Welcome everybody to this call on the 2024 annual figures for Sligro Food Group. Just let me quickly fix the sound. I hope you can all hear me. I will give a short introduction of about 20-25 minutes based on the slides that you can also download from our website for your convenience. I will run through these slides and would like to request you to be in listen-only mode for the time being. After the introduction, there is plenty of time for questions if you have those. Let me run you through the numbers and some highlights of the previous year. Starting with the turnover, the revenue for the group in 2024 was already published earlier on in the year. We saw a pretty tough year with just a little over 1% growth that was fully organic.
We see a difference in the Netherlands and in Belgium. In the Netherlands, we had a performance more or less in line with the market development, but in Belgium, we have lost revenues. I will come back in further detail on the reasons why we lost the turnover in Belgium. It is not so much that market conditions are tough, but after the summer of 2023, we decided to go for a full integration and reorganization of the Belgian activities. As a result, our customers were affected by those actions. To some extent, we lost customers, which we still see in our numbers today. In the Netherlands, it is important to highlight the change in the tobacco revenue. As a result of changes in legislation, we saw a big shift between the retail channel to the petrol channel in terms of selling points for tobacco.
That meant that our customers, petrol outlets, saw a major increase of tobacco sales in the year 2024. In total, for us in the Netherlands, an increase of EUR 60 million compared to 2023. If we take that into account in the numbers also for the Netherlands, we see that despite this impact of the tobacco sales, there was hardly any growth in the Netherlands in 2024 compared to 2023. That is in line with what we see in the market. The market as a whole has very limited to hardly any growth, which is driven mainly by inflation. In terms of volume, there is even a decrease in volumes in the market. That, of course, is impactful in our business. In view of that tobacco development, we already decided that by the end of the year 2024, we would stop selling tobacco altogether.
For the last six months of the year, we only did this because we had remaining contracts with a number of our clients, which we, of course, would like to honor. As of January 1, 2025, we have stopped selling tobacco altogether, which means that you could expect a decrease in top line from 2025 to 2024 of this EUR 267 million. For us, in terms of margins, it is a zero margin turnover. There is no further impact on the bottom line as a result of this choice. A good thing is that we could hold on to the remaining turnover in those outlets. Soft drinks, candy, sandwiches, etc., to the petrol outlets are secured for the next years in contracts with these customers.
If we then move on to the gross profit margin, we see an optical decrease in gross margin, but that is caused to a large extent by the increase in tobacco turnover. Tobacco turnover has a very low gross margin. If we correct for the increase, we see an underlying positive development of gross margin. That is caused by improvement of supplier conditions on our purchasing side. That was mainly driven also by combining the Belgian and Dutch volumes in the purchasing effort. Underlying, a positive development, but as a result of the tobacco, it is not visible in the numbers you see today. There is also a bit of a mix effect in the Netherlands. We see that the delivery has grown faster than cash and carry, which is a bit dilutive on gross margin on the one hand.
On the other hand, we see that there's an increase in the delivery with bigger national accounts, which also have a lower gross margin profile, but also a lower cost profile. These are effects to take into account. In Belgium, as a result of the issues I briefly referred to in the previous slide, we had to do some repairs and some further gestures towards Belgian customers to compensate for the lack of performance in 2024. That hits gross margin. Overall, visibly no improvement, but also there is underlying better performance, which should carry through into 2025. The other operating income, of course, this is not really part of the business model, but every now and then we have some real estate transactions. Last year, we divested a piece of ground in Amsterdam for which we obtained EUR 5 million book profit.
This year, we had a few sales of buildings amounting to book profit of EUR 3 million, but altogether a shift compared to last year to take into account when judging the numbers. I think the big area is the operating costs. We saw that the year was going to be tough at the beginning already of 2024. It meant that we need to be very cost conscious. Also because there was quite a difference between inflation on purchasing and sales on the one hand versus the prices of our added value cost elements.
We started off in the year with a price inflation of roughly 3% in top line, but a 5.7% average price inflation on cost elements, which meant that we had to put in additional effort to compensate for this price increase as there was no room in the market to pass on these additional cost levels. In the end, I think we've been quite successful in compensating for that. Of course, all the compensating measures that we implemented to cover these additional increases did not go into improving bottom line, which is, of course, the end game we're focusing at. In the end, I think all in all, quite a significant cost reduction achieved.
Depreciation amortization, important to highlight that, of course, last year as a result of our decision to seize the SAP rollout program, that ended up into an impairment of the software, which we did in 2023 of EUR 17 million, as you can see in this area. Of course, that was not occurring in 2024 again, so that was more or less a one-off. As a result of the impairment last year, also the run rate of software amortization was lower in 2024. The combination of the two has led to a significantly lower depreciation and amortization charge in the P&L of 2024. Moving towards cash flows, we see that we have a free cash flow, again, positive at around EUR 30 million, different buildup than a year before. On the one hand, we had lower investing activities.
It's not that we limited ourselves, but the net effect of EUR 55 million investment on the one hand and the EUR 17 million book profit on the other is the net effect here. Maybe in the meantime, can everybody check that you are on mute? Because with someone, we have a lot of background noise. Thank you for that. Let's see if I can check myself. I think it's gone now. I hope everybody has the same effect. Back to the presentation. If we see that we have lower investing activities as a net effect, we also had a bit of a lower operating cash flow. It's not because of the results, but that has a working capital impact. It's not that the working capital position has deteriorated structurally.
We see some specific timing elements that make a difference of around EUR 20 million-EUR 25 million in working capital position just because of some payment date movements around the year end. At the balance sheet moment, that gives a bit of an offset picture to what is actually happening. In the course of the year, we see that our liquidity position has improved as a result of an underlying working capital improvement. We expect that that will bounce back in the beginning of 2025. That is just a temporary deviation in working capital position and as a result in this cash flow statement. Resulting net profits, as mentioned before, of course, on the one hand, results have operationally improved slightly.
On the other hand, we were not faced with the impairments that we saw last year, which means that net profit altogether has improved significantly compared to 2023. As a result, we decided to pay out a bit higher dividend than we did last year. We proposed to do a EUR 0.40 per share dividend for 2024 compared to a EUR 0.30 dividend in 2023. We already paid out the interim dividend in October last year, which means that we have a final dividend of EUR 0.10 that will be distributed after the general meeting in May of this year. A bit more on the detailed plans of last year and what we did and what is to come. Also, view on the market, we see that market conditions are still a bit volatile. Consumer confidence is relatively low, but stabilizing more or less.
On the other hand, we also see inflation coming down a bit and also stabilizing compared to the last couple of years. That could be early signs for a bit of recovery or at least relaxation in the market, both in the Netherlands and Belgium. What we also see, and that is the last bullet on this sheet, is that if we compare the food service market to the food retail market, there is still a substantial price gap, but also that is stable. That is caused, of course, because of the added value in the out-of-home market. In the food service market, it is high. Specifically, the development of staffing costs, rent costs, and energy costs have increased significantly. That is still quite the price gap in the out-of-home channel versus the retail channel. That, of course, also influences consumer spending in those areas.
No real triggers that the market will deteriorate any further. Some early signs that the market is going to recover a bit. We expect that that will be a slight volume growth in 2025. On top of that, an inflation of 2%-3%, which then gives us a market growth of 3%-4% for the year to be expected. If we look at our development and relative position in the market in the Netherlands, we use the numbers of the Foods ervice Institute. We see that the market has increased in consumer value with a little over 4%. The market in wholesale value, that's the market where we relate ourselves to, has increased by 2.6%. The difference being the development in the added value, as explained. We see that we have been able to hold on to our market share more or less.
We lost a bit of market share in the first half of the year. That was a result also of a big customer with which we ended the contract in the course of 2023. It was a huge customer, EUR 50 million on an annual basis. The effect of the first half of the year was still visible, of course, in 2024. We regained some of that loss of market share in the second half of 2024, netting out at a slight decrease of 0.1% in the overall share. Still, the clear market leader and the trend in the second half of the year is indicating that we will regain share in the months to come. In Belgium, a different picture. We use Foods ervice Alliance, which is a different definition than the Dutch market and also a bit less reliable in that sense.
It's difficult to explain why a market in consumer spending would be decreasing and the market in wholesale spending would be increasing. These are the numbers in the market. I think most relevant remark on this slide is, yeah, compared to the market, no matter how we measure it, we did a bit worse. We lost some market share in Belgium in the last year, being around 3.7% as it stands. With that, we are still one of the top three players in the Belgian market, which is still highly scattered. What have we done in the last couple of years? What has been the main focus? I will not mention all items on all slides, but give you some of the highlights.
Of course, in Belgium, we decided after the summer of 2023 that we would fully integrate the Belgian operation and implement the legacy IT environment, but also all the logistic insights and governance as we have applied it for many years successfully in the Netherlands. It was, of course, a big transition, both for the Belgian team, our employees, but unfortunately also had quite an impact on the customers in Belgium. I think we finalized all of the activities around the summer of 2024. In that process, lost quite a lot of turnover to some of the customers in Belgium and lost some of the customers altogether. As of the summer, we see that our performance is on par, on similar levels as we have it for many years in the Netherlands. That is a positive development. We get positive feedback of the customers as well.
Slowly, but gradually, we see customers returning to Sligro in Belgium and increasing their spending. Of course, losing the trust is always faster than regaining it. That will take some time to regain it. We have positive outlook on specifically from the second quarter of this year onward that we will regain and return to growth in sales in Belgium. If we look at a part of the integration activities with Belgium and the Netherlands is centralizing the operations. That means that we have a single team steering the Dutch and Belgian activities, integrating a lot of the back office activities. All of this was finalized last year. For instance, in this area, that led to reduction of 150 overhead positions in the group to a large extent.
More than half of that in the Belgian operations, but also in the Dutch headquarter operations, we were able to scale down positions significantly. We think that we can do some more in 2025 in optimizing the structure and then taking out another approximately 50 overhead positions, which of course will save a lot of costs for the group going forward. Specifically within Belgium, the development of the former Metro locations, the integration was fully finalized. We see that we also have the delivery network available now for the customers as of mid last year, which is positive because the by nature typical cash and carry customers of the former Metro locations also are moving gradually towards delivery. It is good that we can also offer them that proposition.
Individual development of the turnover was positive at the Metro locations, so roughly 6% growth compared to last year. Although volumes are not at the levels that Metro historically once had, with the volumes we have today, we are able to operate on a profitable level on EBITDA. That is a positive development and also, again, a step forward compared to 2023. We see a lot of potential and also proof that the Metro format is working under our umbrella, which is positive. Organic growth and upsell are also important target areas. Needless to say that in the year 2024, we did not see the progress on those areas where we expected it to be. Unfortunately, market circumstances were so that volumes in the market were down altogether, which means that growth needs to come from acquisition of customers from other competitors.
There is not a lot of growth in the market in itself, which makes it a tough environment and gives us a lot of challenges. We focus on many areas on how to get the growth back in, including above-the-line advertising campaigns, but also very targeted and data-driven sales effort by our sales force, partly in combination with Heineken being our partner in the Dutch market. We have seen in the second half of the year that we could, against market developments, turn around the situation a bit, gain more customers, and let's hope that when the market recovers, we have a broader customer base that can benefit from a market uplift. To boost organic growth, we also invest in the further improvement of our infrastructure of locations. It does not always mean that it is an expansion.
For instance, in The Hague, one of the examples here at the bottom part, we are going to integrate two separate locations in The Hague into one new location, which will open next week. Both in the Netherlands and also in Belgium, we keep investing in the cash and carry network to optimize the situation. Specifically, maybe to highlight is the Middelkerke, which is on the right-hand side here. Middelkerke is one of the locations we acquired in the former Metro acquisition and what was closed down because of permitting issues. We knew that was a bit of a risk in the business case, but fortunately, we were able to regain the permits in the last couple of months, and we reopened the location as of yesterday. That might give an additional impulse in the revenue development for former Metro locations in Belgium.
On tobacco, I think I already explained a bit on this. On the one hand, we stopped selling tobacco altogether as of January 1, 2025. On the other hand, of course, the tobacco products were never our primary interest. It was a necessary service product if we wanted to be active in the petrol segment. As the manufacturers now have found a direct route to supply those outlets, the remaining products, so everything that is non-tobacco, is up for grabs. Of course, that is where our specialty lies and our relations historically also are good. For two big customers, we already secured a contract for the next three years to supply all tobacco, which of course is the interesting part of the business that we now are able to maintain.
On cost savings, to add a bit on what I said before, a lot of initiatives, smaller and bigger in the supply chain, in the staffing, and of course in reducing the overhead, also making use of new mechanization options that we have in our delivery service. We tested this one on the return packaging in Amsterdam, which is implemented successfully, which saves immediately 10-15 people in the operation. We can roll out this type of mechanization to the other delivery services that we have. There are more options to be discovered and implemented. Gross margin, yeah, of course, when in markets that are tough, pricing is not the way to go. We have to be very strict on pricing and making sure that we manage this very well.
On the one hand, we were able to push some of the price increases on goods into the market. On the other hand, we had to give some more relief in terms of promo and price policies, which in the end have a downward effect on margins. The total of it is a slight improvement, but certainly not in terms of pricing. It's more in managing the mix and promotion strategy where we see room for improvement. That's also the case for the upcoming year because market dynamics have not changed a lot. Our customers have tough business, so that means that we have to support them wherever we can. There is not a lot of room to pass on huge cost increases. We still see room in optimizing price and promo management towards customers, both in cash and carry and in delivery business in the Netherlands and Belgium.
On our ERP, of course, as most of you will know, we had a first attempt on an SAP rollout. At the beginning of 2023, we decided to pause that SAP rollout and stabilize the situation in the Antwerp site as it is. In the course of 2024, we made a new plan together with SAP. SAP is on board as a true partner now and will also assume the role of system integrator themselves, which means that they will support us all the way in the restart of the program. Of course, a lot of lessons have been learned from the previous attempt to implement SAP. We are going to take our time to detail the plan and to detail the designs and to build. That will be the activity for 2025. The rollout, which will be very staged and very controlled, will start as of 2026.
Also means that that is not going to be a burden on the operation in 2025, and we do not expect it to be a big burden on the operation in 2026. Also in terms of CapEx, we can bear the cost that we still have to, the money we still have to invest in the normal annual CapEx budgets that we have. We do not expect a major additional effort to be needed in the further rollout of this package. On ESG, of course, this was the first year where we were going to report under the new European guidelines on CSRD. That was quite an effort to get to that level. The results of those you can find in our annual report, which in Dutch is already available on the website and in English will be available in the next couple of days.
A lot of effort on putting in place the policies, the targets, the KPIs, and measuring it according to the rules of these definitions. Some of the targets that we have set here, you can see on Scope 1 and 2 emissions, but also in the increase of our exclusive product range with certification. It is a better alternative than some of the brands there. A lot of effort has been put in, but yeah, we have extensive reporting available now on these topics. Just putting in the highlights in this presentation. Also on the next slide, you can see that we have a lot of data available now under the definitions that are commonly used in the market. We will be able to track progress on all the activities that we do in this area going forward.
The outlook for next year, the market in general, consumer confidence will still be at the level that we've seen the last couple of years. We expect the high inflation will come down a bit, but we will still see that there's some pressure on volumes in the market. Overall, we expect a slight volume increase and some price inflation going forward. Positive maybe in view of the consumer, what we mentioned here is the purchasing power because of which inflation has been restored. In the end, it's all about the sentiment of consumers, whether they accept new higher price levels and feel comfortable in spending out of home in the market. Of course, that is a direct impact on our customers and as such, a direct impact on our business going forward.
For the next year, limited volume growth with some price inflation, so that will have some slight market growth. Specifically for Sligro, we expect an increase in revenue, of course, excluding the tobacco products in the definition because that will be out of the sales as of 2024. On the one hand, we see a market growth. On the other hand, we have an ambition to outperform the market in both countries. Both in the Netherlands and Belgium, the key to improving results is by fueling the current infrastructure with more volume, which we intend to do in customer acquisition and wherever we can in customer expansion. Of course, we have to keep a close eye on the cost levels. Fortunately, we see that the huge inflation levels that we've seen in the last couple of years in cost pricing have come down as well.
There is now a more balanced level in cost inflation versus consumer or sales price inflation, which is a better environment to operate in and will give us more opportunities to improve results also on the cost side. We will make no specific forecasts for the results of 2025, but in view of our ambition of our 7.5% EBITDA target, which in the original plan was scheduled for 2025, but also based on the assumption that markets would recover, it would be fair to say that it will take us at least a couple of years to get to that 7.5%. If we look at the numbers today, in the appendix on the presentation on the website, you can find the normalized P&L for 2023 and 2024.
Taking out the tobacco impact and the impairments and such, you see that today we have a level in 2024 of 5.2%. We still have a gap towards the 7.5%. As we see it today, it will take us roughly two years to bridge the gap from where we are in 2024 to that level of 7.5%. That is what we are aiming for. That concludes my introduction based on the sheets. We can now switch to Q&A. If you have any questions, please use the raise your hand option in Teams. I can see who has a question. Please go ahead. Again, if you have any questions, please use the raise your hand option in Teams. You can ask your question.
Hi Rob, that is Remi from PGIM. Maybe one quick question.
You mentioned the loss of a large customer beginning of 2024 for EUR 50 million of sales. Could you please elaborate on the reason behind this? You mean the one in the Netherlands, the customer?
Yes. Yeah, of course, in 2023, we still were faced with a lot of scarcity in the market, also in logistics capacity, but also transportation capacity. This was a customer that we gained through one of the acquisitions historically, but was more or less a logistic service provider customer. That meant that this was very specific. The customer name is known, by the way, that's Burger King, so the big hamburger chain for the Dutch business. They only have customer-specific products. They just had a logistics partner in us for the distribution of those goods.
That's not fitting in our business model because we would like to be in charge of purchasing and be able to scale the purchasing activities as such. We decided when the contract ended to stop business with them. I think in a good dialogue with them, we decided that we should end the business. We gave them the opportunity to find a new partner for that. They found a new logistics partner to do the distribution. It was out of the sales. Top line-wise, that was roughly EUR 50 million customers. Half of it lost in 2023, half of it lost in 2024. In terms of profitability and fitting in the business model, that was a good decision for us. Of course, in top line, that has quite a significant impact.
Okay, thank you very much. That's clear.
Maybe one other question. You mentioned some layoffs or reduction in staff thanks to some IT or other maybe reduction plan. I mean, are there like severance costs for laying staff? Do you expect basically this to have a positive impact for next years as maybe you have abnormally high costs in the staff due to some premiums you need to pay?
Yeah, I think it has two effects. On one end, of course, the reduction was achieved in the course of the year. The full year effect of the reduction will be visible in 2025. The total additional severance cost paid was roughly EUR 2.5 million in Belgium for this, which is, of course, also a one-off that is incurred in 2024 and will not reoccur in 2025. That was also in the bridge.
Some of you have probably seen our Capital Markets Day presentation of one and a half, two years ago, where we highlighted the steps towards the 7.5%. Part of the explanation there was that in the first year, of course, we incur both the half-year effect, more or less, of the saving and the severance payments. The full year effect will be visible as of 2025.
Thank you very much.
All right. Any other questions from anyone? If there are no further questions, then I would like to thank you for listening in on this call. In a number of weeks, we will publish our Q1 trading update with the first quarter revenues reported. As we mentioned in our press release, take into account that there is a lot of shifts in the calendar, which make for a lot of technical considerations.
The shift of Easter, and last year we had a leap year, so that added an additional day of revenues. These factors taking into account will blur the visibility on the development a bit. Of course, we will also highlight and explain that in the trading update that we will provide. Of course, you're all welcome to join in on the call when we publish our half-year figures mid-July. I hope to see you again in those calls to listen in. Thank you for now, and hope to see you again. Bye-bye.