OC Oerlikon Corporation AG (OERL.SW) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Oerlikon's Capital Markets Day. My name is Sara Vermeulen, I'm the Head of Group Communications. I'm here today with our Chairman, Michael Suss; our CEO, Roland Fischer; our CFO, Phil Muller; and our Head of Investor Relations, Stephen Gick. We have a full agenda for you today with 3 separate sessions, and each session will have its own Q&A where you can ask questions. Our Chairman will kick off the first session with an overview of Oerlikon. Roland will continue with an update on our group strategy and sustainability. And Philipp will conclude the first session with a presentation on the financials and our outlook. During the Q&A at the end of each session, you'll have the opportunity to ask questions about the session we have just covered. After the break, Georg Stausberg, CEO of Polymer Processing Solutions, will provide you with an update on the division strategy and growth drivers, followed again by Q&A where you can ask questions about the Polymer Processing division. In the third session of our Capital Markets Day, Markus Tacke, CEO of Surface Solutions, will present the strategy and business update for the Surface Solutions followed by Q&A. And with that, I will hand over to our Chairman to start the first session. Michael, the floor is yours.

Thank you, Sara. Good afternoon, ladies and gentlemen. It's a pleasure to have you here all in physics, physical -- not in physics, physical. And I think for almost all of us, it's a new situation again, back to something normal that we discuss stuff together and we have a chance to interact and to exchange our thoughts and our views. So there is not a single day without Oerlikon. I like the phrase very much when I was realizing from our team under which label this Capital Market Day should run. And if you look on the picture, if you -- it doesn't matter if you drive with your car, if you wear your belt, if you do something on e-mobility, for the ones who have kids or grandkids, if you are running, if you're flying, there is in all applications, essential technology from Oerlikon, which makes these products either working or even better. And to be aware about that, that besides by the way, by that underlying for all of that, you need a huge tooling industry, we have an outstanding position. That's why we have not dedicated, shown in here, it's underlying for all of that applications, our strengths in tooling, but Markus will come to that in his session to show how strong we are in that area. If we look on our Oerlikon of today, we will realize that it's not the Oerlikon as we had in 2015 or '16 when I had the pleasure to start within the company. Can I get the next slide, please? We have sold out almost 12,000 people in drives and in pumps. We have sharpened the company, but Roland will touch that deeper. We have sharpened the company from a conglomerate to a 2-pillar structure. We are global, truly global with our sites in 38 countries, but we have to be aware as well that there are countries which counts more, and countries which counts less, and that's why we operate in this countries different. One of the reasons we will touch that is why we have decided, especially for OSS to choose here more regional setup. And we're working across in 7 major industries. So from the 2 industries where polymer division, filament and nonfilament is mainly in, we have the tooling, the automotive, the channel industry, the energy industry and the aviation and space industry. In all other areas, we are following a strategy and a business model where we can contribute a lot out of a really superior technology position with high technical entry levels, in line that the value we're contributing to the overall value of the product is a very small one. So that gives you a pretty good earning position because you count a lot, but your cost position for the whole story is a pretty small. And to do that on the #1 or #2 position, this is more or less the mantra, how we're following our activities and how we have, let's say, the last 5 to 6 years, defined the strategy for the company, where we want to be in and where we are not in. That's why we divested pumps and why we divested drives. That's why we moved -- accelerated through COVID, which wasn't advocating for that move in OSS towards this regional strategy and heading towards a situation where we want to drive more and more decision power to the front line, to the people who are really acting on day-to-day business and not doing it Swiss Oerlikon [indiscernible] from here for the whole world. It was doable maybe in the past, it will be not the role model for the future. So to deepen this understanding, that's one of the main purposes for this Capital Market Day. What are we doing, why we are doing that, where we come from, where we are today and where we want to head to. To make a better awareness or to create a better awareness about who are the people behind because in all day-to-day situations, it's about the people who are doing things. So if you have a better understanding in who is running the show on all different layers, which are decisive for the company, and what are these people then on a short, midterm on one hand, but as well on a strategic perspective, on the other hand, are finally doing? Why it would be good to be invested in Oerlikon. Can I get the next slide, please. So I touched it already, and I will reiterate it a little bit from 4 to 2 divisions means not conglomerate for us means a clear positioning on 2 pillars. There is sometimes the question why you have OPP and OSS, why not to stand-alone? And we had discussions on this business in 2016 and '17, and we figured out for us. It makes a lot of sense. And at that time, we hadn't sold drives yet. It made a lot of sense that these 2 divisions stayed together because they have a similar DNA in the way of engineering and understanding technology and understanding processes and find solutions for these processes. They have a good complementary situation on capital intensity. They fit on one hand and they show a robust business model, which we have as well presented in the COVID period, a good resilience towards market situations and market changes. On the other hand, there is a strategic and management culture, which is enhancing this development, where we need the right people, I mentioned it already, to have people which are really carrying the same spirit and the same approach on business. We have a culture to think it from a customer end on one hand and being fully aware about the capabilities, what we are capable as a company for on the other hand. It's a very decisive point and for a tech company, it's not always the easiest one. We are sometimes doing things because we are capable to do so. And we have to ask more and more, we can do that, but for whom we are doing this and who is ready to pay for? This is a cultural move where we are working since some years on and we will work a while longer. But if you look back the last 6 years and what we are -- have given you as a guidance, it shows you that we are really convinced that we are walking the talk, that we're executing that what we are saying and that we are very reliant on that. You will ask about the shareholder value development. And the shareholder development or the shareholder value development actually is pretty poor, because with the market cap of CHF 7 plus/minus a little bit, we are definitely as a company not where we should be. There are reasons for that. There are mainly 3 reasons, the one is the actual situation and the perceived structure of our shareholder situation, where I have to reiterate that there is an indirect participation by our trust of 18% of Viktor Vekselberg, who is a sanctioned person, very often Oerlikon has mentioned as a Vekselberg company. I have to be clear on that, it's not a Vekselberg company. And not me, not my Board of Directors, not my management would work in a company which belongs to one person, and he guides you, this is ridiculous. And I have simply to tell you, here, it's a little bit necessary to differentiate between perception and between reality. Why we have chosen this model of an Executive Chair? There's a simple reason, because the CEO doesn't want to work any longer. And then the second reason, we asked ourselves -- sorry, you have driven that in 2016 when you told me 5 years, maybe 1 or 2 years longer, and then we have to find a successor. And then we have been sitting together and saying, who could be the successor? What is the profile? And with a strong division CEO, who is Markus Tacke, which we got in, in 2020. And in 2019, still Roland was in-person, division and segment -- our division and group. Now we have a division CEO. We have sold a lot of stuff. We have restructured. We have cleaned up. We have Georg Stausberg, another very experienced division CEO. We have a regional structure for our OSS, where we want to be much closer with the decisions into the regions. Why? Because in COVID, we have seen that there are Chinese management, in China, is doing the right stuff. And it don't need advice from Switzerland or from Liechtenstein, what they have to do. They need to be empowered to utilize the full capability of our markets. In all that environment, the simple question was, what could be the profile for a group CEO? And don't forget, on the other hand, you have a very active Board with a very active Chairman, close to the business, following the business, pushing the business, helping sometimes and sometimes challenging. And in such a situation, there is no real room for a group CEO. That's why we decided to choose an empowered division CEO-ship with a strong position from our CFO, not to forget about that and an active chairman in the role of an Executive Chairman. And this model is not for a year or 2, it's for 3 or 4 or 5 years. And if we discover that in 5 years or whenever it is, there is a better model, then we will adopt again because organizations have always to follow requirements and situations where we are in. Saying that, I would touch the level of execution. As I said, walk the talk. And I think it's clear that we walked the talk the last 6 years. We did what we said. We moved the company very strong through COVID. We have taken cost out in a significant way. Sometimes, for sure, it was not a pleasure. If we have to cut 1,200 jobs, this 1,200 existence, 1,200 families. But if you're on the way to get EUR 200 million or EUR 300 million up from 2019, and then you have to realize that you get EUR 400 million down, you have to adopt costs. And we did that in a way and in a speed which shows as well that there's a very good link between the company and the workforce and the unions and workforce representatives because a lot of that happened outside Switzerland. Switzerland was touched, I think, if I remember, by 80 people. But it was necessary. So costs because I got the question very often. Cost is a mantra for us to be good in costs. Can we always be a cost leader sitting in Switzerland, sitting in high-tech areas, sitting in high-cost areas, maybe not, but we have to be as close as possible to be a cost leader. But even more important is that we utilize our markets, that we're utilizing the strength of our innovation pipeline, which we have. You have the chance outside to see some of our activities we are doing. Unfortunately, you have not a chance to see some of our activities which we have in the pipeline, either because our customers don't like that or we are not ready yet to show it. But you can be absolutely assured that with an R&D rate as we are running it, and with a CapEx rate as we are running it, that there is a lot of innovation for the next years to come, because this is the lifeblood and the oxygen for us that we have enough innovation power to maintain a high-tech business in a high tech and high challenging environment where we are in. Again, from a clear #1 and #2 position. We are not a "me too". And we are not running for growth only, we're running for growth strongly but for growth under our conditions for growth which is profitable and which is fulfilling our requirements. And in that context, I have to -- and maybe Philipp, you will touch that again, but I have to say even if you don't like it. In the last 6 years, we've been not always very good on our capital return. We have a much stronger focus on that. Last year, we've been, '18 we've been, but in 4 other years, we've been not. Different reasons, interesting technologies, which we followed, which we haven't materialized. One example was [indiscernible], yes, but nobody expected that [indiscernible] will stay, but it stays because the industry is very resilient. So having a technology replacing that was not good, and was money we invested and it's not really -- was not a fruitful investment. And some of that we had. On the other hand, we've been not cautious enough, and this is something which we have in the last 2 years, much stronger on our radar screen. But this is -- the second of the 2 reasons, perceived as Vekselberg and Russian company, which is not good for our shareholder value. This situation that the return on capital was not always good. And maybe the third one that we have a high position of investors, which are clear that the mid- and long-term investment is good, what we are doing, but we're not a speculative investment. We're not good for someone who wants to make on a quarterly or half year base his money getting in and getting out because we are mid- and long-term interest investors. And for an investor, this is, sometimes takes a while to see how these results will come. Nevertheless, we have given you an outlook first time for a long while. We gave you an outlook about our growth expectations, our revenue targets, and I have -- I set that in a table. If in 2026, it's CHF 3.5 billion or CHF 3.4 billion or CHF 3.6 billion, I don't know. But we give you an outlook that this is the area in the range we run for. And this is as well a commitment where we commit to. And this is why the company, represented by its management and represented by its Board through me, is confident that they can achieve that. And with this outlook, I would love to hand over to Roland Fischer, who gives you a deeper insight on the strategy and what we are doing. It's Roland's last Capital Market Day. It's our common first one because the last Capital Market Day was in 2014. But Roland, the last one could be the best one.

I think there is a good chance, right? So ladies and gentlemen, a warm welcome from my side as well. Thanks a lot, Michael. I will spend some time to talk about us, to talk about Oerlikon. If you talk about Oerlikon as a company and compare the company with the situation in '14, '15, '16 and the reference was made to the last Capital Market Day, it's a different company. It's -- a lot has changed, not everything. But today, we have stability. Today, we have growth. We have a solid financial operational performance. What remained is the ambition to be a clear #1 in the market segments we are in, or at least to have a strong #2 position and an idea to do more. And as a consequence of that, yes, we divested pumps. We divested drives business. By doing so, we were shrinking. On the other hand side, the 2 remaining divisions have been able to grow over the course of the last 5, 6 years by almost CHF 1 billion. In OPP, we have been able to open the manmade -- traditional old manmade business up to OPP today, polymer processing because we don't have only and don't get me wrong, it's a great business. But today, we have an additional business, it's a nonwoven, it's a polycondensation business and Gick will come to that. This is a growth platform. And in a similar different way, but a similar direction, we have been able to grow the OSS, Surface Solutions business. And just the last step to implement the regional organization by 1st of January of this year is of essence because the world has changed. We are deeply convinced that by empowering the regions and the people being active running the show in the region is a great move and will bring us a lot of benefits. We did some acquisitions, string of pearls, smaller ones, midsized ones, just the recent ones, Coeurdor and INglass, great acquisitions, great business, and we opened up and tapped new market segments, and this is an important part of our growth trajectory. And last but not least, and I think Michael was referring to it, there was a lot of stuff we did internally. Cost is of essence and processes, internal improvements here. I will come to that. On the next page, today, we are a clear #1 in Surface Solutions business. There is no other company being in a position offering a similar or being close to offer a similar portfolio of solutions. In the filament business, again, the market leader with our Japanese friends. And Michael touched it. It's not only the total volume, the revenue, it's a business model. We call it internally sweet spots. We are, in many cases, in applications where our solutions and in many cases, it's not a solution, it's the solution, which makes the difference at the customer side, but carrying only a very small part of the total cost of the product. And this is the area to be. And these are the areas where we are able to generate our profitability. And we are serving 30,000 customers, almost 40 countries, 38 countries, 12,000 people. I think that is really a strong picture of our Oerlikon company. In terms of diversification in the center part of the chart, I mentioned it already as the non-filament part. Equally attractive, even more attractive in terms of profitability. We talked about nonwoven applications. And I will not go into detail because that's a story of Georg. And today, we have a very balanced portfolio, which I consider as a strong -- very strong element of our company, especially in these difficult days where markets are a little bit up and down here and there. On the right-hand side, the financial dimension, we delivered in 2021, 17% EBITDA. We paid a stable dividend over years. And yes, referring to the low share price, the capital payback actually isn't an outstanding one with 5%, right? And our balance sheet is in a very good shape. From that perspective, this is really a confirmation how strong the company is. On the next slide, the question -- just touching it a little bit. Where is Oerlikon coming from, and where is our foundation? It's technology. We are a technology leader. Since the case -- in case of Surface Solutions is 80 years, we are shaping the standards of this industry. In OPP, it's even more impressive. I think earlier this year, Remscheid celebrated the 100th anniversary of Barmag. I think this is really something what tells a lot. It's sustainable. It's a long-lasting business. It's not a short-term optimization story. We do have the long-term success of the company in mind. And we are investing on a constant basis around 5% more than 5% of our yearly revenue into R&D. In good days -- any less good days, and we did it in 2020 when we had our challenges in the Surface Solutions business, we didn't cut our R&D spending, because R&D spending of today is the foundation for the success of the company of tomorrow. On the next slide, please. But -- of course, we are not only working on innovation and technology. We worked a lot on our culture, on our processes and our organization as a company. The regional setup in the OSS division has been indicated, has been touched. We are permanently working on internal improvements, processes, systems. We do have a clear plan to become a digital company and now don't ask me what exactly it does mean. For us, it's clear. We are moving in that direction, and we are achieving at least the last 2, 3 years, great progress this year. And yes, sometimes it's a little bit painful, you don't get paperwork anymore. Everything is online. You have workflows and all that stuff. People have to get used to it, including myself, and you sense already something. But this is the future. This is a part of the game, and we have to continue really to work on that and to make it a great success. Then I think 2 years ago, we established and created our 6 success statements, giving guidance to the organization, to ourself, to the management, how we want the people as the leadership team to act, how we want them to behave, how we want to run our business, how consequent, how fast, how -- in terms of consequence and in terms of ownership, we really want to take the responsibility here for the company. We have the topic of diversity. And for me here, the discussion which is ongoing in terms of gender is by far too short. When I'm talking about diversity, I'm thinking more about regional diversity. And here we are in great shape. Just take our Board. We have industrial experts from China in our Board. We have a guy from the U.S., representing our key markets in the Board. That is the real diversity. Don't get me wrong, gender is important as well, and we are having internal targets to push the share of females in our organization in our leadership team. But in total, it's more. We talk about top talent people, something what we didn't have 5 years ago. Today, we have a stable process. We go through our organization, identifying the new ones, the young ones, carrying a lot of potential and the willingness to make a certain career step here, and we are helping these people. Everybody here on the table, we have mentees. We all take care for the next generation for the younger people. ROCE, I think Michael was very vocal on that. We have been not all the time good here. But for the last few years, we changed a lot here. ROCE is the key KPI for our long-term incentive for the management. And it's a key KPI for everything that is related to spending, whether it's an R&D project or whether it's equipment side or whatever. ROCE is key and the results you see here. And last but not least, and this is a given. We are permanently working on our code of conduct. We are permanently working on our governance dimensions in many directions. And with the ESG topic, I will come to it, I think we have made a huge step in the right direction. The topic of sustainability is not new. It was always our target to serve the customers, to do more with less. That means to help our customers, to save energy, to save waste, to extend lifetime of products, reduce water consumption and all that stuff. This is not new. This is, I think, deep in the DNA of our company and deep -- associated to the products we are offering to our customers. And -- on the next slide, I think that's an important one, to make it obvious and clear to everybody. The people of the society started discussing about ESG in the last few years. Our activities in this area is going back to the year 2009 when a management sitting in [indiscernible] made a conscious decision to go for energy saving with the new products. And having in mind those days, we talked about mainly -- or purely filament equipment, and so the main market was China. In 2009, nobody in China was thinking about energy saving and sustainability, but the management made this conscious decision. Today, we do have the products, I will come to it, saving about 30% of energy. And this is a key element in being successful in these days. Then we had our HSE policy in 2016. We took 2019 as a basis for our ESG report. And last year, we issued our first report. And this year, the second one. And I'm extremely happy that we get credit for that. The rating agencies are recognizing what we are doing and improved our ratings here. And this is a great success. But again, it's not greenwashing. It's just -- and maybe we should have done it, I should have done it or done earlier, talking about it and bring it up, because we had it. And when I talk about that, it's not only about -- on the next slide, the achievements until today. We have been quite brave and took ambitious targets for the year 2030. And different dimensions, energy management systems. Last year, we had 12% of our sites covered, now already 19%. But we have to keep in mind, we start with the right ones, the bigger ones. That means this 19% of our sites represent already more than 50% of our energy consumption. When we talk about renewable energy, Balzers, I think, Liechtenstein has already been a few years [indiscernible]. Nobody talked about it. It's a matter of fact. When we talk about this post waste, a reduction from 41% now down to [indiscernible] 31%, substantial improvement. And just to mention a few of these criterias. And also in terms of diversity, we have a clear target to achieve the 20% share of female employees in our leadership teams. And this is a longer way to go because, at the end, it's also about qualification. We have to find the right people being able to do a good job in any dimensions we are offering, and to fulfill the gender targets here. Important for the long-term success of the company actually is on the next slide, our R&D activities. Already today, we spent 72% of our R&D spendings related to ESG criteria. And what does it mean? ESG criteria means with any new development, we improve at least one criteria, whether it's energy consumption or CO2 emission to be reduced or lifetime without jeopardizing another one. And the target is here to be by 2030 at 100%. That means we will not do innovation and developments anymore, which are not supporting the ESG criteria. I think that is an important statement. And it's tough. I was honestly spoken a little bit struggling with 100% because it means perfect. But we took it and we are behind it. We stand for it. And now on the next slide, maybe to make it a little bit more tangible. You all know, when we talk about ESG, we talk about energy consumption, the left-hand side of the chart, water consumption, social impact, waste, raw material, service time. And if we talk about the tooling business, an important part of our Oerlikon portfolio, volume-wise, profitability wise and also innovation wise. And you will sense it why. If we take, as an example, a simple drill, 8-millimeter diameter. Uncoated traditional drill, you can drill maybe 25, 30 holes. If you compare it depending on the material you are working on, right? If you take a high-end coated drill as a comparison, you can do 160x more holes. That means a black and white comparison, a certain amount of holes to be done. We do it with one coated one or with 160 uncoated one. And this effect, you can now calculate, translate into material savings, CO2 emissions. I think this is a good example for this sweet spot phenomena I was just referring to. When we talk about aircraft, aero engines, our coatings, thin film coating, erosion coating, combustion chamber coatings or turbine coatings are enabling a narrow engine to be 5% more fuel efficient. That means for the same distance, we are consuming 5% less fuel, and this easily can be translated into a number of 26 megatons of CO2 but is equivalent to about 80% of the CO2 emission of Switzerland, just to give you an idea how much it really is. Let me talk about cars, and now let's talk about e-mobility cars. Key rate is [indiscernible]. And each time, we can replace a metal material by a high-end polymer material based on our hot runner technology, reduced rate, 10% rate reduction means 6% extension in range. Especially for an electrical car, it makes a difference, the last 50 miles to the next miles or kilometers to the next, how to say, not filling -- loading station. And it can be decisive. When we talk about manmade fiber, here as an example, we are less resource intensive and we talk about a T-shirt for a guy like me, king size, 150 gram. The filament material required for this T-shirt consumes about 8-liter of water. If we buy a coupon, natural fiber-based T-shirt, it consumes about 1,300 liters of water. A huge difference. And maybe not so much of essence here in Central Europe and Switzerland, where we have plenty of water, but it's the bigger part of this nice blue planet, the situation is a different one. Water is key. And here, filament helps a lot to improve the world. And last but not least, when we talk about energy saving, I referred to the 2009 decision in Remscheid, deciding to develop winders equipment for filament production consuming less energy. If we take the 30% energy reduction, and the number of winders being in operation, this ends up with an energy volume, which translates into 2.6 megatons -- million megatons of -- 2.6 megatons of CO2. And that is the equivalent of the CO2 emission of 0.5 million cars, average about 15,000 kilometers a year. So these few examples hopefully illustrate to you that we are not talking about minor improvements and small incremental improvements. Yes, these smaller ones do exist as well. But here we talk really about big pots and big topics, which help a lot to make the world a little bit better and a little bit more sustainable. In total, on the next slide, and that's my last one, actually, Oerlikon today is in good shape. We are a diversified industrial technology leader for material science in a wider sense and applications. We are providing the solution to plenty of our customer solutions, which makes a difference. In many cases, we are active in the premium segment. Yes, we are a Swiss-based company; quality, reliability. That is key. And that is still something what values a lot for us. It's about serving our customers and about penetrating new markets, opening new markets, serving new customers. And our growth perspective actually is based on that. So we are well positioned for a profitable growth supported by the mega trends, because whatever we are doing -- and actually, I could have showed more slides, giving more examples, in which dimension, Oerlikon as a company, as a solution provider can help and is helping the world and many other -- and many companies and many industries to make fair products better. Having this said, thanks a lot for the last 25 minutes. We are a little bit slightly ahead of schedule. But nevertheless, that's why I would like to hand over to Phil to talk about the financials.

Thank you, Roland. I think I'll just stand here to mix it up a little bit. A warm welcome from my side as well. Excited to be here. I mentioned it during the launch, for me this is also the perfect timing for this Capital Markets Day. Why do I say that? I think there's 3 reasons: Number one, over the past couple of years as a company, we've really done our homework and we talked quite a bit about that; number two, we have a very, very strong outlook; and number three is, I think we collectively will do a better job explaining to you, especially the market dynamics and why we're convinced that we're going to be able to drive profitable growth in the future. And so I want to pick up right where Roland left off with the first slide and really talk about profitable growth. we will spend the next couple of hours together with Georg and Markus describing the strategy, the advantages of our portfolio and the detailed action plans of how we will capture that profitable growth. And we will talk about it along 2 pillars: growing and diversifying the company and the 2 divisions; and further improving the profitability of the portfolio. We will describe to you how the solutions and the products that we have are geared to outgrow their respective end markets. We will describe to you how we will be able to capture the structural growth in those end markets, and very importantly, how from the technology leadership positions we have, we continue to have an ability to expand beyond those spaces to diversify our portfolio, whether that's organic or inorganic. And then we will talk more about the next level of profitability enhancements that we will drive. We've done a lot of work on this over the last couple of years. There is a next level to be achieved by that. This will also return into -- results in improved capital returns. When it's all said and done, what we will talk about today is our detailed strategy and the detailed action plans to achieve 4% to 6% annual organic sales growth, with 17% to 19% EBITDA margins. And we have very detailed plans in place from us. These are midterm targets and our commitment as a management team. If I flip to the next page, I want to start on the growth aspect of it. Surface Solutions, our -- the growth of our sales in this division continues to be driven by an ever increasing demand of our customers for more sustainable and more efficient solutions. We are a clear technology leader here. But we won't just rely on the market growth, we also have 2 very distinct upside potentials. The first one comes from a geographic expansion, specifically in North America and Asia. And the second one comes -- is a derivative of the significant investment we're making into more sustainable new technologies. Markus Tacke will talk a lot more about how we're capturing that growth. This is not just a plan. The actions are already underway. And Georg will talk about Polymer Processing Solutions. The mega trend that we're following here is unchanged. GDP growth, more prosperity specifically in emerging markets. In addition to that, we're diversifying the business beyond the filament position where we will continue to maintain our #1 position. So we're expecting both divisions to have an ability to grow at 4% to 6% organically per year and thereby also the group. If I move on to the focus on the profitability. I think there was a homework that I described that we clearly acknowledged at the end of 2019, we've taken some decisive actions on those. And I just want to focus on that again to drive the fact that this is a very sustainable cost action that we've taken. You look at the first part of this chart here, we've taken about $60 million of G&A expenses out of the company. Actually, when you adjust for the effect of the acquisitions that we made last year, it's almost CHF 70 million. So at ceteris paribus basically same sales levels in the 2 years, 2019 and 2021, that in and of itself was a 250 basis point improvement. Now those administration expenses were really structural in nature and will not return when the company continues to grow sales. And this is when we're talking about operating leverage, this is really what we're talking about: Maintaining this operating leverage as the company grows. This is directly translated into profitability growth, and both Michael and Roland have talked about this. When you compare 2019 and 2021, there's a lot of different factors in there that make the years difficult to compare, but the cost structure was significantly lower. And so we were able to achieve a significantly higher profitability level in 2021, despite basically equal sales levels. That despite the fact that our Surface Solutions business was obviously still significantly impacted from -- by the COVID pandemic. And then lastly, all of this needs to translate into strong capital returns. We have said that our clear goal is at least a double-digit return on capital employed. That's not the end all, be all target, but it is the minimum expectation that we have for us as a management team that we know you have for us as shareholders, and our compensation is fully aligned to that target. Moving on to the next page and talking a little bit more about how do we drive this on a day-to-day business. We've shown this chart on the left-hand side of the page a couple of times already on earnings calls. But basically, everything that's to do with capital deployment inside of Oerlikon runs through this matrix. On the Y-axis, you have capital returns and on the X-axis, you have growth. And every investment we make, whether that's R&D, CapEx or M&A investments need to be plotted against this chart. That doesn't mean that occasionally, we won't make investments in the top left or in the bottom right. But these will be much more specific, much more concrete investments to further enhance certain businesses. We're strategically moving the capital that we allocate to the top right of the company. And in the short, medium and long term, this will drive improved capital returns inside of Oerlikon. You can see the first fruits of this transition. On the right-hand side of the chart, again, this is not our ambition as a management team to be there. But when you look at 2021, and you adjust for the first year impact of M&A deals, which is always very negative because you get all the capital employed, but only some part of the earnings, we were at 9.7% return on capital employed. More to come on this, and I can just reiterate again, 90% of our long-term incentivization is also driven by this critical metric for our shareholders. If I flip the switch a little bit and go to our 2022 guidance before we go into what we're expecting from ourselves for the medium term. We are confirming our 2022 guidance. We continue to expect about CHF 2.9 billion of sales and around 17.5% of EBITDA margins. There have been quite a few questions from the investor community about the targets and the sustainability of the targets for this year given everything that's going on in the world. And what we have said is that we -- obviously, we see the fact that there is a lot of movement inside the world, but we remain very confident in this guidance. It might be that we will be a little bit towards the lower end of the guidance range in Surface Solutions. But based on the strength of the backlog and the excellent execution that we have in Polymer Processing Solutions, we might be a little bit towards the higher end there. So overall, from a company standpoint, CHF 2.9 billion in sales with 17.5% EBITDA margin is absolutely attainable. If I move on to the next page, this is really what we wanted to boil it all down to. I'm giving you the summary expression from a financial statement, and then Markus and Georg will really describe you all the details behind how we're going to get there. When we add it all together, we're expecting the group to be at about CHF 3.5 billion of sales by 2026, and we're expecting the group to be between 17% and 19% operational EBITDA margin. We're expecting both divisions to grow between 4% and 6%, Surface Solutions with a margin of between 20% and 22% and Polymer Processing Solutions between 16% and 17%. Included in this guidance are some of the smaller -- very small acquisitions that we tend to make along the way, also some of the divestments on much smaller scale. Not included in this guidance is the big optionality we still have on M&A. The big optionality we have on M&A is obviously upside potential towards this. And the other thing I will say is that we've obviously tried to base this organic sales growth on sort of a normalized inflationary environment. Clearly, our sales expectation moves up if inflation continues to be higher, but that was not our base assumption for the next 5 years. So let me summarize for you why we think we're so well positioned for the profitable growth. We are coming from a very strong background, leadership positions in both divisions. Huge economic moat around the technology and the customer relationships that we have in both of those product companies. We have proven in the past 5 years that we can grow the company organically and inorganically. And we have a very resilient business model with leading customers and a really global platform. On that basis and from that leadership position, from the strength that we have as a company, we're expecting 4% to 6% annual organic growth, leading to about CHF 3.5 billion of sales in 2026. We target 17% to 19% operational EBITDA margins. You can see from the guidance that we're issuing for the current year that this is very much attainable for us. And the strength and focus on capital returns, where you're seeing the first fruits of that focus in the current year already, will continue to lead us to higher return on capital employed, the key metric for us and for you. So with that, we are indeed still a little bit ahead of time, but that means we have a little bit more time for Q&A. And we will obviously have more time for Q&A also later when Markus and Georg got up here. So Stephen, you're going to lead us through Q&A.?

Thank you, Michael, Roland and Philipp for the presentation. Now it is time for Q&A. [Operator Instructions] We now start with questions in the room. Please first introduce yourself and the institute you're representing.

Andy Schnyder, zCapital. I know we'll hear more from the divisions later. But probably you can tell us how you came up with the guidance in terms of process you had internally, that would be interesting.

Yes -- I think they are all the mics hot. I think we'll talk a little bit more about what is really built up in all the different details of it. But it's really an in-depth analysis of the markets, not just at the big market level, but really specifically what it means for every product company, what products we're selling into that product company. And then really the technology we're developing for that and our share of wallet for each one of those segments. So really, how much can we -- we went down to the level of how much can we achieve for an individual aircraft engine, what's going to be required, how many aircraft engines will there be. The same thing on the Polymer Processing side, what's the capacity, what is going to go through the system and so on. And then really adding on top what we know we can achieve with, for example, sales initiatives like the geographic expansion.

Christian Obst from Baader Bank. I have 2 questions, which are a little bit related to each other. First of all, you have this regional change towards regional structure in Surface Solutions. Does it mean that you now have 3 subsegment leaders for APAC, North America and Europe? And do you have some kind of a matrix structure underneath that, then with tooling automotive, or can you describe, please, the new structure a little bit more? And have you lost some important managers or know-how by this change of structure? And you still have these companies, which are formerly the brand names before. Do you realize still these brand names there in place? That's the first question. And the second one is related to this. You have -- you said several times that return on capital employed is the most important trigger or driver for the company going forward. But you haven't talked much about the capital employed and down to the segments. Can you give us an idea about the capital employed included in Surface Solutions and in Polymer Processing, and how you allocate the capital within these 2 segments.

So maybe I will start with the first part of your question and over to Roland and Philipp, because it was a strong interaction between the Board and the management team how we can utilize our markets more. And to be simple, yes, it gets closer to our matrix. But there is no question mark about who is in the final lead and who's the division head. Second, yes, there is this inside company feeling, Balzers, Metco. That's not there. Balzers and Metco are sales brands. There are brands in their industry. Balzers stands more for the PVD attention staff and Metco for the [indiscernible] additional brands, which we are using, marketing brands, but the structure is clearly there is a Head of Europe, a Head of Asia, a Head of U.S. and North America to take care and responsibility for that region and for the real penetration of the market. Based on the technology which we have and that you will see in Markus' presentation later on, on 5 business lines or no business lines -- product lines, which are providing the core technologies towards that regions. Roland, can you delve more into that?

I think you made already all essential statements. And maybe I would drive from a different angle. When we consider Metco and Balzers as previous companies, they were growing. And at a certain point of time, there is a limitation in running a global business, having or intending targeting a strong market penetration in The U.S. and in Asia and guiding it and directing it out of Liechtenstein or out of [indiscernible]. That simply doesn't work. And that is actually the reason why we went for this setup. And Michael made it, yes, there are regional heads. They do have [ the full P&L ]. They are in charge and responsible for the business development. And yes, there is a kind of matrix behind because when we sell a coating, BALINIT, whatever, BAL.IQ, it has to be identical all over the world. What we do not want is to replace a structure, showing some silo phenomenas by another one. And that's why you anticipated it in the right way, yes.

Probably helped by this transition because it was not an easy transition in a company which was running over decades from a centric base. COVID has proven that the regional teams we have, like in China or in Japan or in Korea or someone couldn't travel for 1.5 or 2 years, they made a decent good job to penetrate the markets and use the customer intimity there. And I'm proud to say that Oerlikon is in 94 different nations in their company that we have regional teams in China, completely Chinese; in Japan, completely Japanese. Korea, but that's one Danish person, only Koreans; U.S., U.S.-based. So these are people who'll interact with the markets in a much closer way as we have done that in the past. No. It's a clear no.

And then Christian, the second part of your question, I think the net operating assets, you can see the split of the net operating assets in our annual report between the 2 divisions. Think about at the company level, it's about CHF 2 billion after the acquisitions last year. And think about 3/4 of that being in Surface Solutions and 1/4 of that being in Polymer Processing, both based on the business model and the acquisitions.

Yes. And going to Surface Solutions, again, is it right that then the capital employed is linked to the regions then, and these people are -- have to work with the allocated capital employed? Or what is -- how is that allocated to the subsegments?

That's a good question, Christian. I would clearly say it's at the intersection of technology and market, has to be, right? So I think if -- and we'll talk more about that in Markus' segment, but think about one of the greatest growth opportunities we have is thin film applications in the United States of America. So that's where the capital is going to go.

Michael Foeth, Bank Vontobel. You alluded to the strategic rationale of having the 2-pillar structure within Oerlikon. And my question would be from a guidance standpoint, 2026 or midterm, how much synergies both on the top line and on the margin are included in your guidance that would justify to continue having the dual pillars setup of Oerlikon?

I'll start maybe the specific sales synergies that we are deriving from the portfolio right now are particularly from the INglass acquisition. So that is really at the intersection between the hot runner systems and the thin film application forming tools. That is where we're generating real sales synergies. In the grander scheme of things, that is not your biggest amount, right? But I think you also heard Michael specifically talk about the justification of the 2 dimensions inside the company is not just sales synergies, right, Michael?

Absolutely. First, we have the cost synergies, which we do in a clear, consistent way, there's all the shared services which we're running across the globe, either it's IT, it's accounting, it's legal setups, it's procurement, it's anything what's related with our cost base. And this is a matter of fact that the 2 divisions in parallel are simply too small for real global activities. That's why they're linked together. That's a practical phase. The other case is that when we thought about -- we thought about in '16, '17, together with Georg Stausberg should we spin-off OPP, OMF in those days or not, and what's the perspective. And the reason was why because we said the filament business that moves up to CHF 1 billion, CHF 1.1 billion and it goes down again and up again and down again, there's more cash as it was perceived. Additionally, negative perception, the cyclicality, which is not there. We are now in 8 years. We are filling up '24, and we're looking for further. And so I wonder sometimes which businesses have a longer cycle because all business has a certain cycle. But the real chance is the way how we run it, the understanding of materials, either polymers and metals, the way how we're engineering answers, the way how we're doing process solutions. We are selling a solution. So we're not selling you a coating or we're selling you something, we're selling you a solution for requirement you have as a customer. And this we do very successfully in both fields. So this is the common in combining DNA. Additionally, now with INglass, you have applications in automotive, in Markus' area, and you have the polymer understanding on Georg's area, where he does pumps and other stuff as well in the polymer world. So there is synergies on the way how they work together, but we don't press them together for the sense of to show 1 unit. If you take Switzerland, maybe that's a good example. You have German Swiss, Italy Swiss, French Swiss outside of Switzerland. It's a very successful model. Inside it shows a certain diversity, and this is what we're doing. We have a certain diversity inside even that Georg's organization is more functional and Markus' more regional. Why? Georg will explain it to you. He has 30, 40, 50 customers across the world, maybe with 5, 6 countries, which matters for him, and Markus is much more region-oriented. So we follow here with our setups, we follow our opportunities. And we combine a very profitable business with our high capital intensity, with a good profitable business and a much lower capital intensity. And that fits perfectly. That's why it stays together. And that's why, finally, we came to the conclusion it's not a good idea to spin it and stay the early only with OSS. And by the way, COVID times have proven us there was not too much companies move through COVID that resilient as we did.

Dominik Feldges from Neue Zürcher Zeitung. I'm afraid, but I have to ask the question about Poland. Are you afraid of being next on their list? And can you please point out how much you -- of revenue you have in Poland and how many people there on the ground? I believe you also have 1 of your 2 shared service centers there in Warsaw, if I'm right.

I'll take it.

You take it.

Yes. So our exposure in Poland is a limited one. We do have a few coating centers. We talk about an order of magnitude of CHF 10 million revenue and maybe delivering of a few million value-based material into Poland. That means a few hundreds of people, and we do have the shared service center. And to be crystal-clear answering your question, no, we don't expect something like that to come. The statements are clear and are obvious. And it always goes back to the sheer fact that the dependency on the sanctioned shareholder is 18%. And that obviously is below the threshold of any parallel...

Any threshold, and again and again, even if nobody wants to stop it, sometimes, it's annoying to think about since 2008 or '10, Oerlikon and Vekselberg, and Vekselberg and Oerlikon, there's a nice book, by the way. Viktor Vekselberg, you should read that that's the time until Vekselberg was investing. And finally rescuing the company with CHF 1 billion spending and motivating the banks at this company with today, 12,000 jobs is still alive. Otherwise, we wouldn't sit here. The second point is that Poland maybe overstretched a little bit their position with what they're moving. But it's not my way to comment it but as European Union, and that is our shareholder structure. And here again, I said it at our table at lunch already. If this is my most and above question, I have a wonderful sleep. We have other questions. We have the question where we buy our resources, either its energy or its raw materials in future and how can we be avoid that we buy it from countries which are not following the same values that we are doing. So we can exchange Russia by Saudi Arabia and Qatar, then we exchange a war country in Europe against the war country in Yemen. Maybe it's a matter of fact that 350,000 [indiscernible] minutes are there, and nobody takes care about. Or we can go with our solar stuff to China and get it from forced labor out of Igur area. So simply, we have to ask ourselves what do we want and how we get through that. This is the real question, how we can steer a company our size with ambitious plans we have through an environment where it's clear we will not have open sky anymore in the global world as we maybe had 5 or 6 years ago. But we will be global. So we will be more, as we discussed it at in different areas in next week again, more region to the region. But that will mean and here our structure fits perfectly into that. That means that we are going in China for China's sake, with the Swiss company. And we are in the U.S. for U.S. sake in an U.S. area. We will be in the world as we've been, but we have to approach it different. And the resilience of supply changes. That will be a real question mark and it will have a price tag. Things will may be more cost or will make cost more as it was in the past. You will not get everything for free. But the last question I have really Mr. Feldges, we had a good discussion last week, I guess, is Viktor Vekselberg now with 15% or 18% or 17% and the Polish moving here or there, Vekselberg made it on a sanctions list in the U.S. by whatever reasons, I'm not in a position to comment that. In 2018, we've been never asked by, never affected by anybody. Never in touch with anything which is sanctioned, not an [ Norfolk ], European Union and somewhere else, simply because we have a shareholder who is Vira Trust far away from any levels to take influence either by size or by whatever else, and that's the reason why Oerlikon should get the credit as a real independent company in an independent market for sure. Whenever you are in touch with some Russians, today, it's not good. Whatever it's Russian. And even myself get sometimes feeling, hey, what they are doing there? Why? And you know out of 20, 30 years work -- there are good and bad people in all countries, by the way, and it will be difficult to separate that, but we have to separate that. There's a Russian government and they are Swiss company, and please keep that aside. Poland is very emotional on that and everybody who is linked with Poland by whatever relative position by family or whatever, for sure, has more emotions on that than others. But emotion is not a good guidance in such a difficult time. And here, we will follow our rationales. Answer good enough or some more? Some more questions about our business and our future? Or still on emotions? We still have 11 minutes. So if you have no questions, we can either do the break earlier or we can do...

No, I will say, we now do a break but maybe restart already at 2:45. And yes, then we will restart with Polymer Processing Solutions. And with that, let's start the break. [Break]

So welcome back, everybody. And I'd now like to come to the second session today, which is the Polymer Processing presentation. I would like to introduce Georg Stausberg, CEO of Polymer Processing Solutions. He has held this role since 2015 and has been with Oerlikon now over 16 years and has, in total, 33 years of experience in the polymer processing industry. Georg, over to you.

Thanks a lot, Sara. And yes, let's get started talking about our division Polymer Processing Solutions. And what Michael Suss already mentioned to say, there's not a single day without Oerlikon. And that is also true for our division. What our polymer parts about? Of course, it's about apparel, but it's also about diapers, it's about lightweight components in cars. It's about packaging, it's about bottles. So if you just would look around in that room here, and would say, okay, if now no polymer inside, here would be no carpet. You would have no upholstery on your chair. So therefore, it's essential to deal with polymers and how we are doing that. Next slide, please. So first of all, just a high-level view on what is our division about. Last year, we were close to CHF 1.4 billion of sales. Last year, we ended up with an EBITDA value of 16%. And we achieved that with more than 4,000 employees. And with basically 3 different types of business. One is the machine business, plant design business, equipment business. And if I talk about plant design, just to give you an idea of what we are talking about, we talk about installations producing 50,000 yarn bobbins a day. You might have seen 1 of the yarn bobbins outside at the table. And a typical customer of ours is producing 50,000 of these bobbins per day, which is equivalent to 1,000 tonnes of polyester per day. You need to have around about 1,000 winders to do such an installation. And that is -- so here, we are talking about investments of CHF 150 million, CHF 200 million with 1 customer on 1 plant. This is on the high-end side. On the equipment side, on the low-end side, and low-end does not mean quality low-end, it really means value-wise. You also see the pumps outside. You see the hot runner system outside where we are talking about a component with EUR 1,000, EUR 1,500 of value. And that is -- but altogether, it's engineering; altogether, it's equipment; and altogether, it's a solution because the customer is not looking for a pump or hot runner system. The customer is looking for a solution, help him to make a better product, make a better yarn, make a better painting on a car or whatever. And in addition to that plant engineering component business or part of our business also service business, which is start-up installation of our big lines, but which is also doing repair of the equipment. And this is the same is true for small pump, the same is true for hot runner system and the same is true for large installations where all our customers need our services where even sometimes we operate repair shops in the sites of our customers. Looking at the regional distribution of -- first of all, not the region, in the distribution by market, at the moment, 60% is filament and 40% is non-filament. I think that's already a big difference to our last Capital Market Day in 2014 where our dependency on filament was much higher. And since then, we could continuously grow our activities in the non-filament businesses. Regional-wise, we still have a high dependency on Asia, still a high dependency on China. But at least, there are now also some movements in other parts of the world, be it in India, be it in Turkey on the filament and textile side. And anyhow now with the acquisition of AG is slow, also our business here becomes, from a regional perspective, more diverse. Let's have a short look to our customer structure. And especially on the Manmade Fibers side, we are really talking about multibillion companies as our customers. We are not talking about small mom-and-pop shops anymore. We are not talking about somebody who has an idea to operate for winders to make a little bit of yarn. We are really talking about big international enterprises, all of them or most of them are even bigger than the Oerlikon Group. And even the non-filament side, there are automotive companies, there are automotive suppliers, there are Tier 1s. Again, we have a lot to do with large-scale companies, with big companies. We talk a lot about key account management. And especially on the filament side, what already was mentioned earlier, basically, we do our business with 50 customers a year, but all of them are international enterprises. I mentioned already before, no modern world without polymers. And I gave you the example. So we wouldn't have a carpet here. We wouldn't have upholstery here. And basically, even in future, there will not be a world without polymers. Roland has mentioned before the topic of water consumption went growing cotton. The world population is growing. We can only trust people together if we use synthetic fibers. We have topics in the automotive industry. Michael was talking about lightweight application. Can we reduce steel parts? Can we reduce glass by plastics, which helps later on to save fuel. So as I said, there are a lot of applications where basically there is no alternative to plastics or to polymers. And what is a challenge. But for us, making business, also a big opportunity is circular economy. Can we find solutions to take polymer parts after they got used in a car or as a textile and recycle it again? And so there are a lot of interesting R&D work ongoing, and I'm quite sure this will create a lot of opportunities to us in the midterm future. Starting already talking about growth. And I want to explain to you now the growth areas for our division. And it starts still with the area of filament business, of textile business. This is our core. This is still a bigger part of our business. And we see here, first of all, there was a lot of growth, more than 4% average in the last couple of years. And later on, we will talk about that in detail that we are positive that this growth will continue. We see even more growth perspective in the area of non-filament, partially because there are other -- there are still higher dynamics, for example, in the area of the hot runner market. If you talk, for example, about nonwoven, the nonwoven market itself has growth potential. But as we started here 5, 6 years ago with a very, very low market share, we even here have a chance not only to grow with the market, but also to outgrow the market. So both then gives us a growth perspective, as I said, which I will talk about later, even in -- to quantify it. Where we see a lot of opportunities for us as Oerlikon Polymer Processing division but which is, at the moment, difficult to quantify is related to certain megatrends. I already talked about recycling before. I will later on talk about biopolymers, circularity, digitalization. There's a lot of topics which will change our industry, I'm quite sure on that in the next -- latest until 2030. To quantify it now, it's quite difficult, but we will talk about it later. There are opportunities for some. I can already indicate some figures. For others, I would say, just looking at the newspaper, just looking at new legislation, it will be obvious that opportunities are coming there. And all the 3 topics mentioned on that slide, I will explain in a little bit more detail in a couple of minutes. But before doing that, some of you might ask your question last year when we announced the acquisition of INglass, what does this have in common with Manmade Fiber? And why now the move from Manmade Fiber into Polymer Processing Solutions. So first of all, also Manmade Fiber is nothing else than polymer processing. And within the Manmade Fiber and our -- when making the design of our machines, we talk a lot about melt distribution. We have a so-called spinning beam distributing a melt stream to 12 yarn ends. A hot runner system has 1 injection point and have to distribute it to 5, 6, 7 injection points in 1 mode. You need to have a lot of know-how about reality about polymers and this, for example, first of all, a common technology know-how. Second of all, what we discussed before, biopolymers, recycling. It's a common challenge for everybody who is dealing with polymer processing, utilizing now here the know-how of a larger group, utilizing the know-how of more than 1 engineer on that topic creates now additional synergies. And last but not least, we are also -- we are making big plans, but we are still an expert in precision components. And you can see it outside. We have these small pumps. It's a precision component cost EUR 1,500, EUR 2,000 but makes the difference later on in the quality of the process. Only with a good pump, you can have a uniform yarn. Only with a good hot runner, you can have polymer part from a car lighting part with good melt distribution. And so therefore, this combination of precision component, geological know-how, and manufacturing of these precision components makes it obvious that using now the component business to step into further areas of plastic processing. It's basically a door opener. But as it's nothing new to us as we are already in the component business, as we do already the know-how, it's something where we know what we are talking about, something where we already find some synergies and not something totally out of the box. And therefore, for us, it's a natural way now to grow further into polymer processing. It's the first step and not the end, but I will come to that later. Now let's have a look on the biggest portion of our business, which is the filament business. And I already mentioned before, it starts with big plants, which you see here on the upper left side of the picture. This is a view in 1 of our customer installations. You see here hundreds of winders. Usually, customers are ordering thousands of winders and around about 50% of the chemical fiber products, which are produced worldwide are run on our equipment. So if you now in the evening, go out doing some work out, doing some sports, wearing some functional wear, there's a probability of more than 50% that the yarn where this t-shirt or this sport shirt is made from -- is produced on Oerlikon equipment. So here, we are the clear market leader with a 40% to 50% market share. And what can you do out of that? Of course, everybody when talking about chemical fiber, I was talking about functional wear. But reality today is already a lot of apparel today, a lot of standard cloths today, it's made from chemical fiber. You will hardly find any suit, you will hardly find any t-shirt, where not at least a certain content is made from polyester, is made from nylon or is made from other chemical fibers. And I will come in a second to the growth of the textile industry. And basically, there's also a good reason for that. And just talking about some lighthouse projects. You see a reference to a customer in Turkey. Also to show, yes, we have a strong customer base in China, but it's not the only one. This factory in Turkey is one of the most modern chemical fiber equipment in the world. And for that customer in Turkey, we not only sold filament equipment. For them, we also sold stable fiber lines. And for them, we did the whole automatization system with a handling of 50,000 bobbins a day, fully automatic bobbing handling, including packaging end-and-end. And with having the ability to talk to the big customers, it also brings us now in the position, and that's really a USP of us in emerging countries like Bangladesh, customers to have less know-how than the big ones in China and India and Turkey. And they were really looking for greenfield application. And we're basically the only 1 at the moment in the world who can offer from the polymerization -- from the polymerization plant down to the bobbin and if required, even within automation, everything out of one hand. And that's the USP, especially now in emerging countries where customers are really looking for turnkey installation for total solution and not just for equipment supply. Let's have a look on the growth dynamics in our industry. And what you can see here is the development on fiber consumption. You see on the bottom the development of natural fiber and on top of the development on chemical fiber. And what you can basically see since 2000, approximately the natural fiber is really flat. There are good reasons for it. First of all, I mentioned already before, chlorine cotton needs hell of water. Depending on sources, between 1,500 and 8,000 liter per kilo of cotton. Independent is only 1,500 , it's a lot. And if you now go to country like Kazakhstan, you have the Aral Sea, which is drying out due to growing cotton around that lake. So there's also an environmental issue with natural fiber. And you cannot grow cotton in every place in the world. So there is a certain natural limitation in growing the business with natural fibers. And that means as long as the world population is growing, as long as people want to get dressed, you have to find ways to do it with chemical fibers. So that means basically the fundamentals for growing our business are very strong and that's still in place. And what you have seen on that slide here, basically you can also see on that slide, and this is the growth rates in our industry since 2000. So it means basically since the last more than 20 years, we have an average growth of 4% on a year-on-year basis. Yes, there have been 1 or 2 years in between where the business was not that promising. But basically, if we really look at the overall tendency since more than 20 years, there's an average growth of 4%, which grows very much in line with the slide which I have shown you before on the fiber consumption, and we expect that this growth will continue. Why it will continue and what is maybe different to what we have seen in 2016? One difference is that until 2016, the Chinese 5-year plan are very much related to quantity only. There were targets in the 5-year plan. And after these targets were published, a lot of chemical fiber producers start investing in new equipment. And as 10 companies did have the same idea at the same time, after 2, 3 years, the 5-year plan was fulfilled and was overachieved and then they stopped investing. Meanwhile, the 5-year plan in China is not related to quantity anymore. It's related to quality. And so therefore, basically, there cannot be any overinvestment in quantity anymore. And what happens at the same time, the big players in China, all of them want to have now full control over the entire value chain. They all have invested upstream in petrochemical plants. Some of them even starting with paraxylene, which is basically in product of a refinery. But all of them started with terephthalate acid production, which is the raw material for making polyester. And from a perspective of economy of scale, one terephthalate acid feeds 5 polyester polycondensation plants. And each polyester polycondensation plant feeds around about 1,000 winders. So as the investments in terephthalate acid are done, they are under installation at the moment. They are under construction in China. The customers need the winders because it doesn't make sense to sell terephthalate acid. It doesn't make sense to sell polyester as a polymer, but it makes sense to have the entire value chain down to the yarn and to sell yarn. So as all these petrochemical investments are ongoing, basically, we can be sure that at least until 2025, additional winders are needed to absorb that material, which is a good basis now that we -- therefore, we are very confident that at least for the next 2 to 3 years, our business will grow. And what happens to them? Last year, China announced a so-called dual control policy. That means also now companies in China are forced to look more and more into the energy efficiency of the operations. From 2025 onwards, customers in China are only allowed to invest in new equipment if it's more energy efficient than the previous one. And already today, our equipment is the most energy-efficient one, and we still have very good ideas in our R&D pipeline in order to have even better solutions from 2025 onwards, which then also help our -- which should also give a push to the market to replace maybe 10-year old equipment with the latest one because it's more energy efficient. So there is a lot of -- still a lot of momentum in the market where we have a strong belief that, at least for the next couple of years, our business will continue to grow and will remain on a very stable high level. So therefore, this time, we are talking about a growing industry, continuing and now looking to the next slide. And that is something where most of you have been aware of. Also in the last years, we might not be perceived as the most growing industry, but we have already been a very cash-effective industry. So in the average of the last 10 years, each year, we made more than CHF 100 million of EBITDA of cash. And last year, it was even CHF 170 million. So we are a constant cash contributor. We are still an asset-light business. We have assembly plants. We have a little bit of manufacturing, but basically a low capital intensity. And for the last couple of years, every year, we were more than CHF 100 million of cash generated with our business. And I think this is also something which will continue. Now we have a combination of a good growth perspective without becoming much more capital intensive. So from that perspective, also talking about capital efficiency before, I see us on a very good track. So these are some details on the filament business. Let's now have a look, still on the textile business, but on the non-filament portion of the textile business. In the first slide here, we talk about nonwoven and plant engineering. Nonwoven is material where the benefit of that is, it's basically a one-step manufacturing process. If you do filament, first of all, you need a yarn. Then you need a weaving machine to make a fabric and you have to make something out of it. On nonwoven, in one step, you already have a fabric, which then can be used for diapers, which can be used for wipes, which can be used for geotextiles, which can be used for filters. And fortunately, in Switzerland, nobody wears a mask anymore. In Germany, we have sometimes to do, but I think all of us still have the picture of the mask in front of us and it's nothing else than filtration material made from nonwoven. And so in that part of the engineering business, we started quite slow 10 years ago. At the moment -- at that time, our market share was quite low. At that time, we still were more on the commodity side with diapers. Meanwhile, we said, okay, where can we differentiate? And we can differentiate on filtration. We can differentiate on geotextiles. We can differentiate on wipe material. And here again, now sustainability kicks in. One of the challenges for wipes is most of the wipes, which we are using cosmetic wipes are flushable wipes. So can we now make it from nonplastic materials? Can we change the design of these wipes in order to make it more sustainable? And here, we have seen also in cooperation with some of our big customers opportunities to develop different technologies, which now put us in a position to have some USPs. And already last year, we made more than EUR 100 million sales in nonwoven coming from some CHF 10 million, CHF 20 million, which we had in 2016. And we still see a lot of opportunities now to grow in that market and even to outgrow our competition. Key for that is R&D. We have R&D centers here. The key of that is cooperation with core players in the industry, in the downstream. And let's say, I'm quite optimistic that here, a CHF 150 million minimum is possible for us, maybe even more. Another part of plant engineering is what I also mentioned earlier, the polycondensation plants. So where we make the polyester? At the moment, it's polyester. Maybe in a couple of years, it's also a little bit of biopolymer or it's a mixture of both. Maybe in a couple of years, it's a combination of chemical recycling and chemical recycled polymer to feed back into such polycondensation plant. So again, offering a lot of growth opportunities to us and at least giving us a chance to develop the overall process. It's not only the topic to make a polycondensation plant, but how later on to make a good quality yarn with recycled material. And with that know-how and plant engineering, again, we are a solution provider. We have very good opportunities to grow. And here, not only in the filament market but also in the packaging industry, for bottles, for films, where we also sold polycondensation plants in the past 2, 3 years. Both of these nonwoven markets, plant engineering markets we see nonwoven with growth even more than 5%. And plant engineering, 2.5%, 3% growth. So both of them remain interesting markets for us. Now let's have a look at 2 other areas in the textile industry, it's industrial yarn and it's carpet yarn. These are also, especially in industrial yarn, we also have growing opportunities. We need industrial yarn in a car for a seat belt. You need industrial yarn in a car for tire cord. You need it for the airbag in your car. But of course, here, these lines are very, very productive. And here, we have some years where you can make a CHF 100 million business. We have over years where then it goes down to CHF 50 million, but we overall consider that as a stable business with not too much of a growth potential, but let's say, having each year basis business of CHF 80 million to CHF 90 million, we take it, especially as you also here have a very good market share. On the carpet side, even we have a market share of more than 80%. Again, carpet, it's fashion-driven. Carpet basically is every 5, 6, 7 years at home, you change your carpet. It's a constant business. At the same time, there are wooden floor coverings, which at least compete with carpets. So therefore, overall, it's stable. Again, it offers us R&D opportunities. Today already in U.S.A., 25% of the carpet yarn is made from recycled polyester. And all is done on our machines. So we also have then replacement cycles. You need new technologies to be able to process this recycled material on your lines. So therefore, we maintain that market share. We maintain a stable business here. It's not too much of a growth opportunity, but from a profit level and let's say, in total, CHF 150 million every year, it's around about 10% of what we are doing, and we're happy to be in that market. Now after talking about the textile part of our business, let's have a closer look now also into the flow control business. In flow control, basically, we are now talking at the division Polymer Process Solutions about 2 business units, which we didn't do in the past. One business unit is Manmade Fibers, and this is what I introduced to you before. The other business in our unit is now flow control. In that business unit, we are now merging our already existing business with key metering pumps and the newly acquired business of hot runner systems formerly INglass, today, Oerlikon flow. Why flow control? I explained it also earlier when we saw the slides on the synergies. The gear metering pump is about precision flow control. The hot runner system is about precision flow control. You need to have a lot of know-how about polymers, about fluids, how to design components. Actually, a component business is about precision manufacturing. So therefore, it makes sense to combine that also in 1 business unit. Now looking at the 2 branches of the business units, starting again with the gear metering pumps. And here, we are only talking about gear metering pumps. The gear pub market is incredibly big. It's a multibillion market. But there is a lot of flow pumps for water for whatever. We really focus on small, precise metering pumps doing metering of paint, doing metering of polymers. So using such a pump in a line for making polyester film without a pump, you would never have a uniform distribution of the thickness of the film. So therefore, that is essential here. And therefore, the focus is on metering on improving quality and not on just transporting or feeding a fluid. The market for this pumps around about CHF 200 million with a market growth of 3%. We are well positioned here. Our business at the moment is in the magnitude of CHF 40 million. For the next 2 years, we will grow to CHF 50 million. Organically, we have invested here in new buildings, in new tooling machinery. We have already a lot of orders in hand in order to fulfill that promise, and it's a very profitable business. On the hot runner side, we have, again, 2 market segments. One is the automotive part, the other one is the nonautomotive part. In automotive, we are already today the #1 in the world with a 25% market share. And talking about automotive parts, we talk about lighting, we talk about interior parts, exterior parts, bumpers, and then basically, we talk about big parts. And the special know-how of how hot runner system at the moment very much linked to automotive. On the nonautomotive side, the market is even much bigger. You can see it here, the CHF 2 billion market instead of a CHF 600 million market. But in that market, both basically, nobody has a market share of more than 10%. It's a much more fragmented market and also the application is much more fragmented. Take a cup of such a bottle as a small part. Take a coffee capsules, is a small part. But still waste containers is also nonautomotive, but it's a big part. So the diversity of parts, the diversity of polymers is much bigger here. That's also the reason why this market is more fragmented. But with our know-how now, we see good opportunities, at least also to come to around about 10% market share in that nonautomotive segment. Again, we have started to invest here. We need now to have a focus more on the smaller parts. We have to redesign some of our injection nozzles. We also have to optimize the manufacturing from bigger parts to smaller parts. This is on the way with additional investment, and we see a very good opportunity here to grow organically in the next couple of years. And I said to getting here, a 10% market share would offer us another CHF 200 million opportunity also mainly organically coming from the hot runner business. And on top of the organic opportunities, we still now see with opening the door into this component business. Now further opportunities also how to grow inorganically further. So via the component. And for me, when talking about M&A for me, it's always important, we are the better owner for the business. And that means we understand what we are talking about. If I now would just add injection molding to Manmade Fiber, the injection molding business model is much more linked to tooling machinery, different customer structure, different end application, different business model. So why should I be the better owner? But on the components side, we know what we are talking about. With the pumps, we know what we are talking about. But now after being in 3, 4, 5 years in injection molding via components, have a much better insight into the industry, delivering pumps not only for chemical fiber but also into other extrusion lines. We have very good insights in these industries. And so now we see a good chance that by stepping into the component business, we get better access to other areas of the polymer processing industries, which then open to us the door for further acquisitions. But then really in a sense that we understand the business, that we know we are the better owner, that we know that we can create some synergies. And therefore, for me, that step via the component is a very good first step in that direction. But as I said, not the final step, and we are looking for further opportunities here. Yes, that's basically on our component business, early from flow control. And we also talked before on the topic of megatrends. And let's start now with the topic of -- and there are a lot of megatrends we are talking about. One is recycling. Topic energy saving will continue. Another topic is biopolymers. And here, by purpose, I'm talking about future mobility. Yes, everybody is talking about e-mobility. But yes, maybe politicians see it like that. But as an engineer, as a technician, I'm always open to alternative technologies. But whatever will be our ability in 10 years, one thing is for sure, the lighter the car, the less will be the energy consumption. Independent if it's an electrical drive or it's still a combustion engine, end and end, but lightweight is a topic for mobility. And last but not least, also digitalization is a megatrend not only for our industry but for many industries. Now let's have a little bit a deeper look into these megatrends. And let's start with the topic of polyester recycling. At the moment, around about 70 million tonnes of polyester yarn, only yarn. I'm not talking about bottles. I'm not talking about film. It's only yarn is produced every year. At the moment, around about 6 million of that is based on recycled material. And I would say this close to 9 million tonnes, which would already be around about 50% growth over a period of 7 years only. For me, it seems still to be quite conservative. And for sure, it will be partially pushed by legislation. You might have seen 4 weeks ago, the announcement of the European Union that by 2030, there must be certain quotas of recycled material and textiles. Today, if you buy a t-shirt, if you see on the t-shirt is made from recycled material, you can be sure 99.9%, it is a recycled bottle. You convert a bottle into granules again. And out of the granules, you can produce yarn again. And so that's if we talk about recycling today. Now legislation will, first of all, force the packaging industry to recycle a bottle to a bottle again. And second of all, it will force the textile industry to recycle textiles into textiles. And so therefore, there are a lot of dynamics in that entire system. And it makes sense because what we can recycle, at least what we call mechanical recycle, is much more efficient from a CO2 perspective. It's much more inefficient from an energy saving perspective. And so -- and basically, if you really consider then post-consumer textiles, not as waste anymore, but as feedstock for making something new out of it. I still would say the 9 million here is a conservative guess. It's not made by ourselves, but it's by Wood Mackenzie, so by an external agency. But even if we only take that figure, if we only take 3 million additional tonnes to be converted into polyester, knowing what today is roughly the cost of a polycondensation plant, knowing today what roughly is the cost of an extrusion system, it will basically open a CHF 500 million market to us on an annual basis. So there are opportunities. We are working on that. As I said before, already today, 25% of the yarn waster already made from recycled material. It's the bottle, but it's made on our equipment, so we know what we are talking about. The most prominent company already today offering recycled polyester fibers in the world for textile is a company Unify. All this yarn is produced on our equipment. So now the challenge is how to make it run, not only with bottle based recycled material, but also with textile-based recycled material. And here, we are doing a lot of work in our R&D center. Here, we are also collaborating with other companies also in the areas of chemical recycling and not mechanical recycling only. My personal assumption here is we will see, in the next 2 to 3 years, very interesting developments here that the technology gets a certain level of maturity, that we then can really commercialize on it. And as said, for me, it will for us open an opportunity in another CHF 500 million market then. That's on the recycling topic. Let's now talk about energy saving. And maybe can we flip to the next slide with biopolymers and then go back to the energy saving because biopolymer and recycling goes a little bit more hand in hand. There's always a discussion of what's now the better way to go? Is it recycling? Is it biopolymer? And in my opinion, it will, to a certain degree, be both. My opinion is whatever is durable, it can be collected. So if in future, we would wear a polyester t-shirt, it's durable. If we would have a collecting system, it's easy to collect, and then we will find ways to recycle it. Then that would, for me, be the most efficient way to do so. If you talk about diapers. To collect post consumer diaper might not be a good idea and to find a way to recycle it might even be more difficult. So therefore, I see a lot of opportunities on biopolymer, but more for disposal materials, be it on packaging, be it on diapers, be it on wipes. And for durable materials, for me, the bigger potential is on recycling. That's the reason why we are talking about both. And we are -- again, for both, we do have partners. Also on the biopolymer side, we are working together with producers of biopolymers. We try together with them to develop new materials, be it new yarns, be it new novum materials. Together with them, we find ways how to adopt our equipment to get a good quality out of these materials. And at least here, there are certain perspectives how much the market for biopolymer will grow. For us, it's difficult now to make an assessment, what does it mean for us. Because I see it here more as a kind of replacement market. So that means goods, let's take, for example, in the packaging industry coffee capsules. If they will be made from biopolymer in future, we will not have more coffee capsules, but it will now make from biopolymer and not from polyethylene anymore. That means will we then sell more hot runners? Most probably not. At least the market for hot runners will not be bigger, but hopefully, our market share will become bigger because we have a better knowledge how to do it with biopolymer than with polyester. So on biopolymer, I don't see that the equipment market will increase. It will -- there will be a kind of substitution, and it's on us with better technical solutions to crop a bigger piece of the cake then. But for today, let's say, difficult to judge in part, you already implemented in the growth figures, which we have seen before. Now going one slide back on energy saving, which is another growth driver. And as already mentioned by Roland, since 2009, at least in the Manmade Fiber business, we labeled e-save And e-save is not just energy saving. E-save means whatever we do in R&D must either energy, environment means by the end of the day, we produce less weight. Economical, that means easier to operate for the operators. So the E stands for different things. But of course, our customers the main driver has been energy. And the WINGS winder, which we introduced in 2009, the one for POY and for unstretched yarn was 25% more energy efficient than the previous generation of machines. And the one for stretched yarn in the WINGS POY was even 40% more energy efficient. So we did a good job already here, 2010, 2011, 2012. But okay, this is now 10 years old technology, and now customers are looking for the next generation. Maybe next time, it's not another 25%. Maybe next time, it's only 10%. But already on a totally different level, and it still allows our customers to become more energy efficient. And that's what we're working on. And that, for sure, will not only for Manmade Fiber equipment, also for hot runner systems, whatever we do in plastic processing. Because, first of all, plastic processing is energy-intensive. You have to melt the polymer, you have to cool down the polymer, you have to heat it up again to stretch it to get certain properties. And whatever we can do here to save energy helps our customers a lot and will remain a strong driver in what we are doing. And if we're doing better than our competitors, it will help us to maintain or even increase our market share in different industries. Let's now step to the topic of future mobility. And here are only a few examples. A few examples of lightweight parts in a car. And here, again, we are already today quite strong. In the automotive sector, we have a 25% market share. And what is our business model here? You also might have seen the part of BMW outside. It's not just that somebody comes around the corner and says, I need a hot runner for such an exterior part of the car, and it's a standard part. No, basically, first of all, the customer, the design engineers of the automotive industry, they show us what they have in mind. And then they go to the mold makers. They go to their Tier 2 customers -- their Tier 2 suppliers. And then the question is, okay, what do I have to do in order to get such an automotive lighting. And then we have the strength that we have a lot of, let's say, due to our big market, due to our big customer base, we have a lot of similarities, and we have simulation software. And then basically, we recommend to say, okay, if you do it like that, if you inject the polymer in your mold like that, you might get a better quality, you might do it with a shorter cycle time, you might do it with less waste, you might do it with shorter heating cycles end and end. And that's basically how we then consult our customers to come to the best possible solution. And basically, again, the customers looking for functionality. It's not just looking for a part is looking for functionality. And based on our know-how from the past, combined with polymer know-how end-and-end, in the first step, we help him to fulfill the functionality. And if he say, this is a solution I'm looking for, then we make a quote on some steel parts, which you see outside. But the key to sell these topics is really what can we do better than others to help the customer to fulfill functionality? And just a small sale remark on the touch panel, this even now offers opportunities in the combination with our Surface Solutions business and the Polymer Processing business. On Polymer Processing, of course, we know how to do the injection, how to distribute the melt. But such a touch panel also needs coating of a polymer part to get a certain functionality. Lighting is a transparent part. Coating of a mold, very much impacts if the part is really transparent or not. And so here, we see have now a lot of opportunities also on the customer side, on the technical side to create additional solutions, which neither OSS alone could create nor we, as OPP or HS flow, could create. And we are not much other companies in the world who have this common know-how in order to create functionality and to create common solutions. So last megatrend to talk about is digitalization. And this is, of course, always the most difficult to explain. And therefore, let's try to do it with a picture. I think all of you are aware about autonomous driving. You need a car, you need sensors who know the positioning of the car. You need sensors who see okay, there is a pedestrian in front of my car. In the car, you need computer capacity in order to do the calculations with millions of data. And what we are talking about in the chemical fiber line is basically nothing else than autonomous driving. In autonomous driving, we talk a lot about 5G technology in order to transfer the data. You have seen the picture of the plant before, a plant with 1,000 winders. How do we transfer the data? That, first of all, we install a kind of in-house cloud system to our customers, what we call the common service platform. So on that common service platform, we can now collect data of 1,000 winders, thousands of data. On that common service platform, we can now add so-called service app, and that is basically the artificial intelligence. On these machines, sometimes you have a signal, the unpair of a small roll, which controls the yarn tension, 150,000, 200,000, 300,000 signals a day. An experienced engineer, he would know there's now a peak, what do we have to do in order to improve the performance of the machine. But no engineer can control 300,000 data a day. With such a service app, we can do, and we can immediately then give a hint to the operator. Please look at that, please look at that, change the gearing, change the temperature in order to control. And the next step, maybe we can even teach the machine to do it automatically. But the basis is data collection. The basis is data analysis with algorithm who really recognize patterns and a lot of data, which is available today. And we have now the first installations in place. We give just a short example from one customer in Turkey. With a specific artificial intelligence module, which we call aim for DTY, he was able to increase the A grade material, which is selling to the market from 92% to 96%, which each week for that customer is a saving of more than EUR 20,000 or additional earnings of EUR 20,000 because we can sell the material to a better price on a higher quality level. It's a small example. But here, I would say we are much ahead of our competitors. We have very good solutions here, which are appreciated by our customers and more to come. The more you step into that topic, the more you see opportunities to come. Yes, that's on the megatrends. And finally, what are the key messages? We are the leader in filament and we believe we will remain a leader in filament and the filament market will continue to grow as world population is growing and as a constant demand of textiles is in place. We see even bigger growth dynamics in the non-filament area, both in the nonwoven side, which is still textile, but even more in the nontextile side now with the acquisition of HS Flow, which opens the door now to further application in different industries. And coming from the upside trends like recycling, like biopolymer, like digitalization, we see areas where we can significantly differentiate from all of our competitors, which really then will help us to maintain or even grow our market share and offer new business opportunities. And putting that all together, then it comes to the figures, which Phil has presented before. It comes to the figures that we are confident this year to end up with around about CHF 1.5 million of sales. And that we are on the way even to become on a mid- to long-term basis, a CHF 2 billion company with all that additional portfolio changes and with all the opportunities, which I've just introduced to you. Thank you very much for your attention, and I'm open to your questions.

Great. Thank you, Georg, for the presentation. Now it's time for Q&A. [Operator Instructions]

Christian Arnold, Stifel. A question on the growth expectations for the filament equipment market. Thinking about fast fashion and lots of governments are now also you actually are fighting against fast fashion. What does it mean for your growth expectations?

It's a good question. First of all, if you look at the real fiber consumption, already in Europe and North America, it's stagnating since 3, 4 years. Yes. So I'm now talking about the per capita consumption. The per capita consumption in Europe is around about 30-kilo per capita. In emerging countries, it's at the moment about 8-kilo per capita. And in emerging countries, you have a population growth of 4%, 5%, whereas in Europe, at the moment, the population is even shrinking. So if we put all that in perspective, yes, fast fashion is part of the story. It's a story which is very much discussed here in Central Europe, but a much bigger growth driver for textile industry in the last couple of years was really what happening in the emerging countries where the per capita consumption is increasing from 8 to 10 to 12-kilo per capita. At the same time, we have the population growth. So therefore, for me, the statement to say there will be -- there is still a stable base for further growth is still there. It might be a certain shift that it might be a little less in Europe and a little less in North America, but more than in Asia, more in Africa, the more wealth is created in these countries.

Okay. And second question, maybe some of the large fashion labels they are not so keen on having made in China label anymore? And what does that mean for your business?

At least it means for me that on a mid-term basis, we do have a lot of opportunities. At the moment, 70% of textiles are made in China, you're right. And I also agree that at least some of the brands mainly they are concerned now on issues around the lockdown in Shanghai, for example. If they order the winter collection in China and the goods are stock in the harbor for 10 weeks, the business has gone. . So therefore, there's indeed a tendency now China plus 1. I don't see that people want to go fully away from China because at least for the time being, China has the most modern equipment in the textile industry, not only for chemical fiber manufacturing, but also the downstream, more modern than any other country. And it will take some time before other countries can come to a similar level, but they have started. And I mentioned before, I showed you the example of Turkey, with the -- which is one of the most modern fabrics now in the world -- factories in the world. I see similar tendencies in India. We even have discussions for Central America. We have discussions on Egypt, where now projects are popping up. So therefore, I see an opportunity for us. There might even be, on a midterm basis, change as the market becomes a little bit more regionalized. So on the equipment side, yes. But as I said, at the moment, the technological gap of China is that big compared to other countries, it will still take some time here. Also people want to be independent, but it's not that easy.

[indiscernible] I have 1 question regarding textile recycling. Can you be a bit more specific on where the technology stands? What you have today and what the challenges are in order to break through and really recycle textiles?

Yes. As I said before, already today, recycling polyester bottles into textile is state-of-the-art. We have delivered plenty of installations in U.S.A. for making carpet yarn based on recycled polyester. We have installations converting recycled bottle into filament yarn for textiles. We are doing it for staple fiber and an end. So this is state-of-the-art. Here, basically, it's a question on extrusion system. It's a question of filtration to get the melt quality as good as possible in order still to make a good textile out of it. What is now the challenge. If you look at your textiles today, you will hardly find any textile, which is 100% polyester, or which is 100% polyamide. All these textiles are made some blends. There is still some cotton inside. There's still some wool inside. There's some elastane inside, and so which basically make it impossible to recycle the textiles, which we are wearing today. And here, we are also in different circles with VDMA in Germany, with the European Textile Association. How do we have to change the design of textiles to make it recyclable. Where do we might have compromise on the functionality of a textile, but then to have it 100% polyester or 100% cotton or whatsoever. So this is for me, one part which we have to go, where we are actively contributing in these associations and not only on the machinery side, but also on the textile side. If we succeed here to make a 100% polyester shirt, we have made already trials then the technologies which are today available for recycling polyester bottles, we can use very similar technologies and also due to the recycling of textiles. If we talk about mixed textiles, cotton and polyester, then these mechanical recycling is not possible, then we have to find ways on chemical recycling. That means basically then to break down the polymer into the original monomers and make a new polymer out of that. Already here, some interesting technologies on the way, some in a semi commercial stage, it works pretty well for, again, 100% pure polyester, but maybe here I even don't need it because they have a mechanical alternative. For blended materials at the moment, it depends very much how much is the contamination. Is it 20% cotton beside, 10% cotton, 30% cotton. Here, a lot of very interesting basic research work is ongoing. There are already very interesting topics on the lab scale, where I say -- I believe that in 3, 4 years, 5 years from now, we might here really see a mature technology, which could be commercialized, which then could be a door opener for real textile recycling.

Andy Schnyder, zCapital. You talked briefly about the volatile cyclical nature of the Carpet and Yarn business. Can you give us some insight about the cyclicality of the other businesses? We -- I think everybody is waiting for a downturn in filament for quite some time, and it seems...

I would not say everybody. I'm not waiting for the downturn because for me, this is much easier to manage if the downturn is not coming.

So it's not happening. And then also in nonwoven and Flow Control, maybe some words on cyclicality there.

Yes. Let's, first of all, start with the filament business. What I explained before, that due to the different structure now in the industry. First of all, due to the fact that -- as I said, we really could see there was a certain linkage to Chinese -- this is a 5 years plan, which basically was only focusing on quantity. And following the 5-year plan in China, the downturn, which you are expecting, which you're waiting for, should have happened already in 2020 or 2021, which was not the case. And now knowing that we are fully booked into '23, that we have already a good backlog into '24 and that we now already start selling orders into '25. At least here, I do not have any indication that this should change, at least on short term. And this is very much driven on what we discussed before. First of all, that our customers are going upstream, and to utilize their upstream capacity, they need downstream equipment. And second of all, there are big projects coming up in India, in Turkey and other parts of the world, which also want to balance against China. So at least I would say, for the next 3, 4 years. I don't have any indication that in the filament market, there will be a downstream. On the HS Flow side, as long as we talk about automotive industry, basically, we could say it goes hand in hand with the automotive industry, which is not fully true. Here, it goes more hand-in-hand with how many new models are on the market because you need new hot runner systems, you need new molds if a new model is popping up. And at the moment, a lot of new models are coming around the corner, not only on e-mobility, but also combustion engine, but smaller cars, more compact cars, lightweight cars. And with all the new models, we have good opportunities to maintain our business, to grow our business. Again, here, I do not see that these dynamics of new models -- I would say, even we can observe in the car industry that the lifetime of a certain generation of cars is shortening. New functionalities are kicking in. And even the facelift of a car gives an opportunity for the Flow Control business because the facelift might need a new front grill, might require a new design of lighting. And so therefore, as here, the number of new models is decisive, at least we consider it as a very stable business, which we could also see in the past years. And here, the growth is more depending how good can we succeed to maintain or even increase our market share. And at least in the last 3 years, HS Flow could gain a 5% market share by having a global footprint, which some of our competitors don't have. And by having a different service concept, the one which I explained to you before on modeling a part, having some simulation on such a part. On the nonwoven side, I would also not expect -- I'd say, we have to differentiate. Of course, and to be very frank here, of course, last year, we had a boom. Everybody last year needed face masks. And for sure, that face mask topic to a certainly be worth overinvested. And this year, on the nonwoven side, even sales might slightly go down. But last year, it was overshooting due to that special COVID event. But on the -- let's say, on the long-term rationale, if talking about filtration material, air filtration, if talking about geotextiles, if talking about wipes. This is, again, a tendency which goes hand-in-hand with population growth, which goes hand-in-hand with new technologies. So if we would cut out the onetime peak on face mask last year, then also the nonwoven business is a very stable one with a very stable growth, which haven't shown the cyclicity in the last couple of years.

And a few words from you on cost inflation and how you cope with that? Probably also a little bit view of the different businesses?

Yes. What we do is, let's say, in the -- basically in the engineering business, it's not usual to talk about index pricing. That's a typical topic of material business, but it's not an engineering business. What we do and not just in this year, that is something which we do since many years, we calculate an inflation markup in our pricing. So if a customer signs a contract today with the delivery in 2025, at least already in the past, we had a 3% to 4% markup on inflation, on our pricing. So it means if the deliveries in '25, the machine is more than 10% more expensive as if we would get the machine today. Then knowing that markup, we try to safeguard the cost for that delivery in 2025 already today. With long-term frame contracts with our suppliers to say, okay, I know that I needed in '25 buy all that already today based on today's cost basis, which here and there might result in a little bit higher inventory. But by doing so, we have cost quite well under control. And what is still a driving factor on cost is design to cost. We have a very, very -- let's say, our R&D engineers have a very close cooperation with our purchasing department. Together with our suppliers, how can we optimize functionalities? Just this year, we have released a new generation of inverters, which we specifically developed with Siemens for our winders which help us to even reduce cost and which then also can compensate for these inflation topics. So with these topics, design to cost, having a kind of inflation markup in our pricing and at the same time, as soon as the contract is signed, securing prices of long-term contracts, we see ourselves in a position to manage this kind of inflation to safeguard our profitability.

Christian Obst from Baader-Helvea. It's concerning -- first of all, thank you for the good presentation for a company, which was almost labeled with no growth certain years ago and now you showed us some growth opportunities. And I have a question concerning the CapEx, you have to invest to grab these opportunities. So how much CapEx over the time until '26? And how much of underlying free cash flow you can generate despite investing into growth?

Yes. I would say, basically, I thought I showed in that one slide that we invest around about 2.5% of our revenues year-by-year. That has been sufficient to finance the growth from 2016 up to now. And I believe that it will also be sufficient to finance the further growth as long as many talking about organic growth. This 2.5% is, of course, excluding any M&A investment. In addition to that, we invest at the moment for our today's business around about CHF 40 million per year in R&D, which also -- even talk to our R&D guys, they confirm that is for them enough money to maneuver. And so therefore, I feel quite comfortable that the demand, neither CapEx nor an R&D spend will be much different than what we're spending today. In case we have an attractive M&A target. Then I will talk to Phil, how we finance it, where the funding coming from. But whatever we also do on the M&A side, we have tend to make here does it fit into our business model? Or will it significantly change our business model? And as long as we stay with that 2.5% CapEx of sales, 3% R&D of sales, we will generate even in the next couple of years, the same magnitude of what we have seen last year, CHF 150 million, CHF 170 million cash on a year-to-year basis.

Over consulting. I have a question about Polymer business. I understand that you don't produce polymers, but could you explain a little bit of the biopolymers, for example, mechanical characteristics on the biopolymers because if you use polymer applied in the automotive industry, your requirement must be very high. And the second question is that are you competing in the automotive sector with the EMS-CHEMIE?

That's the first -- let's answer the first one, biopolymer. There is not the 1 biopolymer. There are biopolymers. The most prominent one at the moment is polylactic acid, PLA, which is based on corn. There are other biopolymers, which are starch-based. And yes, you made the right point, one of the disadvantage of biopolymers is still that their properties are not as good as the one of polyester as the one of nylon. So on PLA, for example, the heat resistance of that material is by far not as good as it is for polyester. And so therefore, it's my judgment to say, I see biopolymers more on the disposable side, where basically you need something for a onetime use only a [indiscernible] a packaging film. So where durability is not a topic. And therefore, you can make compromises on the properties of the polymer. If it now really would come to textiles, to functional textiles, nobody wants its shirt to start degrading as long as you want to wear it. So -- and therefore, here, I see, therefore, to say that on the durable side, I believe still there will be a long, long period where we still need even oil-based polymers, which, personally, I do not see as a problem. Let's say, if we do not burn our oil in a combustion engine, if we only use the remaining oil for making polymers, it's not so much of an environmental problem here. And there is a lot of topics of biopolymer recycling, which by the end of the day, are much more unfriendly to environment because you have high energy consumption. You have a lot of water pollution just to make it recyclable. And so therefore, I believe we still have a period -- a long period with standard polymers and biopolymers, I do see more on the disposable side where you can make compromises on the functionality. Second part of the question, no, we are not a competitor of EMS. As you rightly said, we are not making polymers. EMS-INVENTA was an -- is still -- or today, [indiscernible] INVENTA-FISCHER is a very prominent engineering company. They are one of our customers even. And with a lot of cooperation 20 years ago where they were much stronger in Chemical Fiber, today they are more in the packaging area. But is that they are one of our customers, and we are not a competitor. And if it comes to EMS Chemical, as we are not a chemical producer, as we're not a material producer, we are playing on different playfields.

Stephan, please can I [indiscernible] this. I'm positively surprised that so far the Chinese have not emerged also as a competitor producing polymer processing equipment. And I was wondering why is that the case? If I look at natural fibers, then obviously, there is a trend that local producers in China are entering the market. So if you could possibly contrast to 2 things, so that we get a little bit of comfort also that down the road, suddenly being faced with heavy competition from what is today actually your customer base? .

Happy to do so, yes. First of all, if you look at the technology of natural fiber equipment compared to chemical fiber equipment, there is a different level of technology. And there is now no finger-pointing towards natural fiber. But even if I look now at our portfolio, we have the spinning lines, and these are the big installations which you have seen on the pictures. And to give you just an idea, such a winder has a chuck length of 1.8 meter. On that chuck, you have 12 bobbins. Each bobbin in its full has a weight of 15 kilo. And you are winding the yarn here at speeds of 300 kilometer an hour. And by the end of the day, the target here is each of the 12 bobbins must have exactly the same quality. Each of the 12 bobbins must have exactly the same amount on yarn on that bobbin. And it's not only the 12 bobbins on 1 winders. There are 1,000 winders in 1 factory. fAnd so this for non-technician to have 300-kilometer per hour, 12 bobbins on 1 winder is a real challenge, and that is really high take. Vibration is a topic here. Bobbin formation is a topic here at that high speed. If the bobbin formation is not good enough, then in the downstream process, you are losing 20% efficiency. And these are defects in the bobbin, which sometimes you cannot even see optically. So therefore, the entry barrier in the technology is much, much higher than it's for cotton spinning and it's also much higher. Now I'll take an example from our side. We also do have our DTY machines, texturing machines, where you take the span yard from a spinning line and convert it into a textured yarn into a crimped yarn, which then really feels like cotton. And this texturing technology is also very mature. And that's the reason why since 10 years, we are building these machines in China only. Because for these machines, yes, the Chinese competitors are very close to us. And here, the difference on technology is not big enough that you can justify to make such a machine in Europe. But on the spinning, the entry barrier is much higher. It's a much higher level of technology. And there are even state-owned companies in China, two of our competitors on the winders are state-owned companies since 10 years, they -- since 20 years, they do not come close to us. We even last year took two of their winders. We made a detailed analysis on it. To be very frank, they are able to make 1 good winder. They are able to make 10 good winders. But they're not able to make 500 good winders. And so to put 1 good winder in the showroom, yes, but really to have 500 because here then operation excellence and design know-how, everything kicks in, to make 1,000 winders as good as the other. And yes, here, I still see we could maintain the entry barrier. And at the moment, I would even see this from China perspective, the 2 suppliers or our 2 competitors in the chemical fiber industry, they create altogether 400, 500 jobs. This is of no strategic interest for China. Strategic interest of China is protecting jobs in the textile industry at our customer side. Here, we are talking about 10,000 of jobs. And also China at the moment has a lot of talent. They want to have young engineers for the aerospace industry. They want to have young engineers for the car industry. And if they have now 500 engineers building winders, yes or no, they want to make sure that we still supply to them. If they would be afraid that there would be a certain trade barrier, they couldn't get winders, either from Japan, from U.S., from Switzerland or Germany, they would have a problem. But as long as they have the feeling, they will get the winders, they have also no motivation to push their local suppliers into that industry.

This need that capital. I have an add-on question on the margin 16% to 17% and then 16% already for this year. And according to the presentation, the higher margin also comes from the expansion in non-filament. So I expect that non-filament business has higher margins. We know that INglass certainly has, and this is growing faster. So why is there only such a little bit of margin expansion from 16% today to 16% to 17% midterm when these more profitable businesses should grow faster than the rest?

Okay. Let's say, first of all, I believe for the Manmade Fiber business, the EBIT margin is even better indicator than the EBITDA margin. There would be easy way to create increased EBITDA margin by being more capital intensive. And with the 12% EBIT margin in that chemical fiber environment, I think we are far better than all of our competitors. And of course, here, then we also have natural barriers. As long as there the competitor out, you are not fully flexible on pricing and an end. And I think here, to a certain degree, we reached a very profitable level but to increase that level with the chemical fiber growing further on in the competitive environment where we are in. And also looking at the moment that also some of our customers at the moment are struggling to earn money due to supply chain issues, due to increase oil price, and at least we see a certain limit here. So that indeed, further increase of profitability is then mainly related to the nontextile business. For the time being, this is only CHF 150 million out of CHF 1.5 billion, so it's only 10%. Of course, if we have further opportunities on nonorganic growth, this might change. But for the time being, with the overall leverage here, yes, this is what we can see. But I would say for me, at least from the Manmade Fiber business, maintaining an EBIT of 12% plus, I would say, it's already a challenge. We take it, and we are working on that. But compared to many competitors, in my opinion, it's not too bad.