 8 was probably our most difficult industrial segment in 2022, largely due to a sharp economic slowdown in the construction industry.
While we still managed a top line growth of 17.9% year-on-year, inflationary pressure on input costs could only be passed on with a certain time lag. In addition, EBIT was impacted by a EUR 2.1 million impairment of machines and equipment in quarter three 2022 , which, in combination with a tangible slowdown in demand, led to negative results in quarter four 2022. In terms of our regional diversification, I want to mention that the first production line in U.S. in Newnan, Georgia, started in quarter one 2022, and the second line in July 2022. Being closer to our customer provides us with a strong foothold in the U.S. market. Finally, among the industrial segments, Semperform achieved a 22.7% top line growth on the back of consistent price increases in a changed product mix.
We noticed that the order backlog started to slow down given the strong pent-up demand in 2021. Overall, we managed to keep EBITDA margins stable year-on-year. Our various business units performed differently. Special applications benefited from the recovery of winter tourism, whereas we experienced lower demand from railway construction of our damping products or from the white goods in engineered solutions. Turning now to Sempermed on slide 10. We present the results in the familiar format for you, which after the announced sale, is a combination of continued and discontinued operations. In 2022, sales volumes and earnings marked a sharp decline as the market turned into a buyer's market with significantly lower market prices, which was even aggravated by excess capacity. Demand falling further and very high customer inventories in the entire industry.
Against this backdrop, EBITDA was additionally impacted by high costs of raw materials, logistics, energy and personnel. Notable in Malaysia since quarter 2, 2022, and also provisions for gas contracts and inventory. The impairment of EUR 51.6 million announced end of quarter three, 2022, was offset by a reversal of EUR 40.9 million in the context of the agreed sale of Sempermed in quarter four, 2022. With this, let me take you to a summary of the contractual and financial terms of the Sempermed transaction on slide 11. The new owner, Singapore-based Harps, is a Southeast Asian glove producer with production facilities in Malaysia, and we agreed on a sales price of EUR 150 million, cash and debt-free on 16th of December. This is subject to customary price adjustment upon completion of the transaction.
The transaction is subject to approval by the authorities. We would expect completion by mid of 2023. We have agreed with HARPS to structure the deal in two stages. First, the sale of all production facilities for examination gloves in Malaysia, as well as the worldwide distribution network by mid of this year, 2023. Second, for up to five years, contact manufacturing for surgical gloves in Wimpassing, Austria and Sopron, Hungary on behalf of the buyer. In this context, let me emphasize that the management team of Sempermed is fully dedicated to the new owner and supports their transaction as we speak. With this, let me hand over to Helmut to take us through the financials.
Thank you, Karl, and good afternoon to you all from me. Now, I'm with the company for almost half a year, so permit me to share a few thoughts from the CFO's perspective and where I would see the focus points going forward. On slide 13, I would like to start with conceptually outlining the financial framework necessary not just to implement our industrial customer strategy, but also to have a healthy operational setup. The most important thing that I learned in my previous career, it was a Belgian gentleman, is that cash is king, and hence our prioritized disciplined cash management. I'm very fortunate to have inherited, if I may say so, a strong financial position at Semperit with solid cash reserves. However, I'm well aware that going forward, we will need to build on a healthy leverage.
Secondly, I'll focus on an efficient capital allocation policy, balancing growth with a sustainable shareholder return. Here, allow me to mention that the dividend payment for the fiscal year 2022 represents a one-time deviation from our dividend policy and should be seen in the light of the successful separation of the medical business. Nevertheless, in the future, there will be periods when one pillar of our capital allocation strategy gets prioritized over the other. The essential element, however, are investments into the future of Semperit. To be more concise, I'm talking about disciplined growth investments with very strict return criteria, and only on that basis we can provide an attractive dividend policy for the coming years. This brings me to strategic focus of the financial steering of the company, to achieve an efficient capital structure, which is key.
Both equity and debt financing need to play an active and a complementary role. At the same time, for 2023, this also means a responsible stewardship of the medical business in the light of a transition to a new owner. From an operational perspective, our focus will be on digitalization, on simplification, and lean enterprise to achieve further efficiency enhancements. We're working towards this as a company together with operations and also, with central functions. In the wake of previous supply chain disruptions and inventory buildup, stringent working capital management remains key. You will see the numbers I'll present in a few minutes that we've made significant progress. It's still, on our radar to achieve further targets.
Finally, at the time of high inflation and price pressure, our focus on cost control and structurally adjusting the overhead cost base will be crucial to make our group fit for the future. After this introductory conceptual outline, let me now turn over the page to the intricacies of the IFRS 5 reporting and accounting treatment with a specific view on assets held for sale and discontinued operations triggered by the agreed sale of our medical business on December 16, 2022. IFRS 5 specifies not only the accounting treatment for assets held for sale, but also defines the presentation and disclosure requirements for the discontinued operations. In the P&L, the focus is on continued operations, while discontinued operations will be presented separately in the at the earnings after tax line. The chart on this slide illustrates the moving parts in sequential order.
It starts with the composition of segment results and shows you the reconciliation to the new setup, where the results of discontinued operations of the segment Sempermed are carved out. Under the balance sheet, according to IFRS 5, assets are to be classified as being held for sale if they're to be sold within 12 months, which encompasses assets, provisions, liabilities related to production in Malaysia and global distribution of examination gloves. The cash flow statement reflects cash development of both continued and discontinued operations. Let me now show you how we applied IFRS 5 and which implications this had on our financials. Starting with the overview of our KPIs on slide 15, we represent reported numbers in comparison with 2021, which shows a significant year-on-year increase for revenues at the dyad for the continued operations.
However, when including discontinued operations from the earnings after tax, according to IFRS 5, the result turns negative following the strong decline of Sempermed's performance together with impairments transaction costs at Sempermed. This was also further combined with the effect of deferred tax assets having been written down as a consequence of the downturn of the business and the sale of Sempermed. Lower earnings and higher taxes at our medical business had also an impact on the free cash flow, as higher taxes were paid in 2022 on the good results of 2021, with a year-on-year downturn being at the same order of magnitude as the case for the earnings after tax. I will come back to CapEx in a minute, but suffice to say here that we increased investments by close to 14% year-on-year.
Over the page, we present top-line developments by segments, in total as if formats, which is basically the view from the segment report and as if no transaction had occurred, which should help you in the light of like-to-like comparisons with prior years. This illustrates again the tale of two stories we have presented in the past. With the industrial sector growing strongly while results at the medical sector went steep decline as a result of the end of the special cycle. Overall, the as if format shows a 10% decline in the top-line growth, despite revenues for the industrial sector being up by a very strong 32%. As you can see, in this statement, the income statement has been expanded to reflect the supply relationship between the companies of the Sempermed segments.
As the revenue of the continued operations and material expenses of the discontinued operations from this supply relationship will, of course, continue to exist, the presentation is based on an incremental approach. The elimination of income and expense, the so-called, expense and income consolidation, was not retained for this purpose. Taking past transfer prices into account, this adjustments leads to a corresponding recognition of earnings in both divisions. We add this adjustment, we arrive at aggregated revenues for continued and discontinued operations of EUR 1.1 billion. We then deduct the EUR 324 million for the discontinued business, we come to the new sales figure for continued operations at roughly EUR 780 million. Once again, this last column is the figure that you're going to see in the income statement as well.
If we now apply the same logic to the EBITDA, the negative result at Sempermed drags the group EBITDA in the as if format down to EUR 90.5 million, which is 75% lower than last year. Within this industrial sector, I would like to highlight the double-digit margins for all but Semperseal, the latter one facing difficulties in construction markets, as Karl has already explained. Compared with the 30.6% group EBITDA margin in 2021, which was still largely driven by the excess demand for medical gloves in the first half of the year, the margin came down to 8.6%. This implies again, the segment view that is still relevant for us steering the operations until completion of the separation from the med business.
I also want to point out that this number also incorporates the very attractive aggregated demand for the industrial segments at 17.1%. That will be the more relevant yardstick for the future. When again, checking the reconciliation, how to get from the segment view to the reported EBITDA, allow me to mention the adjustments here which refer to transaction costs with relate to the relation to the separation of Med that are not part of the EBITDA, and leads together with the discontinued operations to an EBITDA of EUR 100.5 million. Again, this is the one shown in the income statement and gives you the new order of magnitude, which also needs to be seen in the light of the guidance going forward.
Focusing on continued operations, only in comparing the major building blocks year-on-year EBITDA changes, the profit take was clearly the driving force behind the EBITDA growth. At the same time, cost of materials increased by EUR 95 million, largely due to cost increases for synthetic rubber in Europe, driven up by higher gas prices, or carbon black, which is an important filler for us, driven by higher transportation costs, due to resourcing in the light of the Russian-Ukraine war. No need to mention, energy costs have increased significantly in 2022, and personnel expenses and miscellaneous expenses, added to the lower EBITDA.
Logistics costs, I think this is important to note, started to ease compared with last year, but the rise in personnel costs from the general inflationary trend needs to be in consideration. On the next slide, number 19, we look at the quarterly CapEx development by segments. I would like to draw your attention to two major observations. As I've said before, we increased CapEx by 13.8% year-on-year to EUR 54.5 million. This was essentially maintenance CapEx, as well as smaller growth investments, with a particular focus on Semperflex and Semperseal. At the same time, we continued investing in Sempermed in a responsible stewardship, including the fourth quarter of 2022, when we had agreed to the sale of our medical business.
These investments into modern assets also clearly contributed to the attractiveness of this business. For the next year, we will keep maintenance CapEx stable at around EUR 50 million, but we'll add growth CapEx of approximately EUR 50 million, essentially for the Semperflex expansion of the plant in Odry. On slide 20, when looking at the cash flow, which as mentioned, is presented as a combination of continued and discontinued operation, the impact from lower earnings and higher tax payments based on the performance of 2021, notably at Sempermed, of EUR 62.1 million becomes clear. As a result, the free cash flow was zero, which implies a sharp decline as compared with the EUR 241 million the year before.
While we have reduced CapEx to the absolute necessary level in the past, please note that we will now take a strong focus on organic growth in addition to maintenance CapEx. This is also something we wanted to indicate and introduce with this chart. On the one hand, we refer to the maintenance part of the investments. On the other, we will show separately the part that is spent for growing the industrial business by significant growth projects. In other words, we're preparing the stage for free cash flow before growth investments that we're going to present starting Q1 2023.
Turning the page to the analysis of quarterly working capital development, I should note that due to the sale of Sempermed, we're not comparing the fourth quarter like for like with previous quarters, as the working capital of discontinued operations amounted to EUR 36.3 million. As mentioned in the beginning that a stringent working capital management remains key, let me conceptually explain the main focus area. Given previous supply chain disruptions and shortages in raw materials, we decided to build strategic reserves for scarce resources like wire rods and carbon black to enable continued production. Of course, this decision resulted in structurally higher levels of inventories, but safeguarded profitability.
At the same time, accounts payable have been reduced in relative terms, while some outstanding receivables were paid in early January, only as some of our customers equally tried to manage their working capital and apparently felt pressure to do so. It will be probably taking a few quarters to make a comparison for continued operations meaningful, but rest assured, this remains a priority for us. Finally, on next page. The balance sheet remains robust and the financial position strong, with cash and cash equivalents amounting to EUR 107 million as of December 31st. We also have available credit facilities of EUR 90 million. Thus in all, our strong financial positions opens up ample opportunities for organic growth, but also M&A.
In my introductory remarks, I have mentioned that even though we currently are cash positive with a net cash of about EUR 54 million, we're looking for a healthy leverage in the future. Going forward, we aim for an efficient capital structure with a healthy leverage position, with both equity and debt finance playing active and complementary role. As to the 2022 dividends, the executive board proposes a base dividend of EUR 1.50 per share, which will be paid in May, and a conditional additional dividend of EUR 2- EUR 3.5, depending on the sale of Sempermed. The exact amount of the dividend proposal depends on the economic outlook and on organic and inorganic growth opportunities becoming more substantiated. The payout is expected in the fourth quarter.
With this, I've come to the end of my presentation and would like to hand back to Karl for his final remarks.
Thank you very much, Helmut. Let me first outline our management agenda for 2023 on slide 24. Having almost completed the first quarter of 2023, I can truly say that we had an encouraging start in the industrial sector so far this year. The glove market continues to be burdened by excess inventories, which applies across the entire market. From our perspective, the recessionary fears early in the year have subsided. We clearly see a slowdown in economic activity and continuing high inflation. Our industry still needs to go through an inventory cleanup.
At the same time, sectors like the construction industry currently face structural challenges like labor shortages and falling demand, for example, in Austria or Germany, which are core market for us. As another trend, we observe growing price sensitivity and ongoing cost pressure, notable in personnel, but we also expect this for energy and raw materials later in the year 2023 towards the winter season. At senior management level, we continue implementing our industrial elastomer strategy, which is gaining new momentum for inorganic and organic growth, and we work on further strategy refinement in 2023. As to the sale of our medical business, the agreement was signed on 16th of December, as we said, and the first part of the transaction in relation to exam gloves is expected to be completed by mid of 2023.
As outlined earlier, the second part of the transaction with respect of surgical gloves in Austria and Hungary was agreed to remain with separate under contract manufacturing for up to 5 years. Finally, on slide 25, to summarize our underlying assumption of lower earnings given subdued consumer demand and further inventory cleanup. 2022 was characterized by a very high overall demand level and a clearly positive price and margin development, we see the 2023 EBITDA forecast in the range of EUR 70 million-EUR 90 million. As already envisioned in earlier calls, we continue to plan CapEx of EUR 100 million in 2023, equally shared between maintenance and growth investments. This compares with EUR 54.5 million in 2022, which was mainly maintenance CapEx.
As to the dividend, sorry, the proposed EUR 1.5 per share base dividend relates to the 2022 financial year and will be paid in May 2023. While the conditional dividend is subject not only to the sale of the medical business, but also further organic and inorganic growth opportunities will be paid in fourth quarter 2023. With this, we are coming to the end of our presentation, and Helmut and I are now available for any question you might have.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who has a question may press star followed by one. If you wish to remove yourself from the question queue, please press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question comes from Sven Sauer from Kepler. Your question please.
Hello. Thank you for the presentation, and thank you for taking my questions. Maybe the first one will be, or you could provide some information on the Sempermed impairment and its reversal. I was just wondering, in Q3 there is an impairment of EUR 50 million for Sempermed. Three months later, even though price levels are not really changing or have not really changed, there is a reversal of the impairment. I understand this is because of the acquisition, but I'm just wanting to ask if there are any fundamental differences that you saw in Q4 and Q3 regarding ASPs and the outlook for the gloves market.
Sven, Helmut speaking here. I can take that. Basically, the impairment in Q3 was done based on the market outlook, the revised market outlook. It was basically done to reflect not only the value in use, but the fair value less cost of disposal, which was higher than the value in use. The reversal of the impairment, however, was based on the transaction that had already been signed on December 16th and the purchase price formula from that transaction. Basically, substantiated fair value less cost of disposal. I hope this answers the question.
Yeah, that helps. I was wondering, can you provide some information? I mean, I know it's not going to be a hard number, but maybe some indication, how the corporate segment will develop with the new business focusing only on the industrial sector and divesting the Sempermed business.
Sven, Karl Haider speaking.
Hello.
Hello. You know, a bigger part of the business will be sold with Sempermed, and therefore, we are refining our industrial strategy in the next couple of months. Our corporate, let's say, situation will be analyzed as well. You know as well, and I repeat, organic growth is our topic for us and inorganic growth as well, M&A, and therefore we need to consider all these aspects together.
Okay. Thanks. The last question then I will go back in the line. It's regarding the CapEx. EUR 50 million in maintenance in 2023 and EUR 50 million for Semperflex? The remaining EUR 60 million of the EUR 110 million, which was announced last year, I assume this is then probably going to be invested between 2024 and 2027.
That's correct. Yeah. Just let me explain this because we introduced this new category of growth investments. We're going to talk about maintenance CapEx, including smaller optimization and growth investments, and the EUR 50 million announced for next year, for 2023, I'm sorry, is substantial growth investments. Also as a preparation how we're gonna report the free cash flow going forward.
Okay. And just to follow up on the EUR 50 million maintenance CapEx. I mean, I understand, there's now a completely different management and different structure and different strategy. Just looking at the CapEx from 2020 and 2021, it was around EUR 25 million and EUR 36 million. I was wondering, why is there such a uplift in maintenance CapEx now going forward?
Historically, there was a backlog. I tried to explain this basically that we were saving. This is now, of course, the time to do optimization measures, to do maintenance measures, and to do smaller efficiency enhancements. That's what I meant we invest into the future.
Great. Thanks a lot for your answers.
The next question comes from Christian Obst from Baader Bank. Your question, please.
Yes. Thank you, and good afternoon. First question is concerning employees. At the end of last year, you had approximately 7,000 employees. If I'm getting it right, there are approximately 2,800 related to Sempermed. Is it a m I right that you are going with approximately 4,000 employees into the new year? How will this affect your cost level going forward?
For Sempermed speaking, employee, you're right, we had over 7,000 people total in Sempermed, and around 2,500 people will be handed over to the new owner. Then the rest stays with our industry segment for the future development of the company. Of course, your thought about inflationary pressure in certain countries, that's the reality. You know the inflation, and we're facing the same as other industries in the different countries.
Yeah. Am I right that productivity per employees was a little bit higher, maybe in the industrial space than at Sempermed, so that you are having kind of an uplift effect when it comes to productivity?
If you refer to, of course, the cost, I think, I want to draw your attention that, of course, with the first closing of Sempermed, the majority of the colleagues are employed in the plant in Kamunting. There's an element of wage arbitrage. I mean, you will have the discontinued segment figures in the notes of the year-end closing. You're absolutely right that in the industrial segment, of course, there's a different degree of automation based on the segment. Here, this automation level certainly plays into the role of the productivity. Whether, of course, since we are manufacturing mostly in Europe in the industrial segment, of course, with the exceptions of India and China and Thailand, is that you have a certain inflationary component, key to the increasing wage levels.
Okay. Thank you for that. When it comes to Semperseal, it was kind of a disappointment going into the fourth quarter, but also when I see some kind of a development since we have Semperseal as a separate entity. There was less now going forward. You talked about some kind of a time lag of the implementation of additional price increases. We do not have the impairment in 2023. Should this lead to a much better margin level even in the first half of 2023 for Semperseal?
Christian, I take this question for later. you know the construction industry in central Europe is under pressure, especially in Germany. you know, certain real estate group really stopped to build apartment houses. Our customer base are the system provider for windows facades. Therefore, from that point of view, the volume went down up from mid of last year with a certain percentage. From that point of view, the whole industry is under pressure here. Therefore, we implemented cost control measures and increased efficiency to compensate this. The market impact is quite reasonable. Therefore, we see towards middle of this year a little bit, a better outlook, but it's too early to say where it goes at the end.
Okay. Okay. When it comes to your guidance, how much have you included now for negative impacts coming from Sempermed, for the remaining Sempermed?
The guidance is basically something that we intend to be for the continued operations. This does not include the Sempermed business. Internally, as we've already said, we continue to steer the business based on the settlement view according to our pro forma. It will be an issue. For the guidance and for the reported EBITDA, it's not an issue.
In the EBITDA, there is nothing included, and the remaining Sempermed business you have in your books is almost-
No.
Valued with, yeah, 0 EBITDA more or less.
Yeah. No, no. I think you need to differentiate. There's the discontinued operations, which is basically the exam glove manufacturing business in Kamunting and the global distribution business. We will continue to manufacture surgical gloves in Wimpassing in Austria. This Wimpassing operation is under the continued operations and will be reported as such. I'm just talking about the discontinued part, which is that affected by closing 123.
Yeah. Yeah. The remaining part, the impact of what we expect there, more or less 0 for the contribution.
The search?
For the remaining part.
Yes. The remaining part, give or take, yeah. Zero.
Okay. Yeah, this was my last question. Thank you very much for the time being.
The next question comes from Markus Remis from RBI. Your question, please.
Yeah, good afternoon, gentlemen. You've been talking about destocking. I'd be interested to get a sense where you think the destocking cycle is currently. Will it be something that still impacts your Q2? If you could maybe shed some light on that effect on a say, yeah, divisional basis where you feel it's stronger and where you feel it maybe lasting longer. Any thoughts on that would be helpful.
Hello there. Dear Markus, I take this question. Destocking impacting the supply chain of our customer, that's the reality. Last year, a certain panic or, let's say, buying happened according to all this logistical issue around the globe, and we faced this in Semperflex and in Semperseal mostly. Sempertrans, we explained it's a different cycle, Semperform with our product mix is again different. Therefore, we face this in Flex and in Seal, and we expect certain wash out of this, let's say, stock jam in the system will happen towards middle of this year.
Presumably lower burden in Q2 than in Q1. I was just trying to reconcile kind of the statement you made regarding the encouraging start. Is that, say, mostly related to order momentum building up again, or is it, you know, related to your pricing power?
Yeah. It is not from the order intake, it is from our pricing strategy last year, which we are still, let's say, rolled over to this year. You can imagine, if you see the different indices in the raw materials or energy, pressure is on us, to reduce prices. Therefore, I will say, the second quarter is a little bit, let's say, under pressure, and we believe in quarter three, four, it's getting different again for them.
Okay. On your, on your dividend, I mean, at the upper end, say, using the top end of the bonus dividend, your cash out would be pretty much equal to the divestment proceeds. I mean, what would you say to an interpretation of saying that any bigger M&A or any meaningful M&A has become less likely and since now you've opted for the, yeah, to return the cash to the shareholders?
On the dividend, I mean, certainly we have, you know, split it in 2. Basically, 1 is the base dividend of EUR 1.50 a share, and the second component is the additional dividend, which is basically the expected price that we're gonna receive for the med business. We still have cash on the balance sheets or in a negative net debt position, meaning a positive cash position, and we have therefore no leverage on the balance sheets. I would not rule out M&A or growth investments by competition. If you look into the markets, and I'm sure you know this much better than others, multiple has come down significantly. Private equity is having, I would say less cases.
There might be an opportunity for us to do something.
Okay. Just looking back since we spoke the last time. If we recall, would you say that your, I mean, aid pipeline has become bigger? I mean, I know you won't give any indications, which I would absolutely not expect, but is there anything you can tell us where you stand in the process? Did say a couple of targets come up because of, I don't know, some distress here or there. I mean, how should we think about the KPI? Should we think as the targets? Do you consider yourself as a buyer for turnaround cases as well?
We don't rule out anything. I mean, it's It just needs to be a disciplined investment. It needs to be an attractive business case. You will understand that I will not comment on our funnel at the moment.
Okay. What would be the maximum stretch of you would do to the balance sheet? What kind of debt metrics?
I would say if you look at reasonable, net debt, EBITDA ratios, I'm inclined to give you one, but you know well what reasonable measures are. I mean, 2.5x , 3x , is certainly not impossible for us, so.
Okay. In your CSO agenda that you outlined, you think towards those return criteria. Can you maybe shed more light on that, which yardsticks that is and at which levels? Is it ROIC or, you know, cash flow return on investment or whatever?
We have these criteria. We have these internal criteria, we are going to refine them in the light of our strategy refinement process, so. They're strict.
Okay. You're not inclined to share them?
No. No.
Okay. Sorry for that. Right. Final question, again, coming back to the Sempermed disposal. I mean, just in case there is a reason for a delayed closing, which means you would have to bear higher losses than initially assumed, would that impact the purchase price?
We are in a good break, on our merger clearances, in the different countries. If I look to the market dynamic of gloves, we see a little bit a better outlook, towards the second half of the year. Therefore, I think, we are very optimistic to close it as planned.
Just to add to your question with regard to purchase price formula, of course, I mean, it's a standard purchase price formula that has a working capital net debt component.
Okay. All right. Yeah, that's it from my side. Thank you very much.
The next question comes from Emmanuel von Spee, from Rothorn Partners. Please go ahead.
Thank you very much for taking my question. I just wanted to clarify a point. I understood in your presentation, which you gave at the beginning, that you are planning to announce a special dividend before the annual general meeting. Is that correct?
It's correct. Before the annual shareholder meeting, we would like to specify this additional dividend to this EUR 1.5.
Okay. Thank you.
The next question comes from Roland Könen from Value-Holdings . Your question, please.
Yes. Good afternoon from my side. I have three additional questions and observations. First one is on the additional dividend question. As one condition is the closing of the transaction, are you confident to get closing done until your AGM at the 24th of April? You were expecting the closing in the 2nd quarter.
No, I think in the presentation we said several times the closing one means we handing over the examination draft and the distribution of legal entities will be towards mid of this year. The closing one will be not done until the general assembly meeting.
Okay, great. The next add-on question is on the maintenance question. As I have learned that the cash flow reflects the cash development of continued and discontinued businesses, the CapEx 2022 was EUR 54 million, including roughly EUR 20 million for the med business. Your guidance for the CapEx of EUR 50 million maintenance CapEx in 2023 is also including the med business. Is it right?
No. It's for the continued operations, not including the med business.
Okay. The third one would be on the discontinued operation. As you have to book the net earnings of the sold business until the closing, do you have to or do we have to think about roughly the same earnings contribution for the discontinued operations until the closing as we have seen of this business in the second half of 2022?
We are not commenting this. As I described before, the supply chain is still overstocked, towards mid of the year, we get a little bit a better view on this.
Okay. Thanks a lot.
There are no further questions at this time, I hand back to Mr. Haider for closing comments.
Thank you very much. I would like to emphasize again, major step for Semperit and for Sempermed, what we have achieved, and we are in the middle of the implementation of the strategy towards the industrial player in the elastomer rubber industry. I think that's it. Thank you very much for all your listening, all your good questions. Thank you. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you very much for joining, and have a pleasant day. Goodbye.