Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ENAV first quarter 2023 results and conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Vittorio De Domenico, Head of Investor Relations. Please go ahead, sir.
Thank you, Sherry. Good afternoon, ladies and gentlemen, and welcome to the ENAV first quarter 2023 results call. Here with me there are ENAV CEO, Mr. Pasqualino Monti, and ENAV CFO, Mr. Luca Colman. They will be running you through the presentation. After that, we will be happy to answer your questions. With that, I leave the floor to Mr. Monti.
Thank you. Thank you, Vittorio. Good afternoon, ladies and gentlemen. As Vittorio said, I'm Pasqualino Monti, the new Chief Executive Officer of ENAV, appointed last week by the new board of directors, which have been established at the general annual meeting held on 28th of April. I'm very proud to be here and to begin this new adventure in ENAV. We will certainly have the opportunity to talk and meet in the coming months. I will now leave the floor to Mr. Colman to give you an overview of the results for the first quarter of 2023. Thank you.
Thank you, Mr. Monti, and good afternoon to all of you. The first quarter of this year demonstrated substantial growth in traffic in term of service unit with a significant year-on-year rise in enroute of 26.8%, coupled with a strong 22.5% in terminal. Most important is the fact that the total enroute service unit volume exceeded by 4.2% the last pre-pandemic year, 2019. That's very important. It is worth noting that our business is back to its traditional seasonality, which is clearly visible in the first quarter of the year, typically the weakest in term of traffic and top line, but not in term of costs, which are fairly stable in the quarterly trend.
Net revenue was EUR 176.8 million, up 5.2% year-on-year, primarily driven by the operative core business, which was EUR 177.6 million, growing 20.5% year-on-year. EBITDA was EUR 9.7 million, down 35.9% year-on-year, mainly due to cost, staff cost, which reflected the labor contract renewal completed in the fourth quarter 2022 and not included in the first quarter of the last year. EBITDA margin stood at 5.5%. As a result of our business, typical above mentioned seasonality, we included EUR 21.8 million net loss in the first quarter of 2023.
CapEx was EUR 14.7 million, while net financial debt was EUR 319.9 million, improving from the EUR 407.8 million recorded at the end of 2022. As a result, the ratio net debt to EBITDA decreased to 1.4x from the 1.5x at the end of December last year. The cash balance at the end of the first quarter was EUR 313 million. Let's take a deeper look on slide three at the traffic trends reported in the first quarter 2023. En-route service units were up 26.8% year-on-year, with international traffic increasing the greatest, 30.3% year-on-year. Overflight up 33.1% and national up 4.3%.
When we look at the en-route traffic from a different perspective, we can see that overflight is the most important component, accounting for 42% of total, while worldwide international accounts for 37% and national accounts for 21%. As already mentioned, it is notable that en-route traffic in the first quarter in 2023 exceeded by 4.2% the volume we managed in the first quarter of 2019, with the month of April following the same trend. Concerning the terminal traffic on slide four, service units increased 22.5% year-on-year, demonstrating a strong performance in all three charging zones, particularly Zone 1 and 3. When we examining terminal traffic by destination, the international component increases by 34.3%, while the domestic component increases by 7.1%.
For terminal, it is confirmed once again the strong recovery trend in traffic that reached. In the first quarter this year, 91.8% of the volume managed in the first quarter 2019. On slide six, we can see that overall group revenue in the first quarter 2023 reached EUR 176.8 million, up EUR 8.7 million year-on-year, which means respectable +5.2%. This performance is primarily due to a positive contribution of EUR 177.6 million from operative revenue, which increased by 20.5% year-on-year, reporting a growth in both en-route and terminal revenue, which went up year-on-year by 22% and 20.3% respectively.
At the same time, we see a negative balance contribution for EUR 9.3 million compared to positive EUR 12.4 million recorded in the same period of the last year. The negative balance is the first quarter, in the first quarter of this year, is mainly due to a couple factors. The first one is EUR 18.7 million negative balance reversal, almost completely related to balance accrued in the combined period 2020, 2021 due to the pandemic and cash in starting from the beginning of this quarter and for the next five years. The second point is a positive balance generated in the quarter of EUR 9.7 million, mainly related to Terminal Zone 3. Looking at non-regulated business as shown the second graph, it is somewhat declining due to a different year-over-year seasoning of the contract signed.
On slide seven, we can see the costs incurred by the group in the first quarter in comparison with the same period of the last year. Total operating costs were EUR 167.1 million, up 9.2% year-on-year due to the increase in both personal costs and external OPEX. For what concerns staff costs, it went up by 8% due to an year-on-year increase in headcount in the group that coupled with the renewal of the labor contract completed in the first quarter 2022, pushed up fixed remuneration by EUR 4.5 million. It is important to notice that the year-on-year comparison is not homogenous because the first quarter 2022 cost base didn't include the renewal of the labor contract.
Higher overtime paid to air traffic controllers is the second reason, and the accrual of the related MBO as a result of the increased number of flights managed in the quarter. This pushed up variable remuneration by EUR 2.5 million year-on-year. As a consequence of these two hikes, also social security contributions went up in the quarter by EUR 2.4 million. For what concern external OPEX, these increased EUR 3.8 million year-on-year, mostly due to a rise in the Eurocontrol contribution, which went up by EUR 1.5 million and an increase in maintenance costs. Moving on, we can comment EBITDA at the movements below. EBITDA stood at EUR 9.7 million with margin at 5.5%, both decreasing year-on-year due to seasonality that characterize ENAV's core business.
As you may be aware, this seasonality foreseeing revenue quarterly trend tightly linked to the air traffic volume, which is at its lowest in the first quarter of the year, also costs remain at least relatively stable over the quarters. CNA stood at EUR 27.9 million, substantially in line year-on-year. Provision and write-downs were EUR 1.8 million in the quarter, increasing EUR 0.6 million year-on-year. In term of net financial expenses, they amounted to EUR 1.5 million the first quarter, mainly due to increase the interest rate on debt, which resulted in a financial expenses totaling EUR 3.5 million, partly offset by EUR 2.2 million of financial income primarily coming from the balance remuneration mechanism.
With regard to the income taxes, we recorded negative EUR 0.4 million, decreasing EUR 1.4 million year-on-year due to the lower taxable income. As a result of this movement, we recorded EUR 21.8 million net loss in the quarter, which is in line with ENAC quarterly trend, reflecting the seasonality, the traffic seasonality typical of our business. In the next slide, we summarize as usual, ENAC liquidity and financial position, which as you can see remains very strong. We closed the first quarter with EUR 313 million cash and the additional drawn line, credit lines for EUR 214 million, out of which EUR 165 million are committed.
Net financial debt stood at EUR 391 million, decreasing EUR 17 million compared with a net debt of EUR 408 million as of the end of December 2022. In more detail, the net debt reduction is mainly driven by net cash in from operations for EUR 37.7 million, cash out for EUR 17.2 million related to capital investments, a cash out for EUR 2.2 million related to 500,000 treasury stock buyback that was performed between January and February. A negative change for EUR 1.1 million in on current commercial debt, mainly related to gross negative balance to be returned at the tariff line. Net debt and EBITDA stood at 1.4x compared with 1.5x reached at the end of 2022.
Let me finally remind you that in March we have re-financed EUR 360 million term loans expiring in July 2023, with new three lines years term loan for the same amount to be repaid in fully upon maturity. Now I'm going to provide you an update on 2022 outlook after the new Eurocontrol traffic forecast that was released at the end of March. We now expect annual traffic to be 6% above the pre-COVID level, reaching 10.6 million service units.
Total revenue are expected now to grow middle single digits year-on-year, with not regulated revenue confirmed to increase high single digits. EBITDA is also now expected to grow potentially middle single digit year-on-year. We need to better understand how will evolve the summer season. CapEx is confirmed to reach roughly EUR 100 million. With that, we are now ready to answer your questions.
Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Aleksandra Arsova of Equita.
Hi, good afternoon to everybody. First of all, welcome to the new CEO. Then I have three questions from my end. The first one is if and when, in case you will be able or willing to provide an indication on 2023 dividend and beyond, and any update on the business plan targets.
The second one is on the bonus-malus. If I remember correctly, you expected to recover something like EUR 4 million in from 2022 bonus. If it's confirmed that you will recover it, and what is the amount of bonus you expect for 2023? The last one is on financial interest. Do you expect this EUR 1.5 million, sorry, to be annualized? Should we expect around EUR 6 million-7 million in net financial income for the full year? Thank you.
Aleksandra, I will take the your question. For the first one, for the dividend, let me just let the CEO and the new board of director to get in the company. They were just appointed as the CEO time before, just couple weeks ago. They need to get in, and we will give you any information, you know, any update, if there will be update on dividend and dividend policy and so on. At the moment, the dividend policy, as you know, is valid. We will see in the next month.
For what concerns the bonus-malus, the part of 2022, these number are not in the guideline that we have given. That's it. We are still ongoing the discussion with the Commission. Actually, we still are waiting for the feedback on this. I think that would be in a short time we will have an answer. The last, I guess the last question, if I'm right, was about interest, financial interest.
At the moment our shall we interest average rate is 3.2% annual, and this is the one we believe to have by the end of the year if, you know, the interest will not increase. This is the actual cost of debt that we have.
Just to understand better, for the bonus models, for what you expect for 2023, and then when you say on interest, the 3.3%, the average interest rates, and what do you expect on balance actualization, which is the positive portion of net interest income?
Okay. For what concern, Just hold on a second. Okay. The bonus models for 2023, at the moment, for the first quarter, actually, we are in line with the best performance that we can get in the bonus models for what concerns us capacity, but as you can imagine, we have to wait, the summer season because on the forecast, the very last talk that we had with Eurocontrol foreseen a very, very high peak in the summer. Other than the, you know, the total number of flights, that we'll have in the next, in the year, the summer is going to be very, very tough. At the moment, we still are looking for to get our share.
I mean, as best performance, as much as we can, but we prefer to give some more detail on this point later on the year, for the reason I told you before, the summer season. We need to see how the summer season will go on. For what concern the second one, maybe you want to answer.
Yes. Luca mentioned the average annual interest rate on the gross debts of approximately 3.3%. Let's say we expect to offset part of it with the mechanism of the balance actualization. We, on a full year basis, should be approximately, let's say something around EUR 9 million-10 million positive to offset part of this interest in the P&L.
Okay, brilliant. Thank you.
The next question is from John Campbell of Bank of America.
Hi. Good afternoon. Thanks for taking my question. I wanted to ask if you had any guidance related to the amount of inflation balance that ENAV expects to accrue in 2023. Would you say that, assuming you do have an expectation, would you say that that would offset the expected increase in operating expenses from, for example, the fixed remuneration increase and the variable remuneration increase? Thank you.
The inflation? Okay. Sorry, I was just checking if I understood right the question, but yes, I did. The inflation we expect to have this year, you know that actually depends on the real inflation that will be at the end of the year by, I mean, registered by Eurostat. Say that we have our forecast. In our forecast, if you know, if the inflation rate is confirmed, we should kind of double the balance for inflation that we had last year. Just a little bit less than double. This amount of money is definitely enough to cover our cost increase.
Just if I could follow up, you expect that the amount in millions of euros will be double the amount that was seen in 2022?
Okay. Just to say that we are thinking about a number, a value that could be around EUR 50 million-EUR 65 million, depending on the total actually, the total in 2022. You know that inflation that you had, that we had in 2022 is something you carry over also in 2023 because, you know, the cost base that we negotiate is without inflation. Let me see. If the rate for 2023 would be confirmed at a rate around, you know, 87%, 8%, that is something that is, I think is the one now is considered, we should have a tax... Sorry, we should have a balance, inflation balance of around, of about roughly EUR 50 million-EUR 65 million.
Okay. That's helpful. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your touchtone telephone. Once again, if you wish to register for a question, please press star and one. A reminder, at this time, we will close the Q&A. If you'd like to ask a question, please press star and one on your telephone. Sir, there are no more questions registered at this time.
Okay.
Okay, perfect. Thank you, Sherry. Thank You, everybody who has joined this call. For any further question you might have, please feel free to follow up with us in Investor Relations. With that, I wish you, everybody, good evening.
Thank you. Bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.